COMMON STOCK PURCHASE AGREEMENT

 

DATED AS OF JULY 11, 2013

 

BY AND BETWEEN

 

EOS PETRO, INC.

 

AND

 

GEM GLOBAL YIELD FUND LIMITED

 

 

 

 

Table of Contents

 

    Page     ARTICLE I DEFINITIONS 1 Section 1.1 Definitions 1       ARTICLE II
PURCHASE AND SALE OF COMMON STOCK 4 Section 2.1 Purchase and Sale of Stock 4
Section 2.2 The Shares 4 Section 2.3 Registration Statement 4 Section 2.4
Purchase Price and Effective Date 4 Section 2.5 Current Report 4       ARTICLE
III REPRESENTATIONS AND WARRANTIES 5 Section 3.1 Representations and Warranties
of the Company 5 Section 3.2 Representatives and Warranties of the Purchaser 11
      ARTICLE IV COVENANTS 12 Section 4.1 Securities Compliance 12 Section 4.2
Registration and Listing 13 Section 4.3 Warrants 13 Section 4.4 Registration
Rights Agreement 14 Section 4.5 Compliance with Laws 14 Section 4.6 Keeping of
Records and Books of Account 14 Section 4.7 Limitations on Holdings and
Issuances 14 Section 4.8 Registration Statement 15 Section 4.9 Other Agreements
15 Section 4.10 Stop Orders 15 Section 4.11 Selling Restrictions; Volume
Limitations 15 Section 4.12 Structuring Fee 16 Section 4.13 Non-Public
Information 16 Section 4.14 DWAC Eligibility 16       ARTICLE V OPINION OF
COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND PURCHASE OF THE SHARES 17
Section 5.1 Opinion of Counsel and Certificate 17 Section 5.2 Conditions
Precedent to the Obligation of the Company to Sell the Shares 17 Section 5.3
Conditions Precedent to the Obligation of the Purchaser To Accept a Draw Down
and Purchase the Shares 18       ARTICLE VI DRAW DOWN TERMS 19 Section 6.1 Draw
Down Terms 19 Section 6.2 Aggregate Limit 21       ARTICLE VII Termination 21
Section 7.1 Term, Termination by Mutual Consent 21

 

 

 

 

Section 7.2 Effect of Termination 21       ARTICLE VIII INDEMNIFICATION 21
Section 8.1 General Indemnity 21 Section 8.2 Indemnification Procedures 22      
ARTICLE IX MISCELLANEOUS 23 Section 9.1 Fees and Expenses 23 Section 9.2
Specific Enforcement, Consent to Jurisdiction 23 Section 9.3 Entire Agreement;
Amendment 24 Section 9.4 Notices 24 Section 9.5 Waivers 25 Section 9.6 Headings
25 Section 9.7 Successors and Assigns 25 Section 9.8 Governing Law 25 Section
9.9 Survival 25 Section 9.10 Counterparts 25 Section 9.11 Publicity 25 Section
9.12 Severability 26 Section 9.13 Further Assurances 26

 

 

 

  

COMMON STOCK PURCHASE AGREEMENT

 

This COMMON STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of July 11,
2013, is made by and between Eos Petro, Inc., a Nevada corporation (the
“Company”) and GEM Global Yield Fund Limited, a company incorporated under the
laws of the Cayman Islands (the “Purchaser”).

 

RECITALS

 

WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell to the Purchaser and the
Purchaser shall purchase up to a maximum of Four Hundred Million Dollars
($400,000,000) of the Company’s common stock, $0.0001 par value per share (the
“Common Stock”).

 

NOW, THEREFORE, the parties hereto agree as follows:

 

AGREEMENT

 

ARTICLE I
DEFINITIONS

 

Section 1.1         Definitions.

 

(a)         “Aggregate Limit” shall have the meaning assigned to such term in
Section 2.1 hereof.

 

(b)         “Articles” shall have the meaning assigned to such term in Section
3.1(c) hereof.

 

(c)         “Bylaws” shall have the meaning assigned to such term in Section
3.1(c) hereof.

 

(d)         “Commission” shall mean the Securities and Exchange Commission or
any successor entity.

 

(e)         “Commission Documents” shall mean, as of a particular date, all
reports, schedules, forms, statements and other documents filed by the Company
with the Commission pursuant to the reporting requirements of the Exchange Act,
including material filed pursuant to Section 13(a) or 15(d) of the Exchange Act,
and shall include all information contained in such filings and all filings
incorporated by reference therein.

 

(f)         “Common Stock” shall have the meaning assigned to such term in the
Recitals.

 

(g)        “Daily Closing Price” shall mean the closing price of the Common
Stock, as recorded by the Principal Market, on a particular day.

 

(h)         “Draw Down” means the transactions contemplated under Section 6.1 of
this Agreement.

 

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(i)         “Draw Down Amount” means the actual amount of proceeds to be paid by
the Purchaser and received by the Company on the Settlement Date in connection
with a Draw Down.

 

(j)          “Draw Down Amount Requested” shall mean the amount of a Draw Down
requested by the Company in its Draw Down Notice as provided in Section 6.1(h)
hereof.

 

(k)         “Draw Down Exercise Date” shall have the meaning assigned to such
term in Section 6.1(h) hereof.

 

(l)          “Draw Down Limit” shall have the meaning assigned to such term in
Section 6.1(a) hereof.

 

(m)        “Draw Down Notice” shall mean a notice sent by the Company to
exercise a Draw Down as provided in Section 6.1(h) hereof.

 

(n)         “Draw Down Pricing Period” shall mean a period of ten (10)
consecutive Trading Days commencing with the first Trading Day designated in the
Draw Down Notice, or such other period mutually agreed upon by the Purchaser and
the Company.

 

(o)         “Effective Date” shall mean the date of the execution and delivery
this Agreement.

 

(p)         “Environmental Laws” shall have the meaning assigned to such term in
Section 3.1(r) hereof.

 

(q)         Intentionally Omitted.

 

(r)          “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.

 

(s)         “GAAP” shall mean generally accepted accounting principles in the
United States of America as applied by the Company.

 

(t)          “Indebtedness” shall have the meaning assigned to such term in
Section 3.1(k) hereof.

 

(u)         “Investment Period” shall have the meaning assigned to such term in
Section 7.1 hereof.

 

(v)         “Market Capitalization” shall be calculated on the Trading Day
preceding each Draw Down Pricing Period and shall be the product of (x) the
number of shares of Common Stock outstanding and (y) the closing bid price of
the Common Stock, both as determined by Bloomberg Financial LP using the DES and
HP functions.

 

(w)        “Material Adverse Effect” shall mean any effect on the business,
operations, properties or financial condition of the Company that is material
and adverse to the Company and its subsidiaries and affiliates, taken as a
whole, and/or any condition, circumstance, or situation that would prohibit or
otherwise materially interfere with the ability of the Company to enter into and
perform any of its obligations under this Agreement in any material respect.

 

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(x)         “Material Agreements” shall have the meaning assigned to such term
in Section 3.1(s) hereof.

 

(y)        “Material Change in Ownership” shall mean that (i) the owners of 5%
or more of the outstanding Common Stock and (ii) the Company’s officers and
directors, shall beneficially own in the aggregate less than 15% of the
outstanding Common Stock.

 

(z)         Intentionally Omitted.

 

(aa)       “Plan” shall have the meaning assigned to such term in Section 3.1(y)
hereof.

 

(bb)      “Principal Market” shall mean the OTC Bulletin Board or any U.S.
national securities exchange on which the Common Stock is traded.

 

(cc)       “Purchase Price” shall have the meaning assigned to such term in
Section 6.1(a) hereof.

 

(dd)      “Registration Statement” shall mean the registration statement on Form
S-1 under the Securities Act, to be filed by the Company with the Commission
with respect to the registration of the Shares to be issued under the Draw
Downs, pursuant to the Registration Rights Agreement attached hereto as Exhibit
A hereto (the “Registration Rights Agreement”).

 

(ee)       “Securities Act” shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.

 

(ff)        “Settlement Date” shall have the meaning assigned to such term in
Section 6.1(d) hereof.

 

(gg)      “Shares” shall mean, collectively, the registered shares of Common
Stock of the Company issuable to the Purchaser upon exercise of any Draw Down
and pursuant to Section 4.12 hereof.

 

(hh)      “Significant Subsidiary” shall have the meaning assigned to such term
in Section 3.1(g) hereof.

 

(ii)         “Structuring Fee” shall have the meaning assigned to such term in
Section 4.12 hereof.

 

(jj)         “Subsidiary” shall mean any corporation or other entity of which at
least a majority of the securities or other ownership interest having ordinary
voting power (absolutely or contingently) for the election of directors or other
persons performing similar functions are at the time owned directly or
indirectly by the Company and/or any of its other subsidiaries.

 

(kk)       Threshold Price” is the lowest price at which the Company may sell
Shares during a Draw Down Pricing Period, as set forth in the Draw Down Notice.
Notwithstanding the foregoing, the Threshold Price shall not be less than $5.00
per share.

 

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(ll)         “Trading Day” shall mean a trading day on the Principal Market.

 

(mm)     “Uplist” shall have the meaning assigned to such term in Section 4.3(b)
hereof.

 

(nn)      “Warrants” shall have the meaning assigned to such term in Section
4.3(a)(ii) hereof.

 

ARTICLE II
PURCHASE AND SALE OF COMMON STOCK

 

Section 2.1        Purchase and Sale of Stock. Subject to the terms and
conditions of this Agreement, the Company shall issue and sell to the Purchaser
and the Purchaser shall purchase from the Company during the Investment Period
(as defined in Section 7.1) up to a maximum of $400,000,000 of Common Stock
provided that if the Company’s public float is less than $100,000,000 for thirty
(30) consecutive days, then up to a maximum of one third of the public float
(the “Aggregate Limit”) on a firm commitment basis. The aggregate dollar amount
of all Draw Down Amounts pursuant to the terms and conditions of this Agreement
shall not exceed the Aggregate Limit.

 

Section 2.2       The Shares. The Company has or will have authorized and has or
will have reserved, and covenants to continue to so reserve once reserved, free
of preemptive rights and other similar contractual rights of stockholders, a
sufficient number of its authorized but unissued shares of its Common Stock to
cover the Shares to be issued in connection with all Draw Downs requested under
this Agreement.

 

Section 2.3        Registration Statement. The Company shall prepare and file a
S-1 Registration Statement with the Commission in accordance with the provisions
of the Securities Act and the Registration Rights Agreement.

 

Section 2.4        Purchase Price and Effective Date. In consideration of and in
express reliance upon the representations, warranties, covenants, terms and
conditions of this Agreement, the Company agrees to issue and sell to the
Purchaser, and the Purchaser agrees to purchase, that number of the Shares to be
issued in connection with each Draw Down in accordance with the terms and
conditions of this Agreement.

 

Section 2.5       Current Report. As soon as practicable, but in any event not
later than 5:30 p.m. (New York time) on the fourth Trading Day immediately
following the Effective Date, the Company shall file with the Commission a
report on Form 8-K relating to the transactions contemplated by, and describing
the material terms and conditions of, this Agreement (the “Current Report”). The
Current Report shall include a copy of this Agreement as an exhibit. The Company
heretofore has provided the Purchaser a reasonable opportunity to comment on a
draft of such Current Report and has given due consideration to such comments.

 

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ARTICLE III
REPRESENTATIONS AND WARRANTIES

 

Section 3.1        Representations and Warranties of the Company. Except as set
forth in the Company Disclosure Schedules delivered to Purchaser by the Company
on or prior to the date of this Agreement, and except as disclosed in the
Commission Filings, which Disclosure Schedules and Commission Filings shall be
deemed a part hereof and, with respect to the Commission Filings, shall qualify
any representation or otherwise made herein, and with respect to the Company
Disclosure Schedules, shall qualify any representation or otherwise made herein
to the extent of the disclosure contained in the corresponding section of the
Company Disclosure Schedules, except to the extent that relevance or
applicability of such disclosure to information called for by such other section
or sections is reasonably apparent on its face from a plain reading thereof,
notwithstanding the omission of a reference or cross-reference thereto, the
Company hereby makes the following representations and warranties to the
Purchaser:

 

(a)       Organization, Good Standing and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of
Nevada and has the requisite corporate power to own, lease and operate its
properties and assets and to conduct its business as it is now being conducted.
As of the Effective Date, the Company has two wholly-owned subsidiaries: (1) Eos
Global Petro, Inc., a Delaware corporation (“Eos Global”); and (2) Eos Petro
Australia Pty Ltd., an Australian company. Eos Global in turn has two
subsidiaries: (1) Plethora Energy Inc., a Delaware corporation and wholly-owned
subsidiary of Eos; and (2) EOS Atlantic Oil & Gas Ltd., a Ghanaian limited
liability company of which Eos owns 90%. The other 10% of EOS Atlantic Oil & Gas
Ltd. is owned by Baychester Petroleum Ltd., one of Eos’ Ghanaian-based
consultants. The Company is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary except for any jurisdiction in which the failure to be so qualified
will not have a Material Adverse Effect.

 

(b)       Authorization, Enforcement. The Company has the requisite corporate
power and authority to enter into and perform this Agreement and to issue and
sell the Shares in accordance with the terms hereof. Except for approvals of the
Company’s Board of Directors or a committee thereof as may be required in
connection with any issuance and sale of Shares to the Purchaser hereunder, the
execution, delivery and performance of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action, and, except as
contemplated by Section 2.2, no further consent or authorization of the Company
or its Board of Directors or stockholders is required. This Agreement has been
duly executed and delivered by the Company. This Agreement constitutes, or shall
constitute when executed and delivered, a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor’s
rights and remedies or by other equitable principles of general application.

 

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(c)       Capitalization. The authorized capital stock of the Company and the
shares thereof issued and outstanding as of the Effective Date are set forth in
the Commission Documents or on Schedule 3.1(c) attached hereto. All of the
outstanding shares of Common Stock have been duly and validly authorized, and
are fully paid and nonassessable. As of the Effective Date, and except as set
forth in the Commission Documents or on Schedule 3.1(c), no shares of Common
Stock are entitled to preemptive rights or registration rights and there are no
outstanding options, warrants, scrip, rights to subscribe to, call or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company. Furthermore,
except as set forth in the Commission Documents or on Schedule 3.1(c), there are
no contracts, commitments, understandings, or arrangements by which the Company
is or may become bound to issue additional shares of the capital stock of the
Company or options, securities or rights convertible into shares of capital
stock of the Company. Except for (i) customary transfer restrictions contained
in agreements entered into by the Company in order to sell restricted stock, and
(ii) certain Lock-Up/Leak-Out agreements set forth on Schedule 3.1(c), as of the
Effective Date, the Company is not a party to, and it has no knowledge of, any
agreement restricting the voting or transfer of any shares of the capital stock
of the Company. The offer and sale of all capital stock, convertible securities,
rights, warrants, or options of the Company issued prior to the Effective Date
materially complied with all applicable federal and state securities laws, and
no stockholder has a right of rescission or damages with respect thereto which
would have a Material Adverse Effect. The Company has furnished or made
available to the Purchaser true and correct copies of the Company’s Certificate
of Incorporation as in effect on the Effective Date (the “Articles”), and the
Company’s Bylaws as in effect on the Effective Date (the “Bylaws”).

 

(d)       Issuance of Shares. The Shares to be issued under this Agreement have
been or will be (prior to issuance to the Purchaser hereunder) duly authorized
by all necessary corporate action and, when paid for or issued in accordance
with the terms hereof, the Shares shall be validly issued and outstanding, fully
paid and nonassessable, and the Purchaser shall be entitled to all rights
accorded to a holder of Common Stock.

 

(e)       No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated herein do not (i) violate any provision of the Company’s Articles
or Bylaws, (ii) conflict with, or constitute a default (or an event which 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 of, any
material agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Company is a party, (iii)
create or impose a lien, charge or encumbrance on any property of the Company
under any agreement or any commitment to which the Company is a party or by
which the Company is bound or by which any of its respective properties or
assets are bound, or (iv) result in a violation of any federal, state, local or
foreign statute, rule, regulation, order, judgment or decree (including federal
and state securities laws and regulations) applicable to the Company or any of
its subsidiaries or by which any property or asset of the Company or any of its
subsidiaries are bound or affected, except, in all cases, for such conflicts,
defaults, terminations, amendments, acceleration, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse Effect.
The Company is not required under federal, state or local law, rule or
regulation to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement, or
issue and sell the Shares to the Purchaser in accordance with the terms hereof
(other than any filings which may be required to be made by the Company with the
Commission or the Principal Market subsequent to the Effective Date, including
the Registration Statement and any registration statement, amendment, prospectus
or prospectus supplement which may be filed pursuant hereto); provided, however,
that, for purposes of the representation made in this sentence, the Company is
assuming and relying upon the accuracy of the representations, warranties and
agreements of the Purchaser herein.

 

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(f)        Commission Documents, Financial Statements. The Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act and, as of the
Effective Date the Company has filed all required Commission Documents. The
Company has delivered or made available to the Purchaser true and complete
copies of the Commission Documents filed with the Commission since December 31,
2010 and prior to the Effective Date. The Company has not provided to the
Purchaser any information which, according to applicable law, rule or
regulation, should have been disclosed publicly by the Company but which has not
been so disclosed, other than with respect to the transactions contemplated by
this Agreement. As of their respective filing dates, the Commission Documents
complied in all material respects with the requirements of the Exchange Act and
other federal, state and local laws, rules and regulations applicable to it,
and, as of its date, the Commission Documents did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the Commission Documents comply as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with GAAP applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed or summary
statements), and fairly present in all material respects the financial position
of the Company and its subsidiaries as of the dates thereof and the results of
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).

 

(g)       No Material Adverse Effect or Material Change in Ownership. Except as
set forth on Schedule 3.1(g) or in Commission Documents filed prior to the
Effective Date, no Material Adverse Effect or any Material Change in Ownership
has occurred or exists with respect to the Company.

 

(h)       No Undisclosed Liabilities. Neither the Company nor any of its
subsidiaries has any liabilities, obligations, claims or losses (whether
liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent
or otherwise) that would be required to be disclosed on a balance sheet of the
Company or any Subsidiary (including the notes thereto) in conformity with GAAP
and are not disclosed in the Commission Documents.

 

(i)        No Undisclosed Events or Circumstances. No event or circumstance has
occurred or exists with respect to the Company or its subsidiaries or their
respective businesses, properties, prospects, operations or financial condition,
which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed.

 

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(j)        Indebtedness. Except as set forth on Schedule 3.1(j), the Commission
Documents as of the Effective Date set forth all outstanding secured and
unsecured Indebtedness of the Company, or for which the Company or any
Subsidiary has commitments through such date. For the purposes of this
Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed money or
amounts owed in excess of $1,000,000 (other than trade accounts payable incurred
in the ordinary course of business), (b) all guaranties, endorsements and other
contingent obligations in respect of Indebtedness of others in excess of
$1,000,000, whether or not the same are or should be reflected in the Company’s
balance sheet (or the notes thereto), except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business; and (c) the present value of any lease payments in
excess of $1,000,000 due under leases required to be capitalized in accordance
with GAAP. Except as set forth on Schedule 3.1(j), neither the Company nor any
Subsidiary is in default with respect to any Indebtedness.

 

(k)       Title To Assets. Each of the Company and its Subsidiaries has good and
marketable title to all of their respective real and personal property reflected
in the Commission Documents, free of any mortgages, pledges, charges, liens,
security interests or other encumbrances, except for those that do not or would
not have a Material Adverse Effect. All said real property leases of the Company
are valid and subsisting and in full force and effect in all material respects.

 

(l)        Actions Pending. There is no action, suit, claim, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any Subsidiary which questions the validity of this Agreement or the
transactions contemplated hereby or any action taken or to be taken pursuant
hereto or thereto. Except as set forth on Schedule 3.1(l) or Commission
Documents filed prior to the Effective Date, there is no action, suit, claim,
investigation or proceeding pending or, to the knowledge of the Company,
threatened, against or involving the Company, any Subsidiary or any of their
respective properties or assets and which, if determined adversely to the
Company or its Subsidiary, would have a Material Adverse Effect.

 

(m)      Compliance With Law. The business of the Company and the subsidiaries
has been and is presently being conducted in all material respects in accordance
with all applicable federal, state and local governmental laws, rules,
regulations and ordinances, except as, individually or in the aggregate, do not
or would not have a Material Adverse Effect. The Company and each of its
subsidiaries have all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of its business as now being conducted by it, except where the failure
to possess such franchises, permits, licenses, consents and other governmental
or regulatory authorizations and approvals, individually or in the aggregate, do
not or would not have a Material Adverse Effect.

 

(n)       Certain Fees. No brokers, finders or financial advisory fees or
commissions will be payable by the Company or any Subsidiary with respect to the
transactions contemplated by this Agreement.

 

(o)       Disclosure. Neither this Agreement nor the Commission Documents or any
other documents, certificates or instruments furnished to the Purchaser by or on
behalf of the Company in connection with the transactions contemplated by this
Agreement contain any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements made herein or therein,
in the light of the circumstances under which they were made herein or therein,
not misleading.

 

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(p)       Operation Of Business. The Company or one or more of its subsidiaries
owns or controls all patents, trademarks, service marks, trade names,
copyrights, licenses and authorizations of the Company as set forth in the
Commission Documents, and all rights with respect to the foregoing, which are
necessary for the conduct of its business as now conducted without, to the
Company’s knowledge, any conflict with the rights of others, except to the
extent that any such conflict would not have a Material Adverse Effect.

 

(q)       Environmental Compliance. The Company and each of its subsidiaries
have obtained all material approvals, authorization, certificates, consents,
licenses, orders and permits or other similar authorizations of all governmental
authorities, or from any other person, that are required under any Environmental
Laws, except for any approvals, authorization, certificates, consents, licenses,
orders and permits or other similar authorizations the failure of which to
obtain does not or would not have a Material Adverse Effect. “Environmental
Laws” shall mean all applicable laws relating to the protection of the
environment including, without limitation, all requirements pertaining to
reporting, licensing, permitting, controlling, investigating or remediating
emissions, discharges, releases or threatened releases of hazardous substances,
chemical substances, pollutants, contaminants or toxic substances, materials or
wastes, whether solid, liquid or gaseous in nature, into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of hazardous
substances, chemical substances, pollutants, contaminants or toxic substances,
material or wastes, whether solid, liquid or gaseous in nature. Except for such
instances as would not individually or in the aggregate have a Material Adverse
Effect, there are no past or present events, conditions, circumstances,
incidents, actions or omissions relating to or in any way affecting the Company
or its subsidiaries that violate or could reasonably be expected to violate any
Environmental Law after the Effective Date or that could reasonably be expected
to give rise to any environmental liability, or otherwise form the basis of any
claim, action, demand, suit, proceeding, hearing, study or investigation (i)
under any Environmental Law, or (ii) based on or related to the manufacture,
processing, distribution, use, treatment, storage (including without limitation
underground storage tanks), disposal, transport or handling, or the emission,
discharge, release or threatened release of any hazardous substance.

 

(r)        Material Agreements. Except as set forth on Schedule 3.1(r), the
Company is not a party to any written or oral contract, instrument, agreement,
commitment, obligation, plan or arrangement, a copy of which would be required
to be filed, but has not yet been filed, with the Commission as an exhibit to an
annual report on Form 10-K (collectively, “Material Agreements”). Except as set
forth on Schedule 3.1(r), the Company has in all material respects performed all
the obligations required to be performed by them to date under the Material
Agreements, have received no notice of default by the Company thereunder and, to
the best of the Company’s knowledge, are not in default under any Material
Agreement now in effect, the result of which would have a Material Adverse
Effect.

 

(s)       Transactions With Affiliates. Except as set forth on Schedule 3.1(s)
or in Commission Documents filed prior to the Effective Date, there are no
loans, leases, agreements, contracts, royalty agreements, management contracts
or arrangements or other continuing transactions exceeding $100,000 between (a)
the Company or any Subsidiary, on the one hand, and (b) any person or entity who
would be covered by Item 404(a) of Regulation S-K, on the other hand.

 

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(t)        Securities Act. The Company will comply in all material respects with
all applicable federal and state securities laws in connection with the offer,
issuance and sale of the Shares hereunder. The Company will comply, when so
filed, in all material respects with the provisions of the Securities Act. The
Commission has not issued any order preventing or suspending the use of the
Registration Statement. The Registration Statement, in the form in which it will
become effective, and also in such form as it may be amended or supplemented
from time to time, will comply in all material respects with the provisions of
the Securities Act and will not at any such time contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein in the light of the circumstances
under which they are made, not misleading. The Company has not distributed and,
prior to the completion of the distribution of the Shares, will not distribute
any offering material in connection with the offering and sale of the Shares
other than the Registration Statement, the related prospectus or other
materials, if any, permitted by the Securities Act.

 

(u)       Employees. As of the Effective Date, the Company does not have any
collective bargaining arrangements or agreements covering any of its employees.
Except as set forth on Schedule 3.1(u) or in Commission Documents filed prior to
the Effective Date, as of the Effective Date, no officer, consultant or key
employee of the Company whose termination, either individually or in the
aggregate, would have a Material Adverse Effect, has terminated or, to the
knowledge of the Company, has any present intention of terminating his or her
employment or engagement with the Company.

 

(v)       Use of Proceeds. Within 60 days of the date first written above, the
Company may issue a Draw Down Notice for a Draw Down Amount Requested no greater
than 5% of Aggregate Limit to fund the acquisition of private or publicly
traded, local or international oil and gas assets. The Threshold Price for such
Draw Down Notice shall be agreed upon by the Company and the Purchaser and shall
not be less than 10% of the closing bid price on the day preceding such Draw
Down Notice but in no event less than $5.00 per share. The remaining amount of
the Aggregate Limit shall be used for working capital.

 

(w)      Public Utility Holding Company Act and Investment Company Act Status.
The Company is not a “holding company” or a “public utility company” as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended.
The Company is not, and as a result of and immediately upon Effective Date will
not be, an “investment company” or a company “controlled” by an “investment
company,” within the meaning of the Investment Company Act of 1940, as amended.

 

(x)       ERISA. No liability to the Pension Benefit Guaranty Corporation has
been incurred with respect to any Plan by the Company or any of its subsidiaries
which is or would have a Material Adverse Effect. The execution and delivery of
this Agreement and the issue and sale of the Shares will not involve any
transaction which is subject to the prohibitions of Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to Section 4975 of the
Internal Revenue Code of 1986, as amended. As used in this Section 3.1(y), the
term “Plan” shall mean an “employee pension benefit plan” (as defined in Section
3 of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by the Company or any Subsidiary or by any
trade or business, whether or not incorporated, which, together with the Company
or any Subsidiary, is under common control, as described in Section 414(b) or
(c) of the Code.

 

10

 

 

(y)       Intentionally Omitted.

 

(z)        Acknowledgment Regarding Purchaser’s Purchase of Shares. The Company
acknowledges and agrees that the Purchaser is acting solely in the capacity of
an arm’s length purchaser with respect to this Agreement and the transactions
contemplated hereunder. The Company further acknowledges that the 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
hereunder and any advice given by the Purchaser or any of its representatives or
agents in connection with this Agreement and the transactions contemplated
hereunder is merely incidental to the Purchaser’s purchase of the Shares.

 

Section 3.2        Representatives and Warranties of the Purchaser. The
Purchaser hereby makes the following representations and warranties to the
Company:

 

(a)       Organization and Standing of the Purchaser. The Purchaser is a company
duly incorporated, validly existing and in good standing under the laws of the
Cayman Islands.

 

(b)       Authorization and Power. The Purchaser has the requisite corporate
power and authority to enter into and perform this Agreement and to purchase the
Shares in accordance with the terms hereof. The execution, delivery and
performance of this Agreement by Purchaser and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action, and no further consent or authorization of the Purchaser, its
Board of Directors or stockholders is required. This Agreement has been duly
executed and delivered by the Purchaser. This Agreement constitutes, or shall
constitute when executed and delivered, a valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership, or
similar laws relating to, or affecting generally the enforcement of, creditor’s
rights and remedies or by other equitable principles of general application.

 

(c)       No Conflicts. The execution, delivery and performance of this
Agreement and the consummation by the Purchaser of the transactions contemplated
hereby and thereby or relating hereto do not and will not (i) result in a
violation of such Purchaser’s charter documents or bylaws or (ii) conflict with,
or constitute a default (or an event which 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 of, any material agreement, mortgage,
deed of trust, indenture, note, bond, license, lease agreement, instrument or
obligation to which the Purchaser is a party, (iii) create or impose or lien,
charge or encumbrance on any property of the Purchaser under any agreement or
any commitment to which the Purchaser is party or by which the Purchaser is
bound or by which any of its respective properties or assets are bound, or (iv)
result in a violation of any law, rule, or regulation, or any order, judgment or
decree of any court or governmental agency applicable to the Purchaser or its
properties, except for such conflicts, defaults and violations as would not,
individually or in the aggregate, prohibit or otherwise interfere with the
ability of the Purchaser to enter into and perform its obligations under this
Agreement in any material respect. The Purchaser is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute, deliver or perform any
of its obligations under this Agreement or to purchase the Shares in accordance
with the terms hereof; provided, however, that for purposes of the
representation made in this sentence, the Purchaser is assuming and relying upon
the accuracy of the representations, warranties and agreements of the Company
herein.

 

11

 

 

(d)       Accredited Investor. The Purchaser is an “accredited investor” as
defined in Regulation D promulgated under the Securities Act.

 

(e)       Financial Risks. The Purchaser acknowledges that it is able to bear
the financial risks associated with an investment in the Shares. The Purchaser
is capable of evaluating the risks and merits of an investment in the Shares by
virtue of its experience as an investor and its knowledge, experience, and
sophistication in financial and business matters and the Purchaser is capable of
bearing the entire loss of its investment in the Shares.

 

(f)        Information. The Purchaser and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Shares which
have been requested by the Purchaser. The Purchaser and its advisors, if any,
have been afforded the opportunity to ask questions of the Company. The
Purchaser has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Shares. The Purchaser understands that it (and not the
Company) shall be responsible for its own tax liabilities that may arise as a
result of this investment or the transactions contemplated by this Agreement.

