Document:

Exhibit 10.1

 

SECOND OMNIBUS AMENDMENT

 

THIS SECOND OMNIBUS AMENDMENT (this "Amendment") is entered into as of August 4, 2016 (the "Amendment Date"), between Growblox Sciences, Inc., a Delaware corporation (the "Company"), GB Sciences Nevada LLC, a Nevada limited liability company ("GBS Nevada") and Pacific Leaf Ventures, LP (the "Investor").

 

R E C I T A L S

 

A. The Company and the Investor are parties to that certain Note Purchase Agreement dated as of May 12, 2015 and made effective June 8, 2015 (as amended from time to time, the "Purchase Agreement"), and a related Amended and Restated 6% Senior Secured Convertible Promissory Note in the nominal principal amount of $2,750,000 (the "Note").

 

B. GBS Nevada and the Investor are parties to that certain Amended and Restated Royalty Agreement dated as of February 8, 2016 (the "Royalty Agreement").  Unless otherwise indicated herein, all capitalized terms used herein have the respective meanings set forth in the Purchase Agreement.

 

C. The Company, GBS Nevada and the Investor previously entered into an Omnibus Amendment and Waiver, dated as of February 8, 2016 (the "First Amendment").

 

D. The Company, GBS Nevada and the Investor desire to further amend the Royalty Agreement, the Note, and the First Amendment, and to enter into certain related agreements in connection therewith, as set forth in this Amendment.

 

NOW, THEREFORE, in consideration of these premises and other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree, as follows:

 

1. Funding of the Note.  The Investor and the Company acknowledge and agree that the principal amount of loans advanced by the Investor to the Company under the Note as of the date hereof is $2,595,195, which amount includes (i) $75,000 of expenses incurred by the Investor at the Company's request in connection with the sale of the Teco Facility, which expenses are hereby deemed to constitute advances to the Company under the Note, and (ii) $500,000 of advances that have been converted to common stock of the Company.  The Investor hereby commits to make additional advances to the Company under the Note in the aggregate amount of $154,805 no later than December 31, 2016 so that Investor shall have made aggregate advances to the Company under the Note in the amount of $2,750,000.

 

2.    Amendment to Royalty Agreement. Section 1.2 of the Royalty Agreement is hereby amended and restated in its entirety to read as follows:

 

"1.2  Royalty Payments.  In consideration of the transfer by PACIFIC LEAF of the Intellectual Property pursuant to the Section 1.1, and the Support provided by PACIFIC LEAF to GBS Nevada and GBS Delaware, during the period (the "Royalty Period") commencing on the Effective Date and ending ten (10) years after the date the first complete royalty payment in excess of twenty-five thousand dollars ($25,000) is actually made to PACIFIC LEAF with respect to any fiscal quarter under this Agreement (the "First Royalty Payment Date"), GBS Nevada shall pay to PACIFIC LEAF within forty-five (45) days after the end of each calendar quarter an amount equal to the Royalty Rate (defined below) multiplied by the gross sales revenues of GBS Nevada and its subsidiaries from all sources during the preceding fiscal quarter, including, without limitation (i) from the sale of cannabis produced at the Teco Facility, (ii) from the sale of

 

its cannabis at dispensaries operated by GBS Partners, and (iii) received by it in respect of the Profits Interest issued to under the GBS Partners Agreements.  The Royalty Rate at any time shall be equal to 16.4%; provided, however, that following the later of (i) the seventh anniversary of the First Royalty Payment Date, and (ii) the date that all amounts outstanding under the Note have been repaid in full, the Royalty Rate shall be reduced to 8.2%.  Notwithstanding the foregoing, (i) the maximum aggregate royalty payments to be made to PACIFIC LEAF under this Agreement shall not exceed $2,420,000 with respect to any calendar year, and (ii) in the event the royalty payment required to be paid to PACIFIC LEAF with respect to any fiscal quarter exceeds GBS Nevada's Adjusted EBITDA (as defined below) for such quarter, GBS Delaware shall be entitled to defer the payment of such excess until the next royalty payment is to be made to PACIFIC LEAF hereunder for the succeeding calendar quarter.  For the purposes hereof, "Adjusted EBITDA" means, with respect to any calendar quarter, the sum of GBS Nevada's (i) net income, (ii) interest expense, (iii) income taxes, (iv) depreciation, and (v) amortization, minus the royalty payment to be made hereunder to PACIFIC LEAF with respect to such calendar quarter.  Adjusted EBITDA shall be calculated in accordance with U.S. generally accepted accounting principles and consistent with the Company's financial statements it files with the Securities and Exchange Commission.

