Document:

exhibit10_5.htm

THIRD AMENDMENT

to the LowCal Agreements (as defined herein)

THIS THIRD AMENDMENT TO THE LOWCAL AGREEMENTS (this “Third Amendment”), dated as of August 14, 2014, is by and among Eos Global Petro, Inc. (“Eos”), Eos Petro, Inc. (“Parent”), LowCal Industries, LLC (“LowCal”) Sail Property Management Group LLC (“Sail”) and LowCo [EOS/Petro], LLC (“LowCo, and collectively referred to with Eos, Parent, LowCal and Sail as the “Parties”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the LowCal Agreements.

WHEREAS, the Parties have previously entered into the following agreements (collectively referred to herein as the “LowCal Agreements”):

	
  

	
a.

	
First Amendment to the LowCal Agreements, dated April 23, 2013, between the Parties;

	
  

	
b.

	
Second Amendment to the LowCal Agreements, dated November 6, 2013, between the Parties;

	
  

	
c.

	
Second Amended and Restated Loan Agreement and Secured Promissory Note, dated November 6, 2013, between Eos and LowCal (the “Note”)

	
  

	
d.

	
Amended and Restated Leasehold Mortgage, Assignment, Security Agreement and Fixture Filing, dated April 23, 2013, between Eos and LowCal;

	
  

	
e.

	
Guaranty, dated February 8, 2013, between Parent and LowCal;

	
  

	
f.

	
Lock-Up/Leak-Out Agreement, dated February 8, 2013, between Parent and LowCal;

	
  

	
g.

	
Lock-Up/Leak-Out Agreement, dated November 6, 2013, between Parent and LowCal;

	
  

	
h.

	
Series B Convertible Preferred Stock Purchase Agreement, dated February 8, 2013, between Parent and LowCal;

	
  

	
i.

	
Series B Convertible Preferred Stock Purchase Agreement, dated April 23, 2013, between Parent and LowCal;

	
  

	
j.

	
Common Stock Purchase Agreement, dated November 6, 2013, between Parent and LowCal (the “Third Stock Purchase Agreement”);

	
  

	
k.

	
January 9, 2013 Extension Agreement dated November 6, 2013 between the Parties (the “Extension Agreement”); and

	
  

	
l.

	
Compliance/Oversight Agreement, dated February 8, 2013, between Eos and Sail.

 

  

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WHEREAS, as of May 1, 2014, LowCal has funded $4,250,000.00 of the total $5,000,000.00 of the Note, leaving $750,000.00 unfunded.

WHEREAS, the Parties reached certain understandings as of May 1, 2014 regarding funding the remainder of the Note and additional compensation payable to LowCal therefor, subject to obtaining the approval of the Parent’s board of directors.

WHEREAS, at a meeting held on the date first written above, the Parent’s board approved the terms of the understandings reached between the Parties, and so the Parties now desire to memorialize the terms of such understandings in writing in this Third Amendment.

WHEREAS, the Parties now desire to amend certain provisions of the LowCal Agreements as set forth herein.

NOW, THEREFORE, in consideration of covenants and agreements contained herein, and intending to be legally bound hereby, the Parties hereby agree to amend the LowCal Agreements as follows:

1.           Extension for Payment of Final Installment. Section 1.1(e) of the Note is hereby amended and restated in its entirety to read as follows:

(e) On or before June 30, 2014 (the “Closing Date”), Holder shall pay to Borrower $750,000.00 (the “Final Installment”).

2.           Amendment to Note Conversion Price. The first sentence of Section 2.5 of the Note is hereby amended and restated in its entirety to read as follows:

 

The principal amount of the Note and all accrued but unpaid interest thereon may be converted in whole or in part at any time at the election of the Holder into restricted shares of common stock of Parent at a conversion price of $2.50 per share (“Conversion Shares”), provided, however that under no circumstances may Holder elect to effect a conversion if, after giving effect to such conversion, LowCal would  beneficially own in excess of 9.99% of the shares of the Company outstanding immediately after giving effect to such conversion. For purposes of the foregoing sentence, the number of shares beneficially owned by the Holder and its Affiliates (as defined below) shall include the number of shares issuable upon the conversion with respect to which the determination of such sentence is being made, but shall exclude the number of shares which would be issuable upon (A) conversion of the remaining, no converted portion of this Note beneficially owned by Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or non-converted portion of any other securities of the Company (including, without limitation, any other notes or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this section, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder and the rules and regulations promulgated thereunder and the rules and regulations promulgated thereunder (the “Exchange Act”).  To the extent that the limitation contained in this section applies, the determination of whether this Note is convertible (in relation to other securities owned by Holder) and of which a portion of this Note is convertible shall be in the sole discretion of Holder.  To ensure compliance with this restriction, Holder will be deemed to represent to the Company each time it elects to convert that such conversion has not violated the restrictions set forth in this paragraph and the Company shall have no obligation to verify or confirm the accuracy of such determination.  In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated

