Exhibit 10.1





 

 









Exhibit 10.1

  




SECURITIES
PURCHASE AGREEMENT

 


This
Securities Purchase Agreement is entered into and dated as of
September 20, 2017 (this “Agreement”), by and among Petro
River Oil Corp., a Delaware corporation (the “Company”), Spyglass Energy Group,
LLC, a Delaware limited liability company (“Spyglass”) and Petro Exploration
Funding II, LLC, a New York limited liability company
(“Purchaser”).

 


RECITAL

 


WHEREAS, the
Company is entering into this Agreement to fund various operations
including drilling programs in its 106,500 acre concession in Osage
County, Oklahoma (the “Osage Drilling Program”) held by
its indirect subsidiary Spyglass;

 


WHEREAS, as
consideration for allocating a portion of the funding herein to the
Osage Drilling Program, Spyglass agrees to enter into this
Agreement along with the Company; and

 


NOW
THEREFORE, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act of
1933, as amended (the “Securities Act”), and Rule 506
promulgated thereunder, the Company desires to issue and sell to
Purchaser and Purchaser desires to purchase from the Company,
certain securities of the Company pursuant to the terms set forth
herein.

 


AGREEMENT

 


In
consideration of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company, Spyglass
and Purchaser agree as follows:

 


ARTICLE
I.

 


DEFINITIONS

 

1.1 Definitions. In addition to the
terms defined elsewhere in this Agreement, the following terms
shall have the meanings set forth in this Section 1.1:

 


“Affiliate” means any Person
that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 144
under the Securities Act.

 


“Assignment of Overriding Royalty
Interests” means the Assignment of Overriding Royalty
Interest between the Company and Purchaser in the form attached as
Exhibit C.

 


“Bankruptcy Event” means any
of the following events: (a) the Company or any Subsidiary
commences a case or other proceeding under any bankruptcy,
reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any
jurisdiction relating to the Company or any Subsidiary thereof; (b)
there is commenced against the Company or any Subsidiary any such
case or proceeding that is not dismissed within 60 days after
commencement; (c) the Company or any Subsidiary is adjudicated
insolvent or bankrupt or any order of relief or other order
approving any such case or proceeding is entered; (d) the Company
or any Subsidiary suffers any appointment of any custodian or the
like for it or any substantial part of its property that is not
discharged or stayed within 60 days; (e) the Company or any
Subsidiary makes a general assignment for the benefit of creditors;
(f) the Company or any Subsidiary fails to pay, or states that it
is unable to pay or is unable to pay, its debts generally as they
become due; (g) the Company or any Subsidiary calls a meeting of
its creditors with a view to arranging a composition, adjustment or
restructuring of its debts; or (h) the Company or any Subsidiary,
by any act or failure to act, expressly indicates its consent to,
approval of or acquiescence in any of the foregoing or takes any
corporate or other action for the purpose of effecting any of the
foregoing.

 


 




 


 

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“Business Day” means any day
except Saturday, Sunday and any day which shall be a federal legal
holiday or a day on which banking institutions in the State of New
York are authorized or required by law or other governmental action
to close.

 


“Change of Control” means
the occurrence of any of the following in one or a series of
related transactions: (i) an acquisition after the date hereof by
an individual or legal entity or “group” (as described
in Rule 13d-5(b)(1) under the Exchange Act) of more than one-third
of the voting rights or equity interests in the Company; (ii) a
replacement of more than one-third of the members of the
Company’s board of directors that is not approved by those
individuals who are members of the board of directors on the date
hereof (or other directors previously approved by such
individuals); (iii) a merger or consolidation of the Company or any
Subsidiary or a sale of more than one-third of the assets of the
Company in one or a series of related transactions, unless
following such transaction or series of transactions, the holders
of the Company’s securities prior to the first such
transaction continue to hold at least two-thirds of the voting
rights and equity interests in the surviving entity or acquirer of
such assets; (iv) a recapitalization, reorganization or other
transaction involving the Company or any Subsidiary that
constitutes or results in a transfer of more than one-third of the
voting rights or equity interests in the Company; (v) consummation
of a “Rule 13e-3 transaction” as defined in Rule 13e-3
under the Exchange Act with respect to the Company, or (vi) the
execution by the Company or its controlling shareholders of an
agreement providing for or reasonably likely to result in any of
the foregoing events.

 


“Closing” means the closing
of the purchase and sale of the Securities pursuant to Section 2.1.

 


“Closing Date” means the
date of the Closing.