 

3. Amendment to Note. Section 3A(viii) of the Note (Management of GBS Nevada) Amendment is hereby deleted in its entirety.

 

4. Amendment to First Amendment Agreement. Section 7 of the First Amendment (GBS Nevada Purchase Option) is hereby de

leted in its entirety.

 

5. Disclosure of Non-public Information.  Each of the Company and GBS Nevada covenant and agree that until the Note has been repaid in full, unless the provisions of this paragraph are expressly waived in writing by the Investor (i) neither the Company nor GBS Nevada shall disclose to the Investor any non-public information with respect to the Company or any of its subsidiaries (including GBS Nevada) that could be deemed to be material to an investor in the common stock of the Company, and (ii) in the event the Company or GBS Nevada discloses such information to the Investor in violation of clause (i) above, the Company shall immediately disclose such information in a Current Report on Form 8-K filed with the Securities and Exchange Commission.

 

6. Issuance of Common Stock and Warrant.  In consideration of the agreements of the Investor under this Amendment, the Company shall issue to the Investor immediately following the execution of this Amendment (i) 1,000,000 shares of the Company's common stock, and (ii) a five-year warrant to purchase 1,500,000 shares of the Company's common stock at a price equal to the closing price of the common stock on the date hereof, substantially in the form of Exhibit A hereto (which includes provisions for cashless exercise).

 

7. Reaffirmation of Loan Documents. Except as amended and modified hereby, all of the terms and provisions of the Purchase Agreement and the other Transaction Documents shall remain in full force and effect and are hereby in all respects ratified and confirmed by the Company.  The Company hereby agrees that except as expressly provided in this Amendment, the amendments and modifications herein contained shall in no manner affect or impair the liabilities, duties and obligations of the Company under the Transaction Documents.

 

8. Representations and Warranties.  As a material inducement for the Investor to enter into this Amendment, the Company hereby represents and warrants to the Investor that after giving effect to this Amendment: (a) all representations and warranties in the Purchase Agreement and the other Transaction Documents are true and correct in all material respects, as though made on the date hereof, except to the

 

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extent that (i) any of them speak to a different specific date or may have otherwise been made inaccurate by the mere passage of time; or (ii) the facts or circumstances on which any of them were based have been changed by transactions or events not prohibited by the Transaction Documents; (b) no Event of Default under the Note will exist after giving effect to this Amendment; and (c) this Amendment has been duly authorized and approved by all necessary organizational action and requires the consent of no other person, and is binding and enforceable against the Company in accordance with its terms.  The Company further represents and warrants to the Investor as of the date of this Amendment that (i) GBS Nevada holds a duly issued provisional certificate (the "Certificate") from the Division of Public & Behavioral Health of the Nevada Department of Health and Human Services to operate an establishment to cultivate medical cannabis at 3550 W. Teco Avenue, Las Vegas, Nevada, (ii) such Certificate is in good standing, (iii) GBS Nevada is in compliance with all applicable legal requirements for the issuance and maintenance of the Certificate, and (iv) neither the Company nor GBS Nevada has received any notice that such Certificate may be revoked nor is any of them aware of any grounds for such revocation.

 

9. Miscellaneous.

 

		(a)	All of the terms and provisions of this Amendment shall bind and inure to the benefit of the parties hereto and their respective successors and assigns.

 

		(b)	This Amendment may be executed in counterparts and by different parties hereto in separate counterparts each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.  Delivery of photocopies of the signature pages to this Amendment by facsimile or electronic mail shall be effective as delivery of manually executed counterparts of this Amendment.

 

		(c)	The headings, captions and arrangements used in this Amendment are, unless specified otherwise, for convenience only and shall not be deemed to limit, amplify or modify the terms of this Amendment, nor affect the meaning thereof.

 

		(d)	Any provision of this Amendment held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

 

		(e)	This Amendment shall be construed in accordance with and governed by the laws of the State of Delaware.

 

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first set forth above.

 

GROWBLOX SCIENCES, INC.