 

  

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thereunder.  For purposes of this section, in determining the number of outstanding shares, Holder may rely on the number of outstanding shares as reflected in (x) the Company’s most recent quarterly or annual report on Form 10-QSB or Form 10-KSB or equivalent similar filing on such public disclosure service as the Company may then be utilizing, as the case may be, (y) a more recent public announcement by the Company including on the OTC Markets website, or (z) any other notice by the Company or the Company’s transfer agent approved by the Company setting forth the number of shares outstanding.  Upon the written or oral request of Holder, the Company shall within two business days confirm orally and in writing to Holder the number of shares then outstanding.  In any case, the number of outstanding shares shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Note, by Holder or its Affiliates since the date as of which such number of outstanding shares was reported.  The provisions of this section may be waived by the Holder, at the election of the Holder, upon not less than 61 days’ prior notice to the Company, and the provisions of this section shall continue to apply until such 61st day (or such later date, as determined by Holder, as may be specified in such notice of waiver).  The provisions of this paragraph shall be implemented in a manner necessary to preserve the intended 9.99% beneficial ownership limitation herein contained and shall not be modified in a manner otherwise than in strict conformity with the terms of this section (or any portion hereof) which may be defective or inconsistent with the intended 9.99% beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such 9.99% limitation.  The limitations contained in this paragraph shall apply to a successor holder of this Note.  “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 of 1933, as amended.

 

The remainder of Section 2.5 shall remain unchanged by this Third Amendment.

3.           Additional Warrant Issuance. Simultaneously with the execution of this Third Amendment and upon obtaining approval of Parent’s board of directors, the Parent shall execute and issue to LowCo the warrant attached hereto as Exhibit A for the purchase of up to 500,000 shares of restricted common stock of the Parent.

 

  

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4.           Acknowledgement of Good Standing.  The Parties agree and acknowledge that any and all Events of Default (as defined in the LowCal Agreements) which may have occurred under the LowCal Agreements on or prior to the date hereof are hereby waived, and the Parties further acknowledge that the LowCal Agreements, as modified by this Third Amendment, are in good standing and full force and effect as of the date hereof.

5.           Acknowledgement of Third Stock Purchase Agreement Amount.  Eos and Parent acknowledge and agree that, so long as the Final Installment of the Loan is funded on or before June 30, 2014, Parent shall sell LowCo 1,000,000 restricted shares of Parent’s common stock pursuant to the terms set forth in the Third Stock Purchase Agreement. LowCal’s failure to fund the Final Installment in accordance with the Note attached to the Second Amendment to the LowCal Agreements shall not reduce the amount of shares sellable to LowCal pursuant to the Third Stock Purchase Agreement, provided, however, that Section 6.5 of the Third Stock Purchase Agreement regarding receipt of less than the full amount of the Loan shall still apply in the event that entire Final Installment of the Loan is not received pursuant to the schedule set forth in Section 1 of this Third Amendment.

6.           Entire Agreement. The LowCal Agreements, as amended by this Third Amendment, embody the entire understanding among the Parties with respect to the subject matter thereof and hereof and can be changed only by an instrument in writing executed by all of the Parties.

7.           Conflict of Terms. In the event of a conflict or inconsistency between the terms of the LowCal Agreements and those of this Third Amendment, the terms of this Third Amendment shall control and govern the rights and obligations of the Parties.

8.           Other Agreements; Ratifications. Except to the extent amended hereby or inconsistent herewith, all of the terms, covenants, conditions and provisions of the LowCal Agreements shall remain in full force and effect, and the Parties hereby acknowledge and confirm that the same are in full force and effect.

9.           Execution.  This Third Amendment may be executed in two or more counterparts, each of which shall be an original, but all of which shall constitute one and the same instrument. Facsimile or other electronic signatures shall be accepted by the Parties as originals.

[remainder of page intentionally left blank, signature page follows]

 

  

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IN WITNESS WHEREOF, the undersigned Parties hereby acknowledge that they have read, understand and consent to the modifications made to the LowCal Agreements by this Third Amendment.

	
 

EOS PETRO, INC.

 

 

By: /s/ Nikolas Konstant

Name: Nikolas Konstant

Title: Chairman

	
 

LOWCAL INDUSTRIES, LLC

 

 

By: /s/ Shlomo Lowy

Name: Kinderlach Ltd Co

Its: Managing Member

	
EOS GLOBAL PETRO, INC.