 


 “Closing Price” means,
for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or
quoted on an Eligible Market or any other national securities
exchange, the closing bid price per share of the Common Stock for
such date (or the nearest preceding date) on the primary Eligible
Market or exchange on which the Common Stock is then listed or
quoted; (b) if prices for the Common Stock are then quoted on the
OTC Bulletin Board, the closing bid price per share of the Common
Stock for such date (or the nearest preceding date) so quoted; (c)
if prices for the Common Stock are then reported in the “Pink
Sheets” published by the National Quotation Bureau
Incorporated (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent closing bid price
per share of the Common Stock so reported; or (d) in all other
cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by
Purchaser.

 


“Commission” means the
Securities and Exchange Commission.

 


“Common Stock” means the
common stock of the Company, par value $0.00001 per share, and any
securities into which such common stock may hereafter be
reclassified.

 


“Convertible Securities”
means any stock or securities (other than Options) convertible into
or exercisable or exchangeable for Common Stock.

 


 “Effective
Date” means the date that the Registration Statement
is first declared effective by the Commission.

 


“Eligible Market” means any
of the New York Stock Exchange, the American Stock Exchange, the
Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq
Capital Market and the OTC Bulletin Board.

 


 




 


 


 


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“Exchange Act” means the
Securities Exchange Act of 1934, as amended.

 


“Losses” means any and all
losses, claims, damages, liabilities, settlement costs and
expenses, including without limitation costs of preparation of
legal action and reasonable attorneys’ fees.

 


“Notes” means the Secured
Promissory Notes due June 2020 with an aggregate principal face
amount of $2,500,000 issued by the Company to Purchaser in the form
of Exhibit A
hereto.

 


“Options” means any rights,
warrants or options to subscribe, directly or indirectly for or
purchase Common Stock or Convertible Securities (including all
Additional Warrants that can be issued under the Transaction
Documents).

 


“ORRI” means the overriding
royalty interest equal to 2% in aggregate of 8/8ths in the oil, gas
and other hydrocarbon substances which may be produced, saved, sold
and marketed from the oil and gas leases as described in the
Assignment of Overriding Royalty Interests.

 


“Person” means an individual
or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock
company, government (or an agency or subdivision thereof) or other
entity of any kind.

 


 “Proceeding” means an
action, claim, suit, investigation or proceeding (including,
without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

 


 “Purchaser Counsel”
means MSN Legal, counsel to Purchaser.

 


 “Rule 144” means Rule
144 promulgated by the Commission pursuant to the Securities Act,
as such Rule may be amended from time to time, or any similar rule
or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

 


“Securities” means the
Notes, the Warrants, the ORRI and the Underlying Shares issued or
issuable (as applicable) to Purchaser pursuant to the Transaction
Documents.

 


“Security Agreement” means
the Security Agreement dated as of the Closing Date, among the
Company, and the Purchaser set forth on the signature pages thereto
substantially in the form of Exhibit D.

 


 “Subsidiaries” shall
mean Spyglass and Bandolier Energy
LLC, each indirect subsidiaries of the Company.


.

 


“Trading Day” means (a) any
day on which the Common Stock is listed or quoted and traded on its
primary Trading Market, or (b) if the Common Stock is not then
listed or quoted and traded on any Trading Market, then any
Business Day.

 


“Trading Market” means OTC
Bulletin Board or any other Eligible Market or any national
securities exchange, market or trading or quotation facility on
which the Common Stock is then listed or quoted.

 


“Transaction Documents”
means this Agreement, the Notes, the Warrants, the Assignment of
Overriding Royalty Interest, the Security Agreement, the Transfer
Agent Instructions and any other documents or agreements executed
or delivered in connection with the transactions contemplated
hereby.

 


 


 




 


 


 


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“Underlying Shares” means
the shares of Common Stock issuable (i) upon exercise of the
Warrants, and (ii) in satisfaction of any other obligation of the
Company to issue shares of Common Stock pursuant to the Transaction
Documents, and in each case, any securities issued or issuable in
exchange for or in respect of such securities.

 


“Warrants” means,
collectively, the Common Stock warrants issued and sold under this
Agreement, in the form of Exhibit B.

 


ARTICLE
II.

 


PURCHASE
AND SALE

 

2.1 Closing. The Closing Date shall
be 10:00 a.m., New York City time, on the date hereof (or such
later date as is mutually agreed to by the Company and Purchaser)
after notification of satisfaction (or waiver) of the conditions to
the Closing set forth in Article V. Subject to the terms
and conditions set forth in this Agreement, at the Closing, the
Company or Spyglass, as the case may be, shall issue and sell to
Purchaser and Purchaser shall purchase from the Company, the Notes
and Warrants, and the ORRI, for the purchase price set forth on
Schedule A hereto
under the heading “Purchase Price”. The Closing shall
take place at the offices of Purchaser Counsel or at such other
location as the parties may agree.