By: /s/ John Poss                         

Name: John Poss

Title: President

GB SCIENCES NEVADA LLC

By: /s/ John Poss                           

Name: John Poss

Title: President

PACIFIC LEAF VENTURES, LP

By: /s/ Sean Harris                        

Name: Sean Harris

 Title: Manager of General Partner

 

 

 

Signature Page to Second Omnibus Amendment

4Exhibit 10.1

 

Execution Version

 

Fourth
Amendment

 

to

 

Credit
Agreement

 

among

 

Energy
One LLC,

as Borrower,

 

The
Guarantor Party Hereto,

 

Wells
Fargo Bank, National Association,

as Administrative Agent,

 

and

 

The Lenders Signatory Hereto

 

 

 

Sole
Bookrunner and Sole Lead Arranger

Wells
Fargo Securities, LLC

 

 

 

     

     

    

 

Fourth
Amendment to Credit Agreement

 

This Fourth
Amendment to Credit Agreement (this “Fourth Amendment”) dated as of August 11, 2016, is among Energy
One LLC, a limited liability company duly formed and existing under the laws of the State of Wyoming (the “Borrower”);
the undersigned Guarantor (the “Guarantor” and collectively with the Borrower, the “Obligors”);
Wells Fargo Bank, National Association, as administrative agent for the Lenders (in
such capacity, together with its successors, the “Administrative Agent”); and the Lenders signatory hereto.

 

Recitals

 

A.           The
Borrower, the Administrative Agent and the Lenders are parties to that certain Credit Agreement dated as of July 30, 2010 (as amended
by the First Amendment to Credit Agreement dated April 10, 2012, the Second Amendment to Credit Agreement dated July 23, 2013 and
the Third Amendment to Credit Agreement dated as of July 16, 2015, the “Credit Agreement”), pursuant to which
the Lenders have made certain credit available to and on behalf of the Borrower.

 

B.           The
Borrower and the Guarantor are parties to that certain Guarantee and Pledge Agreement, dated as of July 30, 2010, made by the Borrower
and each of the other Obligors party thereto in favor of the Administrative Agent (the “Guarantee and Pledge Agreement”).

 

C.           The
Borrower, the Administrative Agent and the Lenders have agreed to amend certain provisions of the Credit Agreement as more fully
set forth herein.

 

D.           NOW,
THEREFORE, in consideration of the premises and the mutual covenants herein contained, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

Section 1.          Defined
Terms. Each capitalized term which is defined in the Credit Agreement, but which is not defined in this Fourth Amendment, shall
have the meaning ascribed such term in the Credit Agreement. Unless otherwise indicated, all section and schedule references in
this Fourth Amendment refer to sections or schedules of the Credit Agreement.

 

Section 2.          Amendments
to Credit Agreement.

 

2.1           Amendments
to Section 1.02.

 

(a)          The
definition of “Agreement” is hereby amended and restated in its entirety to read as follows:

 

“Agreement”
means this Credit Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment,
as the same may from time to time be further amended, modified, supplemented or restated.

 

(b)          The
definition of “Federal Funds Effective Rate” is hereby amended by replacing the period at the end of such definition
with the following:

 

; provided,
that, if the Federal Funds Effective Rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this
Agreement.

 

(c)          The
definition of “LIBO Rate” is hereby amended by replacing the period at the end of such definition with the following:

 

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; provided
that, notwithstanding the foregoing, if the LIBO Rate shall be less than zero, such rate shall be deemed to be zero for the purposes
of this Agreement.

 

(d)          The
definition of “Security Instruments” is hereby amended by inserting the phrase “the Parent Pledge Agreement,”
after the phrase “the Guaranty Agreement,” and before the phrase “mortgages”.

 

(e)          The
following definitions are hereby added where alphabetically appropriate to read as follows:

 

“Fourth
Amendment” means that certain Fourth Amendment to Credit Agreement, dated as of August 11, 2016, among the Borrower,
the Guarantor, the Administrative Agent and the Lenders party thereto.

 

“Fourth
Amendment Effective Date” has the meaning ascribed to such term in the Fourth Amendment.

 

“Parent
Pledge Agreement” means a Pledge Agreement by the Parent in favor of the Administrative Agent in form and substance reasonably
acceptable to the Administrative Agent pledging 7,436,505 shares of common stock issued by Anfield Resources Inc. and owned by
the Parent in favor of the Administrative Agent for the benefit of the Guaranteed Creditors (as defined therein) to secure the
Indebtedness, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.