 

 

By: /s/ Nikolas Konstant

Name: Nikolas Konstant

Title: President

	
SAIL PROPERTY MANAGEMENT GROUP, LLC

 

 

By: /s/ Shlomo Lowy

Name:_______________                                                                

Title: _______________                                                     

 

 

LOWCO [EOS/PETRO], LLC

 

 

By: /s/ Shlomo Lowy

Name: LowCo LLC

Its: Managing Member

 

 

  

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EXHIBIT A to the Third Amendment to the LowCal Agreements

 

 

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

 

 

Warrant No. LOW2014-1

 

August 14, 2014

 

EOS PETRO, INC.

 

WARRANT TO PURCHASE COMMON STOCK

 

****500,000 Shares of Common Stock****

 

THIS WARRANT CERTIFIES THAT, for value received, LowCo [EOS/Petro], LLC, or registered assigns (the “Holder”), is entitled to subscribe for and purchase from Eos Petro, Inc., a Nevada corporation (the “Company”), up to and including the number of fully paid and nonassessable, restricted shares of common stock, par value $0.0001 per share (the “Common Stock”) of the Company set forth above, at the exercise price of $4.00 per share ( the “Warrant Exercise Price”) (and as adjusted from time to time pursuant to Section III hereof), at any time or from time to time from the date first set forth above (the “Issue Date”) and prior to or upon August 14, 2018 (the “Expiration Date”), subject to the provisions and upon the terms and conditions hereinafter set forth.  This Warrant has been issued pursuant to the terms of that certain Third Amendment to the LowCal Agreements, dated as of August 14, 2014, by and among the Company, Eos Global Petro, Inc., LowCal Industries, LLC, Sail Property Management Group LLC, and LowCo [EOS/Petro], LLC.

 

I.           Method of Exercise; Cash Payment; Issuance of New Warrant.

 

A.           Subject to the provisions of this Warrant, the purchase right represented by this Warrant may be exercised by the Holder hereof, in whole or in part and from time to time, at the election of the Holder hereof, by the surrender of this Warrant (with the notice of exercise substantially in the form attached hereto as Exhibit A duly completed and executed) at the principal executive offices of the Company and accompanied by payment to the Company, by wire transfer to an account designated by the Company, of an amount equal to the then applicable Warrant Exercise Price multiplied by the number of Warrant Shares then being purchased.

 

B.           The person or persons in whose name(s) any certificate(s) representing the shares of the Company’s capital stock to be issued upon exercise of this Warrant (the “Warrant Shares”) shall be deemed to have become the holder(s) of record of, and shall be treated for all purposes as the record holder(s) of, the shares represented thereby (and such shares shall be deemed to have been issued) immediately prior to the close of business on the date or dates upon which this Warrant is exercised.  In the event of any exercise of the rights represented by this Warrant, certificates for the Warrant Shares so purchased shall be delivered to the Holder hereof as soon as possible and in any event within twenty (20) days after such exercise and, unless

  

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this Warrant has been fully exercised or expired, a new warrant having the same terms as this Warrant and representing the remaining portion of such shares, if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the Holder hereof as soon as possible and in any event within such 20-day period.

 

II.           Reservation of Shares.   During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved for the purpose of the issuance upon exercise of the purchase rights evidenced by this Warrant a sufficient number of shares of its capital stock to provide for the exercise of the rights represented by this Warrant.

 

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

 

A.           Reclassification.  In case of any reclassification or change of securities of the class issuable upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination) into the same or a different number or class of securities, the Company shall duly execute and deliver to the Holder of this Warrant a new warrant (in form and substance reasonably satisfactory to the Holder of this Warrant), so that the Holder of this Warrant shall thereafter be entitled to receive upon exercise of this Warrant, at a total purchase price not to exceed that payable upon the exercise of the unexercised portion of this Warrant, and in lieu of the shares of Common Stock theretofore issuable upon exercise of this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification or change by a holder of the number of shares then purchasable under this Warrant.  The Company shall deliver such new warrant as soon as possible and in any event within 20 days after such reclassification or change.  Such new warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section III.  The provisions of this subparagraph (A) shall similarly apply to successive reclassifications or changes.

 

B.           Stock Splits or Combination of Shares.  If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide (by stock split) or combine (by reverse stock split) its outstanding shares of capital stock of the class into which this Warrant is exercisable, the Warrant Exercise Price shall be proportionately decreased in the case of a subdivision or increased in the case of a combination, effective at the close of business on the date the subdivision or combination becomes effective and the number of shares of Common Stock issuable upon exercise of this Warrant shall be proportionately increased in the case of a subdivision or decreased in the case of a combination, and in each case to the nearest whole share, effective at the close of business on the date the subdivision or combination becomes effective.  The provisions of this subparagraph (B) shall similarly apply to successive subdivisions or combinations of outstanding shares of capital stock into which this Warrant is exercisable.