 

2.2 Closing
Deliveries.

 

(a) At the Closing, the
Company or Spyglass, as the case may be, shall deliver or cause to
be delivered to Purchaser the following:

 

(i) a Note, registered
in the name of Purchaser, in the principal amount indicated on
Schedule A hereto
under the heading “Note Principal Amount”;

 

(ii) a
Warrant, registered in the name of Purchaser, pursuant to which
Purchaser shall have the right to acquire such number of Underlying
Shares indicated on Schedule A hereto under the
heading “Warrant Shares”; and

 

(iii) an
Assignment of Overriding Royalty Interest, registered in the name
of Purchaser, with the ORRI amount indicated on Schedule A hereto under the
heading “ORRI”;

 

(b) At the Closing,
Purchaser shall deliver or cause to be delivered to the Company (i)
the purchase price set forth on Schedule A hereto under the heading
“Purchase Price”, in United States dollars and in
immediately available funds, by wire transfer to an account
designated in writing by the Company for such purpose, and (ii) the
Security Agreement and the Assignment of Overriding Interest, each
executed by Purchaser.

 


ARTICLE
III.

 


REPRESENTATIONS
AND WARRANTIES

 

3.1 Representations and Warranties of the
Company. The Company and Spyglass hereby makes the following
representations and warranties to the Purchaser:

 

(a) Organization and
Qualification. Each of the Company and the Subsidiaries is
an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and
assets and to carry on its business as currently conducted. Neither
the Company nor any Subsidiary is in violation of any of the
provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.
Each of the Company and the Subsidiaries is duly qualified to
conduct business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the
aggregate, (i) materially adversely affect the legality, validity
or enforceability of any Transaction Document, (ii) have or result
in a material adverse effect on the results of operations, assets,
prospects, business or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or (iii) materially
adversely impair the Company’s ability to perform fully on a
timely basis its obligations under any Transaction Document (any of
(i), (ii) or (iii), a “Material Adverse
Effect”).

 


 




 


 


 


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(b) Authorization;
Enforcement. The Company and its Subsidiaries have the
requisite corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction
Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the
transactions contemplated hereunder and thereunder have been duly
authorized by all necessary action on the part of the Company and
no further consent or action is required by the Company, its Board
of Directors or its stockholders. Each Transaction Document has
been (or upon delivery will be) duly executed by the Company is or,
when delivered in accordance with the terms hereof, will
constitute, assuming due authorization, execution and delivery by
each of the other parties thereto, the valid and binding obligation
of the Company enforceable against the Company in accordance with
its terms, except where enforceability may be limited by a
Bankruptcy Event and except where enforceability is subject to the
application of equitable principles or remedies.

 

(c) No
Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby do not
and will not (i) conflict with or violate any provision of the
Company’s or any Subsidiary’s certificate or articles
of incorporation, bylaws or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or
other instrument (evidencing a Company or Subsidiary debt) or other
binding understanding to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) result in a violation of
any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which
the Company or a Subsidiary is subject (including federal and state
securities laws and regulations and the rules and regulations of
any self-regulatory organization to which the Company or its
securities are subject), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in each case
as, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

 

(d) Filings, Consents
and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than (i) the filing
with the Commission of a Form 8-K Current Report, (ii) the
application(s) to each Trading Market for the listing of the
Underlying Shares for trading thereon, and (iii) the notification
to the Trading Market of the change in the number of shares
outstanding(collectively, the “Required Approvals”).

 

(e) Issuance of the
Securities. The Securities are
duly authorized and, when issued and paid for in accordance with
the Transaction Documents, will be duly and validly issued, fully
paid and nonassessable, free and clear of all Liens (other than
restrictions under applicable securities laws or the Transaction
Documents), and shall not be subject to preemptive rights or
similar rights of shareholders. Assuming the accuracy of the
representations of the Purchaser set forth in Section
3.2, the Securities are
issued in compliance with applicable securities laws, rules and
regulations. The Company has reserved
from its duly authorized capital stock the maximum number of shares
of Common Stock issuable under the Transaction
Documents.