 

ARTICLE IV
COVENANTS

 

The Company covenants with the Purchaser, and the Purchaser covenants with the
Company, as follows, which covenants of one party are for the benefit of the
other party, during the Investment Period.

 

Section 4.1       Securities Compliance.

 

(a)       The Company shall notify the Commission and the Principal Market, if
applicable, in accordance with their rules and regulations, of the transactions
contemplated by this Agreement, and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Shares to the Purchaser. The
Company agrees that it shall, within the time required under the Exchange Act
file a report on Form 8-K disclosing this Agreement and the transaction
contemplated hereby.

 

(b)       The Company shall take such action, if any, as is reasonably necessary
in order to obtain an exemption for or to qualify any subsequent resale of the
Shares by the Investor, in each case, under applicable securities or “Blue Sky”
laws of the states of the United States in such states as is reasonably
requested by the Investor from time to time, and shall provide evidence of any
such action so taken to the Investor.

 

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Section 4.2       Registration and Listing. The Company will take all action
necessary to cause its Common Stock to continue to be registered under Sections
12(b) or 12(g) of the Exchange Act, will comply in all respects with its
reporting and filing obligations under the Exchange Act and take all action
necessary to maintain compliance with such reporting and filing obligations, and
will not take any action or file any document (whether or not permitted by the
Securities Act) to terminate or suspend such registration or to terminate or
suspend its reporting and filing obligations under the Exchange Act or
Securities Act, except as permitted herein. The Company will take all action
necessary to continue the listing or trading of its Common Stock and the listing
of the Shares purchased by Purchaser hereunder on Principal Market or any
relevant market or system, if applicable, and will comply in all respects with
the Company’s reporting, filing and other obligations under the bylaws or rules
of the Principal Market or any relevant market or system.

 

Section 4.3        Warrants.

 

(a)        The Parties acknowledge and agree that:

 

(i) prior to the Effective Date, the Company delivered to the Purchaser and to
590 Partners Capital, LLC three (3) Common Stock purchase warrants each to
purchase, in the aggregate, up to eight million two hundred and seventy-six
thousand (8,372,000) shares of Common Stock. Such warrants were evidenced by
warrant certificate nos. 1 - 6 of the Company. On the Effective Date, the
parties desire to amend and restate in their entirety the portion of the
8,372,000 warrants evidenced by warrant certificate nos. 3, 4, 5 and 6.
Therefore, the Parties agree and acknowledge that, as of the Effective Date, the
previously issued warrant certificates of the Company numbered 3, 4, 5 and 6
will be cancelled and of no further force and effect, and will be replaced with
the following warrant certificates, which the Company shall issue to GEM Capital
SAS and 590 Partners Capital, LLC on the Effective Date:

 

(1) Amended and Restated Warrant Certificate No. 3, attached hereto as Exhibit
B;

 

(2) Amended and Restated Warrant Certificate No. 4, attached hereto as Exhibit
C;

 

(3) Amended and Restated Warrant Certificate No. 5, attached hereto as Exhibit
D;

 

(4) Amended and Restated Warrant Certificate No. 6, attached hereto as Exhibit
E;

 

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(ii) on the Effective Date, the Company shall deliver to GEM Capital SAS and to
590 Partners Capital, LLC one (1) Common Stock purchase warrant each to
purchase, in the aggregate, up to one million five hundred thousand (1,500,000)
shares of Common Stock upon the terms and conditions set forth in the warrant
agreements attached as Exhibit F hereto. The warrants described in this
subsection and subsection 4.3(a)(i) above are collectively referred to herein as
the “Warrants.”

 

(b)       The Company shall use commercially reasonable efforts to uplist to the
NYSE, NASDAQ or AMEX stock exchange (an “Uplist”) within 270 days of the
Effective Date.

 

(c)        Once the Company has Uplisted, a registration statement with respect
to the shares of Common Stock issuable upon exercise of the Warrants shall be
filed by the Company with the Commission within 30 days of Uplisting. The
Company shall use commercially reasonable efforts to have such registration
statement declared effective by the Commission at the earliest possible date.

 

Section 4.4        Registration Rights Agreement. The Company and the Purchaser
shall enter into the Registration Rights Agreement with respect to the Shares,
dated the Effective Date, in the form of Exhibit A attached hereto.

 

Section 4.5        Compliance with Laws.

 

(a)       The Company shall comply with all applicable laws, rules, regulations
and orders (including without limitation Rule 415(a)(4) under the Securities
Act) noncompliance with which would have a Material Adverse Effect.

 

(b)       The Purchaser shall comply with all applicable laws, rules,
regulations and orders in connection with this Agreement and the transactions
contemplated hereby. Without limiting the foregoing, the Purchaser shall comply
with the requirements of the Securities Act and the Exchange Act including
without limitation Rule 415(a)(4) under the Securities Act and Rule 10b-5 and
Regulation M under the Exchange Act.

 

Section 4.6       Keeping of Records and Books of Account. The Company shall
keep adequate records and books of account, in which complete entries will be
made in accordance with GAAP consistently applied, reflecting all financial
transactions of the Company, and in which, for each fiscal year, all proper
reserves for depreciation, depletion, obsolescence, amortization, taxes, bad
debts and other purposes in connection with its business shall be made.

 

Section 4.7       Limitations on Holdings and Issuances. Notwithstanding
anything in this Agreement to the contrary, at no time may the Company issue,
and at no time shall the Purchaser be obligated to purchase, any Shares which
would result in the Purchaser beneficially owning, directly or indirectly, at
the time of such proposed issuance more than 4.9% of the number of shares of
Common Stock issued and outstanding as of the date of such proposed issuance;
provided, however, that upon the Purchaser providing the Company with sixty-one
(61) days’ notice (pursuant to Section 9.4 hereof) (the "Waiver Notice") that
the Purchaser would like to waive this Section 4.7 with regard to any or all
Shares issuable pursuant to this Agreement to the extent the Company or a
Subsidiary has been awarded an oil concession by the Government of Ghana, this
Section 4.7 will be of no force or effect with regard to all or a portion of the
Shares referenced in the Waiver Notice until the date that the Purchaser
notifies the Company (pursuant to Section 9.4 hereof) that the Purchaser revokes
the Waiver Notice; provided, further, that during the sixty-one (61) day period
prior to the expiration of the Investment Period, the Purchaser may waive this
Section 4.7 by providing a Waiver Notice at any time during such sixty-one (61)
day period.

 

14

 

 

Section 4.8       Registration Statement. The Company shall cause the
Registration Statement to be filed and seek that it be declared effective
pursuant to the terms of the Registration Rights Agreement. The Registration
Statement shall register with the Commission the Shares to be issued under the
Draw Downs. The Purchaser shall not be obligated to accept a Draw Down request
from the Company unless the Registration Statement is then effective and the
prospectus included in the Registration Statement is then current and in
compliance with all applicable rules.

 

Section 4.9       Other Agreements.  The Company shall not enter into any
agreement in which the terms of such agreement would restrict or impair the
right to perform of the Company or any Subsidiary under this Agreement or the
Articles.

 

Section 4.10     Stop Orders. The Company will advise the Purchaser promptly
and, if requested by the Purchaser, will confirm such advice in writing: (i) of
the Company’s receipt of notice of any request by the Commission for amendment
of or a supplement to the Registration Statement, any related prospectus or for
additional information; (ii) of the Company’s receipt of notice of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) of the Company becoming aware of the happening of any
event, which makes any statement of a material fact made in the Registration
Statement (as then amended or supplemented) untrue or which requires the making
of any additions to or changes in the Registration Statement (as then amended or
supplemented) in order to state a material fact required by the Securities Act
to be stated therein or necessary in order to make the statements therein not
misleading. If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, the Company will make
commercially reasonable efforts to obtain the withdrawal of such order at the
earliest possible time.

 

Section 4.11     Selling Restrictions; Volume Limitations.

 

(a)       The Purchaser covenants that during the Investment Period neither the
Purchaser nor any of its affiliates nor any entity managed by the Purchaser
will, directly or indirectly, sell any securities of the Company except the
Shares that it owns or has the right to purchase pursuant to the provisions of a
Draw Down Notice. During the Investment Period, neither the Purchaser nor any of
its affiliates nor any entity managed by the Purchaser will enter into a short
position with respect to shares of Common Stock of the Company, including in any
account of the Purchaser’s or in any account directly or indirectly managed by
the Purchaser or any affiliate of the Purchaser or any entity managed by the
Purchaser. During the Investment Period, the Purchaser shall not grant any
option to purchase or acquire any right to dispose or otherwise dispose for
value of any shares of Common Stock or any securities convertible into, or
exchangeable for, or warrants to purchase, any shares of Common Stock, or enter
into any swap, hedge or other agreement that transfers, in whole or in part, the
economic risk of ownership of the Common Stock, except for such sales permitted
by the preceding two sentences. In addition, on a daily Trading Day basis, the
Purchaser agrees to restrict the volume of sales of Shares by the Purchaser, its
affiliates and any entity managed by the Purchaser to no more than ten percent
(10%) (or such other percentage based on the length of the Draw Down Pricing
Period) of the Shares purchased pursuant to such Draw Down Notice.

 

15

 

 

(b)       In addition to the foregoing, in connection with any sale of the
Company’s securities (including any short sale permitted by the preceding
paragraph), the Purchaser shall comply in all respects with all applicable laws,
rules, regulations and orders, including, without limitation, the requirements
of the Securities Act and the Exchange Act, including, without limitation, Rule
415(a)(4) under the Securities Act and Regulation M and Rule 10b-5 under the
Exchange Act.

 

Section 4.12     Structuring Fee. GEMIA, INC. (“GEM”) will receive a structuring
fee from the Company equal to $4 million (the “Structuring Fee”), payable as
follows: from the proceeds of each Draw Down Amount, GEM shall receive a payment
equal to 10% of each Draw Down Amount until such time that GEM has received the
entirety of the $4 million Structuring Fee. At the Company’s election, and in
its sole and absolute discretion, each such ten percent (10%) payment may
instead be paid, in whole or in part, in registered shares of Common Stock at a
per share price equal to ninety percent (90%) of the average closing trading
price for the Company’s Common Stock for the thirty-day period immediately prior
to the Draw Down.

 

(a)       18 Month Repayment. Regardless of whether any Draw Down has been
issued within 18 months of the Effective Date, on the 18 month anniversary of
the Effective Date, if the Company has not paid the Structuring Fee in full, the
unpaid portion of the Structuring Fee will become due and payable in full. At
the Company’s election, and in its sole and absolute discretion, on the 18 month
anniversary of the Effective Date the Company may either: (i) pay the remainder
of the unpaid portion of the Structuring Fee in cash; or (ii) cancel the
remainder of the unpaid portion of the Structuring Fee and convert it into
registered shares of Common Stock at a per share price equal to ninety percent
(90%) of the average closing trading price for the Company’s Common Stock for
the thirty-day period immediately prior to the 18 month anniversary of the
Effective Date.

 

(b)       Shares Registrable. For the avoidance of doubt, any shares issuable
pursuant to this Section 4.12 shall be considered “Shares” registrable pursuant
to the Registration Rights Agreement.

 

Section 4.13     Non-Public Information. Neither the Company nor any of its
directors, officers or agents shall disclose any material non-public information
about the Company to the Purchaser.

 

Section 4.14      DWAC Eligibility. The Company shall cause the Common Stock and
its transfer agent to be, at the time of each Draw Down, eligible to participate
in the DWAC system, and there will be no impediments at the time of each Draw
Down to use of the DWAC system that could adversely affect consummation of the
transactions contemplated by this Agreement. The Parties acknowledge that, as of
the Effective Date, the Company is not a participant in the DWAC
system.         

 

16

 

 

ARTICLE V
OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND PURCHASE OF THE
SHARES

 

Section 5.1        Opinion of Counsel and Certificate. In connection with the
execution and delivery of this Agreement and the transactions contemplated
hereunder, no later than 15 days prior to the Company’s filing of the
Registration Statement, Purchaser shall have received from Company (i) an
opinion of outside counsel of the Company in a form acceptable to the Purchaser
(whose consent shall not be unreasonably withheld), substantially covering the
items set forth in Exhibit G hereto, and (ii) a certificate from the Company in
the form of Exhibit H hereto.

 

Section 5.2        Conditions Precedent to the Obligation of the Company to Sell
the Shares. The obligation hereunder of the Company to issue and sell the Shares
to the Purchaser under any Draw Down Notice is subject to the satisfaction or
waiver of each of the conditions set forth below. These conditions are for the
Company’s sole benefit and may be waived by the Company at any time in its sole
discretion.

 

(a)       Accuracy of the Purchaser’s Representations and Warranties. Except for
representations and warranties that are expressly made as of a particular date,
the representations and warranties of the Purchaser in this Agreement shall be
true and correct in all material respects as of the date when made and as of
each Draw Down Exercise Date and each Settlement Date as though made at that
time.

 

(b)       Registration Statement. The Company shall have the necessary amount of
Shares available to be registered pursuant to the Registration Rights Agreement.
The Company shall take all commercially reasonable steps to have the
Registration Statement declared effective by the Commission. There shall be no
stop order suspending effectiveness of the Registration Statement.

 

(c)       Performance by the Purchaser. The Purchaser shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Purchaser at or prior to each Draw Down Exercise Date and each
Settlement Date, as applicable.

 

(d)       No Injunction. No statute, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.

 

(e)       No Suspension, Etc. Trading in the Common Stock shall not have been
suspended by the Commission or Principal Market, and, at any time prior to each
Draw Down Exercise Date and applicable Settlement Date, none of the events
described in clauses (i), (ii) and (iii) of Section 4.11 hereof shall have
occurred, trading in securities generally as reported on the Principal Market
shall not have been suspended or limited, nor shall a banking moratorium have
been declared either by the United States or State authorities, nor shall there
have occurred any material outbreak or escalation of hostilities or other
national or international calamity or crisis of such magnitude in its effect on,
or any material adverse change in, any financial market which, in each case, in
the reasonable judgment of the Company, makes it impracticable or inadvisable to
issue the Shares.

 

17

 

 

(f)        No Proceedings or Litigation. No action, suit or proceeding before
any arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company or any of the officers, directors or affiliates of the Company
seeking to restrain, prevent or change the transactions contemplated by this
Agreement, or seeking damages in connection with such transactions.

 

Section 5.3       Conditions Precedent to the Obligation of the Purchaser To
Accept a Draw Down and Purchase the Shares. The obligation hereunder of the
Purchaser to accept a Draw Down and to acquire and pay for the Shares is subject
to the satisfaction or waiver, at or before each Draw Down Exercise Date and
each Settlement Date, of each of the conditions set forth below. The conditions
are for the Purchaser’s sole benefit and may be waived by the Purchaser at any
time in its sole discretion.

 

(a)       Accuracy of the Company’s Representations and Warranties. Except for
representations and warranties that are expressly made as of a particular date,
each of the representations and warranties of the Company shall be true and
correct in all material respects as of the date when made and as of the Draw
Down Exercise Date, as though made at that time, including, without limitation,
under Section 3.1(h) hereof.

 

(b)       Registration Statement. The Company shall have the necessary amount of
Shares registered pursuant to the Registration Rights Agreement. The Company
shall take all commercially reasonable steps to have the Registration Statement
on Form S-1 declared effective by the Commission. There shall be no stop order
suspending effectiveness of the Registration Statement.

 

(c)       No Suspension. Trading in the Common Stock shall not have been
suspended by the Commission or Principal Market, and, at any time prior to such
Draw Down Exercise Date, trading in securities generally as reported on the
Principal Market shall not have been suspended or limited, nor shall a banking
moratorium have been declared either by the United States or State authorities,
nor shall there have occurred any material outbreak or escalation of hostilities
or other national or international calamity or crisis of such magnitude in its
effect on, or any material adverse change in, any financial market which, in
each case, in the reasonable judgment of the Purchaser, makes it impracticable
or inadvisable to issue the Shares.

 

(d)       Performance by the Company. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to each Draw Down Exercise Date and each
Settlement Date and shall have delivered the Compliance Certificate
substantially in the form attached hereto as Exhibit I.

 

(e)       No Material Adverse Effect or Material Change in Ownership. No
Material Adverse Effect or Material Change in Ownership shall have occurred to
the Company.

 

18

 

 

(f)        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 which prohibits
the consummation of any of the transactions contemplated by this Agreement.

 

(g)       No Proceedings or Litigation. No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company or any subsidiary, or any of the officers, directors or affiliates
of the Company or any subsidiary seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.

 

(h)       Aggregate Limit. The issuance and sale of the Shares issuable pursuant
to such Draw Down Notice will not violate Section 6.2 hereof.

 

(i)        Shares Authorized. The Shares issuable pursuant to such Draw Down
Notice will have been duly authorized by all necessary corporate action of the
Company.

 

(j)        Due Diligence. Prior to each Settlement Date and from time to time as
reasonably requested by the Purchaser, the Company shall make available for
inspection and review by the Purchaser, its advisors and representatives, and
any underwriter participating in any disposition of the Shares on behalf of the
Purchaser pursuant to the Registration Statement, any amendment, prospectus or
prospectus supplement thereto, or any blue sky, FINRA or other filing, all
financial and other records, all documents and filings with the Commission, and
all other corporate documents and properties of the Company as may be reasonably
necessary for the purpose of such review. In addition, the Company shall cause
its officers, directors and employees to supply all such information reasonably
requested by the Purchaser or any such representative, advisor or underwriter
and to respond to all questions and other inquiries reasonably made or submitted
by any such individuals or entities.

 

ARTICLE VI
DRAW DOWN TERMS

 

Section 6.1       Draw Down Terms. Subject to the satisfaction of the conditions
set forth in this Agreement, and subject to Section 6.2 below, the parties agree
(unless otherwise mutually agreed upon by the parties in writing) as follows:

 

(a)       The Company may, in its sole discretion, issue a Draw Down Notice (as
defined in Section 6.1(h) hereof) for a specified Draw Down Amount Requested.
The Purchaser shall be obligated to purchase 100% of the Draw Down Amount
Requested. Subject to Section 6.1(g) below, the Purchaser shall pay a per Share
amount equal to ninety percent (90%) of the average Daily Closing Price during
the Draw Down Pricing Period (the “Purchase Price”). Subject to Section 4.7
hereof, the Draw Down Amount Requested shall not exceed four hundred percent
(400%) (the “Draw Down Limit”) of the average daily trading volume for the ten
(10) Trading Days immediately preceding the Draw Down Exercise Date.

 

(b)       Prior to commencement of the Draw Down Pricing Period, the Company
shall deliver the Shares to be purchased in such Draw Down to the Purchaser.

 

19

 

 

(c)       Only one Draw Down shall be allowed in each Draw Down Pricing Period.

 

(d)       Each Draw Down shall be settled on the first Trading Day after the end
of each Draw Down Pricing Period (the “Settlement Date”).

 

(e)       At the end of each Draw Down Pricing Period, the Purchaser’s total
Draw Down commitment under this Agreement shall be reduced by the total amount
of the Draw Down Amount for such Draw Down Pricing Period.

 

(f)        Each Draw Down will automatically expire immediately after the last
Trading Day of each Draw Down Pricing Period.

 

(g)       If the Daily Closing Price on a given Trading Day in the Draw Down
Pricing Period, multiplied by ninety percent (90%), is less than the Threshold
Price, then the total amount of the Draw Down Amount Requested will be reduced
by 1/10th (or such other fraction based on the length of the Draw Down Pricing
Period) and no Shares will be purchased or sold with respect to such Trading
Day.

 

(h)       As a condition to exercise of any Draw Down, the Company must (i)
provide a notice to the Purchaser of the Company’s exercise of any Draw Down via
facsimile transmission before commencement of trading on the first Trading Day
of the Draw Down Pricing Period covered by such notice (the “Draw Down Notice”),
substantially in the form attached hereto as Exhibit J and (ii) deliver the
Shares to the Purchaser or its designees via DWAC, if the Company is approved
for DWAC in an amount equal to the Draw Down Amount Requested (which amount
shall be adjusted in the event that the amount accepted by the Purchaser
pursuant to Section 6.1(a) hereof is different that the Draw Down Amount
Requested). The date the Company delivers the Draw Down Notice and the Shares in
accordance with this Section 6.1(h) shall be a “Draw Down Exercise Date.” The
Draw Down Notice shall specify the Draw Down Amount Requested, set the Threshold
Price for such Draw Down and designate the first Trading Day of the Draw Down
Pricing Period that the Company wishes to grant to the Purchaser during the Draw
Down Pricing Period.

 

(i)        On each Settlement Date, the Purchaser shall make payment for the
Shares acquired pursuant to this Agreement to the Company’s designated account
by wire transfer of immediately available funds, provided that the Shares were
received by the Purchaser in accordance with 6.1(b) hereof.

 

(j)        If the Company tenders a Draw Down by delivering a Draw Down Notice
to the Purchaser and the Purchaser fails to make payment for the shares on the
Settlement Date, the Shares issuable upon exercise of the Warrants and the
structuring fee to be paid to GEM pursuant to Section 4.12 shall be reduced by
the percentage amount equal to the quotient of the Draw Down Amount divided by
the Aggregate Limit.

 

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Section 6.2       Aggregate Limit. Notwithstanding anything to the contrary
herein, in no event may the Company issue a Draw Down Notice to the extent that
the sale of shares of Common Stock pursuant thereto and pursuant to all prior
Draw Down Notices issued hereunder would cause the Company to sell or the
Purchaser to purchase shares of Common Stock which in the aggregate are in
excess of the Aggregate Limit. If the Company issues a Draw Down Notice that
otherwise would permit the Purchaser to purchase shares of Common Stock which
would cause the aggregate purchases by Purchaser hereunder to exceed the
Aggregate Limit, such Draw Down Notice shall be void ab initio to the extent of
the amount by which the dollar value of shares or number of shares, as the case
may be, of Common Stock otherwise issuable pursuant to such Draw Down Notice or
together with the dollar value of shares or number of shares, as the case may
be, of all other Common Stock purchased by the Purchaser pursuant hereto would
exceed the Aggregate Limit.

 

ARTICLE VII
Termination

 

Section 7.1       Term, Termination by Mutual Consent. Unless earlier terminated
as provided hereunder, this Agreement shall terminate automatically on the
earlier of (i) twenty four (24) consecutive months from the Effective Date (the
“Investment Period”) and (ii) the date the Purchaser shall have purchased the
Aggregate Limit. This Agreement may be terminated at any time by mutual written
consent of the parties, effective as of the date of such mutual written consent
unless otherwise provided in such written consent.

 

Section 7.2       Effect of Termination. If this Agreement is terminated as
provided in Section 7.1 herein, this Agreement shall become void and of no
further force and effect, except as provided in Section 9.9 hereof. Nothing in
this Section 7.2 shall be deemed to release the Company or the Purchaser from
any liability for any breach under this Agreement, or to impair the rights of
the Company and the Purchaser to compel specific performance by the other party
of its obligations under this Agreement.

 

ARTICLE VIII
INDEMNIFICATION

 

Section 8.1       General Indemnity.

 

(a)       Indemnification by the Company. The Company will indemnify and hold
harmless the Purchaser, GEM and each person who controls the Purchaser or GEM
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act from and against any losses, claims, damages, liabilities and
expenses (including reasonable costs of defense and investigation and all
attorneys’ fees) to which the Purchaser, GEM and each such controlling person
may become subject, under the Securities Act, the Exchange Act or otherwise,
insofar as such losses, claims, damages, liabilities and expenses (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained, or incorporated by
reference, in the Registration Statement relating to Common Stock being sold to
the Purchaser (including any prospectus relating thereto), or any amendment or
supplement to it, or (ii) the omission or alleged omission to state in the
Registration Statement or any document incorporated by reference in the
Registration Statement, a material fact required to be stated therein or
necessary to make the statements therein not misleading. Pursuant to Section 8.2
hereof, the Company will reimburse the Purchaser, GEM and each such controlling
person promptly upon demand for any legal or other costs or expenses reasonably
incurred by the Purchaser, GEM or such controlling person in investigating,
defending against, or preparing to defend against any such claim, action, suit
or proceeding.

 

21

 

 

(b)       Indemnification by the Purchaser. The Purchaser will indemnify and
hold harmless the Company, each of its directors and officers, and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act from and against any losses,
claims, damages, liabilities and expenses (including reasonable costs of defense
and investigation and all attorneys fees) to which the Company and each such
controlling person may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities and expenses (or actions in
respect thereof) arise out of or are based upon (i) an untrue statement, alleged
untrue statement, omission or alleged omission, included in the Registration
Statement in reliance upon, and in conformity with, written information
furnished by the Purchaser to the Company for inclusion in the Registration
Statement, or (ii) the omission or alleged omission to state in the Registration
Statement a material fact required to be stated therein or necessary to make the
statements therein not misleading, to the extent, but only to the extent, the
untrue statement, alleged untrue statement, omission or alleged omission was
made in reliance upon, and in conformity with, written information furnished by
the Purchaser to the Company for inclusion in the Registration Statement.
Pursuant to Section 8.2 hereof, the Purchaser will reimburse the Company and
each such director, officer or controlling person promptly upon demand for any
legal or other costs or expenses reasonably incurred by the Company or the other
person in investigating, defending against, or preparing to defend against any
such loss, claim, damage, liability or expense.

 

Section 8.2        Indemnification Procedures. Promptly after a person receives
notice of a claim or the commencement of an action for which the person intends
to seek indemnification under Section 8.1, the person will notify the
indemnifying party in writing of the claim or commencement of the action, suit
or proceeding; provided, however, that failure to notify the indemnifying party
will not relieve the indemnifying party from liability under Section 8.1, except
to the extent it has been materially prejudiced by the failure to give notice.
The indemnifying party will be entitled to participate in the defense of any
claim, action, suit or proceeding as to which indemnification is being sought,
and if the indemnifying party acknowledges in writing the obligation to
indemnify the party against whom the claim or action is brought, the
indemnifying party may (but will not be required to) assume the defense against
the claim, action, suit or proceeding with counsel satisfactory to it. After an
indemnifying party notifies an indemnified party that the indemnifying party
wishes to assume the defense of a claim, action, suit or proceeding, the
indemnifying party will not be liable for any legal or other expenses incurred
by the indemnified party in connection with the defense against the claim,
action, suit or proceeding except that if, in the opinion of counsel to the
indemnifying party, one or more of the indemnified parties should be separately
represented in connection with a claim, action, suit or proceeding, the
indemnifying party will pay the reasonable fees and expenses of one separate
counsel for all of the indemnified parties. Each indemnified party, as a
condition to receiving indemnification as provided in Section 8.1, will
cooperate in all reasonable respects with the indemnifying party in the defense
of any action or claim as to which indemnification is sought. No indemnifying
party will be liable for any settlement of any action effected without its prior
written consent. No indemnifying party will, without the prior written consent
of the indemnified party, effect any settlement of a pending or threatened
action with respect to which an indemnified party is, or is informed that it may
be, made a party and for which it would be entitled to indemnification, unless
the settlement includes an unconditional release of the indemnified party from
all liability and claims which are the subject matter of the pending or
threatened action.

 

22

 

 

If for any reason the indemnification provided for in this Agreement is not
available to, or is not sufficient to hold harmless, an indemnified party in
respect of any loss or liability referred to in Section 8.1 as to which it is
entitled to indemnification thereunder, each indemnifying party will, in lieu of
indemnifying the indemnified party, contribute to the amount paid or payable by
the indemnified party as a result of such loss or liability, (i) in the
proportion which is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and by the indemnified party on the other
from the sale of Shares which is the subject of the claim, action, suit or
proceeding which resulted in the loss or liability or (ii) if that allocation is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits of the sale of such Shares, but also the relative
fault of the indemnifying party and the indemnified party with respect to the
statements or omissions which are the subject of the claim, action, suit or
proceeding that resulted in the loss or liability, as well as any other relevant
equitable considerations.

 

ARTICLE IX
MISCELLANEOUS

 

Section 9.1       Fees and Expenses. Each party shall bear its own fees and
expenses related to the transactions contemplated by this Agreement; provided,
however, that the Company shall pay, at the Effective Date, all reasonable
attorneys’ fees and expenses (exclusive of disbursements and out-of-pocket
expenses) incurred by the Purchaser up to $15,000 in connection with the
preparation, negotiation, execution and delivery of this Agreement. In addition,
the Company shall pay all reasonable attorneys’ fees and expenses incurred by
the Purchaser in connection with any amendments, modifications or waivers of
this Agreement. The Company shall pay all stamp or other similar taxes and
duties levied in connection with issuance of the Shares pursuant hereto.

 

Section 9.2       Specific Enforcement, Consent to Jurisdiction.

 

(a)       The Company and the Purchaser acknowledge and agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that either party shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement by the other party and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which either
party may be entitled by law or equity.

 

(b)       Each of the Company and the Purchaser (i) hereby irrevocably submits
to the jurisdiction of the United States District Court and other courts of the
United States sitting in the State of New York for the purposes of any suit,
action or proceeding arising out of or relating to this Agreement, and (ii)
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or that
the venue of the suit, action or proceeding is improper. Each of the Company and
the Purchaser consents to process being served in any such suit, action or
proceeding by mailing a copy thereof 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 in this
Section shall affect or limit any right to serve process in any other manner
permitted by law.

 

23

 

 

Section 9.3       Entire Agreement; Amendment. This Agreement represents the
entire agreement of the parties with respect to the subject matter hereof, and
there are no promises, undertakings, representations or warranties by either
party relative to subject matter hereof not expressly set forth herein. No
provision of this Agreement may be amended other than by a written instrument
signed by both parties hereto.