 

C.           Common Stock Dividends.  If the Company at any time while this Warrant is outstanding and unexpired shall pay a dividend with respect to Common Stock payable in Common Stock, then (i) the Warrant Exercise Price shall be adjusted, from and after the date of determination of stockholders entitled to receive such dividend or distribution (the “Record Date”), to that price determined by multiplying the Warrant Exercise Price in effect immediately prior to such date of determination by a fraction (A) the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution, and (B) the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution and (ii) the number of shares of Common Stock issuable upon exercise of this Warrant shall be proportionately adjusted, to the nearest whole

  

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share, from and after the Record Date by multiplying the number of shares of Common Stock purchasable hereunder immediately prior to such Record Date by a fraction (A) the numerator of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution, and (B) the denominator of which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution.  The provisions of this subparagraph (C) shall similarly apply to successive Common Stock dividends by the Company.

 

IV.           Notice of Adjustments.  Whenever the Warrant Exercise Price or the number of shares of Common Stock purchasable hereunder shall be adjusted pursuant to Section III above, the Company shall deliver a written notice, setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Warrant Exercise Price and the number of shares of Common Stock purchasable hereunder after giving effect to such adjustment, and shall use commercially reasonable efforts to cause copies of such notice to be delivered to the Holder of this Warrant within twenty (20) days after the occurrence of the event resulting in such adjustment at such Holder’s last known address in accordance with Section IX hereof.

 

V.           Fractional Shares.  No fractional shares will be issued in connection with any exercise hereunder, but in lieu of such fractional shares, the number of shares of Common Stock to be issued shall be rounded up to the nearest whole number.

 

VI.           Compliance with Securities Act of 1933; Transfer of Warrant or Shares.

 

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

 

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

 

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

 

B.           Transferability of the Warrant.  Notwithstanding anything herein to the contrary, the Warrants shall be transferable to any other person with the prior written consent of the Company, which shall not be unreasonably withheld.

 

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

 

(i)            surrender this Warrant or certificate representing Warrant Shares at the principal executive offices of the Company or provide evidence reasonably satisfactory to the Company of the loss,

 

  

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theft or destruction of this Warrant or certificate representing Warrant Shares and an indemnity agreement reasonable satisfactory to the Company,

 

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

 

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

 

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

 

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

 

VII.           No Rights as Shareholders; Information.  Prior to exercise of this Warrant, the  Holder of this Warrant, as such, shall not be entitled to vote the Warrant Shares or receive dividends on or be deemed the holder of such shares, nor shall anything contained herein be construed to confer upon the Holder of this Warrant, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until this Warrant shall have been exercised and the shares of Common Stock purchasable upon the exercise hereof shall have become deliverable, as provided herein.

 

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

 

IX.           Notices.  Any notice, request, communication or other document required or permitted to be given or delivered to the Holder hereof or the Company shall be in the manner set forth in the Note Purchase Agreement.

 

X.           Reorganizations.  In case of any reorganization of the Company, or in case of the consolidation or merger of the Company with or into any other legal entity (other than a merger or

 

  

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consolidation in which the Company is the continuing legal entity) or of the sale of the properties and assets of the Company as, or substantially as, an entirety to any other legal entity (collectively, "Reorganizations"), each Warrant shall after such Reorganization be exercisable, upon the terms and conditions specified in this Warrant Certificate, for the stock or other securities or property (including cash) to which a holder of the number of Common Shares purchasable (at the time of such Reorganization) upon exercise of such Warrant would have been entitled upon such Reorganization if such Warrant had been exercised in full immediately prior to such Reorganization; and in any such case, if necessary, the provisions set forth in this Section X with respect to the rights and interests thereafter of the holders of the Warrants shall be appropriately adjusted so as to be applicable, as nearly as may reasonably be, to any such stock or other securities or property thereafter deliverable upon exercise of the Warrants.

 

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

 

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

 

XIII.           Governing Law.  This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Nevada, without reference to principles governing choice or conflicts of laws.

 

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

 

XV.           No Impairment.  The Company will not, by an voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Warrant by the Company, but will at all times in good faith assist in carrying out all the provisions of this Warrant and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Holder of this Warrant against impairment.

 

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

 

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

 

XVIII.           Survival of Representations, Warranties and Agreements.  All representations and warranties of the Company and the Holder hereof shall survive the Issue Date of this Warrant, the exercise or conversion

 

  

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of this Warrant (or any part hereof) or the termination or expiration of rights hereunder.  All agreements of the Company and the Holder hereof contained herein shall survive indefinitely, until by their respective terms, they are no longer operative.

 

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

 

 

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           IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be duly executed as of the issue date of this Warrant by its duly authorized officers.