 


 




 


 


 


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(f) Private
Placement. Neither the Company nor any Person acting on the
Company’s behalf has sold or offered to sell or solicited any
offer to buy the Securities by means of any form of general
solicitation or advertising. Neither the Company nor any of its
Affiliates nor any Person acting on the Company's behalf has,
directly or indirectly, at any time within the past six months,
made any offer or sale of any security or solicitation of any offer
to buy any security under circumstances that would (i) eliminate
the availability of the exemption from registration under
Regulation D under the Securities Act in connection with the offer
and sale of the Securities as contemplated hereby or (ii) cause the
offering of the Securities pursuant to the Transaction Documents to
be integrated with prior offerings by the Company for purposes of
any stockholder approval provisions under the rules and regulations
of any Trading Market. Assuming the accuracy of the
Purchaser’s representations and warranties set forth in
Section 3.2, no
registration under the Securities Act is required for the offer and
sale of the Securities by the Company to Purchaser as contemplated
hereby. The issuance and sale of the Securities hereunder does not
contravene the rules and regulations of the Trading Market and no
shareholder approval is required for the Company to fulfill its
obligations under the Transaction Documents (other than those
obligations set forth in Section 4.5). The Company is
not a United States real property holding corporation within the
meaning of the Foreign Investment in Real Property Tax Act of
1980.

 

(g) Acknowledgment
Regarding Purchaser’s Purchase of Securities. The
Company acknowledges and agrees that Purchaser is acting solely in
the capacity of an arm’s length purchaser with respect to
this Agreement and the transactions contemplated hereby. The
Company further acknowledges that Purchaser is not acting as a
financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by Purchaser or its
respective representatives or agents in connection with this
Agreement and the transactions contemplated hereby is merely
incidental to Purchaser’s purchase of the Securities. The
Company further represents to Purchaser that the Company’s
decision to enter into this Agreement has been based solely on the
independent evaluation of the Company and its representatives. The
Company further acknowledges that Purchaser has not made any
promises or commitments other than as set forth in this Agreement,
including any promises or commitments for any additional investment
by Purchaser in the Company.

 

(h) Ranking.
Except as set forth on Schedule 3.1(cc) and the
promissory note issued to Petro Exploration Funding, LLC in the
aggregate principal amount of $2,000,00 on June 15, 2017 (the
“Prior Secured Note”), as of the date of this
Agreement, no indebtedness of the Company is senior to, or pari
passu with, the Notes in right of payment, whether with respect to
interest or upon liquidation or dissolution, or
otherwise.

 

3.2 Representations and
Warranties of the Purchaser. Purchaser hereby represents and
warrants to the Company as follows:

 

(a) Organization;
Authority. Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its organization with the requisite corporate, limited liability
company or partnership power and authority to enter into and to
consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution, delivery and performance by Purchaser of
the Transaction Documents to which it is a party have been duly
authorized by all necessary corporate or limited liability company
action on the part of Purchaser. The Transaction Documents to which
it is a party have been duly executed by Purchaser and, when
delivered by Purchaser in accordance with terms hereof and thereof,
will constitute the valid and legally binding obligation of
Purchaser, enforceable against it in accordance with its
terms.

 


 




 


 


 


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(b) Investment
Intent. Purchaser is
acquiring the Securities for investment purposes and has no present
intention of distributing any of the Securities in violation of
applicable securities laws. Purchaser has been advised and
understands that the Securities have not been registered under the
Securities Act or under the “blue sky” or similar laws
of any jurisdiction and the Securities may be resold only if
registered pursuant to the provisions of the Securities Act and
such other laws, if applicable, or, subject to the terms and
conditions of this Agreement, if an exemption from registration is
available. Nothing contained herein shall be deemed a
representation or warranty by Purchaser to hold the Securities for
any period of time. Purchaser is acquiring the Securities hereunder
in the ordinary course of its business. Purchaser has been advised
and understands that the Company, in issuing the Securities, is
relying upon, among other things, the representations and
warranties of Purchaser herein.

 

(c) Purchaser
Status. As indicated on Purchaser’s signature page
hereto and incorporated herein by reference, Purchaser is an
“accredited investor” as defined in Rule 501(a) under
the Securities Act and/or a “qualified institutional
buyer” as defined in Rule 144A under the Securities
Act.  Purchaser is not a registered broker-dealer under
Section 15 of the Exchange Act.

 

(d) Experience of
Purchaser. Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such
investment. Purchaser is able to bear the economic risk of an
investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.

 

(e) General
Solicitation. Purchaser is not purchasing the Securities as
a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or
general advertisement.

 

(f) Disclosure.
Purchaser acknowledges and agrees that the Company neither makes
nor has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set
forth in Section
3.1.

 

(g)  Bad Actor
Representation.  Purchaser is subject to any of the
"Bad Actor" disqualifications described in Rule 506(d)(1)(i) to
(viii) under the Securities Act (a "Disqualification Event"), except for a
Disqualification Event covered by Rule 506(d)(2) or
(d)(3).


 

 


ARTICLE
IV.