 

2.2           Amendment
to Section 8.01(c). Section 8.01(c) is hereby amended and restated in its entirety to read as follows:

 

(c)          Certificate
of Financial Officer — Compliance. Concurrently with any delivery of financial statements under Section 8.01(a) or Section
8.01(b), a certificate of a Financial Officer in substantially the form of Exhibit D hereto (i) certifying as to whether a Default
has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect
thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Section 9.01, (iii) stating whether
any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in
Section 7.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying
such certificate and (iv) specifying the general and administrative expense of the Borrower and its Subsidiaries and U.S. Energy
Corp. and its subsidiaries, on a combined basis, for the period from the beginning of the current fiscal year through the most
recently ended fiscal quarter.

 

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2.3           Amendments
to Section 8.13. Section 8.13 is hereby amended as follows:

 

(a)          Section
8.13 is hereby amended by replacing each reference to “85%” therein with a reference to “95%”.

 

(b)         New subsections
(d) and (e) are hereby added to the end of Section 8.13 to read as follows:

 

(d)          In
connection with the expenditure of cash directed toward the acquisition or development of any Oil and Gas Properties by the Parent,
the Borrower or any of their respective Subsidiaries after the Fourth Amendment Effective Date, the Parent and the Borrower shall,
and shall cause their respective Subsidiaries to, deliver at the time of delivery to the Administrative Agent of title information
pursuant to Section 8.13, title information in form and substance acceptable to the Administrative Agent covering 95% of the total
value of such additional Oil and Gas Properties as reflected in the Reserve Report.

 

(e)          If
the Borrower, the Parent or any of their respective Subsidiaries has provided title information for additional Properties under
Section 8.13(d), the Borrower or the Parent shall, and shall cause such respective Subsidiary to, within 60 days of notice from
the Administrative Agent that title defects or exceptions exist with respect to such additional Properties, either (i) cure any
such title defects or exceptions (including defects or exceptions as to priority) which are not permitted by Section 9.03 raised
by such information or (ii) deliver title information in form and substance acceptable to the Administrative Agent so that the
Administrative Agent shall have received, together with title information previously delivered to the Administrative Agent, satisfactory
title information on at least 95% of the value of such additional Oil and Gas Properties.

 

2.4           Amendments
to Section 8.14. Section 8.14 is hereby amended as follows:

 

(a)          Section
8.14(a) is hereby amended by replacing each reference to “85%” therein with a reference to “95%”.

 

(b)          A
new subsection (d) is hereby added to the end of Section 8.14 to read as follows:

 

(d)          In
connection with the acquisition or development of any Oil and Gas Properties by the Parent, the Borrower or any of their respective
Subsidiaries after the Fourth Amendment Effective Date, the Parent and the Borrower shall, and shall cause their respective Subsidiaries
to, grant to the Administrative Agent as security for the Indebtedness, contemporaneously with the delivery of the Reserve Report
required pursuant to Section 8.12, a first-priority Lien (provided that Excepted Liens of the type described in clauses (a) to
(d) and (f) of the definition thereof may exist, but subject to the provisos at the end of such definition) on 95% of the total
value of such additional Oil and Gas Properties acquired or developed. All such Liens will be created and perfected by and in accordance
with the provisions of deeds of trust, security agreements and financing statements or other Security Instruments, all in form
and substance reasonably satisfactory to the Administrative Agent and in sufficient executed (and acknowledged where necessary
or appropriate) counterparts for recording purposes. In order to comply with the foregoing, if any Subsidiary places a Lien on
its Oil and Gas Properties and such Subsidiary is not a Guarantor, then it shall become a Guarantor and comply with Section 8.14(b).

 

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2.5           Amendment
to Section 9.04. Section 9.04 is hereby amended and restated in its entirety to read as follows:

 

			The Borrower will not, and will not permit any of its Subsidiaries to, declare or make, or agree
to pay or make, directly or indirectly, any Restricted Payment, return any capital to its holders of Equity Interests or make any
distribution of its Property to its Equity Interest holders without the prior approval of the Majority Lenders, except that the
Borrower may declare and pay (a) dividends or distributions with respect to its Equity Interests payable solely in additional membership
interests of its Equity Interests (other than Disqualified Capital Stock) and (b) Subsidiaries may declare and pay dividends ratably
with respect to their Equity Interests.