 

Section 9.4        Notices. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery, by telex (with correct answer
back received), telecopy or facsimile (with telecopy or facsimile machine
confirmation of delivery received) at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The address for
such communications shall be:

 

If to the Company: Eos Petro, Inc.     1999 Avenue of the Stars, Suite 2520    
Los Angeles, CA 90067     Attn: Nikolas Konstant               With copies to:
Baker & Hostetler LLP     12100 Wilshire Blvd., 15th Floor     Los Angeles,
California 90025     Telephone number:  (310) 820-8800     Fax:  (310) 820-8859
    Attention:  Jeffrey P. Berg, Esq.         If to the Purchaser: GEM Global
Yield Fund Limited     c/o CM Group     Commerce House     1 Bowring Road    
Ramsey     Isle of Man     IM8 2LQ         With copies to: Kramer Levin Naftalis
& Frankel LLP     1177 Avenue of the Americas     New York, New York 10036    
Telephone Number:  (212) 715-9100     Fax:  (212) 715-8000    
Attention:  Christopher S. Auguste, Esq.  

 

Either party hereto may from time to time change its address for notices by
giving at least ten (10) days advance written notice of such changed address to
the other party hereto.

 

24

 

 

Section 9.5       Waivers. No waiver by either party 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 other provisions,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter. No provision of this Agreement may be waived other
than in a written instrument signed by the party against whom enforcement of
such waiver is sought.

 

Section 9.6       Headings. The article, section and subsection headings in this
Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.

 

Section 9.7       Successors and Assigns. Neither party may assign this
Agreement to any person without the prior consent of the other party. This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and assigns. The assignment by a party to this Agreement of any
rights hereunder shall not affect the obligations of such party under this
Agreement.

 

Section 9.8       Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to the choice of law provisions.

 

Section 9.9       Survival. The representations and warranties of the Company
and the Purchaser contained in Article III and the covenants contained in
Article IV shall survive the execution and delivery hereof until the termination
of this Agreement, and the agreements and covenants set forth in Article VIII of
this Agreement shall survive the execution and delivery hereof.

 

Section 9.10     Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and shall become effective when counterparts have been signed by each
party and delivered to the other parties hereto, it being understood that all
parties need not sign the same counterpart. In the event any signature is
delivered by facsimile transmission, the party using such means of delivery
shall cause four additional executed signature pages to be physically delivered
to the other parties within five days of the execution and delivery hereof.

 

Section 9.11     Publicity. On or after the Effective Date, the Company may
issue a press release or otherwise make a public statement or announcement with
respect to this Agreement or the transactions contemplated hereby or the
existence of this Agreement (including, without limitation, by filing a copy of
this Agreement with the Commission); provided, however, that prior to issuing
any such press release, making any such public statement or announcement, the
Company shall consult with the Purchaser on the form and substance of such press
release or other disclosure.

 

25

 

 

Section 9.12     Severability. The provisions of this Agreement are severable
and, in the event that any court of competent jurisdiction shall determine that
any one or more of the provisions or part of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Agreement, and this Agreement
shall be reformed and construed as if such invalid or illegal or unenforceable
provision, or part of such provision, had never been contained herein, so that
such provisions would be valid, legal and enforceable to the maximum extent
possible.

 

Section 9.13     Further Assurances. From and after the date of this Agreement,
upon the request of the Purchaser or the Company, each of the Company and the
Purchaser shall execute and deliver such instrument, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.

 

26

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officer as of the date first above
written.

 

  EOS PETRO, INC.         By: /s/ Nikolas Konstant     Name: Nikolas Konstant  
  Title:   Chairman         GEM GLOBAL YIELD FUND LIMITED         By: /s/ Franco
Scalamandre     Name: Franco Scalamandre     Title:   Managing Director

 

Signature Page to Common Stock Purchase Agreement

 

 

 

 

 

EXHIBIT A TO STOCK PURCHASE AGREEMENT

 

FORM OF REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of July 11, 2013, by
and between EOS PETRO, INC., a Nevada corporation (the “Company”), and GEM
GLOBAL YIELD FUND, a company incorporated under the laws of the Cayman Islands
(together with it permitted assigns, the “Buyer”). Capitalized terms used herein
and not otherwise defined herein shall have the respective meanings set forth in
the Purchase Agreement.

 

WHEREAS:

 

The Company has agreed, upon the terms and subject to the conditions of the
Purchase Agreement, to issue to the Buyer up to Four Hundred Million Dollars
($400,000,000) of Shares and to induce the Buyer to enter into the Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the “Securities
Act”), and applicable state securities laws.

 

NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Buyer hereby
agree as follows:

 

1.            DEFINITIONS.

 

As used in this Agreement, the following terms shall have the following
meanings:

 

a.           “Investor” means the Buyer, any transferee or assignee thereof to
whom a Buyer assigns its rights under this Agreement and who agrees to become
bound by the provisions of this Agreement in accordance with Section 9 and any
transferee or assignee thereof to whom a transferee or assignee assigns its
rights under this Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 9.

 

b.           “Person” means any person or entity including but not limited to
any corporation, a limited liability company, an association, a partnership, an
organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.

 

c.           “Purchase Agreement” means the Common Stock Purchase Agreement
dated as of the date hereof, between the Company and the Buyer, (as amended,
restated, supplemented or otherwise modified from time to time).

 

d.           “Register,” “registered,” and “registration” refer to a
registration effected by preparing and filing one or more registration
statements of the Company in compliance with the Securities Act and pursuant to
Rule 415 under the Securities Act or any successor rule providing for offering
securities on a continuous basis (“Rule 415”), and the declaration or ordering
of effectiveness of such registration statement(s) by the United States
Securities and Exchange Commission (the “Commission”).

 

 

 

 

e.           “Registrable Securities” mean the Shares which have been, or which
may from time to time be, issued or issuable to the Investor pursuant to the
Purchase Agreement.

 

f.            “Registration Statement” means the registration statement of the
Company, on Form S-1 covering only the sale of the Registrable Securities.

 

2.            REGISTRATION.

 

a.           Uplisting. The Company shall use commercially reasonable efforts to
uplist to the NYSE, NASDAQ or AMEX stock exchange (“Uplist”) within 270 days of
the date first written above. Upon completion of such Uplisting, the Company
shall provide immediate written notice to Investor of the Uplisting and the
Company’s obligation under Section 2(b) below to, within 30 days of the
Uplisting, file with the Commission the Registration Statement.

 

b.           Mandatory Registration. The Company shall, within 30 days of
Uplisting, file with the Commission the Registration Statement. The Registration
Statement shall register only the Registrable Securities and no other securities
of the Company. The Investor and its counsel shall have a reasonable opportunity
to review and comment upon such registration statement or amendment to such
registration statement and any related prospectus prior to its filing with the
Commission. Investor shall furnish all information reasonably requested by the
Company for inclusion therein. The Company shall use its commercially reasonable
efforts to have the Registration Statement or amendment declared effective by
the Commission at the earliest possible date. The Company shall use commercially
reasonable efforts to keep the Registration Statement effective pursuant to Rule
415 promulgated under the Securities Act and available for sales of all of the
Registrable Securities at all times until the date as of which the Investor may
sell all of the Registrable Securities without restriction pursuant to Rule
144(b)(1)(i) promulgated under the Securities Act (or successor thereto) (the
“Registration Period”). The Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.

 

c.           Rule 424 Prospectus. The Company shall, as required by applicable
securities regulations, from time to time file with the Commission, pursuant to
Rule 424 promulgated under the Securities Act, the prospectus, amendments and
prospectus supplements, if any, to be used in connection with sales of the
Registrable Securities under the Registration Statement. The Investor and its
counsel shall have a reasonable opportunity to review and comment upon such
prospectus prior to its filing with the Commission. The Investor shall use
commercially reasonable efforts to comment upon such prospectus within two (2)
Trading Days from the date the Investor receives the proposed final version of
such prospectus.

 

- 2 -

 

 

d.           Sufficient Number of Shares Registered. In the event the number of
shares available under the Registration Statement is insufficient to cover all
of the Registrable Securities, subject to the restrictions of applicable law on
the number of shares that may be registered by the Company, the Company shall
amend the Registration Statement or file a new registration statement (a “New
Registration Statement”), so as to cover all of such Registrable Securities as
soon as practicable, but in any event not later than twenty (20) Trading Days
after the necessity therefore arises. The Company shall use commercially
reasonable efforts to cause such amendment and/or New Registration Statement to
become effective as soon as practicable following the filing thereof.

 

3.            RELATED OBLIGATIONS.

 

With respect to the Registration Statement and whenever any Registrable
Securities are to be registered pursuant to Section 2 including on any New
Registration Statement, the Company shall use commercially reasonable efforts to
effect the registration of the Registrable Securities in accordance with the
intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:

 

a.           The Company shall prepare and file with the Commission such
amendments (including post-effective amendments) and supplements to any
registration statement and the prospectus used in connection with such
registration statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the Securities Act, as may be necessary to keep the
Registration Statement or any New Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement or
any New Registration Statement until such time as all of such Registrable
Securities shall have been disposed of in accordance with the intended methods
of disposition by the seller or sellers thereof as set forth in such
registration statement.

 

b.           The Company shall permit the Investor to review and comment upon
the Registration Statement or any New Registration Statement and all amendments
and supplements thereto at least two (2) Trading Days prior to their filing with
the Commission, and not file any document in a form to which Investor reasonably
objects. The Investor shall use commercially reasonable efforts to comment upon
the Registration Statement or any New Registration Statement and any amendments
or supplements thereto within two (2) Trading Days from the date the Investor
receives the final version thereof. The Company shall furnish to the Investor,
without charge any correspondence from the Commission or the staff of the
Commission to the Company or its representatives relating to the Registration
Statement or any New Registration Statement.

 

c.           Upon request of the Investor, the Company shall furnish to the
Investor, (i) promptly after the same is prepared and filed with the Commission,
at least one copy of such registration statement and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits, (ii) upon the effectiveness of any registration
statement, a copy of the prospectus included in such registration statement and
all amendments and supplements thereto (or such other number of copies as the
Investor may reasonably request) and (iii) such other documents, including
copies of any preliminary or final prospectus, as the Investor may reasonably
request from time to time in order to facilitate the disposition of the
Registrable Securities owned by the Investor. For the avoidance of doubt, any
filing available to the Investor via the Commission’s live EDGAR system shall be
deemed “furnished to the Investor” hereunder.

 

- 3 -

 

 

d.           The Company shall use commercially reasonable efforts to (i)
register and qualify the Registrable Securities covered by a registration
statement under such other securities or “blue sky” laws of such jurisdictions
in the United States as the Investor reasonably requests, (ii) prepare and file
in those jurisdictions, such amendments (including post-effective amendments)
and supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. The Company shall promptly notify
the Investor who holds Registrable Securities of the receipt by the Company of
any notification with respect to the suspension of the registration or
qualification of any of the Registrable Securities for sale under the securities
or “blue sky” laws of any jurisdiction in the United States or its receipt of
actual notice of the initiation or threatening of any proceeding for such
purpose.

 

e.           As promptly as practicable after becoming aware of such event or
facts, the Company shall notify the Investor in writing of the happening of any
event or existence of such facts as a result of which the prospectus included in
any registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and promptly prepare a supplement or
amendment to such registration statement to correct such untrue statement or
omission, and deliver a copy of such supplement or amendment to the Investor (or
such other number of copies as the Investor may reasonably request). The Company
shall also promptly notify the Investor in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when a
registration statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to the Investor by
facsimile on the same day of such effectiveness and by overnight mail), (ii) of
any request by the Commission for amendments or supplements to any registration
statement or related prospectus or related information, and (iii) of the
Company’s reasonable determination that a post-effective amendment to a
registration statement would be appropriate.

 

f.            The Company shall use commercially reasonable efforts to prevent
the issuance of any stop order or other suspension of effectiveness of any
registration statement, or the suspension of the qualification of any
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify the Investor of the issuance of such
order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.

 

- 4 -

 

 

g.           The Company shall (i) cause all the Registrable Securities to be
listed on each securities exchange on which securities of the same class or
series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, or
(ii) secure designation and quotation of all the Registrable Securities on the
Principal Market. The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section.

 

h.           Upon the Investor’s written request, the Company shall cooperate
with the Investor to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legend) representing the Registrable
Securities to be offered pursuant to any registration statement and enable such
certificates to be in such denominations or amounts as the Investor may
reasonably request and registered in such names as the Investor may request.

 

i.            The Company shall at all times provide a transfer agent and
registrar with respect to its Common Stock.

 

j.            If reasonably requested by the Investor, the Company shall (i)
immediately incorporate in a prospectus supplement or post-effective amendment
such information as the Investor reasonably believes should be included therein
relating to the sale and distribution of Registrable Securities, including,
without limitation, information with respect to the number of Registrable
Securities being sold, the purchase price being paid therefor and any other
terms of the offering of the Registrable Securities; (ii) make all required
filings of such prospectus supplement or post-effective amendment as soon as
notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii) supplement or make amendments to any
registration statement.

 

k.          The Company shall use commercially reasonable efforts to cause the
Registrable Securities covered by any registration statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable Securities.

 

l.            Within three (3) Trading Days after any registration statement
which includes the Registrable Securities is ordered effective by the
Commission, the Company shall deliver, and shall cause legal counsel for the
Company to deliver, to the transfer agent for such Registrable Securities (with
copies to the Investor) confirmation that such registration statement has been
declared effective by the Commission in the form attached hereto as Exhibit A.
Thereafter, if requested by the Buyer at any time, the Company shall require its
counsel to deliver to the Buyer a written confirmation whether or not the
effectiveness of such registration statement has lapsed at any time for any
reason (including, without limitation, the issuance of a stop order) and whether
or not the registration statement is current and available to the Buyer for sale
of all of the Registrable Securities.

 

m.           The Company shall take all other commercially reasonable actions
necessary to expedite and facilitate disposition by the Investor of Registrable
Securities pursuant to any registration statement.

 

- 5 -

 

 

4.            OBLIGATIONS OF THE INVESTOR.

 

a.           The Company shall notify the Investor in writing of the information
the Company reasonably requires from the Investor in connection with any
registration statement hereunder. The Investor shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request.

 

b.           The Investor agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of any
registration statement hereunder.

 

c.           The Investor agrees that, upon receipt of any notice from the
Company of the happening of any event or existence of facts of the kind
described in Section 3(f) or the first sentence of 3(e), the Investor will
immediately discontinue disposition of Registrable Securities pursuant to any
registration statement(s) covering such Registrable Securities until the
Investor’s receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(f) or the first sentence of 3(e). Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to promptly
deliver shares of Common Stock without any restrictive legend in accordance with
the terms of the Purchase Agreement in connection with any sale of Registrable
Securities with respect to which an Investor has entered into a contract for
sale prior to the Investor’s receipt of a notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first
sentence of Section 3(e) and for which the Investor has not yet settled.

 

5.            EXPENSES OF REGISTRATION.

 

All reasonable expenses, other than sales or brokerage commissions, incurred in
connection with registrations, filings or qualifications pursuant to Sections 2
and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company, if any, shall be paid by the Company.

 

- 6 -

 

 

6.            INDEMNIFICATION.

 

a.           To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend the Investor, each Person, if
any, who controls the Investor, the members, the directors, officers, partners,
employees, agents, representatives of the Investor and each Person, if any, who
controls the Investor within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) (each, an “Indemnified
Person”), against any losses, claims, damages, liabilities, judgments, fines,
penalties, charges, costs, attorneys’ fees, amounts paid in settlement or
expenses, joint or several, (collectively, “Claims”) incurred in investigating,
preparing or defending any action, claim, suit, inquiry, proceeding,
investigation or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or the Commission,
whether pending or threatened, whether or not an indemnified party is or may be
a party thereto (“Indemnified Damages”), to which any of them may become subject
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in the Registration
Statement, any New Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in
which Registrable Securities are offered (“Blue Sky Filing”), or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, (iii) any violation or alleged violation by the Company of
the Securities Act, the Exchange Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to the
Registration Statement or any New Registration Statement or (iv) any material
violation by the Company of this Agreement (the matters in the foregoing clauses
(i) through (iv) being, collectively, “Violations”). The Company shall reimburse
each Indemnified Person promptly as such expenses are incurred and are due and
payable, for any reasonable legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim by an
Indemnified Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information about the Investor furnished in
writing to the Company by such Indemnified Person expressly for use in
connection with the preparation of the Registration Statement, any New
Registration Statement or any such amendment thereof or supplement thereto, if
such prospectus was timely made available by the Company pursuant to Section
3(c) or Section 3(e); (ii) with respect to any superseded prospectus, shall not
inure to the benefit of any such person from whom the person asserting any such
Claim purchased the Registrable Securities that are the subject thereof (or to
the benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the superseded prospectus was corrected
in the revised prospectus, as then amended or supplemented, if such revised
prospectus was timely made available by the Company pursuant to Section 3(c) or
Section 3(e), and the Indemnified Person was promptly advised in writing not to
use the incorrect prospectus prior to the use giving rise to a violation and
such Indemnified Person, notwithstanding such advice, used it; (iii) shall not
be available to the extent such Claim is based on a failure of the Investor to
deliver or to cause to be delivered the prospectus made available by the
Company, if such prospectus was timely made available by the Company pursuant to
Section 3(c) or Section 3(e); and (iv) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by the Investor pursuant to Section 9.

 

- 7 -

 

 

b.           In connection with the Registration Statement or any New
Registration Statement, the Investor agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the same manner
as is set forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement or any New Registration Statement,
each Person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act (collectively and together with an
Indemnified Person, an “Indemnified Party”), against any Claim or Indemnified
Damages to which any of them may become subject, under the Securities Act, the
Exchange Act or otherwise, insofar as such Claim or Indemnified Damages arise
out of or are based upon any Violation, in each case to the extent, and only to
the extent, that such Violation occurs in reliance upon and in conformity with
written information about the Investor to be set forth on the form attached
hereto as Exhibit B which Investor will complete and furnish to the Company no
later than 15 days prior to the filing of the Registration Statement, expressly
for use in connection with such registration statement; and, subject to Section
6(d), the Investor will reimburse any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this Section 6(b)
and the agreement with respect to contribution contained in Section 7 shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Investor, which consent shall not be
unreasonably withheld; provided, further, however, that the Investor shall be
liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to the Investor as a result of the
sale of Registrable Securities pursuant to such registration statement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the transfer of
the Registrable Securities by the Investor pursuant to Section 9.

 

c.           Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim,
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding, provided that there
may be no more than one such separate counsel for all of the Indemnified Parties
The Indemnified Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such
action or claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party or
Indemnified Person which relates to such action or claim. The indemnifying party
shall keep the Indemnified Party or Indemnified Person fully apprised at all
times as to the status of the defense or any settlement negotiations with
respect thereto. No indemnifying party shall be liable for any settlement of any
action, claim or proceeding affected without its written consent, provided,
however, that the indemnifying party shall not unreasonably withhold, delay or
condition its consent. No indemnifying party shall, without the consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such claim or litigation. Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.

 

- 8 -

 

 

d.           The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.

 

e.           The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.

 

7.            CONTRIBUTION.

 

To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that: (i) no seller
of Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities.

 

8.            REPORTS AND DISCLOSURE UNDER THE SECURITIES ACTS.

 

With a view to making available to the Investor the benefits of Rule 144
promulgated under the Securities Act or any other similar rule or regulation of
the Commission that may at any time permit the Investor to sell securities of
the Company to the public without registration (“Rule 144”), the Company agrees,
at the Company’s sole expense, to:

 

a.           make and keep public information available, as those terms are
understood and defined in Rule 144;

 

b.           file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
so long as the Company remains subject to such requirements and the filing of
such reports and other documents is required for the applicable provisions of
Rule 144;

 

- 9 -

 

 

c.           furnish to the Investor so long as the Investor owns Registrable
Securities, promptly upon request and subject to the delivery by the Investor of
a bona fide fair market offer for a licensing or funding opportunity pursuant to
the Purchase Agreement, (i) a written statement by the Company that it has
complied with the reporting and or disclosure provisions of Rule 144, the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested to
permit the Investor to sell such securities pursuant to Rule 144 without
registration (for the avoidance of doubt, any filing available to the Investor
via the Commission’s live EDGAR system shall be deemed “furnished to the
Investor” hereunder); and

 

d.           take such additional action as is requested by the Investor to
enable the Investor to sell the Registrable Securities pursuant to Rule 144,
including, without limitation, delivering all such legal opinions, consents,
certificates, resolutions and instructions to the Company’s Transfer Agent as
may be requested from time to time by the Investor and otherwise reasonably
cooperate with Investor and Investor’s broker to effect such sale of securities
pursuant to Rule 144.

 

The Company agrees that damages may be an inadequate remedy for any breach of
the terms and provisions of this Section 8 and that Investor shall, whether or
not it is pursuing any remedies at law, be entitled to equitable relief in the
form of a preliminary or permanent injunctions, without having to post any bond
or other security, upon any breach or threatened breach of any such terms or
provisions. Investor agrees that the Rule 144 rights under this Agreement are
subject to the delivery by the Investor of a bona fide fair market offer for a
licensing or funding opportunity pursuant to the Purchase Agreement.

 

9.            ASSIGNMENT OF REGISTRATION RIGHTS.

 

The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Investor. The Investor may
not assign its rights under this Agreement without the written consent of the
Company.

 

10.          AMENDMENT OF REGISTRATION RIGHTS.

 

Provisions of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the mutual written consent of the Company and the
Investor.

 

11.          MISCELLANEOUS.

 

a.           A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the registered owner of such Registrable Securities.

 

b.           Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one (1) Trading Day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:

 

- 10 -

 

 

If to the Company:

 

Eos Petro, Inc.
1999 Avenue of the Stars, #2520
Los Angeles, CA 90067
Attn: Nikolas Konstant

 

With a copy to:

 

Baker & Hostetler LLP

12100 Wilshire Blvd., 15th Floor

Los Angeles, California 90025

Attention: Jeffrey P. Berg, Esq.

 

If to the Investor:

 

GEM Global Yield Fund Limited
c/o CM Group
Commerce House
1 Bowring Road
Ramsey
Isle of Man
IM8 2LQ

 

With a copy to:

 

Kramer Levin Naftalis & Frankel LLP

1177 Avenue of the Americas

New York, New York 10036 

Attention: Christopher S. Auguste, Esq.

 

or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three (3) Trading Days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service, shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

 

- 11 -

 

 

c.           Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

 

d.           All matters concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the State of New York,
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, 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 brought in an inconvenient forum or that the
venue of 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 to such
party at the address for such 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. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

 

e.           This Agreement and the Purchase Agreement constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein and therein. This Agreement and the
Purchase Agreement supersede all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof and thereof.

 

f.            Subject to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.

 

g.           The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

 

h.           This Agreement may be executed in identical counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission or by e-mail in a “.pdf” format
data file of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.

 

- 12 -

 

 

i.            Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

j.            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.

 

k.          This Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person.

 

* * * * * *

 

- 13 -

 

 

IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to be duly executed as of day and year first above written.

 

  THE COMPANY:       EOS PETRO, INC.       By:     Name:       Title:        
BUYER:       GEM GLOBAL YIELD FUND       By:     Name:     Title:      

 

 

 

 

EXHIBIT A

TO REGISTRATION RIGHTS AGREEMENT

 

FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT

 

Colonial Stock Transfer Company

Attention: Kourtney Mardanlou

66 Exchange Place

Salt Lake City, Utah 84111 

Date:____________________

 

Dear Sirs,

 

This is to inform you that the Securities and Exchange Commission has declared
the Registration Statement on Form S-1 for Eos Petro, Inc., effective as of
_______________.

 

  Signed,        

 

Cc:     GEM Global Yield Fund Limited   c/o CM Group   Commerce House   1
Bowring Road   Ramsey   Isle of Man   IM8 2LQ       Kramer Levin Naftalis &
Frankel LLP   1177 Avenue of the Americas   New York, New York 10036  
Attention:  Christopher S. Auguste, Esq.

 

 

 

 

Exhibit B

 

S-1 STOCK OWNERSHIP QUESTIONNAIRE

 

TO BE FILLED OUT BY (1) GEM GLOBAL YIELD FUND; (2) 590 Partners Capital; and (3)
GEM Capital SAS

 

  Name and Contact Information:           Full legal name of record holder:    
      Address of record holder:           Taxpayer identification number
of record holder:           Name of contact person:           Telephone number
of contact person:           Fax number of contact person:           E-mail
address of contact person:  

 

Item 1. Beneficial Ownership

 

 1) Deemed Beneficial Ownership: Please state the amount of securities of the
Company you own on the date you complete this Questionnaire. (If none, please
state so in each case.)

 

 

 

 

    Shares of Common
Stock   Other
(Warrants, etc.) Shares as to which you have sole voting power                  
Shares as to which you have shared voting power                   Shares as to
which you have sole investment power                   Shares as to which you
have shared investment power        

 

 

Please state the number of shares owned by family members, trusts and other
organizations with which you have a relationship, and any other shares of which
you may be deemed to be the “beneficial owner”:

 

Name of Holder and
Relationship to You   Shares of Common
Stock   Other
(Warrants, etc.)                              

 

Of such shares:

 

    Shares of Common
Stock   Other
(Warrants, etc.) Shares as to which you have sole voting power                  
Shares as to which you have shared voting power                   Shares as to
which you have sole investment power                   Shares as to which you
have shared investment power        

 

 

 

 

Please list below the name of the person(s) who has or share the power to
dispose of the shares or other securities listed above.

 

                   

 

Do you have any present plans to acquire or dispose of shares of Common Stock of
the Company after you complete this Questionnaire?

 

  Yes    ¨        No    ¨       If so, please describe:                  

 

2) Pledged Securities: If any of such securities have been pledged or otherwise
deposited as collateral or are the subject matter of any voting trust or other
similar agreement or of any contract providing for the sale or other disposition
of such securities, please give the details thereof:

 

                   

 

3) Disclaimer of Beneficial Ownership: Do you wish to disclaim beneficial
ownership of any of the shares reported in response to Item 1?

 

  Yes    ¨        No    ¨

 

 

 

 

If the answer is “Yes”, please furnish the following information with respect to
the person or persons who should be shown as the beneficial owner(s) of the
shares in question:

 

Name and Address of
Actual Beneficial Owner   Relationship of
Such Person to You   Number of Shares
Beneficially Owned                                        

 

Item 2. Underwriter Issues

 

1)Are you a registered broker-dealer under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)?

 

  Yes    ¨        No    ¨

 

2)Are you an affiliate of a registered broker-dealer under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)?

 

  Yes    ¨        No    ¨

 

3)If you answered “yes” to Question 2:

 

a.Did you purchase the shares being registered for resale in the ordinary course
of business?

 

  Yes    ¨        No    ¨

 

b.At the time of the purchase, did you have any agreements or understandings,
directly or indirectly, with any person to distribute the shares being
registered?

 

  Yes    ¨        No    ¨

 

 

 

 

Item 3. Relationships with the Company

 

1) Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (5% or more) has held any
position or office or has had any other material relationship with the Company
(or its predecessors or affiliates) during the past three years.

 

State any exceptions here:

 

                             

 

SIGNATURE

 

If, at any time prior to the filing of the Form S-1, any of the information set
forth in my responses to this Questionnaire has changed due to passage of time,
or any development occurs which requires a change in any of my answers, or has
for any other reason become incorrect, I agree immediately to furnish to the
individual to whom a copy of this Questionnaire is to be sent, as indicated and
at the address shown on the first page hereof, any necessary or appropriate
correcting information. Otherwise, the Company is to understand that the above
information continues to be, to the best of my knowledge, information and
belief, complete and correct as of the date hereof and of the dates of such
mailing and such stockholders meeting.

 

I understand that the information that I am furnishing to you herein will be
used by the Company in the preparation of its Registration Statement on Form
S-1.

 

Date:                         , 200              Signature                 Name
                Relationship to and position(s) by title with the Company and
any subsidiary                 Street Address                 City State/Country
Zip Code                 Telephone Number

 

 

 

 

 

EXHIBIT B TO STOCK PURCHASE AGREEMENT

 

FORM OF AMENDED AND RESTATED

WARRANT CERTIFICATE NO. 3

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES TO BE ISSUED
UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“ACT”), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PROVIDED BY REGULATION D PROMULGATED UNDER THE ACT. SUCH
SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT. THIS WARRANT MAY ONLY BE
EXERCISED BY A PERSON WHO QUALIFIES AS AN “ACCREDITED INVESTOR” PURSUANT TO RULE
501 OF REGULATION D OF THE ACT.

 

EOS PETRO, INC.,

A NEVADA CORPORATION

1999 Avenue of the Stars, Suite 2520

Los Angeles, California 90067

 

COMMON STOCK PURCHASE WARRANT

 

November 12, 2012

 

1.          Issuance

 

THIS IS TO CERTIFY THAT, for value received, GEM Capital SAS (the “Holder”),
shall have the right to purchase from EOS PETRO, INC., a Nevada corporation (the
“Corporation”), six hundred and fifty one thousand five hundred (651,500) fully
paid and non-assessable shares of the Corporation’s common stock, $.0001 par
value per share (the “Common Stock”), subject to further adjustment as set forth
in Section 6 hereof, at any time until 5:00 P.M., Pacific time, on November 12,
2016 (the “Expiration Date”) at an exercise price of $3.00 per share (the
"Exercise Price").

 

2.          Exercise of Warrants

 

(a)          Condition Precedent to Exercise. This Warrant shall vest on July
11, 2013. Thereafter, this Warrant is exercisable pursuant to the provisions set
forth below in this Section 2.

 

(b)          Registration Rights and Lengthening of Term. If a registration
statement has not been filed with the Securities and Exchange Commission and
become effective with respect to the Warrant Shares, as such term is defined in
Section 3 of this Warrant, within 270 days of the date first referenced above,
then the Expiration Date shall be extended by one day for every day that the
Warrant Shares remain unregistered after the 270th day.

 

(c)          Time of Exercise. The Holder shall provide the Corporation with
notice that it may exercise this Warrant at least 61 days prior to the date of
such exercise. Upon the expiration of this 61 day period, the Holder may
exercise this Warrant pursuant to this Section 2.