 


OTHER
AGREEMENTS OF THE PARTIES

 

4.1 Transfer
Restrictions.

 

(a) The Securities may
only be disposed of pursuant to an effective registration statement
under the Securities Act or pursuant to an available exemption from
the registration requirements of the Securities Act, and in
compliance with any applicable state securities laws. In connection
with any transfer of Securities other than pursuant to an effective
registration statement or to the Company or pursuant to Rule 144,
except as otherwise set forth herein, the Company may require the
transferor to provide to the Company an opinion of counsel selected
by the transferor, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such
transfer does not require registration under the Securities Act.
Notwithstanding the foregoing, the Company hereby consents to and
agrees to register on the books of the Company and with its
transfer agent, without any such legal opinion, any transfer of
Securities by Purchaser to an Affiliate of Purchaser, provided that
the transferee certifies to the Company that it is an
“accredited investor” as defined in Rule 501(a) under
the Securities Act.

 


 




 


 


 


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(b) Purchaser agrees to
the imprinting, except as otherwise permitted by Section 4.1(c), of the
following legend on any certificate evidencing
Securities:

 


[NEITHER] THESE
SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
[EXERCISABLE] HAVE [NOT] BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY
LAWS. NOTWITHSTANDING THE FOREGOING, THESE SECURITIES [AND THE
SECURITIES ISSUABLE UPON [EXERCISE] OF THESE SECURITIES] MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.

 

(c) Certificates
evidencing Securities shall not be required to contain the legend
set forth in Section
4.1(b) or any other legend (i) while a Registration
Statement covering the resale of such Securities is effective under
the Securities Act, or (ii) following any sale of such Securities
pursuant to Rule 144, or (iii) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the Staff of the
Commission). The Company shall issue or cause its counsel to issue
the legal opinion included in the Transfer Agent Instructions to
the Company’s transfer agent on the Effective Date or at such
earlier time as a legend is no longer required for certain
Securities, the Company will no later than three Trading Days
following the delivery by Purchaser to the Company or the
Company’s transfer agent of a legended certificate
representing such Securities, deliver or cause to be delivered to
Purchaser a certificate representing such Securities that is free
from all restrictive legends. The Company may not make any notation
on its records or give instructions to any transfer agent of the
Company that enlarge the restrictions on transfer set forth in
Section
4.1(b).

 

(d) The Company
acknowledges and agrees that Purchaser may from time to time pledge
or grant a security interest in some or all of the Securities in
connection with a bona fide margin agreement or other loan or
financing arrangement secured by the Securities and, if required
under the terms of such agreement, loan or arrangement, Purchaser
may transfer pledged or secured Securities to the pledgees or
secured parties. Such a pledge or transfer would not be subject to
approval of the Company and no legal opinion of the pledgee,
secured party or pledgor shall be required in connection therewith.
Further, no notice shall be required of such pledge. At the
Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or
transfer of the Securities, including the preparation and filing of
any required prospectus supplement under Rule 424(b)(3) of the
Securities Act or other applicable provision of the Securities Act
to appropriately amend the list of selling stockholders
thereunder.

 


 




 


 


 


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4.2 Acknowledgment of Dilution. The
Company acknowledges that the issuance of the Securities (including
the Underlying Shares) will result in dilution of the outstanding
shares of Common Stock, which dilution may be substantial under
certain market conditions. The Company further acknowledges that
its obligations under the Transaction Documents, including without
limitation its obligation to issue the Securities (including the
Underlying Shares) pursuant to the Transaction Documents, are
unconditional and absolute and not subject to any right of set off,
counterclaim, delay or reduction, regardless of the effect of any
such dilution or any claim that the Company may have against
Purchaser. Anything in this Agreement or elsewhere herein to the
contrary notwithstanding, it is understood and agreed by the
Company (i) that Purchaser has not been asked to agree, nor has
Purchaser agreed, to desist from purchasing or selling, long and/or
short, securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold the
Securities for any specified term; (ii) that future open market or
other transactions by Purchaser, including short sales, and
specifically including, without limitation, short sales or
“derivative” transactions, before or after the closing
of this or future private placement transactions, may negatively
impact the market price of the Company’s publicly-traded
securities; (iii) that Purchaser, and counter parties in
“derivative” transactions to which Purchaser is a
party, directly or indirectly, presently may have a
“short” position in the Common Stock, and (iv) that
Purchaser shall not be deemed to have any affiliation with or
control over any arm’s length counter-party in any
“derivative” transaction.