 

2.6           Amendment
to Section 9.12. Section 9.12 is hereby amended by adding the following sentence to the end of Section 9.12:

 

Notwithstanding the foregoing
or anything to the contrary contained herein, without the prior approval of the Majority Lenders, from and after the Fourth Amendment
Effective Date, the Borrower will not, and will not permit any Subsidiary to: (a) sell, assign, farm-out, convey or otherwise transfer
any Property except for (i) the sale of Hydrocarbons in the ordinary course of business and (ii) the sale or transfer of equipment
that is no longer necessary for the business of the Borrower or such Subsidiary or is replaced by equipment of at least comparable
value and use or (b) voluntarily terminate or unwind any Swap Agreements or create any off-setting positions which have the economic
effect of terminating any Swap Agreements.

 

2.7           Amendment
to Article IX. Article IX is hereby amended by adding a new Section 9.20 to the end thereof to read as follows:

 

Section
9.20         General and Administrative Expense. The Borrower shall not permit
general and administrative expense recognized as an expense under GAAP to exceed $3,000,000 in the aggregate for the Borrower
and its Subsidiaries and U.S. Energy Corp. and its subsidiaries, on a combined basis, for fiscal year 2016 or fiscal year 2017.
For purposes of this Section 9.20, general and administrative expenses shall exclude stock-based compensation expense, depreciation,
amortization, and similar expenses that will not ultimately be settled in cash.

 

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2.8           Amendment
to Section 10.01(d). Section 10.01(d) is hereby amended by replacing the phrase “Section 8.14” therein with the
phrase “Section 8.13(e), Section 8.14”.

 

Section 3.          Conditions
Precedent. This Fourth Amendment shall become effective on the date (such date, the “Fourth Amendment Effective Date”)
when each of the following conditions is satisfied (or waived in accordance with Section 12.02):

 

3.1           The
Administrative Agent shall have received from the Lenders and the Borrower counterparts (in such number as may be requested by
the Administrative Agent) of this Fourth Amendment signed on behalf of such Persons.

 

3.2           The
Administrative Agent and the Lenders shall have received all fees and other amounts due and payable on or prior to the Fourth Amendment
Effective Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed
or paid by the Borrower under the Credit Agreement (including, but not limited to, the reasonable fees of Paul Hastings LLP).

 

3.3           The
Administrative Agent shall have received duly executed and notarized deeds of trust and/or mortgages or supplements to existing
deeds of trust and/or mortgages in form satisfactory to the Administrative Agent to the extent necessary, so that (a) the Mortgaged
Properties represent at least 95% of the total value of the Oil and Gas Properties of the Borrower and the Subsidiaries evaluated
in the most recently delivered Reserve Report and (b) the Mortgaged Properties include 100% of the total value of the Oil and Gas
Properties of the Borrower and the Subsidiaries described on Schedule 1 attached to this Fourth Amendment.

 

3.4           The
Administrative Agent shall have received evidence satisfactory to the Administrative Agent that on the Fourth Amendment Effective
Date, the total Revolving Credit Exposures do not exceed the Borrowing Base then in effect.

 

3.5           No
Default shall have occurred and be continuing as of the Fourth Amendment Effective Date.

 

3.6           The
Administrative Agent shall have received from each party thereto duly executed counterparts (in such number as may be requested
by the Administrative Agent) of the Parent Pledge Agreement.

 

3.7           The
Administrative Agent shall have received such other documents as the Administrative Agent or its special counsel may reasonably
require.

 

The Administrative
Agent is hereby authorized and directed to declare this Fourth Amendment to be effective (and the Fourth Amendment Effective Date
shall occur) when it has received documents confirming or certifying, to the satisfaction of the Administrative Agent, compliance
with the conditions set forth in this Section 3 or the waiver of such conditions as permitted in Section 12.02. Such declaration
shall be final, conclusive and binding upon all parties to the Credit Agreement for all purposes.

 

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Section
4.          Borrowing Base Maintenance; Postponement of Next Scheduled Redetermination.

 

4.1           Borrowing
Base Maintenance. For the period from and including the Fourth Amendment Effective Date to but excluding the next Redetermination
Date, the amount of the Borrowing Base shall be $6,000,000. Notwithstanding the foregoing, the Borrowing Base may be subject to
further adjustments from time to time pursuant to Section 2.07(e), Section 8.13(c) or Section 9.12(d). For the avoidance of any
doubt, this Borrowing Base redetermination shall constitute the April 1, 2016 Scheduled Redetermination.