 

 

 

 

Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 3

 

(d)          Methods of Exercise. So long as the condition in Section 2(a) has
been satisfied, the Holder hereof may exercise this Warrant, in whole or in
partial allotments, at the Exercise Price per share payable hereunder, payable
at such Holder's election by cash, certified or official bank check, or wire
transfer to an account designated by the Corporation. Upon surrender of this
Warrant with the annexed Notice of Exercise Form attached hereto as Exhibit A
duly completed and executed, together with payment of the Exercise Price for the
Warrant Shares then being purchased (collectively referred to as the “Exercise
Materials”), the Holder shall be entitled to receive a certificate or
certificates for the Warrant Shares so purchased, provided the 61 day period
referenced in Section 2(c) of this Warrant has expired. In lieu of the issuance
of any fractional share, the Corporation shall round up or down the fractional
amount to the nearest whole number.

 

(e)          Issuance of Stock Certificates. In the event of any exercise of
this Warrant in accordance with and subject to the terms and conditions hereof,
certificates for the shares of Warrant Shares so purchased shall be dated the
date of such exercise and delivered to the Holder hereof within a reasonable
time, not exceeding five (5) Business Days after such exercise (the “Delivery
Date”) or, at the request of the Holder (provided that a registration statement
under the Securities Act (as defined below) providing for the resale of the
Warrant Shares being purchased is then in effect or that such Warrant Shares are
otherwise exempt from registration), issued and delivered to the Depository
Trust Company (“DTC”) account on the Holder’s behalf via the Deposit Withdrawal
Agent Commission System (“DWAC”) on or before the Delivery Date (if the
Corporation is eligible for DWAC services at such time), and the Holder hereof
shall be deemed for all purposes to be the holder of the shares of Warrant
Shares so purchased as of the date of such exercise, and, unless this Warrant
has been fully exercised or expired, a new warrant having the same terms as this
Warrant and representing the remaining portion of such shares, if any, with
respect to which this Warrant shall not then have been exercised shall also be
issued to the Holder hereof as soon as possible and in any event within twenty
(20) Business Days after such effective exercise.

 

(f)          Business Days. For the purposes of this Warrant, the term “Business
Day” means any day other than Saturday, Sunday or other day on which commercial
banks in Los Angeles, California are authorized or required by law to remain
closed.

 

3.          Reservation of Shares

 

The Corporation hereby agrees that at all times during the term of this Warrant
there shall be reserved for issuance upon exercise of this Warrant such number
of shares of Common Stock as shall be required for issuance upon exercise of
this Warrant (the “Warrant Shares”).

 

4.          Mutilation or Loss of Warrant

 

Upon receipt of evidence reasonably satisfactory to the Corporation of the loss,
theft, destruction or mutilation of this Warrant or any stock certificate and,
in the case of any such loss, theft or destruction, upon receipt of an indemnity
agreement reasonably satisfactory to the Corporation, or in the case of any such
mutilation upon surrender and cancellation of such mutilated Warrant or stock
certificate, the Corporation will issue and deliver a new warrant (containing
the same terms as this Warrant) or stock certificate, in lieu of the lost,
stolen, destroyed or mutilated Warrant or stock certificate, and any such lost,
stolen, destroyed or mutilated Warrant or stock certificate shall thereupon
become void.

 

5.          Rights of the Holder

 

Prior to the exercise of this Warrant, the Holder of this Warrant, as such,
shall not be entitled to vote the Warrant Shares or receive dividends on or be
deemed the holder of such shares, nor shall anything contained herein be
construed to confer upon the Holder of this Warrant, as such, any of the rights
of a shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to receive notice of meetings, or to receive dividends or subscription rights
or otherwise until this Warrant shall have been exercised and the Common Stock
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.

 

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Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 3

 

6.          Protection Against Dilution.

 

The number and kind of securities purchasable upon the exercise of this Warrant
and the Exercise Price shall be subject to adjustment to the nearest whole share
(one-half and greater being rounded upward) and nearest cent (one-half cent and
greater being rounded upward) from time to time upon the occurrence of certain
events, as follows. Each of the adjustments provided by the subsections below
shall be deemed separate adjustments and any adjustment of this Warrant pursuant
to one subsection of this Section 6 shall preclude additional adjustments for
the same event or transaction by the remaining subsections.

 

(a)          Reclassification or Merger. In case of any reclassification, change
or conversion of securities of the class issuable upon exercise of this Warrant
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination), or in
case of any merger of the Corporation with or into another corporation (other
than a merger with another corporation in which the Corporation is the acquiring
and the surviving corporation and which does not result in any reclassification
or change of outstanding securities issuable upon exercise of this Warrant), or
in case of any sale of all or substantially all of the assets of the
Corporation, the Corporation, or such successor or purchasing corporation, as
the case may be, shall duly execute and deliver to the Holder of this Warrant a
new warrant so that the Holder of this Warrant shall have the right to receive,
at a total purchase price not to exceed that payable upon the exercise of the
unexercised portion of this Warrant, and in lieu of the Common Stock theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of stock,
other securities, money and property receivable upon such reclassification,
change or merger by a holder of the number of shares of Common Stock then
purchasable under this Warrant. Such new Warrant shall provide for adjustments
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 6. The provisions of this Section 6(a) shall
similarly apply to successive reclassifications, changes, mergers and transfers.

 

(b)          Subdivision or Combination of Shares.

 

(i)          On October 12, 2012, pursuant to an Agreement and Plan of Merger
dated July 16, 2012 (the “Merger Agreement”), the Corporation completed a merger
transaction (the “Merger”). In the Merger Agreement, the Corporation agreed to
implement a reverse stock split at an exchange ratio of 1-for-800 of the
Corporation’s outstanding shares of Common Stock as soon as reasonably
practicable following the completion of the Merger (the “Merger Reverse Split”).
When this Merger Reverse Split is implemented, it shall have no effect on this
Warrant. Neither the Exercise Price nor the number of Warrant Shares issuable
upon exercise of this Warrant shall be increased or decreased on account of the
Merger Reverse Split.

 

(ii)         Other than the Merger Reverse Split, while this Warrant remains
outstanding and unexpired, for all other subdivisions (by stock split) or
combinations (by reverse stock split) of the Corporation’s outstanding shares of
capital stock of the class into which this Warrant is exercisable, the Exercise
Price shall be proportionately decreased in the case of a subdivision or
increased in the case of a combination, effective at the close of business on
the date the subdivision or combination becomes effective and the number of
shares of Common Stock issuable upon exercise of this Warrant shall be
proportionately increased in the case of a subdivision or decreased in the case
of a combination, and in each case the nearest whole share, effective at the
close of business on the date the subdivision or combination becomes effective.
The provisions of this subparagraph (b)(ii) shall similarly apply to successive
subdivisions or combinations of outstanding shares of capital stock into which
this Warrant is exercisable.

 

3

 

 

Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 3

 

(c)          Common Stock Dividends. If the Corporation at any time while this
Warrant is outstanding and unexpired shall pay a dividend with respect to Common
Stock payable in Common Stock, then: (i) the Exercise Price shall be adjusted,
from and after the date of determination of stockholders entitled to receive
such dividend or distribution (the “Record Date”), to that price determined by
multiplying the Exercise Price in effect immediately prior to such date of
determination by a fraction (a) the numerator of which shall be the total number
of shares of Common Stock outstanding immediately prior to such dividend or
distribution, and (b) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such dividend or
distribution and (ii) the number of shares of Common Stock issuable upon
exercise of this Warrant shall be proportionately adjusted, to the nearest whole
share, from and after the Record Date by multiplying the number of shares of
Common Stock purchasable hereunder immediately prior to such Record Date by a
fraction (a) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately after such dividend or distribution, and
(b) the denominator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution. The provisions
of this subparagraph (c) shall similarly apply to successive Common Stock
dividends by the Corporation.

 

(d)          Other Adjustments Not Expressly Provided. If, at any time or from
time to time while this Warrant is outstanding any event occurs of the type
contemplated by the provisions of this Section 6 but not expressly provided for
by such provisions (including the granting of stock appreciation rights, phantom
stock rights or other rights with equity features), then the Corporation’s Board
of Directors may make an appropriate adjustment to the Exercise Price or the
number of shares of Common Stock purchasable upon the exercise of this Warrant
as to protect the rights of the Holder; provided that no such adjustment will
increase the Exercise Price as otherwise determined pursuant to this Section 6.
For the avoidance of doubt, while this Warrant remains outstanding and
unexpired, any new issuances of the Corporation’s outstanding shares of capital
stock of the class into which this Warrant is exercisable at a price lower than
the Exercise Price shall not result in an increase in the number of shares of
Common Stock purchasable upon the exercise of this Warrant.

 

7.          Outstanding Shares of the Corporation.

 

As of the date first written above prior to the issuance of this Warrant,
assuming implementation of the Merger Reverse Split, and further assuming that
the Corporation will not enter into any other transactions in which it issues
capital stock of the Corporation or other securities convertible into capital
stock of the Corporation prior to the Merger Reverse Split, the number of shares
of Common Stock of the Corporation outstanding, on a fully-diluted basis, would
not exceed forty five million (45,000,000).

 

8.          Notice of Adjustments

 

Whenever the Exercise Price or the number of Warrant Shares purchasable
hereunder shall be adjusted pursuant to Section 6 hereof, the Corporation shall
deliver to the Holder a certificate signed by its chief financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
and the Exercise Price and the number of Warrant Shares purchasable hereunder
after giving effect to such adjustment.

 

4

 

 

Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 3

 

9.          Securities Laws

 

(a)          Compliance with Securities Act of 1933. The Holder of this Warrant,
by acceptance hereof, agrees that this Warrant and the Warrant Shares
(collectively, the “Securities”) are being acquired for investment and that such
holder will not offer, sell, transfer or otherwise dispose of the Securities
except under circumstances which will not result in a violation of the
Securities Act of 1933, as amended (the “Securities Act”), and any applicable
state securities laws. Upon exercise of this Warrant, unless the Warrant Shares
being acquired are registered under the Securities Act and any applicable state
securities laws or an exemption from such registration is available, the Holder
hereof shall confirm in writing that the Warrant Shares so purchased are being
acquired for investment and not with a view toward distribution or resale in
violation of the Securities Act and shall confirm such other matters related
thereto as may be reasonably requested by the Corporation. The Holder
understands that this Warrant and the stock purchasable hereunder constitute
“restricted securities” under federal securities laws and acknowledges that Rule
144 of the Securities and Exchange Commission is not now, and may not in the
future be, available for resale of this Warrant and/or the stock purchasable
hereunder. The Warrant Shares (unless registered under the Securities Act and
any applicable state securities laws) shall be stamped or imprinted with a
legend in substantially the following form:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

 

Such legend shall be removed by the Corporation, upon the request of the Holder,
at such time as the restrictions on the transfer of the applicable security
shall have terminated.

 

(b)          Transferability of the Warrant. Subject to compliance with Section
9(c) below, which provisions are intended to ensure compliance with applicable
federal and state securities laws, the Securities may be transferred by the
Holder hereof, in whole or in part and from time to time.

 

(c)          Method of Transfer. With respect to any offer, sale, transfer or
other disposition of the Securities, the Holder hereof shall, prior to such
offer, sale, transfer or other disposition:

 

(i)         surrender this Warrant or certificate representing Warrant Shares at
the principal executive offices of the Corporation or provide evidence
reasonably satisfactory to the Corporation of the loss, theft or destruction of
this Warrant or certificate representing Warrant Shares and an indemnity
agreement reasonably satisfactory to the Corporation;

 

(ii)        pay any applicable transfer taxes or establish to the satisfaction
of the Corporation that such taxes have been paid;

 

(iii)      deliver a written assignment to the Corporation in substantially the
form attached hereto as Exhibit B or appropriate stock power duly completed and
executed prior to transfer, describing briefly the manner thereof; and

 

(iv)       deliver a written opinion of such Holder’s counsel, or other
evidence, if reasonably requested by the Corporation, to the effect that such
offer, sale, transfer or other disposition may be effected without registration
or qualification (under the Securities Act as then in effect and any applicable
state securities law then in effect) of the Securities.

 

5

 

 

Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 3

 

As soon as reasonably practicable after receiving the items set forth above, the
Corporation shall notify the Holder that it may sell, transfer or otherwise
dispose of the Securities, all in accordance with the terms of the notice
delivered to the Corporation. If a determination has been made pursuant to this
Section 9(c) that the opinion of counsel for the Holder or other evidence is not
reasonably satisfactory to the Corporation, the Corporation shall so notify the
Holder promptly with details of such determination. Notwithstanding the
foregoing, the Securities may, as to such federal laws, be offered, sold or
otherwise disposed of in accordance with Rule 144 under the Securities Act if
the Corporation satisfied the provisions thereof and provided that the Holder
shall furnish such information as the Corporation may reasonably request to
provide a reasonable assurance that the provisions of Rule 144 have been
satisfied. Each certificate representing this Warrant or Warrant Shares thus
transferred (except a transfer pursuant to Rule 144 or an effective registration
statement) shall bear a legend as to the applicable restrictions on
transferability in order to ensure compliance with applicable federal and state
securities laws, unless in the aforesaid opinion of counsel to the Holder and to
the reasonable satisfaction of the Corporation, such legend is not required in
order to ensure compliance with such laws. Upon any partial transfer of this
Warrant, the Corporation will issue and deliver to such new Holder a new warrant
(in form and substance similar to this Warrant) with respect to the portion
transferred and will issue and deliver to the Holder a new warrant (in form and
substance similar to this Warrant) with respect to the portion not transferred
as soon as possible and in any event within twenty (20) Business Days after such
transfer. In addition, the Holder will comply with all other applicable
securities legislation in addition to the Securities Act to which the Holder is
subject in selling or transferring any Warrants or Warrant Shares and the
Corporation may refuse to register any sale or transfer not in compliance with
such other securities legislation.

 

10.         Payment of Taxes

 

The Corporation shall pay any and all issue and other taxes payable in respect
of any issue or delivery of Common Stock upon the exercise of this Warrant that
may be imposed under the laws of the United States or by any state, political
subdivision or taxing authority of the United States; provided, however, that
the Corporation shall not be required to pay any tax or taxes that may be
payable in respect of any transfer involved in the issue or delivery of any
Warrant or certificates for Common Stock in a name other than that of the
registered Holder of such Warrant, and no such issue or delivery shall be made
unless and until the person or entity requesting the issuance thereof shall have
paid to the Corporation the amount of such tax or shall have established to the
satisfaction of the Corporation that such tax has been paid.

 

11.         Notices and Payments

 

Any notice required or permitted hereunder shall be given in writing and shall
be deemed effectively given upon, (a) personal delivery or telecopy, (b) one (1)
Business Day after deposit with a nationally recognized overnight delivery
service such as Federal Express, with postage and fees prepaid, addressed to
each of the other parties thereunto entitled at the following addresses, or at
such other addresses as a party may designate by written notice to each of the
other parties hereto or (c) four (4) Business Days following the date of deposit
in the United States mails, first-class postage prepaid, addressed to each of
the other parties thereunto entitled at the following addresses, or at such
other addresses as a party may designate by written notice to each of the other
parties hereto.

 

CORPORATION: EOS PETRO, INC.   Attention: Nikolas Konstant   1999 Avenue of the
Stars, Suite 2520   Los Angeles, CA 90067   Tel: (310) 552-1555   Fax: (424)
288-5650     with a copy to: Baker & Hostetler LLP   Attention: Jeffrey P. Berg
  12100 Wilshire Blvd. 15th Floor   Los Angeles, CA 90049   Tel: (310) 442-8850
  Fax: (310) 820-8859     HOLDER: GEM Capital SAS   c/o CM Group   Commerce
House   1 Bowring Road

 

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Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 3

 

  Ramsey   Isle of man   IM8 2LQ     with a copy to: Kramer Levin Naftalis &
Frankel LLP   1177 Avenue of the Americas   New York, New York 10036   Telephone
Number: (212) 715-9100   Fax: (212) 715-8000   Attention: Christopher S.
Auguste, Esq.

 

12.         Governing Law

 

This Warrant shall be deemed to be a contract made under the laws of the State
of Nevada and for all purposes shall be governed by and construed in accordance
with the laws of the State of Nevada applicable to contracts to be made and
performed entirely within the State of Nevada.

 

13.         Modification and Waiver; Effect of Amendment or Waiver

 

This Warrant and any provision hereof may be modified, amended, waived,
discharged or terminated only by an instrument in writing, designated as an
amendment to this Warrant and executed by a duly authorized officer of the
Corporation and the Holder of this Warrant. Any waiver or amendment effected in
accordance with this Section 13 shall be binding upon the Holder, each future
holder of this Warrant or of any shares purchased under this Warrant (including
securities into which such shares have been converted) and the Corporation.

 

14.         Binding Effect on Successors

 

This Warrant shall be binding upon any corporation succeeding the Corporation in
case of the consolidation, merger or amalgamation of the Corporation with or
into any other corporation, and all of the obligations of the Corporation
relating to the Common Stock issuable upon the exercise or conversion of this
Warrant shall survive the exercise, conversion and termination of this Warrant
and all of the covenants and agreements of the Corporation shall inure to the
benefit of the successors and assigns of the Holder hereof. The Corporation
will, at the time of the exercise or conversion of this Warrant, in whole or in
part, upon request of the Holder in respect of any rights to which the Holder
shall continue to be entitled after such exercise or conversion in accordance
with this Warrant; provided, however, that the failure of the Holder to make any
such request shall not affect the continuing obligations of the Corporation to
the Holder in respect of such rights.

 

15.        No Impairment

 

The Corporation will not, by any voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed under
this Warrant by the Corporation, but will at all times in good faith assist in
carrying out all the provisions of this Warrant and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Holder of this Warrant against impairment.

 

16.         Descriptive Headings

 

The descriptive headings of the several paragraphs of this Warrant are inserted
for convenience only and do not constitute a part of this Warrant. The language
in this Warrant shall be construed as to its fair meaning without regard to
which party drafted this Warrant.

 

7

 

 

Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 3

 

17.         Entire Agreement

 

This Warrant constitutes the full and entire understanding and agreement between
the parties with regard to the subject matter hereof and supersedes all prior
and contemporaneous agreements, representations, and undertakings of the
parties, whether oral or written, with respect to such subject matter.

 

18.         Severability

 

In the event that any one or more of the provisions contained in this Warrant
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such provision(s) shall be ineffective only to the extent of such
invalidity, illegality or unenforceability, without invalidating the remainder
of such provision or the remaining provisions of this Warrant and such
invalidity, illegality or unenforceability shall not affect any other provision
of this Warrant, which shall remain in full force and effect.

 

19.         Counterparts

 

This Warrant may be executed in two or more counterparts, each of which shall be
an original, and all of which together shall constitute one instrument.

 

8

 

 

Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 3

 

IN WITNESS WHEREOF, the Corporation has caused this Warrant to be duly executed
and delivered by its duly authorized officer.

 

EOS PETRO, INC.

by its authorized signatory:

 

Nikolas Konstant   Chairman of the Board and CFO  

 

9

 

 

EXHIBIT A

 

NOTICE OF EXERCISE

 

TO:EOS PETRO, INC. (the “Corporation”)

 

1.          The undersigned hereby:

¨elects to purchase __________ shares of Common Stock of the Corporation
pursuant to the terms of the attached Warrant, and tenders herewith payment of
the purchase price of such shares in full. The undersigned intends the payment
of the purchase price shall be made as (check one):

 

Cash Exercise_______

 

If the undersigned has elected a Cash Exercise, the undersigned shall pay the
sum of $________ by certified or official bank check (or via wire transfer) to
the Corporation in accordance with the terms of the Warrant.

 

2.          Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:

 

 

(Name)

 

 

(Address)

 

 

(City, State)

 

3.          The undersigned represents that the aforesaid shares being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares, all except as in
compliance with applicable securities laws, and that the undersigned is an
“accredited investor” within the meaning of Rule 501 of Regulation D promulgated
under the Securities Act of 1933, as amended.

 

(Date)               (Signature)

 

  NOTICE: Signature must be guaranteed by a commercial bank or trust company or
a member firm of a major stock exchange if shares of capital stock are to be
issued, or securities are to be delivered, other than to or in the name of the
registered holder of this Warrant. In addition, signature must correspond in all
respects with the name as written upon the face of the Warrant in every
particular without alteration or any change whatever.

 

 

 

 

 

EXHIBIT B

 

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned holder of the attached Warrant hereby sells,
assigns and transfers unto _______________________ whose address is
_______________________________________ and whose taxpayer identification number
is _________________ the undersigned’s right, title and interest in and to the
Warrant issued by Eos Petro, Inc., a Nevada corporation (the “Corporation”) to
purchase _______ shares of the Corporation’s Common Stock, and does hereby
irrevocably constitute and appoint __________________________ attorney to
transfer said Warrant on the books of the Corporation with full power of
substitution in the premises.

 

In connection with such sale, assignment, transfer or other disposition of this
Warrant, the undersigned hereby confirms that:

 

¨such sale, transfer or other disposition may be effected without registration
or qualification (under the Securities Act as then in effect and any applicable
state securities law then in effect) of this Warrant or the shares of capital
stock of the Corporation issuable thereunder and has attached hereto a written
opinion of the undersigned’s counsel to that effect; or

 

¨such sale, transfer or other disposition has been registered under the
Securities Act of 1933, as amended, and registered and/or qualified under all
applicable state securities laws.

 

(Date)               (Signature)

 

  NOTICE:  Signature must correspond in all respects with the name as written
upon the face of the Warrant in every particular without alteration or any
change whatever.

 

 

 

 

 

EXHIBIT C TO STOCK PURCHASE AGREEMENT

 

FORM OF AMENDED AND RESTATED

WARRANT CERTIFICATE NO. 4

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES TO BE ISSUED
UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“ACT”), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PROVIDED BY REGULATION D PROMULGATED UNDER THE ACT. SUCH
SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT. THIS WARRANT MAY ONLY BE
EXERCISED BY A PERSON WHO QUALIFIES AS AN “ACCREDITED INVESTOR” PURSUANT TO RULE
501 OF REGULATION D OF THE ACT.

 

EOS PETRO, INC.,

A NEVADA CORPORATION

1999 Avenue of the Stars, Suite 2520

Los Angeles, California 90067

 

COMMON STOCK PURCHASE WARRANT

 

November 12, 2012

 

1.Issuance

 

THIS IS TO CERTIFY THAT, for value received, 590 Partners Capital, LLC (the
“Holder”), shall have the right to purchase from EOS PETRO, INC., a Nevada
corporation (the “Corporation”), six hundred and fifty one thousand five hundred
(651,500) fully paid and non-assessable shares of the Corporation’s common
stock, $.0001 par value per share (the “Common Stock”), subject to further
adjustment as set forth in Section 6 hereof, at any time until 5:00 P.M.,
Pacific time, on November 12, 2016 (the “Expiration Date”) at an exercise price
of $3.00 per share (the "Exercise Price").

 

2.Exercise of Warrants

 

(a)          Condition Precedent to Exercise. This Warrant shall vest on July
11, 2013. Thereafter, this Warrant is exercisable pursuant to the provisions set
forth below in this Section 2.

 

(b)          Registration Rights and Lengthening of Term. If a registration
statement has not been filed with the Securities and Exchange Commission and
become effective with respect to the Warrant Shares, as such term is defined in
Section 3 of this Warrant, within 270 days of the date first referenced above,
then the Expiration Date shall be extended by one day for every day that the
Warrant Shares remain unregistered after the 270th day.

 

(c)          Time of Exercise. The Holder shall provide the Corporation with
notice that it may exercise this Warrant at least 61 days prior to the date of
such exercise. Upon the expiration of this 61 day period, the Holder may
exercise this Warrant pursuant to this Section 2.

 

 

 

 

Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 4

 

(d)          Method of Exercise. So long as the condition in Section 2(a) has
been satisfied, the Holder hereof may exercise this Warrant, in whole or in
partial allotments, at the Exercise Price per share payable hereunder, payable
at such Holder's election by cash, certified or official bank check, or wire
transfer to an account designated by the Corporation. Upon surrender of this
Warrant with the annexed Notice of Exercise Form attached hereto as Exhibit A
duly completed and executed, together with payment of the Exercise Price for the
Warrant Shares then being purchased (collectively referred to as the “Exercise
Materials”), the Holder shall be entitled to receive a certificate or
certificates for the Warrant Shares so purchased, provided the 61 day period
referenced in Section 2(c) of this Warrant has expired. In lieu of the issuance
of any fractional share, the Corporation shall round up or down the fractional
amount to the nearest whole number.

 

(e)          Issuance of Stock Certificates. In the event of any exercise of
this Warrant in accordance with and subject to the terms and conditions hereof,
certificates for the shares of Warrant Shares so purchased shall be dated the
date of such exercise and delivered to the Holder hereof within a reasonable
time, not exceeding five (5) Business Days after such exercise (the “Delivery
Date”) or, at the request of the Holder (provided that a registration statement
under the Securities Act (as defined below) providing for the resale of the
Warrant Shares being purchased is then in effect or that such Warrant Shares are
otherwise exempt from registration), issued and delivered to the Depository
Trust Company (“DTC”) account on the Holder’s behalf via the Deposit Withdrawal
Agent Commission System (“DWAC”) on or before the Delivery Date (if the
Corporation is eligible for DWAC services at such time), and the Holder hereof
shall be deemed for all purposes to be the holder of the shares of Warrant
Shares so purchased as of the date of such exercise, and, unless this Warrant
has been fully exercised or expired, a new warrant having the same terms as this
Warrant and representing the remaining portion of such shares, if any, with
respect to which this Warrant shall not then have been exercised shall also be
issued to the Holder hereof as soon as possible and in any event within twenty
(20) Business Days after such effective exercise.

 

(g)          Business Days. For the purposes of this Warrant, the term “Business
Day” means any day other than Saturday, Sunday or other day on which commercial
banks in Los Angeles, California are authorized or required by law to remain
closed.

 

3.Reservation of Shares

 

The Corporation hereby agrees that at all times during the term of this Warrant
there shall be reserved for issuance upon exercise of this Warrant such number
of shares of Common Stock as shall be required for issuance upon exercise of
this Warrant (the “Warrant Shares”).

 

4.Mutilation or Loss of Warrant

 

Upon receipt of evidence reasonably satisfactory to the Corporation of the loss,
theft, destruction or mutilation of this Warrant or any stock certificate and,
in the case of any such loss, theft or destruction, upon receipt of an indemnity
agreement reasonably satisfactory to the Corporation, or in the case of any such
mutilation upon surrender and cancellation of such mutilated Warrant or stock
certificate, the Corporation will issue and deliver a new warrant (containing
the same terms as this Warrant) or stock certificate, in lieu of the lost,
stolen, destroyed or mutilated Warrant or stock certificate, and any such lost,
stolen, destroyed or mutilated Warrant or stock certificate shall thereupon
become void.

 

5.Rights of the Holder

 

Prior to the exercise of this Warrant, the Holder of this Warrant, as such,
shall not be entitled to vote the Warrant Shares or receive dividends on or be
deemed the holder of such shares, nor shall anything contained herein be
construed to confer upon the Holder of this Warrant, as such, any of the rights
of a shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to receive notice of meetings, or to receive dividends or subscription rights
or otherwise until this Warrant shall have been exercised and the Common Stock
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.

 

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Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 4

 

6.Protection Against Dilution.

 

The number and kind of securities purchasable upon the exercise of this Warrant
and the Exercise Price shall be subject to adjustment to the nearest whole share
(one-half and greater being rounded upward) and nearest cent (one-half cent and
greater being rounded upward) from time to time upon the occurrence of certain
events, as follows. Each of the adjustments provided by the subsections below
shall be deemed separate adjustments and any adjustment of this Warrant pursuant
to one subsection of this Section 6 shall preclude additional adjustments for
the same event or transaction by the remaining subsections.

 

(a)          Reclassification or Merger. In case of any reclassification, change
or conversion of securities of the class issuable upon exercise of this Warrant
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination), or in
case of any merger of the Corporation with or into another corporation (other
than a merger with another corporation in which the Corporation is the acquiring
and the surviving corporation and which does not result in any reclassification
or change of outstanding securities issuable upon exercise of this Warrant), or
in case of any sale of all or substantially all of the assets of the
Corporation, the Corporation, or such successor or purchasing corporation, as
the case may be, shall duly execute and deliver to the Holder of this Warrant a
new warrant so that the Holder of this Warrant shall have the right to receive,
at a total purchase price not to exceed that payable upon the exercise of the
unexercised portion of this Warrant, and in lieu of the Common Stock theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of stock,
other securities, money and property receivable upon such reclassification,
change or merger by a holder of the number of shares of Common Stock then
purchasable under this Warrant. Such new Warrant shall provide for adjustments
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 6. The provisions of this Section 6(a) shall
similarly apply to successive reclassifications, changes, mergers and transfers.

 

(b)          Subdivision or Combination of Shares.

 

(i)          On October 12, 2012, pursuant to an Agreement and Plan of Merger
dated July 16, 2012 (the “Merger Agreement”), the Corporation completed a merger
transaction (the “Merger”). In the Merger Agreement, the Corporation agreed to
implement a reverse stock split at an exchange ratio of 1-for-800 of the
Corporation’s outstanding shares of Common Stock as soon as reasonably
practicable following the completion of the Merger (the “Merger Reverse Split”).
When this Merger Reverse Split is implemented, it shall have no effect on this
Warrant. Neither the Exercise Price nor the number of Warrant Shares issuable
upon exercise of this Warrant shall be increased or decreased on account of the
Merger Reverse Split.

 

(ii)         Other than the Merger Reverse Split, while this Warrant remains
outstanding and unexpired, for all other subdivisions (by stock split) or
combinations (by reverse stock split) of the Corporation’s outstanding shares of
capital stock of the class into which this Warrant is exercisable, the Exercise
Price shall be proportionately decreased in the case of a subdivision or
increased in the case of a combination, effective at the close of business on
the date the subdivision or combination becomes effective and the number of
shares of Common Stock issuable upon exercise of this Warrant shall be
proportionately increased in the case of a subdivision or decreased in the case
of a combination, and in each case the nearest whole share, effective at the
close of business on the date the subdivision or combination becomes effective.
The provisions of this subparagraph (b)(ii) shall similarly apply to successive
subdivisions or combinations of outstanding shares of capital stock into which
this Warrant is exercisable.