 

4.3 Furnishing of Information. As
long as Purchaser owns Securities, the Company covenants to timely
file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act. Upon
the request of Purchaser, the Company shall deliver to Purchaser a
written certification of a duly authorized officer as to whether it
has complied with the preceding sentence. As long as Purchaser owns
Securities, if the Company is not required to file reports pursuant
to such laws, it will prepare and furnish to Purchaser and make
publicly available in accordance with paragraph (c) of Rule 144
such information as is required for Purchaser to sell the
Securities under Rule 144. The Company further covenants that it
will take such further action as any holder of Securities may
reasonably request to satisfy the provisions of Rule 144 applicable
to the issuer of securities relating to transactions for the sale
of securities pursuant to Rule 144.

 

4.4 Exercise Procedures. The form
of Exercise Notice included in the Warrants set forth the totality
of the procedures required by Purchaser, or member of Purchaser, in
order to exercise the Warrants. No additional legal opinion or
other information or instructions shall be necessary to enable
Purchaser, or member of Purchaser, to exercise their Warrants. The
Company shall honor exercises of the and shall deliver Underlying
Shares in accordance with the terms, conditions and time periods
set forth in the Transaction Documents.

 

4.5 Repayment of Notes. Each of the
parties hereto agrees that all repayments of the Notes (including
any accrued interest thereon) by the Company (other than by
conversion of the Notes) will be paid pro rata to the holders
thereof based upon the principal amount then outstanding to each of
such holders.

 


 




 


 


 


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4.6 No Impairment. At all times
after the date hereof, the Company will not take or permit any
action, or cause or permit any Subsidiaries to take or permit any
action that materially impairs or adversely affects the rights of
Purchaser under the Agreement or the Notes.

 

4.7 Indemnification. In
consideration of Purchaser's execution and delivery of the
Transaction Documents and acquiring the Securities thereunder and
in addition to all of the Company's other obligations under the
Transaction Documents, the Company shall defend, protect, indemnify
and hold harmless Purchaser and each other holder of the Securities
and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of
the foregoing Persons' agents or other representatives (including,
without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the
"Related Persons") from and
against any and all actions, causes of action, suits, claims and
Losses in connection therewith (irrespective of whether any such
Related Person is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and
disbursements (the "Indemnified
Liabilities"), incurred by any Related Person as a result
of, or arising out of, or relating to (a) any misrepresentation or
breach of any representation or warranty made in the Transaction
Documents or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby
or thereby or (c) any cause of action, suit or claim brought or
made against such Related Person by a third party (including for
these purposes a derivative action brought on behalf of the
Company) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents
or any other certificate, instrument or document contemplated
hereby or thereby, (ii) any transaction financed or to be financed
in whole or in part, directly or indirectly, with the proceeds of
the issuance of the Securities, or (iii) the status of Purchaser or
holder of the Securities as an investor in the Company. To the
extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable
law.

 


ARTICLE
V.

 


CONDITIONS

 

5.1 Conditions Precedent to the
Obligations of Purchasers. The obligation of Purchaser to
acquire Securities at the Closing is subject to the satisfaction or
waiver by h Purchaser, at or before the Closing, of each of the
following conditions:

 

(a) Representations and Warranties.
The representations and warranties of the Company contained herein
shall be true and correct in all material respects as of the date
when made and as of the Closing as though made on and as of such
date;

 

(b) Performance. The Company shall
have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with
by it at or prior to the Closing;

 

(c) No Injunction. No statute,
rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction that
prohibits the consummation of any of the transactions contemplated
by the Transaction Documents;

 

(d) Adverse Changes. Since the date
of execution of this Agreement, no event or series of events shall
have occurred that reasonably would be expected to have a Material
Adverse Effect;

 


 




 


 


 


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(e) No Suspensions of Trading in Common
Stock; Listing. Trading in the Common Stock shall not have
been suspended by the Commission or any Trading Market (except for
any suspensions of trading of not more than one Trading Day solely
to permit dissemination of material information regarding the
Company) at any time since the date of execution of this Agreement,
and the Common Stock shall have been at all times since such date
listed for trading on an Eligible Market;

 

5.2 Conditions Precedent to the
Obligations of the Company. The obligation of the Company to
sell Securities at the Closing is subject to the satisfaction or
waiver by the Company, at or before the Closing, of each of the
following conditions:

 

(a) Representations and Warranties.
The representations and warranties of Purchaser contained herein
shall be true and correct in all material respects as of the date
when made and as of the Closing Date as though made on and as of
such date;

 

(b) Performance. Purchaser shall
have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with
by Purchaser at or prior to the Closing; and

 

(c) No Injunction. No statute,
rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction that
prohibits the consummation of any of the transactions contemplated
by the Transaction Documents.

 


ARTICLE
VI.

 


MISCELLANEOUS

 

6.1 Termination. This Agreement may
be terminated by the Company or Purchaser, by written notice to the
other parties, if the Closing has not been consummated by the third
Trading Day following the date of this Agreement; provided that no
such termination will affect the right of any party to sue for any
breach by the other party (or parties).