 

4.2           Postponement
of Next Scheduled Redetermination. Notwithstanding the provisions of Section 2.07, in lieu of the October 1, 2016 Scheduled
Redetermination, the next Scheduled Redetermination shall instead occur on December 1, 2016. For the avoidance of any doubt, in
lieu of the Reserve Report as of June 30, 2016 that is required to be furnished to the Administrative Agent and the Lenders on
or before September 1, 2016 pursuant to Section 8.12, the Borrower shall instead furnish to the Administrative Agent and the Lenders
on or prior to November 1, 2016, a Reserve Report as of August 31, 2016.

 

Section
5.          Limited Waivers.

 

Section 9.01(a) provides
that the Borrower will not, as of the last day of any fiscal quarter, permit its ratio of (i) EBITDAX for the four fiscal
quarter then ending to (ii) Interest Expense for such period to be less than 3.0 to 1.0 (such financial covenant, the “Interest
Coverage Ratio Covenant”). The Borrower has informed the Administrative Agent and the Lenders that the Borrower was not
in compliance with the Interest Coverage Ratio Covenant as of the last day of the fiscal quarter ending March 31, 2016 and does
not expect to be in compliance with the Interest Coverage Ratio Covenant as of the last day of the fiscal quarter ending June 30,
2016. Accordingly, the Borrower has requested that the Lenders waive, and the Lenders do hereby waive, the Borrower’s compliance
with the Interest Coverage Ratio Covenant as of the last day of the fiscal quarter ending March 31, 2016 and as of the last day
of the fiscal quarter ending June 30, 2016.

 

Section 9.01(b) provides
that the Borrower will not, at any time, permit its ratio of Total Debt as of such time to EBITDAX for the four fiscal quarters
ending on the last day of the fiscal quarter immediately preceding the date of determination for which financial statements are
available to be greater than 3.5 to 1.0 (such financial covenant, the “Leverage Ratio Covenant”). The Borrower
has informed the Administrative Agent and the Lenders that the Borrower was not in compliance with the Leverage Ratio Covenant
as of the last day of the fiscal quarter ending March 31, 2016 and does not expect to be in compliance with the Leverage Ratio
Covenant as of the last day of the fiscal quarter ending June 30, 2016. Accordingly, the Borrower has requested that the Lenders
waive, and the Lenders do hereby waive, the Borrower’s compliance with the Leverage Ratio Covenant as of the last day of
the fiscal quarter ending March 31, 2016 and as of the fiscal quarter ending June 30, 2016.

 

Section 9.01(c) provides
that the Borrower will not, as of the last day of any fiscal quarter, permit its ratio of (i) consolidated current assets
to (ii) consolidated current liabilities to be less than 1.0 to 1.0 (such financial covenant, the “Current Ratio
Covenant”). The Borrower has informed the Administrative Agent and the Lenders that the Borrower was not in compliance
with the Current Ratio Covenant as of the last day of the fiscal quarter ending March 31, 2016 and does not expect to be in compliance
with the Current Ratio Covenant as of the last day of the fiscal quarter ending June 30, 2016. Accordingly, the Borrower has requested
that the Lenders waive, and the Lenders do hereby waive, the Borrower’s compliance with the Current Ratio Covenant as of
the last day of the fiscal quarter ending March 31, 2016 and as of the last day of the fiscal quarter ending June 30, 2016.

 

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Except as expressly
waived herein, all covenants, obligations and agreements of the Borrower and each Guarantor contained in the Credit Agreement and
the other Loan Documents shall remain in full force and effect in accordance with their terms. Without limitation of the foregoing,
the foregoing waivers are hereby granted to the extent and only to the extent specifically stated herein and for no other purpose
and shall not be deemed to (a) be a consent or agreement to, or waiver or modification of, or amendment to, any other term or condition
of the Credit Agreement, any other Loan Document or any of the documents referred to therein, (b) except as expressly set forth
herein, prejudice any right or rights which the Administrative Agent or the Lenders may now have or may have in the future under
or in connection with the Credit Agreement, any other Loan Document or any of the documents referred to therein, or (c) constitute
any course of dealing or other basis for altering any obligation of the Borrower or any Guarantor or any right, privilege or remedy
of the Administrative Agent or the Lenders under the Credit Agreement, the other Loan Documents, or any other contract or instrument.
Granting the waivers set forth herein does not and should not be construed to be an assurance or promise that consents or waivers
will be granted in the future, whether for the matters herein stated or on other unrelated matters.

 

Section
6.          Post-Closing Covenants.