 

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Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 4

 

(c)          Common Stock Dividends. If the Corporation at any time while this
Warrant is outstanding and unexpired shall pay a dividend with respect to Common
Stock payable in Common Stock, then: (i) the Exercise Price shall be adjusted,
from and after the date of determination of stockholders entitled to receive
such dividend or distribution (the “Record Date”), to that price determined by
multiplying the Exercise Price in effect immediately prior to such date of
determination by a fraction (a) the numerator of which shall be the total number
of shares of Common Stock outstanding immediately prior to such dividend or
distribution, and (b) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such dividend or
distribution and (ii) the number of shares of Common Stock issuable upon
exercise of this Warrant shall be proportionately adjusted, to the nearest whole
share, from and after the Record Date by multiplying the number of shares of
Common Stock purchasable hereunder immediately prior to such Record Date by a
fraction (a) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately after such dividend or distribution, and
(b) the denominator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution. The provisions
of this subparagraph (c) shall similarly apply to successive Common Stock
dividends by the Corporation.

 

(d)          Other Adjustments Not Expressly Provided. If, at any time or from
time to time while this Warrant is outstanding any event occurs of the type
contemplated by the provisions of this Section 6 but not expressly provided for
by such provisions (including the granting of stock appreciation rights, phantom
stock rights or other rights with equity features), then the Corporation’s Board
of Directors may make an appropriate adjustment to the Exercise Price or the
number of shares of Common Stock purchasable upon the exercise of this Warrant
as to protect the rights of the Holder; provided that no such adjustment will
increase the Exercise Price as otherwise determined pursuant to this Section 6.
For the avoidance of doubt, while this Warrant remains outstanding and
unexpired, any new issuances of the Corporation’s outstanding shares of capital
stock of the class into which this Warrant is exercisable at a price lower than
the Exercise Price shall not result in an increase in the number of shares of
Common Stock purchasable upon the exercise of this Warrant.

 

7.Outstanding Shares of the Corporation.

 

As of the date first written above prior to the issuance of this Warrant,
assuming implementation of the Merger Reverse Split, and further assuming that
the Corporation will not enter into any other transactions in which it issues
capital stock of the Corporation or other securities convertible into capital
stock of the Corporation prior to the Merger Reverse Split, the number of shares
of Common Stock of the Corporation outstanding, on a fully-diluted basis, would
not exceed forty five million (45,000,000).

 

8.Notice of Adjustments

 

Whenever the Exercise Price or the number of Warrant Shares purchasable
hereunder shall be adjusted pursuant to Section 6 hereof, the Corporation shall
deliver to the Holder a certificate signed by its chief financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
and the Exercise Price and the number of Warrant Shares purchasable hereunder
after giving effect to such adjustment.

 

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Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 4

 

9.Securities Laws

 

(a)          Compliance with Securities Act of 1933. The Holder of this Warrant,
by acceptance hereof, agrees that this Warrant and the Warrant Shares
(collectively, the “Securities”) are being acquired for investment and that such
holder will not offer, sell, transfer or otherwise dispose of the Securities
except under circumstances which will not result in a violation of the
Securities Act of 1933, as amended (the “Securities Act”), and any applicable
state securities laws. Upon exercise of this Warrant, unless the Warrant Shares
being acquired are registered under the Securities Act and any applicable state
securities laws or an exemption from such registration is available, the Holder
hereof shall confirm in writing that the Warrant Shares so purchased are being
acquired for investment and not with a view toward distribution or resale in
violation of the Securities Act and shall confirm such other matters related
thereto as may be reasonably requested by the Corporation. The Holder
understands that this Warrant and the stock purchasable hereunder constitute
“restricted securities” under federal securities laws and acknowledges that Rule
144 of the Securities and Exchange Commission is not now, and may not in the
future be, available for resale of this Warrant and/or the stock purchasable
hereunder. The Warrant Shares (unless registered under the Securities Act and
any applicable state securities laws) shall be stamped or imprinted with a
legend in substantially the following form:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

 

Such legend shall be removed by the Corporation, upon the request of the Holder,
at such time as the restrictions on the transfer of the applicable security
shall have terminated.

 

(b)          Transferability of the Warrant. Subject to compliance with Section
9(c) below, which provisions are intended to ensure compliance with applicable
federal and state securities laws, the Securities may be transferred by the
Holder hereof, in whole or in part and from time to time.

 

(c)          Method of Transfer. With respect to any offer, sale, transfer or
other disposition of the Securities, the Holder hereof shall, prior to such
offer, sale, transfer or other disposition:

 

(i)          surrender this Warrant or certificate representing Warrant Shares
at the principal executive offices of the Corporation or provide evidence
reasonably satisfactory to the Corporation of the loss, theft or destruction of
this Warrant or certificate representing Warrant Shares and an indemnity
agreement reasonably satisfactory to the Corporation;

 

(ii)         pay any applicable transfer taxes or establish to the satisfaction
of the Corporation that such taxes have been paid;

 

(iii)        deliver a written assignment to the Corporation in substantially
the form attached hereto as Exhibit B or appropriate stock power duly completed
and executed prior to transfer, describing briefly the manner thereof; and

 

(iv)        deliver a written opinion of such Holder’s counsel, or other
evidence, if reasonably requested by the Corporation, to the effect that such
offer, sale, transfer or other disposition may be effected without registration
or qualification (under the Securities Act as then in effect and any applicable
state securities law then in effect) of the Securities.

 

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Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 4

 

As soon as reasonably practicable after receiving the items set forth above, the
Corporation shall notify the Holder that it may sell, transfer or otherwise
dispose of the Securities, all in accordance with the terms of the notice
delivered to the Corporation. If a determination has been made pursuant to this
Section 9(c) that the opinion of counsel for the Holder or other evidence is not
reasonably satisfactory to the Corporation, the Corporation shall so notify the
Holder promptly with details of such determination. Notwithstanding the
foregoing, the Securities may, as to such federal laws, be offered, sold or
otherwise disposed of in accordance with Rule 144 under the Securities Act if
the Corporation satisfied the provisions thereof and provided that the Holder
shall furnish such information as the Corporation may reasonably request to
provide a reasonable assurance that the provisions of Rule 144 have been
satisfied. Each certificate representing this Warrant or Warrant Shares thus
transferred (except a transfer pursuant to Rule 144 or an effective registration
statement) shall bear a legend as to the applicable restrictions on
transferability in order to ensure compliance with applicable federal and state
securities laws, unless in the aforesaid opinion of counsel to the Holder and to
the reasonable satisfaction of the Corporation, such legend is not required in
order to ensure compliance with such laws. Upon any partial transfer of this
Warrant, the Corporation will issue and deliver to such new Holder a new warrant
(in form and substance similar to this Warrant) with respect to the portion
transferred and will issue and deliver to the Holder a new warrant (in form and
substance similar to this Warrant) with respect to the portion not transferred
as soon as possible and in any event within twenty (20) Business Days after such
transfer. In addition, the Holder will comply with all other applicable
securities legislation in addition to the Securities Act to which the Holder is
subject in selling or transferring any Warrants or Warrant Shares and the
Corporation may refuse to register any sale or transfer not in compliance with
such other securities legislation.

 

10.Payment of Taxes

 

The Corporation shall pay any and all issue and other taxes payable in respect
of any issue or delivery of Common Stock upon the exercise of this Warrant that
may be imposed under the laws of the United States or by any state, political
subdivision or taxing authority of the United States; provided, however, that
the Corporation shall not be required to pay any tax or taxes that may be
payable in respect of any transfer involved in the issue or delivery of any
Warrant or certificates for Common Stock in a name other than that of the
registered Holder of such Warrant, and no such issue or delivery shall be made
unless and until the person or entity requesting the issuance thereof shall have
paid to the Corporation the amount of such tax or shall have established to the
satisfaction of the Corporation that such tax has been paid.

 

11.Notices and Payments

 

Any notice required or permitted hereunder shall be given in writing and shall
be deemed effectively given upon, (a) personal delivery or telecopy, (b) one (1)
Business Day after deposit with a nationally recognized overnight delivery
service such as Federal Express, with postage and fees prepaid, addressed to
each of the other parties thereunto entitled at the following addresses, or at
such other addresses as a party may designate by written notice to each of the
other parties hereto or (c) four (4) Business Days following the date of deposit
in the United States mails, first-class postage prepaid, addressed to each of
the other parties thereunto entitled at the following addresses, or at such
other addresses as a party may designate by written notice to each of the other
parties hereto.

 

CORPORATION: EOS PETRO, INC.     Attention: Nikolas Konstant     1999 Avenue of
the Stars, Suite 2520     Los Angeles, CA 90067     Tel: (310) 552-1555     Fax:
(424) 288-5650         with a copy to: Baker & Hostetler LLP    
Attention:  Jeffrey P. Berg     12100 Wilshire Blvd. 15th Floor     Los Angeles,
CA 90049     Tel: (310) 442-8850     Fax: (310) 820-8859         HOLDER: 590
Partners Capital, LLC     c/o GEM     22287 Mulholland Drive     Suite 265    
Calabas, California 91302  

 

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Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 4

 

with a copy to: Kramer Levin Naftalis & Frankel LLP     1177 Avenue of the
Americas     New York, New York 10036     Telephone Number:  (212) 715-9100    
Fax:  (212) 715-8000     Attention:  Christopher S. Auguste, Esq.  

 

12.Governing Law

 

This Warrant shall be deemed to be a contract made under the laws of the State
of Nevada and for all purposes shall be governed by and construed in accordance
with the laws of the State of Nevada applicable to contracts to be made and
performed entirely within the State of Nevada.

 

13.Modification and Waiver; Effect of Amendment or Waiver

 

This Warrant and any provision hereof may be modified, amended, waived,
discharged or terminated only by an instrument in writing, designated as an
amendment to this Warrant and executed by a duly authorized officer of the
Corporation and the Holder of this Warrant. Any waiver or amendment effected in
accordance with this Section 13 shall be binding upon the Holder, each future
holder of this Warrant or of any shares purchased under this Warrant (including
securities into which such shares have been converted) and the Corporation.

 

14.Binding Effect on Successors

 

This Warrant shall be binding upon any corporation succeeding the Corporation in
case of the consolidation, merger or amalgamation of the Corporation with or
into any other corporation, and all of the obligations of the Corporation
relating to the Common Stock issuable upon the exercise or conversion of this
Warrant shall survive the exercise, conversion and termination of this Warrant
and all of the covenants and agreements of the Corporation shall inure to the
benefit of the successors and assigns of the Holder hereof. The Corporation
will, at the time of the exercise or conversion of this Warrant, in whole or in
part, upon request of the Holder in respect of any rights to which the Holder
shall continue to be entitled after such exercise or conversion in accordance
with this Warrant; provided, however, that the failure of the Holder to make any
such request shall not affect the continuing obligations of the Corporation to
the Holder in respect of such rights.

 

15.No Impairment

 

The Corporation will not, by any voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed under
this Warrant by the Corporation, but will at all times in good faith assist in
carrying out all the provisions of this Warrant and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Holder of this Warrant against impairment.

 

16.Descriptive Headings

 

The descriptive headings of the several paragraphs of this Warrant are inserted
for convenience only and do not constitute a part of this Warrant. The language
in this Warrant shall be construed as to its fair meaning without regard to
which party drafted this Warrant.

 

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Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 4

 

17.Entire Agreement

 

This Warrant constitutes the full and entire understanding and agreement between
the parties with regard to the subject matter hereof and supersedes all prior
and contemporaneous agreements, representations, and undertakings of the
parties, whether oral or written, with respect to such subject matter.

 

18.Severability

 

In the event that any one or more of the provisions contained in this Warrant
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such provision(s) shall be ineffective only to the extent of such
invalidity, illegality or unenforceability, without invalidating the remainder
of such provision or the remaining provisions of this Warrant and such
invalidity, illegality or unenforceability shall not affect any other provision
of this Warrant, which shall remain in full force and effect.

 

19.Counterparts

 

This Warrant may be executed in two or more counterparts, each of which shall be
an original, and all of which together shall constitute one instrument.

 

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Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 4

 

IN WITNESS WHEREOF, the Corporation has caused this Warrant to be duly executed
and delivered by its duly authorized officer.

 

EOS PETRO, INC.   by its authorized signatory:           Nikolas Konstant  
Chairman of the Board and CFO  

 

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EXHIBIT A

 

NOTICE OF EXERCISE

 

TO:       EOS PETRO, INC. (the “Corporation”)

 

1.    The undersigned hereby: 

¨elects to purchase __________ shares of Common Stock of the Corporation
pursuant to the terms of the attached Warrant, and tenders herewith payment of
the purchase price of such shares in full. The undersigned intends the payment
of the purchase price shall be made as (check one):

 

Cash Exercise_______

 

If the undersigned has elected a Cash Exercise, the undersigned shall pay the
sum of $________ by certified or official bank check (or via wire transfer) to
the Corporation in accordance with the terms of the Warrant.

 

2.    Please issue a certificate or certificates representing said shares in the
name of the undersigned or in such other name or names as are specified below:

 

        (Name)           (Address)           (City, State)  

 

3.   The undersigned represents that the aforesaid shares being acquired for the
account of the undersigned for investment and not with a view to, or for resale
in connection with, the distribution thereof and that the undersigned has no
present intention of distributing or reselling such shares, all except as in
compliance with applicable securities laws, and that the undersigned is an
“accredited investor” within the meaning of Rule 501 of Regulation D promulgated
under the Securities Act of 1933, as amended.

 

    (Date)  

 

      (Signature)

 

  NOTICE: Signature must be guaranteed by a commercial bank or trust company or
a member firm of a major stock exchange if shares of capital stock are to be
issued, or securities are to be delivered, other than to or in the name of the
registered holder of this Warrant. In addition, signature must correspond in all
respects with the name as written upon the face of the Warrant in every
particular without alteration or any change whatever.

 

 

 

 

EXHIBIT B

 

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned holder of the attached Warrant hereby sells,
assigns and transfers unto _______________________ whose address is
_______________________________________ and whose taxpayer identification number
is _________________ the undersigned’s right, title and interest in and to the
Warrant issued by Eos Petro, Inc., a Nevada corporation (the “Corporation”) to
purchase _______ shares of the Corporation’s Common Stock, and does hereby
irrevocably constitute and appoint __________________________ attorney to
transfer said Warrant on the books of the Corporation with full power of
substitution in the premises.

 

In connection with such sale, assignment, transfer or other disposition of this
Warrant, the undersigned hereby confirms that:

 

¨such sale, transfer or other disposition may be effected without registration
or qualification (under the Securities Act as then in effect and any applicable
state securities law then in effect) of this Warrant or the shares of capital
stock of the Corporation issuable thereunder and has attached hereto a written
opinion of the undersigned’s counsel to that effect; or

 

¨such sale, transfer or other disposition has been registered under the
Securities Act of 1933, as amended, and registered and/or qualified under all
applicable state securities laws.

 

    (Date)  

 

      (Signature)

 

  NOTICE:  Signature must correspond in all respects with the name as written
upon the face of the Warrant in every particular without alteration or any
change whatever.

 

 

 

 

 

EXHIBIT D TO STOCK PURCHASE AGREEMENT

 

FORM OF AMENDED AND RESTATED

WARRANT CERTIFICATE NO. 5

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES TO BE ISSUED
UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“ACT”), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PROVIDED BY REGULATION D PROMULGATED UNDER THE ACT. SUCH
SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT. THIS WARRANT MAY ONLY BE
EXERCISED BY A PERSON WHO QUALIFIES AS AN “ACCREDITED INVESTOR” PURSUANT TO RULE
501 OF REGULATION D OF THE ACT.

 

EOS PETRO, INC.,

A NEVADA CORPORATION

1999 Avenue of the Stars, Suite 2520

Los Angeles, California 90067

 

COMMON STOCK PURCHASE WARRANT

 

November 12, 2012

 

1.           Issuance

 

THIS IS TO CERTIFY THAT, for value received, GEM Capital SAS (the “Holder”),
shall have the right to purchase from EOS PETRO, INC., a Nevada corporation (the
“Corporation”), two million, three hundred and thirty-five thousand (2,335,000)
fully paid and non-assessable shares of the Corporation’s common stock, $.0001
par value per share (the “Common Stock”), subject to further adjustment as set
forth in Section 6 hereof, at any time until 5:00 P.M., Pacific time, on
November 12, 2015 (the “Expiration Date”) at an exercise price of $5.35 per
share (the "Exercise Price").

 

2.           Exercise of Warrants

 

(a)          Condition Precedent to Exercise. This Warrant does not vest and
shall not be exercisable by Holder, under any circumstances whatsoever, until
the date that either: (i) a petroleum agreement, between either the Corporation,
a subsidiary of the Corporation or an affiliate of the Corporation and the
Ghanaian Ministry of Energy, receives Parliamentary ratification and becomes
effective, pursuant to the Process for Acquiring a Block for Exploration as set
forth in Exhibit A attached hereto; or (ii) the Corporation or a subsidiary of
the Corporation closes a deal to acquire assets having a cost greater than
$40,000,000.00.

 

(b)          Registration Rights and Automatic Lengthening of Term. If a
registration statement has not been filed with the Securities and Exchange
Commission and become effective with respect to the shares of Common Stock
underlying this Warrant (such shares, the “Warrant Shares”) within 270 days of
the date first referenced above, then the Expiration Date shall be extended by
one day for every day that the Warrant Shares remain unregistered after the
270th day.

 

 

 

Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 5

 

(c)          Time of Exercise. The Holder shall provide the Corporation with
notice that it may exercise this Warrant at least 61 days prior to the date of
such exercise. Upon the expiration of this 61 day period, the Holder may
exercise this Warrant pursuant to this Section 2.

 

(d)          Corporation’s Option to Shorten Term. Notwithstanding Section 2(b),
the Corporation may elect to shorten the term of this Warrant by moving the
Expiration Date to the date six months from the day that all of the following
conditions have been satisfied:

 

(i)          either of the two conditions precedent to exercise set forth in
Section 2(a) is satisfied;

 

(ii)         the Corporation has publicly announced the Section 2(d)(i)
ratification or closing of the acquisition, as the case may be;

 

(iii)        the Warrant Shares are subject to an effective registration
statement under the Securities Act of 1933, as amended (the “Securities Act”);
and

 

(iv)        the Corporation provides notice to Holder of its election to shorten
the Warrant’s term within twenty (20) Business Days of the last of the
conditions in (i), (ii) and (iii) to occur.

 

(e)          Holder’s Option to Lengthen Term. If the Expiration Date has been
moved pursuant to the provisions of Section 2(d), then Holder may elect to
extend the term of the Warrant by moving the Expiration Date forward one
calendar day for every Trading Day that the thirty day average trailing trading
volume of the Corporation’s common stock is greater than $750 million
($750,000,000) (each qualifying Trading Day a “Lengthening Day”), provided,
however, that the Expiration Date shall not be moved past the date that the
Warrant was originally set to expire pursuant to Section 1, as such date may
have been extended pursuant to Section 2(b). Holder must provide notice to the
Corporation of each election to lengthen the Warrant’s term within 20 Business
Days of the expiration of the month in which the Lengthening Day(s) occurred.

 

(f)           Method of Exercise. So long as the condition in Section 2(a) has
been satisfied, the Holder hereof may exercise this Warrant, in whole or in
partial allotments, at the Exercise Price per share payable hereunder, payable
at such Holder's election by cash, certified or official bank check, or wire
transfer to an account designated by the Corporation. Upon surrender of this
Warrant with the annexed Notice of Exercise Form attached hereto as Exhibit B
duly completed and executed, together with payment of the Exercise Price for the
Warrant Shares then being purchased (collectively referred to as the “Exercise
Materials”), the Holder shall be entitled to receive a certificate or
certificates for the Warrant Shares so purchased, provided the 61 day period
referenced in Section 2(c) of this Warrant has expired. In lieu of the issuance
of any fractional share, the Corporation shall round up or down the fractional
amount to the nearest whole number.

 

(g)          Issuance of Stock Certificates. In the event of any exercise of
this Warrant in accordance with and subject to the terms and conditions hereof,
certificates for the shares of Warrant Shares so purchased shall be dated the
date of such exercise and delivered to the Holder hereof within a reasonable
time, not exceeding five (5) Business Days after such exercise (the “Delivery
Date”) or, at the request of the Holder (provided that a registration statement
under the Securities Act (as defined below) providing for the resale of the
Warrant Shares being purchased is then in effect or that such Warrant Shares are
otherwise exempt from registration), issued and delivered to the Depository
Trust Company (“DTC”) account on the Holder’s behalf via the Deposit Withdrawal
Agent Commission System (“DWAC”) on or before the Delivery Date (if the
Corporation is eligible for DWAC services at such time), and the Holder hereof
shall be deemed for all purposes to be the holder of the shares of Warrant
Shares so purchased as of the date of such exercise, and, unless this Warrant
has been fully exercised or expired, a new warrant having the same terms as this
Warrant and representing the remaining portion of such shares, if any, with
respect to which this Warrant shall not then have been exercised shall also be
issued to the Holder hereof as soon as possible and in any event within twenty
(20) Business Days after such effective exercise

 

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Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 5

 

(h)          Business Days. For the purposes of this Warrant, the term “Business
Day” means any day other than Saturday, Sunday or other day on which commercial
banks in Los Angeles, California are authorized or required by law to remain
closed.

 

3.           Reservation of Shares

 

The Corporation hereby agrees that at all times during the term of this Warrant
there shall be reserved for issuance upon exercise of this Warrant such number
of shares of Common Stock as shall be required for issuance upon exercise of
this Warrant.

 

4.           Mutilation or Loss of Warrant

 

Upon receipt of evidence reasonably satisfactory to the Corporation of the loss,
theft, destruction or mutilation of this Warrant or any stock certificate and,
in the case of any such loss, theft or destruction, upon receipt of an indemnity
agreement reasonably satisfactory to the Corporation, or in the case of any such
mutilation upon surrender and cancellation of such mutilated Warrant or stock
certificate, the Corporation will issue and deliver a new warrant (containing
the same terms as this Warrant) or stock certificate, in lieu of the lost,
stolen, destroyed or mutilated Warrant or stock certificate, and any such lost,
stolen, destroyed or mutilated Warrant or stock certificate shall thereupon
become void.

 

5.           Rights of the Holder

 

Prior to the exercise of this Warrant, the Holder of this Warrant, as such,
shall not be entitled to vote the Warrant Shares or receive dividends on or be
deemed the holder of such shares, nor shall anything contained herein be
construed to confer upon the Holder of this Warrant, as such, any of the rights
of a shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to receive notice of meetings, or to receive dividends or subscription rights
or otherwise until this Warrant shall have been exercised and the Common Stock
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.

 

6.           Protection Against Dilution.

 

The number and kind of securities purchasable upon the exercise of this Warrant
and the Warrant Exercise Price shall be subject to adjustment to the nearest
whole share (one-half and greater being rounded upward) and nearest cent
(one-half cent and greater being rounded upward) from time to time upon the
occurrence of certain events, as follows.

 

(a)          Reclassification or Merger. In case of any reclassification, change
or conversion of securities of the class issuable upon exercise of this Warrant
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination), or in
case of any merger of the Corporation with or into another corporation (other
than a merger with another corporation in which the Corporation is the acquiring
and the surviving corporation and which does not result in any reclassification
or change of outstanding securities issuable upon exercise of this Warrant), or
in case of any sale of all or substantially all of the assets of the
Corporation, the Corporation, or such successor or purchasing corporation, as
the case may be, shall duly execute and deliver to the holder of this Warrant a
new warrant so that the holder of this Warrant shall have the right to receive,
at a total purchase price not to exceed that payable upon the exercise of the
unexercised portion of this Warrant, and in lieu of the Common Stock theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of stock,
other securities, money and property receivable upon such reclassification,
change or merger by a holder of the number of shares of Common Stock then
purchasable under this Warrant. Such new Warrant shall provide for adjustments
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 6. The provisions of this Section 6(b) shall
similarly apply to successive reclassifications, changes, mergers and transfers.

 

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Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 5

 

(b)          Subdivision or Combination of Shares.

 

(i)          On October 12, 2012, pursuant to an Agreement and Plan of Merger
dated July 16, 2012 (the “Merger Agreement”), the Corporation completed a merger
transaction (the “Merger”). In the Merger Agreement, the Corporation agreed to
implement a reverse stock split at an exchange ratio of 1-for-800 of the
Corporation’s outstanding shares of Common Stock as soon as reasonably
practicable following the completion of the Merger (the “Merger Reverse Split”).
When this Merger Reverse Split is implemented, it shall have no effect on this
Warrant. Neither the Exercise Price nor the number of Warrant Shares issuable
upon exercise of this Warrant shall be increased or decreased on account of the
Merger Reverse Split.

 

(ii)         Other than the Merger Reverse Split, while this Warrant remains
outstanding and unexpired, for all other subdivisions (by stock split) or
combinations (by reverse stock split) of the Corporation’s outstanding shares of
capital stock of the class into which this Warrant is exercisable, the Exercise
Price shall be proportionately decreased in the case of a subdivision or
increased in the case of a combination, effective at the close of business on
the date the subdivision or combination becomes effective and the number of
shares of Common Stock issuable upon exercise of this Warrant shall be
proportionately increased in the case of a subdivision or decreased in the case
of a combination, and in each case the nearest whole share, effective at the
close of business on the date the subdivision or combination becomes effective.
The provisions of this subparagraph (b)(ii) shall similarly apply to successive
subdivisions or combinations of outstanding shares of capital stock into which
this Warrant is exercisable.

 

(c)          Common Stock Dividends. If the Corporation at any time while this
Warrant is outstanding and unexpired shall pay a dividend with respect to Common
Stock payable in Common Stock, then: (i) the Exercise Price shall be adjusted,
from and after the date of determination of stockholders entitled to receive
such dividend or distribution (the “Record Date”), to that price determined by
multiplying the Exercise Price in effect immediately prior to such date of
determination by a fraction (a) the numerator of which shall be the total number
of shares of Common Stock outstanding immediately prior to such dividend or
distribution, and (b) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such dividend or
distribution and (ii) the number of shares of Common Stock issuable upon
exercise of this Warrant shall be proportionately adjusted, to the nearest whole
share, from and after the Record Date by multiplying the number of shares of
Common Stock purchasable hereunder immediately prior to such Record Date by a
fraction (a) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately after such dividend or distribution, and
(b) the denominator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution. The provisions
of this subparagraph (c) shall similarly apply to successive Common Stock
dividends by the Corporation.

 

(d)          Other Adjustments Not Expressly Provided. If, at any time or from
time to time while this Warrant is outstanding any event occurs of the type
contemplated by the provisions of this Section 6 but not expressly provided for
by such provisions (including the granting of stock appreciation rights, phantom
stock rights or other rights with equity features), then the Corporation’s Board
of Directors may make an appropriate adjustment to the Exercise Price or the
number of shares of Common Stock purchasable upon the exercise of this Warrant
as to protect the rights of the Holder; provided that no such adjustment will
increase the Exercise Price as otherwise determined pursuant to this Section 6.
For the avoidance of doubt, while this Warrant remains outstanding and
unexpired, any new issuances of the Corporation’s outstanding shares of capital
stock of the class into which this Warrant is exercisable at a price lower than
the Exercise Price shall not result in an increase in the number of shares of
Common Stock purchasable upon the exercise of this Warrant.

 

4

 

 

Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 5

 

7.           Outstanding Shares of the Corporation.

 

As of the date first written above prior to the issuance of this Warrant,
assuming implementation of the Merger Reverse Split, and further assuming that
the Corporation will not enter into any other transactions in which it issues
capital stock of the Corporation or other securities convertible into capital
stock of the Corporation prior to the Merger Reverse Split, the number of shares
of Common Stock of the Corporation outstanding, on a fully-diluted basis, would
not exceed forty five million (45,000,000).

 

8.           Notice of Adjustments

 

Whenever the Exercise Price or the number of Warrant Shares purchasable
hereunder shall be adjusted pursuant to Section 6 hereof, the Corporation shall
deliver to the Holder a certificate signed by its chief financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
and the Exercise Price and the number of Warrant Shares purchasable hereunder
after giving effect to such adjustment.

 

9.           Securities Laws

 

(a)          Compliance with Securities Act of 1933. The Holder of this Warrant,
by acceptance hereof, agrees that this Warrant and the Warrant Shares
(collectively, the “Securities”) are being acquired for investment and that such
holder will not offer, sell, transfer or otherwise dispose of the Securities
except under circumstances which will not result in a violation of the
Securities Act of 1933, as amended (the “Securities Act”), and any applicable
state securities laws. Upon exercise of this Warrant, unless the Warrant Shares
being acquired are registered under the Securities Act and any applicable state
securities laws or an exemption from such registration is available, the Holder
hereof shall confirm in writing that the Warrant Shares so purchased are being
acquired for investment and not with a view toward distribution or resale in
violation of the Securities Act and shall confirm such other matters related
thereto as may be reasonably requested by the Corporation. The Holder
understands that this Warrant and the stock purchasable hereunder constitute
“restricted securities” under federal securities laws and acknowledges that Rule
144 of the Securities and Exchange Commission is not now, and may not in the
future be, available for resale of this Warrant and/or the stock purchasable
hereunder. The Warrant Shares (unless registered under the Securities Act and
any applicable state securities laws) shall be stamped or imprinted with a
legend in substantially the following form:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

 

Such legend shall be removed by the Corporation, upon the request of the Holder,
at such time as the restrictions on the transfer of the applicable security
shall have terminated.

 

5

 

 

Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 5

 

(b)          Transferability of the Warrant. Subject to compliance with Section
9(c) below and the foregoing sentence, which provisions are intended to ensure
compliance with applicable federal and state securities laws, the Securities may
be transferred by the Holder hereof, in whole or in part and from time to time.