EOS PETRO, INC.

a Nevada corporation

By:           /s/ Nikolas Konstant

Name:      Nikolas Konstant

Title:        Chairman

  

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EXHIBIT A to the Warrant

 

NOTICE OF EXERCISE

 

To:  EOS PETRO, INC. (the “Company”)

 

1.      The undersigned hereby elects to purchase __________ shares of Common Stock of the Company pursuant to the terms of the attached Warrant, and tenders herewith:

 

           ____           payment of the purchase price of such shares in full

 

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

 

_________________________________________

(Name)

_________________________________________

(Address)

_________________________________________

(City, State)

 

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

_______________

          (Date)

__________________________________________

        (Signature)

 

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

  

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EXHIBIT B to the Warrant

 

FORM OF ASSIGNMENT

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

 

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

 

	
  

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

	
  

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

_______________

          (Date)

____________________________________

        (Signature)

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

 

  

-9-ex4-5.htm

Exhibit 4.5

 

FOURTH FORBEARANCE AND MODIFICATION AGREEMENT

This Fourth Forbearance and Modification Agreement (this “Agreement") is made as of August 12, 2014 by and among Ranor, Inc., a Delaware corporation, having a place of business and mailing address of 1 Bella Drive, Westminster, MA 01473-1058  (the “Borrower”), TechPrecision Corporation, a Delaware corporation, having a place of business and mailing address of 3477 Corporate Parkway - Suite 140, Center Valley, PA 18034 (the "Guarantor”) and Santander Bank, N.A. (formerly known as Sovereign Bank), a national banking association, with a place of business at 75 State Street, Boston, MA 02109 (the "Lender").

Reference is hereby made to the following documents relating to the issuance of certain Massachusetts Development Finance Agency Revenue Bonds (hereinafter collectively referred to as the “Loan Documents”) by and among the Borrower and the Guarantor (collectively, the "Obligors") and the Lender, including, without limitation, the following:

a. A certain Bond Purchase Agreement among the Lender, the Obligors and Massachusetts Development Finance Agency dated on or about December 30, 2010;

b. Massachusetts Development Finance Agency Revenue Bonds, Ranor Issue, Series 2010A, in the principal amount of $4,250,000.00 (the “Bonds”);

c. A certain Mortgage, Loan and Security Agreement among the Lender, the Borrower and Massachusetts Development Finance Agency, recorded with the Worcester County Registry of Deeds at Book 7331, Page 96 (the “Mortgage”);

d. A certain Collateral Assignment of Leases and Rents among the Lender and the Borrower, recorded with the Worcester County Registry of Deeds at Book 7331, Page 178;

e. A certain Guaranty executed by the Guarantor dated on or about December 30, 2010;

f. A certain ISDA 2002 Master Agreement, and confirmations of trades issued thereunder (the “Swap Agreement”);

g. A certain Forbearance and Modification Agreement dated on or about January 16, 2014;

h. A certain Depository Account, Security and Pledge Agreement dated May 30, 2014 respecting Account Number 2771763737 (the “Collateral Account”);

i. A certain Forbearance and Modification Agreement dated May 30, 2014; and

j. A certain Forbearance and Modification Agreement dated July 1, 2014 (the “Third Forbearance Agreement”).

The Obligors acknowledge and agree that as a result of the Borrower’s failure to pay its indebtedness to the Lender arising under the Loan Documents on or before the Forbearance Termination Date specified in the Third Forbearance Agreement, all such indebtedness is due and payable in full.  The Borrower acknowledges and agrees that the Lender has no obligation to make additional loans or otherwise extend credit to the Borrower under the Loan Documents or otherwise.  The Borrower has requested that the Lender forbear from exercising its rights and remedies under the Loan Documents, and the Lender agrees to do so until the Forbearance Termination Date (as hereinafter defined) upon the following terms and conditions:

1 Ratification of Existing Agreements.

1.1 All of the Obligors' obligations, indebtedness and liabilities to the Lender as evidenced by or otherwise arising under the Loan Documents and this agreement (the “Indebtedness”), except as otherwise expressly modified in this Agreement upon the terms set forth herein and therein, are, by the Obligors' execution of this Agreement, ratified and confirmed in all respects by the Obligors. By the Obligors' execution of this Agreement, the Obligors represent and warrant that no counterclaim, right of set-off or defense of any kind exists or is outstanding with respect to the Indebtedness.

1.2 As of August 12, 2014, the aggregate principal amount of the Indebtedness is equal to $1,482,677.77, plus accrued but unpaid interest, early termination fees payable in accordance with the terms of the Swap Agreement, and any other costs or fees incurred under the Loan Documents or this Agreement.