 

6.2 Fees and Expenses. Within 10
days following the Closing, the Company shall pay Purchaser its
reasonable legal fees and expenses incurred in connection with the
preparation and negotiation of this Agreement. The Company shall
pay all transfer agent fees, stamp taxes and other taxes and duties
levied in connection with the issuance of any
Securities.

 

6.3 Entire Agreement. The
Transaction Documents, together with the Exhibits, Annexes, and
Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to
such matters, which the parties acknowledge have been merged into
such documents, exhibits and schedules. At or after the Closing,
and without further consideration, each party will execute and
deliver to the other parties such further documents as may be
reasonably requested in order to give practical effect to the
intention of the parties under the Transaction
Documents.

 


 




 


 


 


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6.4 Notices. Any and all notices or
other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the
facsimile number specified in this Section prior to 6:30 p.m. (New
York City time) on a Trading Day, (ii) the Trading Day after the
date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number specified in this Agreement
later than 6:30 p.m. (New York City time) on any date and earlier
than 11:59 p.m. (New York City time) on such date, (iii) the
Trading Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt
by the party to whom such notice is required to be given. The
address for such notices and communications shall be as
follows:

 


	

If to
the Company:

	

Petro
River Oil Corp


	
 

	

55
5th
Avenue


	
 

	

New
York, NY 10003


	
 

	

Attn:                Scot
Cohen


	
 

	
 


	
 

	
 


	
 

	
 


	
 

	
 


	
 

	
 


	
 

	
 


	
 

	
 


	
 

	
 


	
 

	
 


	

If to
the Purchaser:

	

Petro
Exploration Funding LLC


	
 

	

55
5th
Avenue


	
 

	

New
York, NY 10003


	
 

	

Attn:                      Scot
Cohen







 


or such
other address as may be designated in writing hereafter, in the
same manner, by such Person.

 

6.5 Amendments; Waivers. No
provision of this Agreement may be waived or amended except in a
written instrument signed, in the case of an amendment, by the
Company and holders collectively holding 60% of the aggregate
principal amount outstanding under the Notes or, in the case of a
waiver, by the party against whom enforcement of any such waiver is
sought. No such amendment shall be effective to the extent that it
applies to less than all of the holders of the Notes then
outstanding without the consent of holders collectively holding 90%
of the aggregate principal amount outstanding under the Notes. No
waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right
hereunder in any manner impair the exercise of any such
right.

 

6.6 Construction. The headings
herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the
provisions hereof. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied
against any party.

 

6.7 Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The Company may
not assign this Agreement or any rights or obligations hereunder
without the prior written consent of Purchaser. Purchaser may
assign its rights under this Agreement to any Person to whom
Purchaser assigns or transfers any Securities, provided such
transferee agrees in writing to be bound, with respect to the
transferred Securities, by the provisions hereof that apply to the
Purchaser. Notwithstanding anything to the contrary herein,
Securities may be assigned to any Person in connection with a bona
fide margin account or other loan or financing arrangement secured
by such Securities.

 


 




 


 


 


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6.8 No Third-Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto
and their respective successors and permitted assigns and is not
for the benefit of, nor may any provision hereof be enforced by,
any other Person, except that each Related Person is an intended
third party beneficiary of Section 4.7.

 

6.9 Governing Law; Venue; Waiver of Jury
Trial. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed
by and construed and enforced in accordance with the internal laws
of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense
of the transactions contemplated by any of the Transaction
Documents (whether brought against a party hereto or its respective
Affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts
sitting in the City of New York, Borough of Manhattan. Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of
the state and federal courts sitting in the City of New York,
Borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the
enforcement of any of this Agreement), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is improper.
Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to
such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or any of the
Transaction Documents or the transactions contemplated hereby or
thereby. If either party shall commence an action or proceeding to
enforce any provisions of this Agreement or any Transaction
Document, then the prevailing party in such action or proceeding
shall be reimbursed by the other party for its reasonable
attorneys’ fees and other reasonable costs and expenses
incurred with the investigation, preparation and prosecution of
such action or proceeding.

 

6.10 Survival.
The representations, warranties, agreements and covenants contained
herein shall survive the Closing and the delivery, exercise and/or
conversion of the Securities, as applicable.

 

6.11 Execution.
This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In
the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as
if such facsimile signature page were an original
thereof.

 

6.12 Severability.
If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Agreement shall not in
any way be affected or impaired thereby and the parties will
attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this
Agreement.