 

(c)          Method of Transfer. With respect to any offer, sale, transfer or
other disposition of the Securities, the Holder hereof shall, prior to such
offer, sale, transfer or other disposition:

 

(i)          surrender this Warrant or certificate representing Warrant Shares
at the principal executive offices of the Corporation or provide evidence
reasonably satisfactory to the Corporation of the loss, theft or destruction of
this Warrant or certificate representing Warrant Shares and an indemnity
agreement reasonably satisfactory to the Corporation;

 

(ii)         pay any applicable transfer taxes or establish to the satisfaction
of the Corporation that such taxes have been paid;

 

(iii)        deliver a written assignment to the Corporation in substantially
the form attached hereto as Exhibit C or appropriate stock power duly completed
and executed prior to transfer, describing briefly the manner thereof; and

 

(iv)         deliver a written opinion of such Holder’s counsel, or other
evidence, if reasonably requested by the Corporation, to the effect that such
offer, sale, transfer or other disposition may be effected without registration
or qualification (under the Securities Act as then in effect and any applicable
state securities law then in effect) of the Securities.

 

As soon as reasonably practicable after receiving the items set forth above, the
Corporation shall notify the Holder that it may sell, transfer or otherwise
dispose of the Securities, all in accordance with the terms of the notice
delivered to the Corporation. If a determination has been made pursuant to this
Section 9(c) that the opinion of counsel for the Holder or other evidence is not
reasonably satisfactory to the Corporation, the Corporation shall so notify the
Holder promptly with details of such determination. Notwithstanding the
foregoing, the Securities may, as to such federal laws, be offered, sold or
otherwise disposed of in accordance with Rule 144 under the Securities Act if
the Corporation satisfied the provisions thereof and provided that the Holder
shall furnish such information as the Corporation may reasonably request to
provide a reasonable assurance that the provisions of Rule 144 have been
satisfied. Each certificate representing this Warrant or Warrant Shares thus
transferred (except a transfer pursuant to Rule 144 or an effective registration
statement) shall bear a legend as to the applicable restrictions on
transferability in order to ensure compliance with applicable federal and state
securities laws, unless in the aforesaid opinion of counsel to the Holder and to
the reasonable satisfaction of the Corporation, such legend is not required in
order to ensure compliance with such laws. Upon any partial transfer of this
Warrant, the Corporation will issue and deliver to such new Holder a new warrant
(in form and substance similar to this Warrant) with respect to the portion
transferred and will issue and deliver to the Holder a new warrant (in form and
substance similar to this Warrant) with respect to the portion not transferred
as soon as possible and in any event within twenty (20) Business Days after such
transfer (such new warrants issued upon any partial transfer are collectively
referred to as “Partial Transfer Warrants”). In addition, the Holder will comply
with all other applicable securities legislation in addition to the Securities
Act to which the Holder is subject in selling or transferring any Warrants or
Warrant Shares and the Corporation may refuse to register any sale or transfer
not in compliance with such other securities legislation.

 

10.         Payment of Taxes

 

The Corporation shall pay any and all issue and other taxes payable in respect
of any issue or delivery of Common Stock upon the exercise of this Warrant that
may be imposed under the laws of the United States or by any state, political
subdivision or taxing authority of the United States; provided, however, that
the Corporation shall not be required to pay any tax or taxes that may be
payable in respect of any transfer involved in the issue or delivery of any
Warrant or certificates for Common Stock in a name other than that of the
registered Holder of such Warrant, and no such issue or delivery shall be made
unless and until the person or entity requesting the issuance thereof shall have
paid to the Corporation the amount of such tax or shall have established to the
satisfaction of the Corporation that such tax has been paid.

 

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Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 5

 

11.         Notices and Payments

 

Any notice required or permitted hereunder shall be given in writing and shall
be deemed effectively given upon, (a) personal delivery or telecopy, (b) one (1)
Business Day after deposit with a nationally recognized overnight delivery
service such as Federal Express, with postage and fees prepaid, addressed to
each of the other parties thereunto entitled at the following addresses, or at
such other addresses as a party may designate by written notice to each of the
other parties hereto or (c) four (4) Business Days following the date of deposit
in the United States mails, first-class postage prepaid, addressed to each of
the other parties thereunto entitled at the following addresses, or at such
other addresses as a party may designate by written notice to each of the other
parties hereto.

 

CORPORATION: Eos Petro, Inc.   Attention: Nikolas Konstant   1999 Avenue of the
Stars, Suite 2520   Los Angeles, CA 90067   Tel: (310) 552-1555   Fax: (424)
288-5650     with a copy to: Baker & Hostetler LLP   Attention:  Jeffrey P. Berg
  12100 Wilshire Blvd. 15th Floor   Los Angeles, CA 90049   Tel: (310) 442-8850
  Fax: (310) 820-8859     HOLDER: GEM Capital SAS   c/o CM Group   Commerce
House   1 Bowring Road   Ramsey   Isle of man   IM8 2LQ     with a copy to:
Kramer Levin Naftalis & Frankel LLP   1177 Avenue of the Americas   New York,
New York 10036   Telephone Number:  (212) 715-9100   Fax:  (212) 715-8000  
Attention:  Christopher S. Auguste, Esq.

 

12.         Governing Law

 

This Warrant shall be deemed to be a contract made under the laws of the State
of Nevada and for all purposes shall be governed by and construed in accordance
with the laws of the State of Nevada applicable to contracts to be made and
performed entirely within the State of Nevada.

 

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Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 5

 

13.         Modification and Waiver; Effect of Amendment or Waiver

 

This Warrant and any provision hereof may be modified, amended, waived,
discharged or terminated only by an instrument in writing, designated as an
amendment to this Warrant and executed by a duly authorized officer of the
Corporation and the Holder of this Warrant. Any waiver or amendment effected in
accordance with this Section 13 shall be binding upon the Holder, each future
holder of this Warrant or of any shares purchased under this Warrant (including
securities into which such shares have been converted) and the Corporation.

 

14.         Binding Effect on Successors

 

This Warrant shall be binding upon any corporation succeeding the Corporation in
case of the consolidation, merger or amalgamation of the Corporation with or
into any other corporation, and all of the obligations of the Corporation
relating to the Common Stock issuable upon the exercise or conversion of this
Warrant shall survive the exercise, conversion and termination of this Warrant
and all of the covenants and agreements of the Corporation shall inure to the
benefit of the successors and assigns of the Holder hereof. The Corporation
will, at the time of the exercise or conversion of this Warrant, in whole or in
part, upon request of the Holder in respect of any rights to which the Holder
shall continue to be entitled after such exercise or conversion in accordance
with this Warrant; provided, however, that the failure of the Holder to make any
such request shall not affect the continuing obligations of the Corporation to
the Holder in respect of such rights.

 

15.         No Impairment

 

The Corporation will not, by any voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed under
this Warrant by the Corporation, but will at all times in good faith assist in
carrying out all the provisions of this Warrant and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Holder of this Warrant against impairment.

 

16.         Descriptive Headings

 

The descriptive headings of the several paragraphs of this Warrant are inserted
for convenience only and do not constitute a part of this Warrant. The language
in this Warrant shall be construed as to its fair meaning without regard to
which party drafted this Warrant.

 

17.         Entire Agreement

 

This Warrant constitutes the full and entire understanding and agreement between
the parties with regard to the subject matter hereof and supersedes all prior
and contemporaneous agreements, representations, and undertakings of the
parties, whether oral or written, with respect to such subject matter.

 

18.         Severability

 

In the event that any one or more of the provisions contained in this Warrant
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such provision(s) shall be ineffective only to the extent of such
invalidity, illegality or unenforceability, without invalidating the remainder
of such provision or the remaining provisions of this Warrant and such
invalidity, illegality or unenforceability shall not affect any other provision
of this Warrant, which shall remain in full force and effect.

 

19.         Counterparts

 

This Warrant may be executed in two or more counterparts, each of which shall be
an original, and all of which together shall constitute one instrument.

 

8

 

 

Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 5

 

IN WITNESS WHEREOF, the Corporation has caused this Warrant to be duly executed
and delivered by its duly authorized officer.

 

EOS PETRO, INC.

by its authorized signatory:

 

    Nikolas Konstant   Chairman of the Board and CFO  

  

9

 

 

EXHIBIT A

 

Process for Acquiring Block for Exploration

 

[tex10-8dchart.jpg]

 

 

 

 

Eos Petro, Inc. Common Stock Purchase Warrant Warrant Certificate No. 5

 

EXHIBIT B

 

NOTICE OF EXERCISE

 

TO:EOS PETRO, INC. (the “Corporation”)

 

1.    The undersigned hereby:

¨elects to purchase __________ shares of Common Stock of the Corporation
pursuant to the terms of the attached Warrant, and tenders herewith payment of
the purchase price of such shares in full. The undersigned intends the payment
of the purchase price shall be made as (check one):

 

Cash Exercise_______

 

If the undersigned has elected a Cash Exercise, the undersigned shall pay the
sum of $________ by certified or official bank check (or via wire transfer) to
the Corporation in accordance with the terms of the Warrant.

 

2.    Please issue a certificate or certificates representing said shares in the
name of the undersigned or in such other name or names as are specified below:

_________________________________________

(Name)

_________________________________________

(Address)

_________________________________________

(City, State)

 

3.    The undersigned represents that the aforesaid shares being acquired for
the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares, all except as in
compliance with applicable securities laws, and that the undersigned is an
“accredited investor” within the meaning of Rule 501 of Regulation D promulgated
under the Securities Act of 1933, as amended.

_______________   (Date)         (Signature)

 

  NOTICE: Signature must be guaranteed by a commercial bank or trust company or
a member firm of a major stock exchange if shares of capital stock are to be
issued, or securities are to be delivered, other than to or in the name of the
registered holder of this Warrant. In addition, signature must correspond in all
respects with the name as written upon the face of the Warrant in every
particular without alteration or any change whatever.

  

2

 

 

EXHIBIT C

 

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned holder of the attached Warrant hereby sells,
assigns and transfers unto _______________________ whose address is
_______________________________________ and whose taxpayer identification number
is _________________ the undersigned’s right, title and interest in and to the
Warrant issued by Eos Petro, Inc., a Nevada corporation (the “Corporation”) to
purchase _______ shares of the Corporation’s Common Stock, and does hereby
irrevocably constitute and appoint __________________________ attorney to
transfer said Warrant on the books of the Corporation with full power of
substitution in the premises.

 

In connection with such sale, assignment, transfer or other disposition of this
Warrant, the undersigned hereby confirms that:

 

¨such sale, transfer or other disposition may be effected without registration
or qualification (under the Securities Act as then in effect and any applicable
state securities law then in effect) of this Warrant or the shares of capital
stock of the Corporation issuable thereunder and has attached hereto a written
opinion of the undersigned’s counsel to that effect; or

 

¨such sale, transfer or other disposition has been registered under the
Securities Act of 1933, as amended, and registered and/or qualified under all
applicable state securities laws.

 

_______________   (Date)         (Signature)

 

  NOTICE:  Signature must correspond in all respects with the name as written
upon the face of the Warrant in every particular without alteration or any
change whatever.

 

 

 

 

EXHIBIT E TO STOCK PURCHASE AGREEMENT

 

FORM OF AMENDED AND RESTATED

WARRANT CERTIFICATE NO. 6

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES TO BE ISSUED
UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“ACT”), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PROVIDED BY REGULATION D PROMULGATED UNDER THE ACT. SUCH
SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT. THIS WARRANT MAY ONLY BE
EXERCISED BY A PERSON WHO QUALIFIES AS AN “ACCREDITED INVESTOR” PURSUANT TO RULE
501 OF REGULATION D OF THE ACT.

 

EOS PETRO, INC.,

A NEVADA CORPORATION

1999 Avenue of the Stars, Suite 2520

Los Angeles, California 90067

 

COMMON STOCK PURCHASE WARRANT

 

November 12, 2012

 

1.            Issuance

 

THIS IS TO CERTIFY THAT, for value received, 590 Partners Capital, LLC (the
“Holder”), shall have the right to purchase from EOS PETRO, INC., a Nevada
corporation (the “Corporation”), two million, three hundred and thirty-five
thousand (2,335,000) fully paid and non-assessable shares of the Corporation’s
common stock, $.0001 par value per share (the “Common Stock”), subject to
further adjustment as set forth in Section 6 hereof, at any time until 5:00
P.M., Pacific time, on November 12, 2015 (the “Expiration Date”) at an exercise
price of $5.35 per share (the "Exercise Price").

 

2.           Exercise of Warrants

 

(a)          Condition Precedent to Exercise. This Warrant does not vest and
shall not be exercisable by Holder, under any circumstances whatsoever, until
the date that either: (i) a petroleum agreement, between either the Corporation,
a subsidiary of the Corporation or an affiliate of the Corporation and the
Ghanaian Ministry of Energy, receives Parliamentary ratification and becomes
effective, pursuant to the Process for Acquiring a Block for Exploration as set
forth in Exhibit A attached hereto; or (ii) the Corporation or a subsidiary of
the Corporation closes a deal to acquire assets having a cost greater than
$40,000,000.00.

 

(b)          Registration Rights and Automatic Lengthening of Term. If a
registration statement has not been filed with the Securities and Exchange
Commission and become effective with respect to the shares of Common Stock
underlying this Warrant (such shares, the “Warrant Shares”) within 270 days of
the date first referenced above, then the Expiration Date shall be extended by
one day for every day that the Warrant Shares remain unregistered after the
270th day.

 

 

 

 

Eos Petro, Inc.

Common Stock Purchase Warrant

Warrant Certificate No. 6

 

 

 (c)          Time of Exercise. The Holder shall provide the Corporation with
notice that it may exercise this Warrant at least 61 days prior to the date of
such exercise. Upon the expiration of this 61 day period, the Holder may
exercise this Warrant pursuant to this Section 2.

 

(d)          Corporation’s Option to Shorten Term. Notwithstanding Section 2(b),
the Corporation may elect to shorten the term of this Warrant by moving the
Expiration Date to the date six months from the day that all of the following
conditions have been satisfied:

 

(i)          either of the two conditions precedent to exercise set forth in
Section 2(a) is satisfied;

 

(ii)         the Corporation has publicly announced the Section 2(d)(i)
ratification or closing of the acquisition, as the case may be;

 

(iii)        the Warrant Shares are subject to an effective registration
statement under the Securities Act of 1933, as amended (the “Securities Act”);
and

 

(iv)        the Corporation provides notice to Holder of its election to shorten
the Warrant’s term within twenty (20) Business Days of the last of the
conditions in (i), (ii) and (iii) to occur.

 

(e)          Holder’s Option to Lengthen Term. If the Expiration Date has been
moved pursuant to the provisions of Section 2(d), then Holder may elect to
extend the term of the Warrant by moving the Expiration Date forward one
calendar day for every Trading Day that the thirty day average trailing trading
volume of the Corporation’s common stock is greater than $750 million
($750,000,000) (each qualifying Trading Day a “Lengthening Day”), provided,
however, that the Expiration Date shall not be moved past the date that the
Warrant was originally set to expire pursuant to Section 1, as such date may
have been extended pursuant to Section 2(b). Holder must provide notice to the
Corporation of each election to lengthen the Warrant’s term within 20 Business
Days of the expiration of the month in which the Lengthening Day(s) occurred.

 

(f)          Method of Exercise. So long as the condition in Section 2(a) has
been satisfied, the Holder hereof may exercise this Warrant, in whole or in
partial allotments, at the Exercise Price per share payable hereunder, payable
at such Holder's election by cash, certified or official bank check, or wire
transfer to an account designated by the Corporation. Upon surrender of this
Warrant with the annexed Notice of Exercise Form attached hereto as Exhibit B
duly completed and executed, together with payment of the Exercise Price for the
Warrant Shares then being purchased (collectively referred to as the “Exercise
Materials”), the Holder shall be entitled to receive a certificate or
certificates for the Warrant Shares so purchased, provided the 61 day period
referenced in Section 2(c) of this Warrant has expired. In lieu of the issuance
of any fractional share, the Corporation shall round up or down the fractional
amount to the nearest whole number.

 

(g)          Issuance of Stock Certificates. In the event of any exercise of
this Warrant in accordance with and subject to the terms and conditions hereof,
certificates for the shares of Warrant Shares so purchased shall be dated the
date of such exercise and delivered to the Holder hereof within a reasonable
time, not exceeding five (5) Business Days after such exercise (the “Delivery
Date”) or, at the request of the Holder (provided that a registration statement
under the Securities Act (as defined below) providing for the resale of the
Warrant Shares being purchased is then in effect or that such Warrant Shares are
otherwise exempt from registration), issued and delivered to the Depository
Trust Company (“DTC”) account on the Holder’s behalf via the Deposit Withdrawal
Agent Commission System (“DWAC”) on or before the Delivery Date (if the
Corporation is eligible for DWAC services at such time), and the Holder hereof
shall be deemed for all purposes to be the holder of the shares of Warrant
Shares so purchased as of the date of such exercise, and, unless this Warrant
has been fully exercised or expired, a new warrant having the same terms as this
Warrant and representing the remaining portion of such shares, if any, with
respect to which this Warrant shall not then have been exercised shall also be
issued to the Holder hereof as soon as possible and in any event within twenty
(20) Business Days after such effective exercise

 

2

 

 

Eos Petro, Inc.

Common Stock Purchase Warrant

Warrant Certificate No. 6

 

 

(h)          Business Days. For the purposes of this Warrant, the term “Business
Day” means any day other than Saturday, Sunday or other day on which commercial
banks in Los Angeles, California are authorized or required by law to remain
closed.

 

3.           Reservation of Shares

 

The Corporation hereby agrees that at all times during the term of this Warrant
there shall be reserved for issuance upon exercise of this Warrant such number
of shares of Common Stock as shall be required for issuance upon exercise of
this Warrant.

 

4.           Mutilation or Loss of Warrant

 

Upon receipt of evidence reasonably satisfactory to the Corporation of the loss,
theft, destruction or mutilation of this Warrant or any stock certificate and,
in the case of any such loss, theft or destruction, upon receipt of an indemnity
agreement reasonably satisfactory to the Corporation, or in the case of any such
mutilation upon surrender and cancellation of such mutilated Warrant or stock
certificate, the Corporation will issue and deliver a new warrant (containing
the same terms as this Warrant) or stock certificate, in lieu of the lost,
stolen, destroyed or mutilated Warrant or stock certificate, and any such lost,
stolen, destroyed or mutilated Warrant or stock certificate shall thereupon
become void.

 

5.           Rights of the Holder

 

Prior to the exercise of this Warrant, the Holder of this Warrant, as such,
shall not be entitled to vote the Warrant Shares or receive dividends on or be
deemed the holder of such shares, nor shall anything contained herein be
construed to confer upon the Holder of this Warrant, as such, any of the rights
of a shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to receive notice of meetings, or to receive dividends or subscription rights
or otherwise until this Warrant shall have been exercised and the Common Stock
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.

 

6.           Protection Against Dilution.

 

The number and kind of securities purchasable upon the exercise of this Warrant
and the Warrant Exercise Price shall be subject to adjustment to the nearest
whole share (one-half and greater being rounded upward) and nearest cent
(one-half cent and greater being rounded upward) from time to time upon the
occurrence of certain events, as follows.

 

(a)          Reclassification or Merger. In case of any reclassification, change
or conversion of securities of the class issuable upon exercise of this Warrant
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination), or in
case of any merger of the Corporation with or into another corporation (other
than a merger with another corporation in which the Corporation is the acquiring
and the surviving corporation and which does not result in any reclassification
or change of outstanding securities issuable upon exercise of this Warrant), or
in case of any sale of all or substantially all of the assets of the
Corporation, the Corporation, or such successor or purchasing corporation, as
the case may be, shall duly execute and deliver to the holder of this Warrant a
new warrant so that the holder of this Warrant shall have the right to receive,
at a total purchase price not to exceed that payable upon the exercise of the
unexercised portion of this Warrant, and in lieu of the Common Stock theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of stock,
other securities, money and property receivable upon such reclassification,
change or merger by a holder of the number of shares of Common Stock then
purchasable under this Warrant. Such new Warrant shall provide for adjustments
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 6. The provisions of this Section 6(b) shall
similarly apply to successive reclassifications, changes, mergers and transfers.

 

3

 

 

Eos Petro, Inc.

Common Stock Purchase Warrant

Warrant Certificate No. 6

 

 

(b)          Subdivision or Combination of Shares.

 

(i)          On October 12, 2012, pursuant to an Agreement and Plan of Merger
dated July 16, 2012 (the “Merger Agreement”), the Corporation completed a merger
transaction (the “Merger”). In the Merger Agreement, the Corporation agreed to
implement a reverse stock split at an exchange ratio of 1-for-800 of the
Corporation’s outstanding shares of Common Stock as soon as reasonably
practicable following the completion of the Merger (the “Merger Reverse Split”).
When this Merger Reverse Split is implemented, it shall have no effect on this
Warrant. Neither the Exercise Price nor the number of Warrant Shares issuable
upon exercise of this Warrant shall be increased or decreased on account of the
Merger Reverse Split.

 

(ii)         Other than the Merger Reverse Split, while this Warrant remains
outstanding and unexpired, for all other subdivisions (by stock split) or
combinations (by reverse stock split) of the Corporation’s outstanding shares of
capital stock of the class into which this Warrant is exercisable, the Exercise
Price shall be proportionately decreased in the case of a subdivision or
increased in the case of a combination, effective at the close of business on
the date the subdivision or combination becomes effective and the number of
shares of Common Stock issuable upon exercise of this Warrant shall be
proportionately increased in the case of a subdivision or decreased in the case
of a combination, and in each case the nearest whole share, effective at the
close of business on the date the subdivision or combination becomes effective.
The provisions of this subparagraph (b)(ii) shall similarly apply to successive
subdivisions or combinations of outstanding shares of capital stock into which
this Warrant is exercisable.

 

(c)          Common Stock Dividends. If the Corporation at any time while this
Warrant is outstanding and unexpired shall pay a dividend with respect to Common
Stock payable in Common Stock, then: (i) the Exercise Price shall be adjusted,
from and after the date of determination of stockholders entitled to receive
such dividend or distribution (the “Record Date”), to that price determined by
multiplying the Exercise Price in effect immediately prior to such date of
determination by a fraction (a) the numerator of which shall be the total number
of shares of Common Stock outstanding immediately prior to such dividend or
distribution, and (b) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such dividend or
distribution and (ii) the number of shares of Common Stock issuable upon
exercise of this Warrant shall be proportionately adjusted, to the nearest whole
share, from and after the Record Date by multiplying the number of shares of
Common Stock purchasable hereunder immediately prior to such Record Date by a
fraction (a) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately after such dividend or distribution, and
(b) the denominator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution. The provisions
of this subparagraph (c) shall similarly apply to successive Common Stock
dividends by the Corporation.

 

(d)          Other Adjustments Not Expressly Provided. If, at any time or from
time to time while this Warrant is outstanding any event occurs of the type
contemplated by the provisions of this Section 6 but not expressly provided for
by such provisions (including the granting of stock appreciation rights, phantom
stock rights or other rights with equity features), then the Corporation’s Board
of Directors may make an appropriate adjustment to the Exercise Price or the
number of shares of Common Stock purchasable upon the exercise of this Warrant
as to protect the rights of the Holder; provided that no such adjustment will
increase the Exercise Price as otherwise determined pursuant to this Section 6.
For the avoidance of doubt, while this Warrant remains outstanding and
unexpired, any new issuances of the Corporation’s outstanding shares of capital
stock of the class into which this Warrant is exercisable at a price lower than
the Exercise Price shall not result in an increase in the number of shares of
Common Stock purchasable upon the exercise of this Warrant.

 

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Eos Petro, Inc.

Common Stock Purchase Warrant

Warrant Certificate No. 6

 

 

7.           Outstanding Shares of the Corporation.

 

As of the date first written above prior to the issuance of this Warrant,
assuming implementation of the Merger Reverse Split, and further assuming that
the Corporation will not enter into any other transactions in which it issues
capital stock of the Corporation or other securities convertible into capital
stock of the Corporation prior to the Merger Reverse Split, the number of shares
of Common Stock of the Corporation outstanding, on a fully-diluted basis, would
not exceed forty five million (45,000,000).

 

8.           Notice of Adjustments

 

Whenever the Exercise Price or the number of Warrant Shares purchasable
hereunder shall be adjusted pursuant to Section 6 hereof, the Corporation shall
deliver to the Holder a certificate signed by its chief financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
and the Exercise Price and the number of Warrant Shares purchasable hereunder
after giving effect to such adjustment.

 

9.           Securities Laws

 

(a)          Compliance with Securities Act of 1933. The Holder of this Warrant,
by acceptance hereof, agrees that this Warrant and the Warrant Shares
(collectively, the “Securities”) are being acquired for investment and that such
holder will not offer, sell, transfer or otherwise dispose of the Securities
except under circumstances which will not result in a violation of the
Securities Act of 1933, as amended (the “Securities Act”), and any applicable
state securities laws. Upon exercise of this Warrant, unless the Warrant Shares
being acquired are registered under the Securities Act and any applicable state
securities laws or an exemption from such registration is available, the Holder
hereof shall confirm in writing that the Warrant Shares so purchased are being
acquired for investment and not with a view toward distribution or resale in
violation of the Securities Act and shall confirm such other matters related
thereto as may be reasonably requested by the Corporation. The Holder
understands that this Warrant and the stock purchasable hereunder constitute
“restricted securities” under federal securities laws and acknowledges that Rule
144 of the Securities and Exchange Commission is not now, and may not in the
future be, available for resale of this Warrant and/or the stock purchasable
hereunder. The Warrant Shares (unless registered under the Securities Act and
any applicable state securities laws) shall be stamped or imprinted with a
legend in substantially the following form:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

 

Such legend shall be removed by the Corporation, upon the request of the Holder,
at such time as the restrictions on the transfer of the applicable security
shall have terminated.

 

(b)          Transferability of the Warrant. Subject to compliance with Section
9(c) below and the foregoing sentence, which provisions are intended to ensure
compliance with applicable federal and state securities laws, the Securities may
be transferred by the Holder hereof, in whole or in part and from time to time.

 

5

 

 

Eos Petro, Inc.

Common Stock Purchase Warrant

Warrant Certificate No. 6

 

 

(c)          Method of Transfer. With respect to any offer, sale, transfer or
other disposition of the Securities, the Holder hereof shall, prior to such
offer, sale, transfer or other disposition:

 

(i)          surrender this Warrant or certificate representing Warrant Shares
at the principal executive offices of the Corporation or provide evidence
reasonably satisfactory to the Corporation of the loss, theft or destruction of
this Warrant or certificate representing Warrant Shares and an indemnity
agreement reasonably satisfactory to the Corporation;

 

(ii)         pay any applicable transfer taxes or establish to the satisfaction
of the Corporation that such taxes have been paid;

 

(iii)        deliver a written assignment to the Corporation in substantially
the form attached hereto as Exhibit C or appropriate stock power duly completed
and executed prior to transfer, describing briefly the manner thereof; and

 

(iv)        deliver a written opinion of such Holder’s counsel, or other
evidence, if reasonably requested by the Corporation, to the effect that such
offer, sale, transfer or other disposition may be effected without registration
or qualification (under the Securities Act as then in effect and any applicable
state securities law then in effect) of the Securities.

 

As soon as reasonably practicable after receiving the items set forth above, the
Corporation shall notify the Holder that it may sell, transfer or otherwise
dispose of the Securities, all in accordance with the terms of the notice
delivered to the Corporation. If a determination has been made pursuant to this
Section 9(c) that the opinion of counsel for the Holder or other evidence is not
reasonably satisfactory to the Corporation, the Corporation shall so notify the
Holder promptly with details of such determination. Notwithstanding the
foregoing, the Securities may, as to such federal laws, be offered, sold or
otherwise disposed of in accordance with Rule 144 under the Securities Act if
the Corporation satisfied the provisions thereof and provided that the Holder
shall furnish such information as the Corporation may reasonably request to
provide a reasonable assurance that the provisions of Rule 144 have been
satisfied. Each certificate representing this Warrant or Warrant Shares thus
transferred (except a transfer pursuant to Rule 144 or an effective registration
statement) shall bear a legend as to the applicable restrictions on
transferability in order to ensure compliance with applicable federal and state
securities laws, unless in the aforesaid opinion of counsel to the Holder and to
the reasonable satisfaction of the Corporation, such legend is not required in
order to ensure compliance with such laws. Upon any partial transfer of this
Warrant, the Corporation will issue and deliver to such new Holder a new warrant
(in form and substance similar to this Warrant) with respect to the portion
transferred and will issue and deliver to the Holder a new warrant (in form and
substance similar to this Warrant) with respect to the portion not transferred
as soon as possible and in any event within twenty (20) Business Days after such
transfer (such new warrants issued upon any partial transfer are collectively
referred to as “Partial Transfer Warrants”). In addition, the Holder will comply
with all other applicable securities legislation in addition to the Securities
Act to which the Holder is subject in selling or transferring any Warrants or
Warrant Shares and the Corporation may refuse to register any sale or transfer
not in compliance with such other securities legislation.

 

10.         Payment of Taxes

 

The Corporation shall pay any and all issue and other taxes payable in respect
of any issue or delivery of Common Stock upon the exercise of this Warrant that
may be imposed under the laws of the United States or by any state, political
subdivision or taxing authority of the United States; provided, however, that
the Corporation shall not be required to pay any tax or taxes that may be
payable in respect of any transfer involved in the issue or delivery of any
Warrant or certificates for Common Stock in a name other than that of the
registered Holder of such Warrant, and no such issue or delivery shall be made
unless and until the person or entity requesting the issuance thereof shall have
paid to the Corporation the amount of such tax or shall have established to the
satisfaction of the Corporation that such tax has been paid.

 

6

 

 

Eos Petro, Inc.