 

 

 

 

  

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1.3 The entire amount of the Indebtedness is immediately due and payable to the Lender without defense, counterclaim or offset.

2 Forbearance Obligations.

2.1 Subject to the satisfaction of the condition precedent set forth below , the Lender agrees to forbear from accelerating the payment the Indebtedness and instituting proceedings to enforce its rights and remedies under the Loan Documents until that date (the "Forbearance Termination Date") which is defined as the earliest to occur of:

2.1.1 September 30, 2014;

2.1.2 an Event of Default under the Loan Documents (other than those Events of Default now existing, any existing defaults not having been waived hereunder);

2.1.3 the failure of the Obligors to comply with the terms of this Agreement;

2.1.4 the initiation of any federal or state bankruptcy, insolvency or similar proceeding by or against the Obligors;

2.1.5 the commencement of litigation or legal proceedings by the Obligors against the Lender or any of its affiliates; or

2.1.6 the failure of the Obligors to comply with any term or condition of any other agreement, document or instrument evidencing any other indebtedness to the Lender.

2.2 Upon the termination of the Lender's forbearance obligations hereunder, the Lender shall be free in its sole and absolute discretion to proceed to enforce any or all of its rights and remedies under or in respect of the Loan Documents and applicable law.  All of the Obligors' obligations and liabilities to the Lender hereunder (including without limitation the Obligors' payment obligations) shall survive the Forbearance Termination Date, and all of such obligations are secured under the Loan Documents and any other documents, instruments or agreements pursuant to which the Obligors may, from time to time, grant to the Lender collateral security for the Obligors' obligations to the Lender.

3 Condition Precedent.  The Lender's forbearance obligations hereunder shall be subject to, and shall not be effective or enforceable until the satisfaction of the condition precedent that the Borrower shall have paid:

3.1  the installment of principal of the Bonds due on August 1, 2014 in the amount of $17,708.33, plus interest; and

3.2 the Forbearance Fee of $30,000.00 required under the Third Forbearance Agreement.

4 Interest.

4.1 Notwithstanding anything to the contrary set forth in the Loan Documents, the outstanding principal amounts owing from the Borrower to the Lender pursuant to the Bonds shall bear interest commencing August 1, 2014 at an interest rate per annum equal to: sixty-five percent (65%) of the sum of (a) one month LIBOR; plus, (b) 6.75%.  Interest shall continue to be payable at the times and in the manner set forth in the Loan Documents.

4.2 Notwithstanding any provisions of the Loan Documents to the contrary, upon the occurrence of the Forbearance Termination Date the outstanding principal balance of the Bonds shall bear interest at an interest rate per annum equal to: sixty five percent (65%) of the sum of (a) one month LIBOR; plus, (b) 16.0%.

5 Financial Reports.  The Borrower shall continue to provide to the Lender all financial reports and other information required to be provided under the Loan Documents.  In addition:

5.1 On August 15, 2014, and on each Friday thereafter, the Borrower will furnish to the Lender a rolling thirteen week cash flow projection in a form satisfactory to the Lender.

5.2 At the request of the Lender made from time to time, the Obligors shall cause to be delivered to the Lender appraisals and environmental site assessments of all real property owned by the Borrower.  Such appraisals and site assessments shall be performed by professionals satisfactory to the Lender, in form, substance and scope satisfactory to the Lender, and undertaken at the Obligors' sole expense.

 

 

 

 

  

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5.3  The Borrower shall permit the Lender and its agents to enter upon the Borrower's premises for the purpose of conducting a collateral audit, to inspect its books and records, to make extracts therefrom and to discuss the Borrower's affairs with the employees, agents and officers, at the Borrower's expense.

5.4 The Obligors shall at any time or from time to time execute and deliver such further instruments, and take such further action as the Lender may reasonably request, in each case further to effect the purposes of this Agreement and the Loan Documents.

6 Covenants.  Without any prejudice or impairment whatsoever to any of the Lender's rights and remedies contained in the Loan Documents, the Obligors covenant and agree with the Lender as follows:

6.1 The Borrower will pay an installment of principal of the Bonds on September 1, 2014 in the amount of $17,708.33, plus interest at the rate set forth herein.

6.2 The Borrower will retain a management consultant acceptable to Lender (the “Consultant”) no later than August 25, 2014 and the engagement of the Consultant will begin no later than August 29, 2014.

6.3 Notwithstanding anything to the contrary set forth in any of the Loan Documents, the Obligors agree to terminate the Swap Agreement and to pay in full in cash the Indebtedness on the Forbearance Termination Date.

6.4 The Obligors shall comply and continue to comply with all of the terms, covenants and provisions contained in the Loan Documents, except as such terms, covenants and provisions are expressly modified by this Agreement upon the terms set forth herein.