 

6.1           Title.         Within
90 days following the Fourth Amendment Effective Date, the Administrative Agent shall have received, together with title information
previously delivered to the Administrative Agent, satisfactory title information on at least (a) 95% of the total value of the
Oil and Gas Properties of the Borrower and the Subsidiaries evaluated by the most recently delivered Reserve Report and (b) 100%
of the total value of the Oil and Gas Properties of the Borrower and the Subsidiaries described on Schedule 1 attached to this
Fourth Amendment. 

 

6.2           Riverton
Real Estate.         Within forty-five (45) days following the Fourth Amendment
Effective Date, the Administrative Agent shall have received from the Parent the following:

 

(a)         a duly executed mortgage for the Riverton Real Estate (the “Mortgage”); and 

 

(b)          written
customary legal opinions of local counsel for the Loan Parties with respect to the Mortgage as to such matters as the Administrative
Agent may reasonably request (including the enforceability of each Mortgage and perfection of any related fixture filings (if any)),
in form and substance reasonably satisfactory to the Administrative Agent.

 

6.3           Riverton
Real Estate Title Policy and Survey. If at any time after December 1, 2016, the Administrative Agent determines in its
sole discretion that there is not sufficient collateral for the Indebtedness, then within forty-five (45) days following the Borrower’s
receipt of a notice from the Administrative Agent of such determination (notice of such determination, the “Collateral
Notice”), the Administrative Agent shall have received from the Parent the following:

 

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(a)          a
fully paid American Land Title Association Lender’s Extended Coverage title insurance policy (or a customary marked, binding
title commitment to issue such policies), accompanied by a borrower affidavit or, if required by the Title Company, gap indemnity
in favor of the Title Company, in form and substance reasonably acceptable to the Administrative Agent, including such endorsements
as the Administrative Agent may deem reasonably necessary (including zoning endorsements where available, which may necessitate
the delivery of a zoning report) and in an amount equal to the value of the Riverton Real Estate as approved by the Administrative
Agent, issued by Title Company or another title insurer reasonably acceptable to the Administrative Agent, insuring the Mortgage
to be a valid first and subsisting Lien on the property described therein, free and clear of all defects, excepting only Permitted
Liens, and providing for such other affirmative insurance (including endorsements for future advances under the Loan Documents
and for mechanics’ and materialmen’s Liens (filed and inchoate)) as the Administrative Agent may deem reasonably necessary;
and

 

(b)          a
survey for all real property owned by Parent in Riverton, Wyoming (the “Riverton Real Estate” meeting ALTA/NSPS
2016 Minimum Standard Detail Requirements, including Table A Items 2-4, 7(a), 7(b)1, 7(c), 8, 9, 13, 14, 16, and 20, certified
to the Borrower, the Parent and Administrative Agent and the applicable title insurance company (the “Title Company”).

 

6.4           Riverton
Real Estate Flood Insurance. If at any time any improvement to the Riverton Real Estate is located in a special flood hazard
area and flood insurance is available in the community in which the Riverton Real Estate is located, then upon the earlier to occur
of (a) forty-five (45) days following the Borrower’s receipt of a Collateral Notice and (b) thirty (30) days following the
Borrower’s receipt of a notice from the Administrative Agent that a Lender’s lending requirements or lending policies
require flood insurance on such improvement to the Riverton Real Estate, the Parent shall provide to the Administrative Agent a
copy of the following: the flood insurance policy, the Parent’s application for a flood insurance policy plus proof of premium
payment, a declaration page confirming that flood insurance has been issued, or such other evidence of flood insurance satisfactory
to the Administrative Agent.

 

The
failure by the Borrower or the Parent to comply with any of the requirements of this Section 6 of this Fourth Amendment shall constitute
an immediate Event of Default.

 

Section
7.          Miscellaneous.

 

7.1           Confirmation.  The
provisions of the Credit Agreement, as amended by this Fourth Amendment, shall remain in full force and effect following the Fourth
Amendment Effective Date.

 

7.2           Ratification
and Affirmation; Representations and Warranties.  Each Obligor hereby: (a) acknowledges the terms of this Fourth
Amendment; (b) ratifies and affirms its obligations under, and acknowledges its continued liability under, each Loan Document
and agrees that each Loan Document remains in full force and effect as expressly amended hereby; (c) agrees that from and
after the Fourth Amendment Effective Date each reference to the Credit Agreement in the other Loan Documents shall be deemed to
be a reference to the Credit Agreement, as amended by this Fourth Amendment; and (d) represents and warrants to the Lenders
that as of the date hereof, after giving effect to the terms of this Fourth Amendment: (i) all of the representations and warranties
contained in each Loan Document are true and correct, except to the extent any such representations and warranties are expressly
limited to an earlier date, in which case, such representations and warranties shall continue to be true and correct as of such
specified earlier date, (ii) no Default or Event of Default has occurred and is continuing and (iii) no event, development or circumstance
has occurred or shall then exist that has resulted in, or could reasonably be expected to have, a Material Adverse Effect.