Common Stock Purchase Warrant

Warrant Certificate No. 6

 

 

11.          Notices and Payments

 

Any notice required or permitted hereunder shall be given in writing and shall
be deemed effectively given upon, (a) personal delivery or telecopy, (b) one (1)
Business Day after deposit with a nationally recognized overnight delivery
service such as Federal Express, with postage and fees prepaid, addressed to
each of the other parties thereunto entitled at the following addresses, or at
such other addresses as a party may designate by written notice to each of the
other parties hereto or (c) four (4) Business Days following the date of deposit
in the United States mails, first-class postage prepaid, addressed to each of
the other parties thereunto entitled at the following addresses, or at such
other addresses as a party may designate by written notice to each of the other
parties hereto.

 

CORPORATION:   Eos Petro, Inc.     Attention: Nikolas Konstant     1999 Avenue
of the Stars, Suite 2520     Los Angeles, CA 90067     Tel: (310) 552-1555    
Fax: (424) 288-5650       with a copy to:   Baker & Hostetler LLP    
Attention:  Jeffrey P. Berg     12100 Wilshire Blvd. 15th Floor     Los Angeles,
CA 90049     Tel: (310) 442-8850     Fax: (310) 820-8859       HOLDER:   590
Partners Capital, LLC     c/o GEM     22287 Mulholland Drive     Suite 265    
Calabas, CA 91302

 

with a copy to:   Kramer Levin Naftalis & Frankel LLP     1177 Avenue of the
Americas     New York, New York 10036     Telephone Number:  (212) 715-9100    
Fax:  (212) 715-8000     Attention:  Christopher S. Auguste, Esq.

 

12.         Governing Law

 

This Warrant shall be deemed to be a contract made under the laws of the State
of Nevada and for all purposes shall be governed by and construed in accordance
with the laws of the State of Nevada applicable to contracts to be made and
performed entirely within the State of Nevada.

 

13.         Modification and Waiver; Effect of Amendment or Waiver

 

This Warrant and any provision hereof may be modified, amended, waived,
discharged or terminated only by an instrument in writing, designated as an
amendment to this Warrant and executed by a duly authorized officer of the
Corporation and the Holder of this Warrant. Any waiver or amendment effected in
accordance with this Section 13 shall be binding upon the Holder, each future
holder of this Warrant or of any shares purchased under this Warrant (including
securities into which such shares have been converted) and the Corporation.

 

7

 

 

Eos Petro, Inc.

Common Stock Purchase Warrant

Warrant Certificate No. 6

 

 

14.         Binding Effect on Successors

 

This Warrant shall be binding upon any corporation succeeding the Corporation in
case of the consolidation, merger or amalgamation of the Corporation with or
into any other corporation, and all of the obligations of the Corporation
relating to the Common Stock issuable upon the exercise or conversion of this
Warrant shall survive the exercise, conversion and termination of this Warrant
and all of the covenants and agreements of the Corporation shall inure to the
benefit of the successors and assigns of the Holder hereof. The Corporation
will, at the time of the exercise or conversion of this Warrant, in whole or in
part, upon request of the Holder in respect of any rights to which the Holder
shall continue to be entitled after such exercise or conversion in accordance
with this Warrant; provided, however, that the failure of the Holder to make any
such request shall not affect the continuing obligations of the Corporation to
the Holder in respect of such rights.

 

15.         No Impairment

 

The Corporation will not, by any voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed under
this Warrant by the Corporation, but will at all times in good faith assist in
carrying out all the provisions of this Warrant and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Holder of this Warrant against impairment.

 

16.         Descriptive Headings

 

The descriptive headings of the several paragraphs of this Warrant are inserted
for convenience only and do not constitute a part of this Warrant. The language
in this Warrant shall be construed as to its fair meaning without regard to
which party drafted this Warrant.

 

17.         Entire Agreement

 

This Warrant constitutes the full and entire understanding and agreement between
the parties with regard to the subject matter hereof and supersedes all prior
and contemporaneous agreements, representations, and undertakings of the
parties, whether oral or written, with respect to such subject matter.

 

18.         Severability

 

In the event that any one or more of the provisions contained in this Warrant
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such provision(s) shall be ineffective only to the extent of such
invalidity, illegality or unenforceability, without invalidating the remainder
of such provision or the remaining provisions of this Warrant and such
invalidity, illegality or unenforceability shall not affect any other provision
of this Warrant, which shall remain in full force and effect.

 

19.         Counterparts

 

This Warrant may be executed in two or more counterparts, each of which shall be
an original, and all of which together shall constitute one instrument.

 

8

 

 

Eos Petro, Inc.

Common Stock Purchase Warrant

Warrant Certificate No. 6

 

 

IN WITNESS WHEREOF, the Corporation has caused this Warrant to be duly executed
and delivered by its duly authorized officer.

 

EOS PETRO, INC.

by its authorized signatory:

 

      Nikolas Konstant     Chairman of the Board and CFO    

 

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EXHIBIT A

 

Process for Acquiring Block for Exploration

 

[tex10-8echart.jpg]

 

 

 

 

Eos Petro, Inc.

Common Stock Purchase Warrant

Warrant Certificate No. 6

 

 

EXHIBIT B

 

NOTICE OF EXERCISE

 

TO: EOS PETRO, INC. (the “Corporation”)

 

1.        The undersigned hereby:

¨elects to purchase __________ shares of Common Stock of the Corporation
pursuant to the terms of the attached Warrant, and tenders herewith payment of
the purchase price of such shares in full. The undersigned intends the payment
of the purchase price shall be made as (check one):

 

Cash Exercise_______

 

If the undersigned has elected a Cash Exercise, the undersigned shall pay the
sum of $________ by certified or official bank check (or via wire transfer) to
the Corporation in accordance with the terms of the Warrant.

 

2.        Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name or names as are specified
below:

 

        (Name)           (Address)           (City, State)  

 

3.        The undersigned represents that the aforesaid shares being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares, all except as in
compliance with applicable securities laws, and that the undersigned is an
“accredited investor” within the meaning of Rule 501 of Regulation D promulgated
under the Securities Act of 1933, as amended.

 

      (Date)               (Signature)           NOTICE: Signature must be
guaranteed by a commercial bank or trust company or a member firm of a major
stock exchange if shares of capital stock are to be issued, or securities are to
be delivered, other than to or in the name of the registered holder of this
Warrant. In addition, signature must correspond in all respects with the name as
written upon the face of the Warrant in every particular without alteration or
any change whatever.

 

2

 

 

EXHIBIT C

 

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned holder of the attached Warrant hereby sells,
assigns and transfers unto _______________________ whose address is
_______________________________________ and whose taxpayer identification number
is _________________ the undersigned’s right, title and interest in and to the
Warrant issued by Eos Petro, Inc., a Nevada corporation (the “Corporation”) to
purchase _______ shares of the Corporation’s Common Stock, and does hereby
irrevocably constitute and appoint __________________________ attorney to
transfer said Warrant on the books of the Corporation with full power of
substitution in the premises.

 

In connection with such sale, assignment, transfer or other disposition of this
Warrant, the undersigned hereby confirms that:

 

¨such sale, transfer or other disposition may be effected without registration
or qualification (under the Securities Act as then in effect and any applicable
state securities law then in effect) of this Warrant or the shares of capital
stock of the Corporation issuable thereunder and has attached hereto a written
opinion of the undersigned’s counsel to that effect; or

 

¨such sale, transfer or other disposition has been registered under the
Securities Act of 1933, as amended, and registered and/or qualified under all
applicable state securities laws.

 

      (Date)               (Signature)           NOTICE:  Signature must
correspond in all respects with the name as written upon the face of the Warrant
in every particular without alteration or any change whatever.

 

 

 

 

 

EXHIBIT F TO STOCK PURCHASE AGREEMENT

FORM OF WARRANT CERTIFICATE NO. 7

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES TO BE ISSUED
UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“ACT”), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PROVIDED BY REGULATION D PROMULGATED UNDER THE ACT. SUCH
SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT. THIS WARRANT MAY ONLY BE
EXERCISED BY A PERSON WHO QUALIFIES AS AN “ACCREDITED INVESTOR” PURSUANT TO RULE
501 OF REGULATION D OF THE ACT.

 

EOS PETRO, INC.,

A NEVADA CORPORATION

1999 Avenue of the Stars, Suite 2520

Los Angeles, California 90067

 

COMMON STOCK PURCHASE WARRANT

 

July 11, 2013

 

1.             Issuance

 

THIS IS TO CERTIFY THAT, for value received, 590 Partners Capital, LLC (the
“Holder”), shall have the right to purchase from EOS PETRO, INC., a Nevada
corporation (the “Corporation”), seven hundred and fifty thousand (750,000)
fully paid and non-assessable shares of the Corporation’s common stock, $.0001
par value per share (the “Common Stock”), subject to further adjustment as set
forth in Section 6 hereof, at any time until 5:00 P.M., Pacific time, on July
11, 2018 (the “Expiration Date”) at a per share exercise price to be determined
as follows (the "Exercise Price"): the Exercise Price shall be equal to the
average fair market value of the Corporation’s publicly traded shares of common
stock during the 30-calendar day period immediately preceding July 11, 2014, but
in no event to exceed $8.00.

 

2.             Exercise of Warrants

 

(a)          Condition Precedent to Exercise. This Warrant does not vest and
shall not be exercisable by Holder, under any circumstances whatsoever, until
the one year anniversary of the date first written above. Thereafter, this
Warrant is exercisable pursuant to the provisions set forth below in this
Section 2.

 

(b)          Registration Rights and Lengthening of Term. If a registration
statement has not been filed with the Securities and Exchange Commission and
become effective with respect to the Warrant Shares, as such term is defined in
Section 3 of this Warrant, within 24 full months of the date first referenced
above, then the Expiration Date shall be extended by one day for every day that
the Warrant Shares remain unregistered after the last day of such 24th month.

 

(c)          Time of Exercise. The Holder shall provide the Corporation with
notice that it may exercise this Warrant at least 61 days prior to the date of
such exercise. Upon the expiration of this 61 day period, the Holder may
exercise this Warrant pursuant to this Section 2.

 

 

 

 

Eos Petro, Inc.   Common Stock Purchase Warrant    

 

(d)          Methods of Exercise. So long as the condition in Section 2(a) has
been satisfied, the Holder hereof may exercise this Warrant, in whole or in
partial allotments, at the Exercise Price per share payable hereunder, payable
at such Holder's election by cash, certified or official bank check, or wire
transfer to an account designated by the Corporation. Upon surrender of this
Warrant with the annexed Notice of Exercise Form attached hereto as Exhibit A
duly completed and executed, together with payment of the Exercise Price for the
Warrant Shares then being purchased (collectively referred to as the “Exercise
Materials”), the Holder shall be entitled to receive a certificate or
certificates for the Warrant Shares so purchased, provided the 61 day period
referenced in Section 2(c) of this Warrant has expired. In lieu of the issuance
of any fractional share, the Corporation shall round up or down the fractional
amount to the nearest whole number.

 

(e)          Issuance of Stock Certificates. In the event of any exercise of
this Warrant in accordance with and subject to the terms and conditions hereof,
certificates for the shares of Warrant Shares so purchased shall be dated the
date of such exercise and delivered to the Holder hereof within a reasonable
time, not exceeding five (5) Business Days after such exercise (the “Delivery
Date”) or, at the request of the Holder (provided that a registration statement
under the Securities Act (as defined below) providing for the resale of the
Warrant Shares being purchased is then in effect or that such Warrant Shares are
otherwise exempt from registration), issued and delivered to the Depository
Trust Company (“DTC”) account on the Holder’s behalf via the Deposit Withdrawal
Agent Commission System (“DWAC”) on or before the Delivery Date (if the
Corporation is eligible for DWAC services at such time), and the Holder hereof
shall be deemed for all purposes to be the holder of the shares of Warrant
Shares so purchased as of the date of such exercise, and, unless this Warrant
has been fully exercised or expired, a new warrant having the same terms as this
Warrant and representing the remaining portion of such shares, if any, with
respect to which this Warrant shall not then have been exercised shall also be
issued to the Holder hereof as soon as possible and in any event within twenty
(20) Business Days after such effective exercise.

 

(f)          Business Days. For the purposes of this Warrant, the term “Business
Day” means any day other than Saturday, Sunday or other day on which commercial
banks in Los Angeles, California are authorized or required by law to remain
closed.

 

3.             Reservation of Shares

 

The Corporation hereby agrees that at all times during the term of this Warrant
there shall be reserved for issuance upon exercise of this Warrant such number
of shares of Common Stock as shall be required for issuance upon exercise of
this Warrant (the “Warrant Shares”).

 

4.             Mutilation or Loss of Warrant

 

Upon receipt of evidence reasonably satisfactory to the Corporation of the loss,
theft, destruction or mutilation of this Warrant or any stock certificate and,
in the case of any such loss, theft or destruction, upon receipt of an indemnity
agreement reasonably satisfactory to the Corporation, or in the case of any such
mutilation upon surrender and cancellation of such mutilated Warrant or stock
certificate, the Corporation will issue and deliver a new warrant (containing
the same terms as this Warrant) or stock certificate, in lieu of the lost,
stolen, destroyed or mutilated Warrant or stock certificate, and any such lost,
stolen, destroyed or mutilated Warrant or stock certificate shall thereupon
become void.

 

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Eos Petro, Inc.   Common Stock Purchase Warrant    

 

5.           Rights of the Holder

 

Prior to the exercise of this Warrant, the Holder of this Warrant, as such,
shall not be entitled to vote the Warrant Shares or receive dividends on or be
deemed the holder of such shares, nor shall anything contained herein be
construed to confer upon the Holder of this Warrant, as such, any of the rights
of a shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to receive notice of meetings, or to receive dividends or subscription rights
or otherwise until this Warrant shall have been exercised and the Common Stock
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.

 

6.           Protection Against Dilution.

 

The number and kind of securities purchasable upon the exercise of this Warrant
and the Exercise Price shall be subject to adjustment to the nearest whole share
(one-half and greater being rounded upward) and nearest cent (one-half cent and
greater being rounded upward) from time to time upon the occurrence of certain
events, as follows. Each of the adjustments provided by the subsections below
shall be deemed separate adjustments and any adjustment of this Warrant pursuant
to one subsection of this Section 6 shall preclude additional adjustments for
the same event or transaction by the remaining subsections.

 

(a)          Reclassification or Merger. In case of any reclassification, change
or conversion of securities of the class issuable upon exercise of this Warrant
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination), or in
case of any merger of the Corporation with or into another corporation (other
than a merger with another corporation in which the Corporation is the acquiring
and the surviving corporation and which does not result in any reclassification
or change of outstanding securities issuable upon exercise of this Warrant), or
in case of any sale of all or substantially all of the assets of the
Corporation, the Corporation, or such successor or purchasing corporation, as
the case may be, shall duly execute and deliver to the Holder of this Warrant a
new warrant so that the Holder of this Warrant shall have the right to receive,
at a total purchase price not to exceed that payable upon the exercise of the
unexercised portion of this Warrant, and in lieu of the Common Stock theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of stock,
other securities, money and property receivable upon such reclassification,
change or merger by a holder of the number of shares of Common Stock then
purchasable under this Warrant. Such new Warrant shall provide for adjustments
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 6. The provisions of this Section 6(a) shall
similarly apply to successive reclassifications, changes, mergers and transfers.

 

(b)          Subdivision or Combination of Shares. While this Warrant remains
outstanding and unexpired, for all subdivisions (by stock split) or combinations
(by reverse stock split) of the Corporation’s outstanding shares of capital
stock of the class into which this Warrant is exercisable, the Exercise Price
shall be proportionately decreased in the case of a subdivision or increased in
the case of a combination, effective at the close of business on the date the
subdivision or combination becomes effective and the number of shares of Common
Stock issuable upon exercise of this Warrant shall be proportionately increased
in the case of a subdivision or decreased in the case of a combination, and in
each case the nearest whole share, effective at the close of business on the
date the subdivision or combination becomes effective. The provisions of this
subparagraph (b)(ii) shall similarly apply to successive subdivisions or
combinations of outstanding shares of capital stock into which this Warrant is
exercisable.

 

(c)          Common Stock Dividends. If the Corporation at any time while this
Warrant is outstanding and unexpired shall pay a dividend with respect to Common
Stock payable in Common Stock, then: (i) the Exercise Price shall be adjusted,
from and after the date of determination of stockholders entitled to receive
such dividend or distribution (the “Record Date”), to that price determined by
multiplying the Exercise Price in effect immediately prior to such date of
determination by a fraction (a) the numerator of which shall be the total number
of shares of Common Stock outstanding immediately prior to such dividend or
distribution, and (b) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such dividend or
distribution and (ii) the number of shares of Common Stock issuable upon
exercise of this Warrant shall be proportionately adjusted, to the nearest whole
share, from and after the Record Date by multiplying the number of shares of
Common Stock purchasable hereunder immediately prior to such Record Date by a
fraction (a) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately after such dividend or distribution, and
(b) the denominator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution. The provisions
of this subparagraph (c) shall similarly apply to successive Common Stock
dividends by the Corporation.

 

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Eos Petro, Inc.   Common Stock Purchase Warrant    

 

(d)          Other Adjustments Not Expressly Provided. If, at any time or from
time to time while this Warrant is outstanding any event occurs of the type
contemplated by the provisions of this Section 6 but not expressly provided for
by such provisions (including the granting of stock appreciation rights, phantom
stock rights or other rights with equity features), then the Corporation’s Board
of Directors may make an appropriate adjustment to the Exercise Price or the
number of shares of Common Stock purchasable upon the exercise of this Warrant
as to protect the rights of the Holder; provided that no such adjustment will
increase the Exercise Price as otherwise determined pursuant to this Section 6.
For the avoidance of doubt, while this Warrant remains outstanding and
unexpired, any new issuances of the Corporation’s outstanding shares of capital
stock of the class into which this Warrant is exercisable at a price lower than
the Exercise Price shall not result in an increase in the number of shares of
Common Stock purchasable upon the exercise of this Warrant.

 

7.             Notice of Adjustments

 

Whenever the Exercise Price or the number of Warrant Shares purchasable
hereunder shall be adjusted pursuant to Section 6 hereof, the Corporation shall
deliver to the Holder a certificate signed by its chief financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
and the Exercise Price and the number of Warrant Shares purchasable hereunder
after giving effect to such adjustment.

 

8.             Securities Laws

 

(a)          Compliance with Securities Act of 1933. The Holder of this Warrant,
by acceptance hereof, agrees that this Warrant and the Warrant Shares
(collectively, the “Securities”) are being acquired for investment and that such
holder will not offer, sell, transfer or otherwise dispose of the Securities
except under circumstances which will not result in a violation of the
Securities Act of 1933, as amended (the “Securities Act”), and any applicable
state securities laws. Upon exercise of this Warrant, unless the Warrant Shares
being acquired are registered under the Securities Act and any applicable state
securities laws or an exemption from such registration is available, the Holder
hereof shall confirm in writing that the Warrant Shares so purchased are being
acquired for investment and not with a view toward distribution or resale in
violation of the Securities Act and shall confirm such other matters related
thereto as may be reasonably requested by the Corporation. The Holder
understands that this Warrant and the stock purchasable hereunder constitute
“restricted securities” under federal securities laws and acknowledges that Rule
144 of the Securities and Exchange Commission is not now, and may not in the
future be, available for resale of this Warrant and/or the stock purchasable
hereunder. The Warrant Shares (unless registered under the Securities Act and
any applicable state securities laws) shall be stamped or imprinted with a
legend in substantially the following form:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

 

Such legend shall be removed by the Corporation, upon the request of the Holder,
at such time as the restrictions on the transfer of the applicable security
shall have terminated.

 

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Eos Petro, Inc.   Common Stock Purchase Warrant    

 

(b)          Transferability of the Warrant. Subject to compliance with Section
8(c) below, which provisions are intended to ensure compliance with applicable
federal and state securities laws, the Securities may be transferred by the
Holder hereof, in whole or in part and from time to time.

 

(c)          Method of Transfer. With respect to any offer, sale, transfer or
other disposition of the Securities, the Holder hereof shall, prior to such
offer, sale, transfer or other disposition:

 

(i)          surrender this Warrant or certificate representing Warrant Shares
at the principal executive offices of the Corporation or provide evidence
reasonably satisfactory to the Corporation of the loss, theft or destruction of
this Warrant or certificate representing Warrant Shares and an indemnity
agreement reasonably satisfactory to the Corporation;

 

(ii)         pay any applicable transfer taxes or establish to the satisfaction
of the Corporation that such taxes have been paid;

 

(iii)          deliver a written assignment to the Corporation in substantially
the form attached hereto as Exhibit B or appropriate stock power duly completed
and executed prior to transfer, describing briefly the manner thereof; and

 

(iv)        deliver a written opinion of such Holder’s counsel, or other
evidence, if reasonably requested by the Corporation, to the effect that such
offer, sale, transfer or other disposition may be effected without registration
or qualification (under the Securities Act as then in effect and any applicable
state securities law then in effect) of the Securities.

 

As soon as reasonably practicable after receiving the items set forth above, the
Corporation shall notify the Holder that it may sell, transfer or otherwise
dispose of the Securities, all in accordance with the terms of the notice
delivered to the Corporation. If a determination has been made pursuant to this
Section 8(c) that the opinion of counsel for the Holder or other evidence is not
reasonably satisfactory to the Corporation, the Corporation shall so notify the
Holder promptly with details of such determination. Notwithstanding the
foregoing, the Securities may, as to such federal laws, be offered, sold or
otherwise disposed of in accordance with Rule 144 under the Securities Act if
the Corporation satisfied the provisions thereof and provided that the Holder
shall furnish such information as the Corporation may reasonably request to
provide a reasonable assurance that the provisions of Rule 144 have been
satisfied. Each certificate representing this Warrant or Warrant Shares thus
transferred (except a transfer pursuant to Rule 144 or an effective registration
statement) shall bear a legend as to the applicable restrictions on
transferability in order to ensure compliance with applicable federal and state
securities laws, unless in the aforesaid opinion of counsel to the Holder and to
the reasonable satisfaction of the Corporation, such legend is not required in
order to ensure compliance with such laws. Upon any partial transfer of this
Warrant, the Corporation will issue and deliver to such new Holder a new warrant
(in form and substance similar to this Warrant) with respect to the portion
transferred and will issue and deliver to the Holder a new warrant (in form and
substance similar to this Warrant) with respect to the portion not transferred
as soon as possible and in any event within twenty (20) Business Days after such
transfer. In addition, the Holder will comply with all other applicable
securities legislation in addition to the Securities Act to which the Holder is
subject in selling or transferring any Warrants or Warrant Shares and the
Corporation may refuse to register any sale or transfer not in compliance with
such other securities legislation.

 

9.             Payment of Taxes

 

The Corporation shall pay any and all issue and other taxes payable in respect
of any issue or delivery of Common Stock upon the exercise of this Warrant that
may be imposed under the laws of the United States or by any state, political
subdivision or taxing authority of the United States; provided, however, that
the Corporation shall not be required to pay any tax or taxes that may be
payable in respect of any transfer involved in the issue or delivery of any
Warrant or certificates for Common Stock in a name other than that of the
registered Holder of such Warrant, and no such issue or delivery shall be made
unless and until the person or entity requesting the issuance thereof shall have
paid to the Corporation the amount of such tax or shall have established to the
satisfaction of the Corporation that such tax has been paid.

 

5

 

 

Eos Petro, Inc.   Common Stock Purchase Warrant    

 

10.           Notices and Payments

 

Any notice required or permitted hereunder shall be given in writing and shall
be deemed effectively given upon, (a) personal delivery or telecopy, (b) one (1)
Business Day after deposit with a nationally recognized overnight delivery
service such as Federal Express, with postage and fees prepaid, addressed to
each of the other parties thereunto entitled at the following addresses, or at
such other addresses as a party may designate by written notice to each of the
other parties hereto or (c) four (4) Business Days following the date of deposit
in the United States mails, first-class postage prepaid, addressed to each of
the other parties thereunto entitled at the following addresses, or at such
other addresses as a party may designate by written notice to each of the other
parties hereto.

 

CORPORATION: EOS PETRO, INC.   Attention: Nikolas Konstant   1999 Avenue of the
Stars, Suite 2520   Los Angeles, CA 90067   Tel: (310) 552-1555   Fax: (424)
288-5650     with a copy to: Baker & Hostetler LLP   Attention:  Jeffrey P. Berg
  12100 Wilshire Blvd. 15th Floor   Los Angeles, CA 90049   Tel: (310) 442-8850
  Fax: (310) 820-8859     HOLDER: 590 Partners Capital, LLC   c/o GE   22287
Mulholland Drive   Suite 265   Calabasas, CA 91302     with a copy to: Kramer
Levin Naftalis & Frankel LLP   1177 Avenue of the Americas   New York, New York
10036   Telephone Number:  (212) 715-9100   Fax:  (212) 715-8000  
Attention:  Christopher S. Auguste, Esq.

 

11.           Governing Law

 

This Warrant shall be deemed to be a contract made under the laws of the State
of Nevada and for all purposes shall be governed by and construed in accordance
with the laws of the State of Nevada applicable to contracts to be made and
performed entirely within the State of Nevada.

 

12.           Modification and Waiver; Effect of Amendment or Waiver

 

This Warrant and any provision hereof may be modified, amended, waived,
discharged or terminated only by an instrument in writing, designated as an
amendment to this Warrant and executed by a duly authorized officer of the
Corporation and the Holder of this Warrant. Any waiver or amendment effected in
accordance with this Section 12 shall be binding upon the Holder, each future
holder of this Warrant or of any shares purchased under this Warrant (including
securities into which such shares have been converted) and the Corporation.

 

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Eos Petro, Inc.   Common Stock Purchase Warrant    

 

13.           Binding Effect on Successors

 

This Warrant shall be binding upon any corporation succeeding the Corporation in
case of the consolidation, merger or amalgamation of the Corporation with or
into any other corporation, and all of the obligations of the Corporation
relating to the Common Stock issuable upon the exercise or conversion of this
Warrant shall survive the exercise, conversion and termination of this Warrant
and all of the covenants and agreements of the Corporation shall inure to the
benefit of the successors and assigns of the Holder hereof. The Corporation
will, at the time of the exercise or conversion of this Warrant, in whole or in
part, upon request of the Holder in respect of any rights to which the Holder
shall continue to be entitled after such exercise or conversion in accordance
with this Warrant; provided, however, that the failure of the Holder to make any
such request shall not affect the continuing obligations of the Corporation to
the Holder in respect of such rights.

 

14.           No Impairment

 

The Corporation will not, by any voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed under
this Warrant by the Corporation, but will at all times in good faith assist in
carrying out all the provisions of this Warrant and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Holder of this Warrant against impairment.

 

15.           Descriptive Headings

 

The descriptive headings of the several paragraphs of this Warrant are inserted
for convenience only and do not constitute a part of this Warrant. The language
in this Warrant shall be construed as to its fair meaning without regard to
which party drafted this Warrant.

 

16.           Entire Agreement

 

This Warrant constitutes the full and entire understanding and agreement between
the parties with regard to the subject matter hereof and supersedes all prior
and contemporaneous agreements, representations, and undertakings of the
parties, whether oral or written, with respect to such subject matter.

 

17.           Severability

 

In the event that any one or more of the provisions contained in this Warrant
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such provision(s) shall be ineffective only to the extent of such
invalidity, illegality or unenforceability, without invalidating the remainder
of such provision or the remaining provisions of this Warrant and such
invalidity, illegality or unenforceability shall not affect any other provision
of this Warrant, which shall remain in full force and effect.

 

18.           Counterparts

 

This Warrant may be executed in two or more counterparts, each of which shall be
an original, and all of which together shall constitute one instrument.

 

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Eos Petro, Inc.   Common Stock Purchase Warrant    

 

IN WITNESS WHEREOF, the Corporation has caused this Warrant to be duly executed
and delivered by its duly authorized officer.

 

EOS PETRO, INC.

by its authorized signatory:

 

    Nikolas Konstant   Chairman and CFO  

 

8

 

 

EXHIBIT A

 

NOTICE OF EXERCISE

 

TO:        EOS PETRO, INC. (the “Corporation”)

 

1.    The undersigned hereby:

¨elects to purchase __________ shares of Common Stock of the Corporation
pursuant to the terms of the attached Warrant, and tenders herewith payment of
the purchase price of such shares in full. The undersigned intends the payment
of the purchase price shall be made as (check one):

 

Cash Exercise_______ , with a per share exercise price of $____________

 

If the undersigned has elected a Cash Exercise, the undersigned shall pay the
sum of $________ by certified or official bank check (or via wire transfer) to
the Corporation in accordance with the terms of the Warrant.

 

2.    Please issue a certificate or certificates representing said shares in the
name of the undersigned or in such other name or names as are specified below:

_________________________________________

(Name)

_________________________________________

(Address)

_________________________________________

(City, State)

 

3.    The undersigned represents that the aforesaid shares being acquired for
the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares, all except as in
compliance with applicable securities laws, and that the undersigned is an
“accredited investor” within the meaning of Rule 501 of Regulation D promulgated
under the Securities Act of 1933, as amended.

_______________

(Date)

 

      (Signature)       NOTICE: Signature must be guaranteed by a commercial
bank or trust company or a member firm of a major stock exchange if shares of
capital stock are to be issued, or securities are to be delivered, other than to
or in the name of the registered holder of this Warrant. In addition, signature
must correspond in all respects with the name as written upon the face of the
Warrant in every particular without alteration or any change whatever.

 

 

 

 

EXHIBIT B

 

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned holder of the attached Warrant hereby sells,
assigns and transfers unto _______________________ whose address is
_______________________________________ and whose taxpayer identification number
is _________________ the undersigned’s right, title and interest in and to the
Warrant issued by Eos Petro, Inc., a Nevada corporation (the “Corporation”) to
purchase _______ shares of the Corporation’s Common Stock, and does hereby
irrevocably constitute and appoint __________________________ attorney to
transfer said Warrant on the books of the Corporation with full power of
substitution in the premises.