6.5 The Loan Agreement is hereby amended by deleting therefrom Section 5.10(a), and substituting therefor the words, “Intentionally omitted.”

6.6 The Loan Agreement is hereby amended by deleting therefrom Section 5.10(b), and substituting therefor the words, “Intentionally omitted.”

 

 

7 Collateral Account.  In the Lender’s discretion, the Lender may make funds in the Collateral Account available to the Borrower to enable the Borrower to pay ordinary and necessary expenses incurred in the ordinary course of business.

8 Forbearance Fee.  The Borrower shall pay to the Lender a non-refundable forbearance fee equal to $30,000.00 (the "Forbearance Fee"), which shall be deemed fully earned by the Lender upon the execution hereof.  The Forbearance Fee shall be paid in installments, as follows: a first installment in the amount of $15,000.00 payable on September 1, 2014; and, a second installment in the amount of $15,000.00 on the Forbearance Termination Date.  In the event that the Indebtedness is paid in full on or before the date on which any installment of the Forbearance Fee is due, any remaining installments of the Forbearance Fee shall be waived by the Lender.  The Forbearance Fee provided for herein is in addition to the Forbearance Fee required under the terms of the Third Forbearance Agreement.

 

 

9 Expenses.  The Obligors agree to pay to the Lender upon demand (a) an amount equal to any and all out-of-pocket costs or expenses (including legal fees and disbursements) incurred or sustained by the Lender in connection with the preparation of this Agreement and all related matters and (b) from time to time after the Forbearance Termination Date, any and all out-of-pocket costs or expenses (including legal fees and disbursements and reasonable consulting, accounting, appraisal and other similar professional fees and expenses) hereafter incurred or sustained by the Lender in connection with the administration of credit extended by the Lender to the Borrower or the preservation of or enforcement of any rights of the Lender under this Agreement and the Loan Documents or in respect of any of the Obligors' other obligations to the Lender.

10 Partial Payment Not Waiver.  Any partial payments made by the Borrower or the Guarantor or any other party on behalf of the Borrower or the Guarantor and accepted by the Lender will not constitute a waiver of any default, waiver of demand, or waiver of any other right held by the Lender under the Loan Documents or this Agreement.  Except as otherwise modified or amended by this Agreement, all of the terms of the Loan Documents shall remain in full force and effect and are expressly ratified and confirmed by the Borrower and the Guarantor.

 

 

 

  

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11 No Waiver.  Except as otherwise expressly provided for in this Agreement, nothing in this Agreement shall extend to or affect in any way any of the Obligors' obligations or any of the rights of the Lender and remedies of the Lender arising under the Loan Documents, and the Lender shall not be deemed to have waived any or all of such rights or remedies with respect to any Event of Default or event or condition which, with notice or the lapse of time, or both would become an Event of Default under the Loan Documents and which upon the Obligors' execution and delivery of this Agreement might otherwise exist or which might hereafter occur.

12 Release of the Lender.  By execution of this Agreement, the Borrower and the Guarantor jointly and severally acknowledge and confirm that they do not have any offsets, defenses or claims against the Lender, or any of its officers, agents, directors or employees whether asserted or unasserted.  To the extent that they may have such offsets, defenses or claims, the Borrower and the Guarantor and each of their respective successors, assigns, parents, subsidiaries, affiliates, predecessors, employees, agents, heirs, executors, as applicable, jointly and severally, release and forever discharge the Lender, its subsidiaries, affiliates, officers, directors, employees, agents, attorneys, successors and assigns, both present and former (collectively the "Lender Affiliates") of and from any and all manner of action and actions, cause and causes of action, suits, debts, controversies, damages, judgments, executions, claims and demands whatsoever, asserted or unasserted, in law or in equity which against the Lender and/or the Lender Affiliates they ever had, now have or which any of the Borrower’s or the Guarantor’s successors, assigns, parents, subsidiaries, affiliates, predecessors, employees, agents, heirs, executors, as applicable, both present and former ever had or now has, upon or by reason of any manner, cause, causes or thing whatsoever, including, without limitation, any presently existing claim or defense whether or not presently suspected, contemplated or anticipated.

13 Waiver of Requirement of Prejudgment Bond.  In the event of litigation between the Lender and any Obligor in which the Lender seeks injunctive or other equitable relief, each of the Obligors waives any and all rights to require the Lender to provide or furnish a bond or other surety in connection with the issuance of preliminary or permanent injunctive or other equitable relief under Rule 65 of the Federal Rules of Civil Procedure and under any similar rule or provision of the laws or rules of procedure adopted in any jurisdiction wherein the Lender may seek to enforce tis rights.

14 Voluntary Agreement.  The Obligors represent and warrant that they are represented by legal counsel of their choice, are fully aware of the terms contained in this Agreement and have voluntarily and without coercion or duress of any kind, entered into this Agreement and the documents executed in connection with this Agreement.

15 Notices.  Any notice, payment, demand or communication required or permitted to be given by any provision of this Agreement will be deemed to have been given when delivered personally to the party designated to receive such notice or, on the third business day after the same is sent by certified mail, postage and charges prepaid, directed to the following addresses or to such other or additional addresses as any party might designate by written notice to the other parties:

	
To the Lender:

	
With a copy to the Lender’s counsel:

	
John P. Bowen, Vice President

Santander Bank, N.A.

MA1-WCM-0301

446 Main Street

Worcester, MA 01608

	
Bertin C. Emmons, Senior Counsel

Santander Bank, N. A.

NH1-CBO-0410

125 Main Street

Salem, NH 03079

 

 

 

  

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To the Borrower:

	
To the Guarantor:

	
Ranor, Inc.

1 Bella Drive

Westminster, MA 01473-1058

Attention: Alexander Shen, President

	
TechPrecision Corporation

3477 Corporate Parkway - Suite 140

Center Valley, PA 18034

Attention: Richard Fitzgerald, CFO

 

16 Entire Agreement; Binding Affect.  This Agreement constitutes the entire and final agreement among the parties and there are no agreements, understandings, warranties or representations among the parties except as set forth herein.  This Agreement will inure to the benefit and bind the respective heirs, administrators, executors, representatives, successors and permitted assigns of the parties hereto.

17 Severability.  If any clause or provision of this Agreement is determined to be illegal, invalid or unenforceable under any present or future law by the final judgment of a court of competent jurisdiction, the remainder of this Agreement will not be affected thereby.  It is the intention of the parties that if any such provision is held to be invalid, illegal or unenforceable, there will be added in lieu thereof a provision as similar in terms to such provision as is possible, and that such added provision will be legal, valid and enforceable.

18 Headings.  All headings contained in this Agreement are for reference purposes only and are not intended to affect in any way the meaning or interpretation of this Agreement.

19 Governing Law.  This Agreement is executed and delivered in the Commonwealth of Massachusetts and it is the desire and intention of the parties that it be in all respects interpreted according to the laws of the Commonwealth of Massachusetts.  The Obligors specifically and irrevocably consent to the jurisdiction and venue of the federal and state courts of the Commonwealth of Massachusetts with respect to all matters concerning this Agreement or the Loan Documents or the enforcement of any of the foregoing.  The Obligors agree that the execution and performance of this Agreement shall have a Commonwealth of Massachusetts situs and accordingly, the Obligors consent to personal jurisdiction in the Commonwealth of Massachusetts.

20 Counterparts.  This Agreement may be executed in counterparts, each of which will be deemed an original document, but all of which will constitute a single document.  This document will not be binding on or constitute evidence of a contract between the parties until such time as a counterpart of this document has been executed by each of the parties and a copy thereof delivered to each party under this Agreement.

21 Amendment.  Neither this Agreement nor any of the provisions hereof can be changed, waived, discharged or terminated, except by an instrument in writing signed by the parties against whom enforcement of the change, waiver, discharge or termination is sought.

22 WAIVER OF JURY TRIAL.  THE OBLIGORS KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE OR HEREAFTER HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE UNDERLYING TRANSACTIONS.  THE OBLIGORS CERTIFY THAT NEITHER THE LENDER NOR ANY OF ITS REPRESENTATIVES, AGENTS OR COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDER WOULD NOT IN THE EVENT OF ANY SUCH SUIT, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY JURY.

 

 

  

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23 Restriction on Assignment.  The Obligors may not assign any obligations hereunder or under any related agreement to any person without the prior written consent of the Lender.  The Lender may without notice to or consent of any person, sell, assign, grant a participation in or otherwise dispose of all or any portion of the Note, the Agreement and the related agreements.  In connection therewith, the Lender may disclose to a prospective purchaser, assignee, participant or transferee any information possessed by the Lender relating to the loan and the collateral securing the loan.

[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK.  THE SIGNATURE PAGE FOLLOWS.]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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Witness:

	
RANOR, INC.

	
 

 

/s/ Danny Khouly

	
 

 

By:

	
 

 

/s/ Alexander Shen

Alexander Shen, President

	  	
 

TECHPRECISION CORPORATION

	
 

 

/s/ Danny Khouly

	
 

 

By:

	
 

 

/s/ Richard Fitzgerald

Richard Fitzgerald, CFO

	  	
 

SANTANDER BANK, N.A.

	
 

 

/s/ Jan Stone

	
 

 

By:

	
 

 

/s/ John P. Bowen

John P. Bowen, Vice President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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