 

    	 	Page 8	 

     

    

 

7.3           Counterparts.  This
Fourth Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts
taken together shall be deemed to constitute one and the same instrument. Delivery of an executed counterpart of a signature page
of this Fourth Amendment by telecopy, facsimile or email transmission shall be effective as delivery of a manually executed counterpart
of this Fourth Amendment.

 

7.4           No
Oral Agreement.  This Fourth Amendment, the Credit Agreement, the Guaranty and Pledge Agreement and the other Loan
Documents executed in connection herewith and therewith represent the final agreement between the parties and may not be contradicted
by evidence of prior, contemporaneous, or oral agreements of the parties. There are no oral agreements between the parties.

 

7.5           GOVERNING
LAW.  THIS FOURTH AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

 

7.6           Payment
of Expenses.  In accordance with Section 12.03, the Borrower agrees to pay or reimburse the Administrative Agent
for all of its reasonable out-of-pocket costs and reasonable expenses incurred in connection with this Fourth Amendment, any other
documents prepared in connection herewith and the transactions contemplated hereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Administrative Agent.

 

7.7           Severability.  Any
provision of this Fourth Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other
jurisdiction.

 

7.8           Successors
and Assigns.  This Fourth Amendment shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.

 

7.9           Loan
Document. This Fourth Amendment is a “Loan Document” as defined and described in the Credit Agreement, and all
of the terms and provisions of the Credit Agreement relating to Loan Documents shall apply hereto.

 

    	 	Page 9	 

     

    

 

7.10         Release.
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, EACH OBLIGOR hereby, for itself
and its successors and assigns, fully and without reserve, releases and forever discharges each LENDER, the Arranger, the Issuing
Bank, and each of their respective successors and assigns, officers, directors, employees, representatives, trustees, attorneys,
agents, advisors (including attorneys, accountants and experts) and affiliates (collectively the “Released Parties”
and individually a “Released Party”) from any and all actions, claims, demands, causes of action, judgments,
executions, suits, debts, liabilities, costs, damages, expenses or other obligations of any kind and nature whatsoever, known or
unknown, direct and/or indirect, at law or in equity, whether now existing or hereafter asserted (INCLUDING, WITHOUT LIMITATION,
ANY OFFSETS, REDUCTIONS, REBATEMENT, CLAIMS OF USURY OR CLAIMS WITH RESPECT TO THE NEGLIGENCE OF ANY RELEASED PARTY), for or because
of any matters or things occurring, existing or actions done, omitted to be done, or suffered to be done by any of the Released
Parties, in each case, on or prior to the FOURTH AMENDMENT Effective Date and are in any way directly or indirectly arising out
of or in any way connected to any of this FOURTH AMENDMENT, the Credit Agreement, any other Loan Document or any of the transactions
contemplated hereby or thereby (collectively, the “Released Matters”). eaCH oBLIGOR, by execution hereof, hereby
acknowledges and agrees that the agreements in this Section 7.10 are intended to cover and be in full satisfaction for all or any
alleged injuries or damages arising in connection with the Released Matters. 

 

[Signature Pages Follow]

 

    	 	Page 10	 

     

    

 

IN WITNESS WHEREOF,
the parties hereto have caused this Fourth Amendment to be duly executed effective as of the Fourth Amendment Effective Date.

 

	BORROWER:	ENERGY ONE LLC
	 	 	 
	 	By:	/s/ David Veltri
	 	Name:	David Veltri
	 	Title:	CEO and President
	 	 	 
	GUARANTOR:	U.S. ENERGY CORP.
	 	 	 
	 	By:	/s/ David Veltri
	 	Name:	David Veltri
	 	Title:	CEO and President

 

     

     

    

 

	ADMINISTRATIVE AGENT:	WELLS FARGO BANK,
	 	NATIONAL ASSOCIATION,
		as Administrative Agent and a Lender
	 	 	 
	 	By:	/s/ Patrick J. Fults
	 	Name:	Patrick J. Fults
	 	Title:	Director

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