 

6.13 Rescission
and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions
of) the Transaction Documents, whenever Purchaser exercises a
right, election, demand or option under a Transaction Document and
the Company does not timely perform its related obligations within
the periods therein provided, then Purchaser may rescind or
withdraw, in its sole discretion from time to time upon written
notice to the Company, any relevant notice, demand or election in
whole or in part without prejudice to its future actions and
rights.

 


 




 


 


 


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6.14 Replacement
of Securities. If any certificate or instrument evidencing
any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for
and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft
or destruction and customary and reasonable indemnity, if
requested. The applicants for a new certificate or instrument under
such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement
Securities.

 

6.15 Remedies.
In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, Purchaser
and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may
not be adequate compensation for any loss incurred by reason of any
breach of obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be
adequate.

 

6.16 Usury.
To the extent it may lawfully do so, the Company hereby agrees not
to insist upon or plead or in any manner whatsoever claim, and will
resist any and all efforts to be compelled to take the benefit or
advantage of, usury laws wherever enacted, now or at any time
hereafter in force, in connection with any claim, action or
proceeding that may be brought by Purchaser in order to enforce any
right or remedy under any Transaction Document. Notwithstanding any
provision to the contrary contained in any Transaction Document, it
is expressly agreed and provided that the total liability of the
Company under the Transaction Documents for payments in the nature
of interest shall not exceed the maximum lawful rate authorized
under applicable law (the “Maximum Rate”), and,
without limiting the foregoing, in no event shall any rate of
interest or default interest, or both of them, when aggregated with
any other sums in the nature of interest that the Company may be
obligated to pay under the Transaction Documents exceed such
Maximum Rate. It is agreed that if the maximum contract rate of
interest allowed by law and applicable to the Transaction Documents
is increased or decreased by statute or any official governmental
action subsequent to the date hereof, the new maximum contract rate
of interest allowed by law will be the Maximum Rate of interest
applicable to the Transaction Documents from the effective date
forward, unless such application is precluded by applicable law. If
under any circumstances whatsoever, interest in excess of the
Maximum Rate is paid by the Company to Purchaser with respect to
indebtedness evidenced by the Transaction Documents, such excess
shall be applied by Purchaser to the unpaid principal balance of
any such indebtedness or be refunded to the Company, the manner of
handling such excess to be at Purchaser’s
election.

 

6.17 Adjustments
in Share Numbers and Prices. In the event of any stock
split, subdivision, dividend or distribution payable in shares of
Common Stock (or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly
shares of Common Stock), combination or other similar
recapitalization or event occurring after the date hereof, each
reference in this Agreement to a number of shares or a price per
share shall be amended to appropriately account for such
event.

 


[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

 


SIGNATURE
PAGES FOLLOW]

 




 


 


 


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

 


	
 

	


PETRO RIVER OIL CORP.


	
 

	
 


	
 

	
 


	
 

	

By:                                                                    


	
 

	

Stephen
Brunner


	
 

	

President


	
 

	
 


	
 

	

SPYGLASS ENERGY GROUP, LLC.By: Stephen BrunnerManager


	
 

	
 







[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

 


SIGNATURE
PAGE OF PURCHASER FOLLOWS.]

 


 




 

-15-








 






 


	
 

	


PETRO EXPLORATION FUNDING II, LLC


 


 



By:            _________________________


Scot
Cohen


Managing
Member


 



Note Principal Amount: $2,500,000


Warrant
Shares:


 


	
 

	


Status (check boxes as applicable):


 


☐
Purchaser is an “accredited investor” as defined in
Rule 501(a) under the Securities Act.


 


☐
Purchaser is a “qualified institutional buyer” as
defined in Rule 144A under the Securities Act. 


 


	
 

	


Address for Notice:


 



20 E 20th
Street, 6th
Fl



New York, NY 10003



Attn: Scot Cohen


 


	
 

	
 







 

 

 





 



[Signature Page to Securities Purchase Agreement]

 


	
 


	
 


	
 


	
 







 

 


 

 


 

 


 

 




 

-16-








 







Exhibits:

 



A.               

Form of
Note





 



B.               

Form of
Warrant





 



C.               

Form of Assignment
of Overriding Royalty Interest





 



D.               

Form of Security
Agreement





 


 




 

-17-








 






 




Schedule
A

 

 


	

 


 


 


 


 



Purchaser

	

 


 


 


 



Note Principal Amount

	

 


 


 


 



Warrant Shares

	

 

 


 

 



ORRI


 

	

 

 


 

 



Purchase Price


 


	

Petro
Exploration Funding II LLC


 

	

2,500,000


 

	

1,250,000


 

	

2%


 

	

2,500,000


 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 







 

 

 


 

 


 


 


 


 


 


 




 

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