 

In connection with such sale, assignment, transfer or other disposition of this
Warrant, the undersigned hereby confirms that:

 

£such sale, transfer or other disposition may be effected without registration
or qualification (under the Securities Act as then in effect and any applicable
state securities law then in effect) of this Warrant or the shares of capital
stock of the Corporation issuable thereunder and has attached hereto a written
opinion of the undersigned’s counsel to that effect; or

 

£such sale, transfer or other disposition has been registered under the
Securities Act of 1933, as amended, and registered and/or qualified under all
applicable state securities laws.

 

_______________

(Date)

 

    (Signature)       NOTICE: Signature must correspond in all respects with the
name as written upon the face of the Warrant in every particular without
alteration or any change whatever.

  

 

 

 

 

Eos Petro, Inc.   Common Stock Purchase Warrant    

 

EXHIBIT F TO STOCK PURCHASE AGREEMENT CONT’D

 

FORM OF WARRANT CERTIFICATE NO. 8

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES TO BE ISSUED
UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“ACT”), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PROVIDED BY REGULATION D PROMULGATED UNDER THE ACT. SUCH
SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT. THIS WARRANT MAY ONLY BE
EXERCISED BY A PERSON WHO QUALIFIES AS AN “ACCREDITED INVESTOR” PURSUANT TO RULE
501 OF REGULATION D OF THE ACT.

 

EOS PETRO, INC.,

A NEVADA CORPORATION

1999 Avenue of the Stars, Suite 2520

Los Angeles, California 90067

 

COMMON STOCK PURCHASE WARRANT

 

July 11, 2013

 

1.             Issuance

 

THIS IS TO CERTIFY THAT, for value received, GEM Capital SAS (the “Holder”),
shall have the right to purchase from EOS PETRO, INC., a Nevada corporation (the
“Corporation”), seven hundred and fifty thousand (750,000) fully paid and
non-assessable shares of the Corporation’s common stock, $.0001 par value per
share (the “Common Stock”), subject to further adjustment as set forth in
Section 6 hereof, at any time until 5:00 P.M., Pacific time, on July 11, 2018
(the “Expiration Date”) at a per share exercise price to be determined as
follows (the "Exercise Price"): the Exercise Price shall be equal to the average
fair market value of the Corporation’s publicly traded shares of common stock
during the 30-calendar day period immediately preceding July 11, 2014, but in no
event to exceed $8.00.

 

2.             Exercise of Warrants

 

(a)          Condition Precedent to Exercise. This Warrant does not vest and
shall not be exercisable by Holder, under any circumstances whatsoever, until
the one year anniversary of the date first written above. Thereafter, this
Warrant is exercisable pursuant to the provisions set forth below in this
Section 2.

 

(b)          Registration Rights and Lengthening of Term. If a registration
statement has not been filed with the Securities and Exchange Commission and
become effective with respect to the Warrant Shares, as such term is defined in
Section 3 of this Warrant, within 24 full months of the date first referenced
above, then the Expiration Date shall be extended by one day for every day that
the Warrant Shares remain unregistered after the last day of such 24th month.

 

3

 

 

Eos Petro, Inc.   Common Stock Purchase Warrant    

 

(c)          Time of Exercise. The Holder shall provide the Corporation with
notice that it may exercise this Warrant at least 61 days prior to the date of
such exercise. Upon the expiration of this 61 day period, the Holder may
exercise this Warrant pursuant to this Section 2.

 

(d)          Methods of Exercise. So long as the condition in Section 2(a) has
been satisfied, the Holder hereof may exercise this Warrant, in whole or in
partial allotments, at the Exercise Price per share payable hereunder, payable
at such Holder's election by cash, certified or official bank check, or wire
transfer to an account designated by the Corporation. Upon surrender of this
Warrant with the annexed Notice of Exercise Form attached hereto as Exhibit A
duly completed and executed, together with payment of the Exercise Price for the
Warrant Shares then being purchased (collectively referred to as the “Exercise
Materials”), the Holder shall be entitled to receive a certificate or
certificates for the Warrant Shares so purchased, provided the 61 day period
referenced in Section 2(c) of this Warrant has expired. In lieu of the issuance
of any fractional share, the Corporation shall round up or down the fractional
amount to the nearest whole number.

 

(e)          Issuance of Stock Certificates. In the event of any exercise of
this Warrant in accordance with and subject to the terms and conditions hereof,
certificates for the shares of Warrant Shares so purchased shall be dated the
date of such exercise and delivered to the Holder hereof within a reasonable
time, not exceeding five (5) Business Days after such exercise (the “Delivery
Date”) or, at the request of the Holder (provided that a registration statement
under the Securities Act (as defined below) providing for the resale of the
Warrant Shares being purchased is then in effect or that such Warrant Shares are
otherwise exempt from registration), issued and delivered to the Depository
Trust Company (“DTC”) account on the Holder’s behalf via the Deposit Withdrawal
Agent Commission System (“DWAC”) on or before the Delivery Date (if the
Corporation is eligible for DWAC services at such time), and the Holder hereof
shall be deemed for all purposes to be the holder of the shares of Warrant
Shares so purchased as of the date of such exercise, and, unless this Warrant
has been fully exercised or expired, a new warrant having the same terms as this
Warrant and representing the remaining portion of such shares, if any, with
respect to which this Warrant shall not then have been exercised shall also be
issued to the Holder hereof as soon as possible and in any event within twenty
(20) Business Days after such effective exercise.

 

(f)          Business Days. For the purposes of this Warrant, the term “Business
Day” means any day other than Saturday, Sunday or other day on which commercial
banks in Los Angeles, California are authorized or required by law to remain
closed.

 

3.             Reservation of Shares

 

The Corporation hereby agrees that at all times during the term of this Warrant
there shall be reserved for issuance upon exercise of this Warrant such number
of shares of Common Stock as shall be required for issuance upon exercise of
this Warrant (the “Warrant Shares”).

 

4.             Mutilation or Loss of Warrant

 

Upon receipt of evidence reasonably satisfactory to the Corporation of the loss,
theft, destruction or mutilation of this Warrant or any stock certificate and,
in the case of any such loss, theft or destruction, upon receipt of an indemnity
agreement reasonably satisfactory to the Corporation, or in the case of any such
mutilation upon surrender and cancellation of such mutilated Warrant or stock
certificate, the Corporation will issue and deliver a new warrant (containing
the same terms as this Warrant) or stock certificate, in lieu of the lost,
stolen, destroyed or mutilated Warrant or stock certificate, and any such lost,
stolen, destroyed or mutilated Warrant or stock certificate shall thereupon
become void.

 

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Eos Petro, Inc.   Common Stock Purchase Warrant    

 

5.             Rights of the Holder

 

Prior to the exercise of this Warrant, the Holder of this Warrant, as such,
shall not be entitled to vote the Warrant Shares or receive dividends on or be
deemed the holder of such shares, nor shall anything contained herein be
construed to confer upon the Holder of this Warrant, as such, any of the rights
of a shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to receive notice of meetings, or to receive dividends or subscription rights
or otherwise until this Warrant shall have been exercised and the Common Stock
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.

 

6.             Protection Against Dilution.

 

The number and kind of securities purchasable upon the exercise of this Warrant
and the Exercise Price shall be subject to adjustment to the nearest whole share
(one-half and greater being rounded upward) and nearest cent (one-half cent and
greater being rounded upward) from time to time upon the occurrence of certain
events, as follows. Each of the adjustments provided by the subsections below
shall be deemed separate adjustments and any adjustment of this Warrant pursuant
to one subsection of this Section 6 shall preclude additional adjustments for
the same event or transaction by the remaining subsections.

 

(a)          Reclassification or Merger. In case of any reclassification, change
or conversion of securities of the class issuable upon exercise of this Warrant
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination), or in
case of any merger of the Corporation with or into another corporation (other
than a merger with another corporation in which the Corporation is the acquiring
and the surviving corporation and which does not result in any reclassification
or change of outstanding securities issuable upon exercise of this Warrant), or
in case of any sale of all or substantially all of the assets of the
Corporation, the Corporation, or such successor or purchasing corporation, as
the case may be, shall duly execute and deliver to the Holder of this Warrant a
new warrant so that the Holder of this Warrant shall have the right to receive,
at a total purchase price not to exceed that payable upon the exercise of the
unexercised portion of this Warrant, and in lieu of the Common Stock theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of stock,
other securities, money and property receivable upon such reclassification,
change or merger by a holder of the number of shares of Common Stock then
purchasable under this Warrant. Such new Warrant shall provide for adjustments
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 6. The provisions of this Section 6(a) shall
similarly apply to successive reclassifications, changes, mergers and transfers.

 

(b)          Subdivision or Combination of Shares. While this Warrant remains
outstanding and unexpired, for all subdivisions (by stock split) or combinations
(by reverse stock split) of the Corporation’s outstanding shares of capital
stock of the class into which this Warrant is exercisable, the Exercise Price
shall be proportionately decreased in the case of a subdivision or increased in
the case of a combination, effective at the close of business on the date the
subdivision or combination becomes effective and the number of shares of Common
Stock issuable upon exercise of this Warrant shall be proportionately increased
in the case of a subdivision or decreased in the case of a combination, and in
each case the nearest whole share, effective at the close of business on the
date the subdivision or combination becomes effective. The provisions of this
subparagraph (b)(ii) shall similarly apply to successive subdivisions or

combinations of outstanding shares of capital stock into which this Warrant is
exercisable.

 

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Eos Petro, Inc.   Common Stock Purchase Warrant    

 

(c)          Common Stock Dividends. If the Corporation at any time while this
Warrant is outstanding and unexpired shall pay a dividend with respect to Common
Stock payable in Common Stock, then: (i) the Exercise Price shall be adjusted,
from and after the date of determination of stockholders entitled to receive
such dividend or distribution (the “Record Date”), to that price determined by
multiplying the Exercise Price in effect immediately prior to such date of
determination by a fraction (a) the numerator of which shall be the total number
of shares of Common Stock outstanding immediately prior to such dividend or
distribution, and (b) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such dividend or
distribution and (ii) the number of shares of Common Stock issuable upon
exercise of this Warrant shall be proportionately adjusted, to the nearest whole
share, from and after the Record Date by multiplying the number of shares of
Common Stock purchasable hereunder immediately prior to such Record Date by a
fraction (a) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately after such dividend or distribution, and
(b) the denominator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution. The provisions
of this subparagraph (c) shall similarly apply to successive Common Stock
dividends by the Corporation.

 

(d)          Other Adjustments Not Expressly Provided. If, at any time or from
time to time while this Warrant is outstanding any event occurs of the type
contemplated by the provisions of this Section 6 but not expressly provided for
by such provisions (including the granting of stock appreciation rights, phantom
stock rights or other rights with equity features), then the Corporation’s Board
of Directors may make an appropriate adjustment to the Exercise Price or the
number of shares of Common Stock purchasable upon the exercise of this Warrant
as to protect the rights of the Holder; provided that no such adjustment will
increase the Exercise Price as otherwise determined pursuant to this Section 6.
For the avoidance of doubt, while this Warrant remains outstanding and
unexpired, any new issuances of the Corporation’s outstanding shares of capital
stock of the class into which this Warrant is exercisable at a price lower than
the Exercise Price shall not result in an increase in the number of shares of
Common Stock purchasable upon the exercise of this Warrant.

 

7.             Notice of Adjustments

 

Whenever the Exercise Price or the number of Warrant Shares purchasable
hereunder shall be adjusted pursuant to Section 6 hereof, the Corporation shall
deliver to the Holder a certificate signed by its chief financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
and the Exercise Price and the number of Warrant Shares purchasable hereunder
after giving effect to such adjustment.

 

8.             Securities Laws

 

(a)          Compliance with Securities Act of 1933. The Holder of this Warrant,
by acceptance hereof, agrees that this Warrant and the Warrant Shares
(collectively, the “Securities”) are being acquired for investment and that such
holder will not offer, sell, transfer or otherwise dispose of the Securities
except under circumstances which will not result in a violation of the
Securities Act of 1933, as amended (the “Securities Act”), and any applicable
state securities laws. Upon exercise of this Warrant, unless the Warrant Shares
being acquired are registered under the Securities Act and any applicable state
securities laws or an exemption from such registration is available, the Holder
hereof shall confirm in writing that the Warrant Shares so purchased are being
acquired for investment and not with a view toward distribution or resale in
violation of the Securities Act and shall confirm such other matters related
thereto as may be reasonably requested by the Corporation. The Holder
understands that this Warrant and the stock purchasable hereunder constitute
“restricted securities” under federal securities laws and acknowledges that Rule
144 of the Securities and Exchange Commission is not now, and may not in the
future be, available for resale of this Warrant and/or the stock purchasable
hereunder. The Warrant Shares (unless registered under the Securities Act and
any applicable state securities laws) shall be stamped or imprinted with a
legend in substantially the following form:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

 

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Eos Petro, Inc.   Common Stock Purchase Warrant    

 

Such legend shall be removed by the Corporation, upon the request of the Holder,
at such time as the restrictions on the transfer of the applicable security
shall have terminated.

 

(b)          Transferability of the Warrant. Subject to compliance with Section
8(c) below, which provisions are intended to ensure compliance with applicable
federal and state securities laws, the Securities may be transferred by the
Holder hereof, in whole or in part and from time to time.

 

(c)          Method of Transfer. With respect to any offer, sale, transfer or
other disposition of the Securities, the Holder hereof shall, prior to such
offer, sale, transfer or other disposition:

 

(i)          surrender this Warrant or certificate representing Warrant Shares
at the principal executive offices of the Corporation or provide evidence
reasonably satisfactory to the Corporation of the loss, theft or destruction of
this Warrant or certificate representing Warrant Shares and an indemnity
agreement reasonably satisfactory to the Corporation;

 

(ii)         pay any applicable transfer taxes or establish to the satisfaction
of the Corporation that such taxes have been paid;

 

(iii)         deliver a written assignment to the Corporation in substantially
the form attached hereto as Exhibit B or appropriate stock power duly completed
and executed prior to transfer, describing briefly the manner thereof; and

 

(iv)        deliver a written opinion of such Holder’s counsel, or other
evidence, if reasonably requested by the Corporation, to the effect that such
offer, sale, transfer or other disposition may be effected without registration
or qualification (under the Securities Act as then in effect and any applicable
state securities law then in effect) of the Securities.

  

As soon as reasonably practicable after receiving the items set forth above, the
Corporation shall notify the Holder that it may sell, transfer or otherwise
dispose of the Securities, all in accordance with the terms of the notice
delivered to the Corporation. If a determination has been made pursuant to this
Section 8(c) that the opinion of counsel for the Holder or other evidence is not
reasonably satisfactory to the Corporation, the Corporation shall so notify the
Holder promptly with details of such determination. Notwithstanding the
foregoing, the Securities may, as to such federal laws, be offered, sold or
otherwise disposed of in accordance with Rule 144 under the Securities Act if
the Corporation satisfied the provisions thereof and provided that the Holder
shall furnish such information as the Corporation may reasonably request to
provide a reasonable assurance that the provisions of Rule 144 have been
satisfied. Each certificate representing this Warrant or Warrant Shares thus
transferred (except a transfer pursuant to Rule 144 or an effective registration
statement) shall bear a legend as to the applicable restrictions on
transferability in order to ensure compliance with applicable federal and state
securities laws, unless in the aforesaid opinion of counsel to the Holder and to
the reasonable satisfaction of the Corporation, such legend is not required in
order to ensure compliance with such laws. Upon any partial transfer of this
Warrant, the Corporation will issue and deliver to such new Holder a new warrant
(in form and substance similar to this Warrant) with respect to the portion
transferred and will issue and deliver to the Holder a new warrant (in form and
substance similar to this Warrant) with respect to the portion not transferred
as soon as possible and in any event within twenty (20) Business Days after such
transfer. In addition, the Holder will comply with all other applicable
securities legislation in addition to the Securities Act to which the Holder is
subject in selling or transferring any Warrants or Warrant Shares and the
Corporation may refuse to register any sale or transfer not in compliance with
such other securities legislation.

 

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Eos Petro, Inc.   Common Stock Purchase Warrant    

 

9.             Payment of Taxes

 

The Corporation shall pay any and all issue and other taxes payable in respect
of any issue or delivery of Common Stock upon the exercise of this Warrant that
may be imposed under the laws of the United States or by any state, political
subdivision or taxing authority of the United States; provided, however, that
the Corporation shall not be required to pay any tax or taxes that may be
payable in respect of any transfer involved in the issue or delivery of any
Warrant or certificates for Common Stock in a name other than that of the
registered Holder of such Warrant, and no such issue or delivery shall be made
unless and until the person or entity requesting the issuance thereof shall have
paid to the Corporation the amount of such tax or shall have established to the
satisfaction of the Corporation that such tax has been paid.

 

10.           Notices and Payments

 

Any notice required or permitted hereunder shall be given in writing and shall
be deemed effectively given upon, (a) personal delivery or telecopy, (b) one (1)
Business Day after deposit with a nationally recognized overnight delivery
service such as Federal Express, with postage and fees prepaid, addressed to
each of the other parties thereunto entitled at the following addresses, or at
such other addresses as a party may designate by written notice to each of the
other parties hereto or (c) four (4) Business Days following the date of deposit
in the United States mails, first-class postage prepaid, addressed to each of
the other parties thereunto entitled at the following addresses, or at such
other addresses as a party may designate by written notice to each of the other
parties hereto.

 

CORPORATION: EOS PETRO, INC.   Attention: Nikolas Konstant   1999 Avenue of the
Stars, Suite 2520   Los Angeles, CA 90067   Tel: (310) 552-1555   Fax: (424)
288-5650     with a copy to: Baker & Hostetler LLP   Attention:  Jeffrey P. Berg
  12100 Wilshire Blvd. 15th Floor   Los Angeles, CA 90049   Tel: (310) 442-8850
  Fax: (310) 820-8859     HOLDER: GEM Capital SAS   c/o CM Group   Commerce
House   1 Bowring Road   Ramsey   Isle of man   IM8 2LQ     with a copy to:
Kramer Levin Naftalis & Frankel LLP   1177 Avenue of the Americas   New York,
New York 10036   Telephone Number:  (212) 715-9100   Fax:  (212) 715-8000  
Attention:  Christopher S. Auguste, Esq.

 

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Eos Petro, Inc.   Common Stock Purchase Warrant    

 

11.           Governing Law

 

This Warrant shall be deemed to be a contract made under the laws of the State
of Nevada and for all purposes shall be governed by and construed in accordance
with the laws of the State of Nevada applicable to contracts to be made and
performed entirely within the State of Nevada.

 

12.           Modification and Waiver; Effect of Amendment or Waiver

 

This Warrant and any provision hereof may be modified, amended, waived,
discharged or terminated only by an instrument in writing, designated as an
amendment to this Warrant and executed by a duly authorized officer of the
Corporation and the Holder of this Warrant. Any waiver or amendment effected in
accordance with this Section 12 shall be binding upon the Holder, each future
holder of this Warrant or of any shares purchased under this Warrant (including
securities into which such shares have been converted) and the Corporation.

 

13.           Binding Effect on Successors

 

This Warrant shall be binding upon any corporation succeeding the Corporation in
case of the consolidation, merger or amalgamation of the Corporation with or
into any other corporation, and all of the obligations of the Corporation
relating to the Common Stock issuable upon the exercise or conversion of this
Warrant shall survive the exercise, conversion and termination of this Warrant
and all of the covenants and agreements of the Corporation shall inure to the
benefit of the successors and assigns of the Holder hereof. The Corporation
will, at the time of the exercise or conversion of this Warrant, in whole or in
part, upon request of the Holder in respect of any rights to which the Holder
shall continue to be entitled after such exercise or conversion in accordance
with this Warrant; provided, however, that the failure of the Holder to make any
such request shall not affect the continuing obligations of the Corporation to
the Holder in respect of such rights.

 

14.           No Impairment

 

The Corporation will not, by any voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed under
this Warrant by the Corporation, but will at all times in good faith assist in
carrying out all the provisions of this Warrant and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights of the
Holder of this Warrant against impairment.

 

15.           Descriptive Headings

 

The descriptive headings of the several paragraphs of this Warrant are inserted
for convenience only and do not constitute a part of this Warrant. The language
in this Warrant shall be construed as to its fair meaning without regard to
which party drafted this Warrant.

 

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Eos Petro, Inc.   Common Stock Purchase Warrant    

 

16.           Entire Agreement

 

This Warrant constitutes the full and entire understanding and agreement between
the parties with regard to the subject matter hereof and supersedes all prior
and contemporaneous agreements, representations, and undertakings of the
parties, whether oral or written, with respect to such subject matter.

 

17.           Severability

 

In the event that any one or more of the provisions contained in this Warrant
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such provision(s) shall be ineffective only to the extent of such
invalidity, illegality or unenforceability, without invalidating the remainder
of such provision or the remaining provisions of this Warrant and such
invalidity, illegality or unenforceability shall not affect any other provision
of this Warrant, which shall remain in full force and effect.

 

18.           Counterparts

 

This Warrant may be executed in two or more counterparts, each of which shall be
an original, and all of which together shall constitute one instrument.

 

10

 

 

Eos Petro, Inc.   Common Stock Purchase Warrant    

 

IN WITNESS WHEREOF, the Corporation has caused this Warrant to be duly executed
and delivered by its duly authorized officer.

 

EOS PETRO, INC.

by its authorized signatory:

 

    Nikolas Konstant   Chairman and CFO  

 

11

 

 

EXHIBIT A

 

NOTICE OF EXERCISE

 

TO:    EOS PETRO, INC. (the “Corporation”)

 

1.    The undersigned hereby:

¨elects to purchase __________ shares of Common Stock of the Corporation
pursuant to the terms of the attached Warrant, and tenders herewith payment of
the purchase price of such shares in full. The undersigned intends the payment
of the purchase price shall be made as (check one):

 

Cash Exercise_______ , with a per share exercise price of $____________

 

If the undersigned has elected a Cash Exercise, the undersigned shall pay the
sum of $________ by certified or official bank check (or via wire transfer) to
the Corporation in accordance with the terms of the Warrant.

 

2.          Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:

_________________________________________

(Name)

_________________________________________

(Address)

_________________________________________

(City, State)

 

3.          The undersigned represents that the aforesaid shares being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares, all except as in
compliance with applicable securities laws, and that the undersigned is an
“accredited investor” within the meaning of Rule 501 of Regulation D promulgated
under the Securities Act of 1933, as amended.

_______________

(Date)

 

      (Signature)       NOTICE: Signature must be guaranteed by a commercial
bank or trust company or a member firm of a major stock exchange if shares of
capital stock are to be issued, or securities are to be delivered, other than to
or in the name of the registered holder of this Warrant. In addition, signature
must correspond in all respects with the name as written upon the face of the
Warrant in every particular without alteration or any change whatever.

 

 

 

 

EXHIBIT B

 

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned holder of the attached Warrant hereby sells,
assigns and transfers unto _______________________ whose address is
_______________________________________ and whose taxpayer identification number
is _________________ the undersigned’s right, title and interest in and to the
Warrant issued by Eos Petro, Inc., a Nevada corporation (the “Corporation”) to
purchase _______ shares of the Corporation’s Common Stock, and does hereby
irrevocably constitute and appoint __________________________ attorney to
transfer said Warrant on the books of the Corporation with full power of
substitution in the premises.

 

In connection with such sale, assignment, transfer or other disposition of this
Warrant, the undersigned hereby confirms that:

 

¨such sale, transfer or other disposition may be effected without registration
or qualification (under the Securities Act as then in effect and any applicable
state securities law then in effect) of this Warrant or the shares of capital
stock of the Corporation issuable thereunder and has attached hereto a written
opinion of the undersigned’s counsel to that effect; or

 

¨such sale, transfer or other disposition has been registered under the
Securities Act of 1933, as amended, and registered and/or qualified under all
applicable state securities laws.

 

_______________

(Date)

 

      (Signature)       NOTICE: Signature must correspond in all respects with
the name as written upon the face of the Warrant in every particular without
alteration or any change whatever.

   

 

 

 

EXHIBIT G

Items to be Addressed in the Company’s Legal Opinion Letter

From Outside Counsel

 

1. The Company and each of its Subsidiaries is duly qualified to do business and
is in good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary except for
any jurisdiction in which failure to be so qualified will not have a Material
Adverse Effect.

 

2. The execution of, and performance of the obligations under, the Agreement,
and the issuance and sale of the Shares by the Company pursuant to the Agreement
will not, as of the date hereof:

 

i. conflict with, or constitute a default (or an event which 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 of, any material
agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which the Company is a party.

 

ii. create or impose a lien, charge or encumbrance on any property of the
Company under any agreement or any commitment to which the Company is a party or
by which the Company is bound or by which any of its respective properties or
assets are bound.

 

iii. result in a violation of any federal or state order, judgment or decree
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries are bound or affected, except,
in all cases, for such conflicts, defaults, terminations, amendments,
acceleration, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect.

 

iv. violate the Company’s governing documents or any federal or Nevada statute,
rule or regulation applicable to the Company.

 

v. require any consents, approvals, or authorizations to be obtained by the
Company, or any registrations, declarations or filings to be made by the
Company, in each case, under any federal or Nevada statute, rule or regulation
applicable to the Company that have not been obtained or made.

 

3. There is no action, suit, claim, investigation or proceeding pending or, to
our knowledge, threatened against the Company or any Subsidiary which questions
the validity of the Agreement or the transactions contemplated thereby or any
action taken or to be taken pursuant hereto or thereto. There is no action,
suit, claim, investigation or proceeding pending or, to our knowledge,
threatened, against or involving the Company, any Subsidiary or any of their
respective properties or assets and which, if determined adversely to the
Company or its Subsidiary, would have a Material Adverse Effect.

 

4. The execution, delivery and performance of the Agreement has been duly
authorized by all necessary corporate action of the Company, and the Agreement
has been duly executed and delivered by the Company.

 

 

 

 

EXHIBIT H

Form of Certificate of the Company

 

_________________, 2013

 

The undersigned, Eos Petro, Inc., a Nevada corporation (the “Company”), delivers
this certificate in connection with the Common Stock Purchase Agreement, dated
as of ____________, 2013 (the “Agreement”), by and among the Company and GEM
Global Yield Fund (the “Purchaser”), and hereby certifies on the date first
written above, that (capitalized terms used herein without definition have the
meanings assigned to them in the Agreement):

 

1.          Attached hereto as Exhibit A is a true, complete and correct copy of
the Articles of Incorporation of the Company as filed with the Secretary of
State of Nevada. The Articles of Incorporation of the Company has not been
further amended or restated, and no document with respect to any amendment to
the Articles of Incorporation of the Company has been filed in the office of the
Secretary of State of Nevada since the date shown on the face of the state
certification relating to the Company’s Articles of Incorporation, which is in
full force and effect on the date hereof, and no action has been taken by the
Company in contemplation of any such amendment or the dissolution, merger or
consolidation of the Company.

 

2.          Attached hereto as Exhibit B is a true and complete copy of the
Bylaws of the Company, as amended and restated through, and as in full force and
effect on, the date hereof, and no proposal for any amendment, repeal or other
modification to the Bylaws of the Company has been taken or is currently pending
before the Board of Directors or stockholders of the Company.

 

3.          The Board of Directors of the Company has approved the transactions
contemplated by the Agreement; said approval has not been amended, rescinded or
modified and remains in full force and effect as of the date hereof.

 

4.          Each person who, as an officer of the Company, or as
attorney-in-fact of an officer of the Company, signed (i) the Agreement and (ii)
any other document delivered prior hereto or on the date hereof in connection
with the transactions contemplated by the Agreement, was duly elected, qualified
and acting as such officer or duly appointed and acting as such
attorney-in-fact, and the signature of each such person appearing on any such
document is his or her genuine signature.

 

IN WITNESS WHEREOF, I have signed my name as of the date first above written.

    

  EOS PETRO, INC.           Name:   Title:

 

 

 

 

EXHIBIT I

 

Form of Compliance Certificate

 

In connection with the issuance of shares of common stock of Eos Petro, Inc.
(the “Company”) pursuant to the Draw Down Notice, dated __________________,
delivered by the Company to GEM Global Yield Fund (the “Purchaser”) pursuant to
Section 5.3(d) of the Common Stock Purchase Agreement dated as of ____________,
2013, by and between the Company and Purchaser (the “Agreement”), the
undersigned hereby certifies as follows:

 

1.          The undersigned is the duly elected ________________ of the Company.

 

2.          Except as set forth in the attached Schedule, the representations
and warranties of the Company set forth in Section 3.1 of the Agreement are true
and correct in all material respects as though made on and as of the date
hereof, except for representations and warranties that speak as of a particular
date.

 

3.          The Company has performed in all material respects all covenants and
agreements to be performed by the Company on or prior to the Draw Down Exercise
Date and the Settlement Date related to the Draw Down Notice and has complied in
all material respects with all obligations and conditions contained in Section
5.3 of the Agreement.

 

Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to them in the Agreement.

 

The undersigned has executed this Certificate this ____ day of _____, _______

 

  By:           Name:           Title:  

 

 

 

 

EXHIBIT J TO THE

COMMON STOCK PURCHASE AGREEMENT

 FORM OF DRAW DOWN NOTICE

 

Reference is made to the Common Stock Purchase Agreement dated as of _________,
2013, (the “Purchase Agreement”) by and between Eos Petro, Inc. (the “Company”)
and GEM Global Yield Fund Limited. Capitalized terms used and not otherwise
defined herein shall have the meanings given such terms in the Purchase
Agreement.

 

In accordance with and pursuant to Section 6.1 of the Purchase Agreement, the
Company hereby issues this Draw Down Notice to exercise a Draw Down request for
the Draw Down Amount indicated below.

 

Draw Down Amount:

 

Draw Down Pricing Period Start Date:

 

Draw Down Pricing Period End Date:

 

Settlement Date:

 

Draw Down Threshold Price:

 

Dollar Amount and Number of Shares

Of Common Stock Currently Unissued Under the Registration Statement:

 

Dollar Amount and Number of Shares

Of Common Stock Currently Available under the Aggregate Limit:

 

Dated:_______________________ By:       Name:     Title:

 

  Address:     Facsimile No.: