Document:

EX-10.1

 Exhibit 10.1 

EXECUTION VERSION 
 FIRST AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT 
 FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”),
dated as of the Amendment Effective Date (as herein defined), to the Amended and Restated Revolving Credit Agreement dated as of September 25, 2015 (the “Credit Agreement”), among KBR, Inc. (the “Borrower”),
the several banks and other institutions from time to time parties thereto (the “Lenders”) and Citibank, N.A., as administrative agent (in such capacity, the “Administrative Agent”) for the Lenders. 

W I T N E S S E T H: 

WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make, and have made, certain loans and other extensions of credit to the Borrower; 

WHEREAS, the Borrower has requested certain amendments to the Credit Agreement as set forth herein; and 

WHEREAS, the Lenders are willing to agree to such amendments on the terms set forth herein; 

NOW THEREFORE, in consideration of the premises and mutual covenants contained herein, the undersigned hereby agree as follows: 

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

II. Amendments to the Credit Agreement. Effective as of the Amendment Effective Date (as hereinafter defined)): 

(a) Section 1.01 of the Credit Agreement is amended by adding the following definitions in alphabetical order: 

“Ammonia Project” means an engineering, procurement and construction project relating to an ammonia plant located in
Louisiana, completed by Borrower’s engineering and construction business segment.  

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by
the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution. 
 “Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing
law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule. 

“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member
Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial

 
institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with
its parent; 
 “EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and
Norway. 
 “EEA Resolution Authority” means any public administrative authority or any person entrusted with public
administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution. 

“EU Bail-In Legislation Schedule” means the EU
Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time. 

“Power Project” means an engineering, procurement and construction project relating to an electric power-generating
plant located in Iowa, undertaken by Borrower’s non-strategic business segment. 

“Permitted Ammonia Project Cash Chargebacks” means cash payments on non-cash
estimated project losses incurred by the Borrower directly attributable to the Ammonia Project in an amount not to exceed $44,000,000 recorded for the period commencing with the fiscal quarter ending December 31, 2016 through and including the
fiscal quarter ending September 30, 2017. 
 “Permitted Power Project Cash Chargebacks” means cash payments on non-cash estimated project losses incurred by the Borrower directly attributable to the Power Project in an amount not to exceed $112,000,000 recorded for the period commencing with the fiscal quarter ending
December 31, 2016 through and including the fiscal quarter ending March 31, 2018. 
 “Write-Down and Conversion
Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the
applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule. 

(b) The definition of “Consolidated EBITDA” in Section 1.01 of the Credit Agreement is amended by
(a) deleting the “and” at the end of clause (B) of the proviso thereof, (b) relating “.” with “; and” at the end of clause (C) of the proviso thereof, and (c) adding a new
clause (D) at the end of the proviso thereof as follows: 
 (D) for the purposes of determining Consolidated
EBITDA (solely for purposes of determining compliance with Section 5.03(a) but not for not for any other purpose, including, without limitation, the calculation of the Applicable Margin), to the extent such amounts are included as
deductions from Consolidated EBITDA for the period, Borrower may add back to such Consolidated Net Income Attributable to Borrower all amounts attributed to the Permitted Power Project Cash Chargebacks and the Permitted Ammonia Project Cash
Chargebacks. 

  
 2 

 (c) The definition of “Defaulting Lender” in
Section 1.01 of the Credit Agreement is amended and restated in its entirety as follows: 
 “Defaulting
Lender” means, at any time, subject to Section 2.21(h), (i) any Bank that has failed for three or more Business Days to comply with its obligations under this Agreement to make an Advance and/or make a payment to any
Issuing Bank in respect of a Letter of Credit Advance or make any other payment due hereunder (each a “funding obligation”) unless such Bank has notified the Administrative Agent and the Borrower in writing that such failure
is the result of such Bank’s determination that one or more conditions precedent to funding has not been satisfied (each of which conditions precedent, together with the applicable Default, if any, shall be specifically identified in such
writing), (ii) any Bank that has notified the Administrative Agent, the Borrower or any Issuing Bank in writing or has stated publicly, that it does not intend to comply with its funding obligation hereunder, unless such writing or statement states
that such position is based on such Bank’s determination that one or more conditions precedent to funding cannot be satisfied (each of which conditions precedent, together with the applicable Default, if any, shall be specifically identified in
such writing or public statement), (iii) any Bank that has defaulted on its funding obligations under other loan agreements, credit agreements or similar financing agreements with the Borrower or any Subsidiary thereof, (iv) any Bank that
has, for five or more Business Days, failed to confirm in writing to the Administrative Agent and the Borrower, in response to a written request of the Administrative Agent or the Borrower, that it will comply with its prospective funding
obligations hereunder (provided that such Bank will cease to be a Defaulting Lender pursuant to this clause (iv) upon the Administrative Agent’s and the Borrower’s receipt of such written confirmation),
(v) any Bank with respect to which a Lender Insolvency Event has occurred and is continuing with respect to such Bank or its Parent Company (provided, in each case, that neither the reallocation of funding obligations provided for in
Section 2.21(a) as a result of a Bank’s being a Defaulting Lender nor the performance by Non-Defaulting Lenders of such reallocated funding obligations will by themselves cause the relevant
Defaulting Lender to become a Non-Defaulting Lender) or (vi) any Bank that has become the subject of a Bail-in Action. Any determination by the Administrative Agent
that a Bank is a Defaulting Lender under any of clauses (i) through (vi) above will be conclusive and binding absent manifest error, and such Bank will be deemed to be a Defaulting Lender (subject to
Section 2.21(h)) upon notification of such determination by the Administrative Agent in good faith to the Borrower, the Issuing Banks and the Banks. 

(d) Section 2.21(a)(i) of the Credit Agreement is amended and restated in its entirety as follows: 

(i) the L/C Exposure of such Defaulting Lender will, subject to the limitations in proviso (A) below, automatically be
reallocated (effective on the day such Bank becomes a Defaulting Lender) among the Non-Defaulting Lenders pro rata in accordance with their respective Commitments; provided that
(A) the sum of each Non-Defaulting Lender’s total Revolving Credit Exposure and its Pro Rata Share of the L/C Exposure may not in any event exceed the Commitment of such Non-Defaulting Lender as in effect at the time of such reallocation, and (B) subject to Section 8.20, neither such reallocation

  
 3 

 
nor any payment by a Non-Defaulting Lender pursuant thereto will constitute a waiver or release of any claim the Borrower, the Administrative Agent, the
Issuing Banks or any other Bank may have against such Defaulting Lender or cause such Defaulting Lender to be a Non-Defaulting Lender; and 

(e) Section 5.03(a) of the Credit Agreement is amended and restated in its entirety as follows: 

(a) Consolidated Debt to Consolidated EBITDA. Shall not permit, (1) as of the last day of any fiscal quarter from
the fiscal quarter ending December 31, 2016 to December 31, 2017, the ratio of Consolidated Debt to Consolidated EBITDA, for the four fiscal quarters ending on such date to be greater than 3.50 to 1.00, or (2) as of the last day of
any fiscal quarter thereafter, the ratio of Consolidated Debt to Consolidated EBITDA, for the four fiscal quarters ending on such date to be greater than 3.25 to 1.00. 

(f) A new Section 8.20 is added to the Credit Agreement as follows: 

8.20 Acknowledgement and Consent to Bail-In of EEA Financial Institutions. Notwithstanding
anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the
extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by: 

 

	 	(a)	the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

  

	 	(b)	the effects of any Bail-in Action on any such liability, including, if applicable: 

  

	 	(i)	a reduction in full or in part or cancellation of any such liability; 

  

	 	(ii)	a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise
conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or 

 

	 	(iii)	the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority. 

III. Effectiveness of Amendment. This Amendment shall become effective as of December 21, 2016 (the “Amendment Effective Date”)
upon receipt by the Administrative Agent of (a) counterparts to this Amendment executed by the Borrower and the Subsidiary Guarantors, the Administrative Agent, and the Required Banks, (b) the Amendment Fee as set forth in Section IV below
and (c) any other amounts due and payable to the Administrative Agent. 

  
 4 

 IV. Amendment Fee. The Borrower shall pay to Administrative Agent in immediately available funds, on or
before the Amendment Effective Date, for the account of each Lender that delivers its signature page to this Amendment by the date requested by the Borrower for the delivery of signatures hereto, an amendment fee (the “Amendment
Fee”) in an amount equal to each such Lender’s Commitment times five (5) basis points. The Amendment Fee shall be payable in full upon the Amendment Effective Date and shall be nonrefundable. 

V. Representations and Warranties. The Borrower hereby represents and warrants as of the Amendment Effective Date that after giving effect to this
Amendment, (a) each of the representations and warranties in the Credit Agreement shall be true and correct in all material respects as if made on and as of the Amendment Effective Date (except to the extent that (i) such representations
and warranties relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date and (ii) any such representations or warranties are qualified by a
materiality standard, in which case such representation and warranties shall be true in all respects) and (b) no Default or Event of Default has occurred and is continuing. 

VI. Expenses. The Borrower shall pay all reasonable and invoiced fees, charges and disbursements of counsel to the Administrative Agent related to this
Amendment. 
 VII. Continuing Effect of the Credit Agreement. This Amendment is limited solely to the matters set forth herein and shall not
constitute an amendment or waiver of any other provision of the Credit Agreement or any other Loan Document not expressly referred to herein or be construed as a waiver or consent to any further or future action on the part of any Loan Party that
would require the consent of the Lenders or the Administrative Agent. Except as expressly waived hereby, the provisions of the Credit Agreement or any other Loan Document are and shall remain in full force and effect and are hereby ratified and
confirmed. This Amendment is a Loan Document. 
 VIII. Governing Law. This Amendment shall be governed by and construed in accordance with the laws
of the State of New York. 
 IX. Counterparts. This Amendment may be executed by one or more of the parties hereto on any number of separate
counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Amendment may be delivered by facsimile or other electronic transmission of the relevant signature pages hereof. 

[signature pages follow] 

  
 5 

 WITNESS WHEREOF, the undersigned have caused this Amendment to be executed and delivered by their respective duly
authorized officers as of the date first above written. 
  

			
	BORROWER
	
	KBR, INC.
		
	By:	 	 /s/ James Philip McCormick, Jr.

	Name:	 	James Philip McCormick, Jr.
	Title:	 	Vice President – Finance, Treasurer

 [Signature Page to First Amendment to 

KBR, Inc. Amended and Restated Credit Agreement] 

 CONSENT BY GUARANTORS 

Each of the undersigned Subsidiary Guarantors hereby acknowledges receipt of a copy of the foregoing Amendment, consents to the Amendment and reaffirms the
terms and conditions of the Guarantee executed by it and acknowledges and agrees that such Guarantee remains in full force and effect and is hereby reaffirmed, ratified and confirmed. 

[signatures are on the following page] 

 
			
	SUBSIDIARY GUARANTORS
	
	KBR HOLDINGS, LLC
	
	KELLOGG BROWN & ROOT LLC
	
	KELLOGG BROWN & ROOT SERVICES, INC.
	
	KBR USA LLC
	
	KBR GROUP HOLDINGS, LLC
	
	KBRWYLE TECHNOLOGY SOLUTIONS, LLC
	
	WYLE INC.
		
	By:	 	 /s/ James Philip McCormick, Jr.

	Name:	 	James Philip McCormick, Jr.
	Title:	 	Vice President – Treasurer

  
 [Signature Page to First
Amendment to 
 KBR, Inc. Amended and Restated Credit Agreement] 

 
			
	CITIBANK, N.A., as Administrative Agent
		
	By:	 	 /s/ Maureen P. Maroney

	Name:	 	Maureen P. Maroney
	Title:	 	Vice President
	
	CITIBANK, N.A., as a Bank and as an Issuing Bank
		
	By:	 	 /s/ Maureen P. Maroney

	Name:	 	Maureen P. Maroney
	Title:	 	Vice President

  
 [Signature Page to First
Amendment to 
 KBR, Inc. Amended and Restated Credit Agreement] 

 
			
	 BANK OF AMERICA, N.A.,
 as an
Issuing Bank and a Bank

		
	By:	 	 /s/ Patrick Martin

	Name:	 	Patrick Martin
	Title:	 	Managing Director

  
 [Signature Page to First
Amendment to 
 KBR, Inc. Amended and Restated Credit Agreement] 

 
			
	 BNP PARIBAS,
 as an Issuing Bank and
a Bank

		
	By:	 	 /s/ Liz Chang

	Name:	 	Liz Chang
	Title:	 	Vice President
		
	By:	 	 /s/ Mary-Ann Wong

	Name:	 	Mary-Ann Wong
	Title:	 	Vice President

  
 [Signature Page to First
Amendment to 
 KBR, Inc. Amended and Restated Credit Agreement] 

 
			
	 ING BANK N.V., DUBLIN BRANCH,
 as an
Issuing Bank and a Bank

		
	By:	 	 /s/ Sean Hasset

	Name:	 	Sean Hasset
	Title:	 	Director

  
 [Signature Page to First
Amendment to 
 KBR, Inc. Amended and Restated Credit Agreement] 

 
			
	 THE BANK OF NOVA SCOTIA,
 as an
Issuing Bank and a Bank

		
	By:	 	 /s/ J. Frazell

	Name:	 	J. Frazell
	Title:	 	Director

  
 [Signature Page to First
Amendment to 
 KBR, Inc. Amended and Restated Credit Agreement] 

 
			
	 COMPASS BANK,
 as an Issuing Bank
and a Bank

		
	By:	 	 /s/ Aaron Loyd

	Name:	 	Aaron Loyd
	Title:	 	Vice President

  
 [Signature Page to First
Amendment to 
 KBR, Inc. Amended and Restated Credit Agreement] 

 
			
	LLOYDS BANK PLC, as a Bank
		
	By:	 	 /s/ Erin Walsh

	Name:	 	Erin Walsh
	Title:	 	Assistant Vice President – W004
		
	By:	 	 /s/ Joel Slomko

	Name:	 	Joel Slomko
	Title:	 	Assistant Vice President – S088

  
 [Signature Page to First
Amendment to 
 KBR, Inc. Amended and Restated Credit Agreement] 

 
			
	MUFG UNION BANK, N.A., as a Bank
		
	By:	 	 /s/ Susan Swerdloff

	Name:	 	Susan Swerdloff
	Title:	 	Managing Director

  
 [Signature Page to First
Amendment to 
 KBR, Inc. Amended and Restated Credit Agreement] 

 
			
	 REGIONS BANK,
 as a
Bank

		
	By:	 	 /s/ Joey Powell

	Name:	 	Joey Powell
	Title:	 	Director

  
 [Signature Page to First
Amendment to 
 KBR, Inc. Amended and Restated Credit Agreement] 

 
			
	SUMITOMO MITSUI BANKING CORPORATION, as a Bank
		
	By:	 	 /s/ Katsuyuki Kubo

	Name:	 	Katsuyuki Kubo
	Title:	 	Managing Director

  
 [Signature Page to First
Amendment to 
 KBR, Inc. Amended and Restated Credit Agreement] 

 
			
	AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED, as a Bank
		
	By:	 	 /s/ Robert Grillo

	Name:	 	Robert Grillo
	Title:	 	Director

  
 [Signature Page to First
Amendment to 
 KBR, Inc. Amended and Restated Credit Agreement] 

 
			
	 STANDARD CHARTERED BANK,
 as a
Bank

		
	By:	 	 /s/ Steven Aloupis

	Name:	 	Steven Aloupis A2388
	Title:	 	Managing Director
		 	Loan Syndications
		 	Standard Chartered Bank

  
 [Signature Page to First
Amendment to 
 KBR, Inc. Amended and Restated Credit Agreement] 

 
			
	NATIONAL BANK OF KUWAIT S.A.K., GRAND CAYMAN BRANCH, as a Bank
		
	By:	 	 /s/ Wendy Wanninger

	Name:	 	Wendy Wanninger
	Title:	 	Executive Manager
		
	By:	 	 /s/ Michael McHugh

	Name:	 	Michael McHugh
	Title:	 	Executive Manager

  
 [Signature Page to First
Amendment to 
 KBR, Inc. Amended and Restated Credit Agreement] 

 
			
	 COMERICA BANK,
 as a
Bank

		
	By:	 	 /s/ L.J. Perenyi

	Name:	 	L.J. Perenyi
	Title:	 	Vice President

  
 [Signature Page to First
Amendment to 
 KBR, Inc. Amended and Restated Credit Agreement] 

 
			
	 NBAD AMERICAS N.V.,
 as a
Bank

		
	By:	 	 /s/ David Young

	Name:	 	David Young
	Title:	 	Director, Client Relationship
		 	NBAD Americas N.V.
		
	By:	 	 /s/ Pamela Sigda

	Name:	 	Pamela Sigda
	Title:	 	Chief Operating Officer & SVP
		 	NBAD Americas N.V.

  
 [Signature Page to First
Amendment to 
 KBR, Inc. Amended and Restated Credit Agreement] 

 
			
	 RIYAD BANK HOUSTON AGENCY,
 as a
Bank

		
	By:	 	 /s/ Michael Meiss

	Name:	 	Michael Meiss
	Title:	 	General Manager
		
	By:	 	 /s/ Manny Cafeo

	Name:	 	Manny Cafeo
	Title:	 	Operations Manager

  
 [Signature Page to First
Amendment to 
 KBR, Inc. Amended and Restated Credit Agreement]Exhibit 4.1

 

EXHIBIT A

 

NEITHER THIS SECURITY
NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE
OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

 

U.S.
energy corp.

 

	Warrant Shares:	 	 	Initial Exercise Date: June 21, 2017

 

THIS COMMON STOCK PURCHASE
WARRANT (the “Warrant”) certifies that, for value received,                      
or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after June 21, 2017 (the “Initial Exercise Date”) and on
or prior to the close of business on the five (5) year anniversary of the Initial Exercise Date (the “Termination Date”)
but not thereafter, to subscribe for and purchase from U.S. Energy Corp., a Wyoming corporation (the “Company”),
up to              shares (as subject to adjustment hereunder,
the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall
be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1.          
Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities
Purchase Agreement (the “Purchase Agreement”), dated December 16, 2016, among the Company and the purchasers
signatory thereto.

 

    1

     

    

 

Section
2.            Exercise.

 

a)          Exercise
of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times
on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company or the Transfer Agent (or
such other office or agency that the Company may designate by notice in writing to the registered Holder at the address of the
Holder appearing on the books of the Company), as applicable, of a duly executed facsimile copy or PDF copy submitted by electronic
(or e-mail attachment) of the Notice of Exercise in the form annexed hereto. Within the earlier of (i) three (3) Trading Days and
(ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the
date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable
Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure
specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall
be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required.
Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company
until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which
case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final
Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total
number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records
showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice
of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares
hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on
the face hereof.

 

b)           Exercise
Price. The exercise price per share of the Common Stock under this Warrant shall be $2.05, subject to adjustment hereunder
(the “Exercise Price”).

 

c)           Cashless
Exercise. If at any time after the six-month anniversary of the Closing Date, there is no effective Registration Statement
registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then this Warrant may also
be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled
to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A) = the
last VWAP immediately preceding the time of delivery of the Notice of Exercise giving rise to the applicable “cashless exercise”,
as set forth in the applicable Notice of Exercise (to clarify, the “last VWAP” will be the last VWAP as calculated
over an entire Trading Day such that, in the event that this Warrant is exercised at a time that the Trading Market is open, the
prior Trading Day’s VWAP shall be used in this calculation);

 

(B) = the
Exercise Price of this Warrant, as adjusted hereunder; and

 

    2

     

    

 

(X) =
the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant
if such exercise were by means of a cash exercise rather than a cashless exercise.

 

If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9)
of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period
of the Warrant Shares being issued may be tacked on to the holding period of this Warrant.  The Company agrees not to
take any position contrary to this Section 2(c).

 

“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if OTCQB or OTCQX is not a Trading Market,
the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable,
(c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then
reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding
to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all
other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith
by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company.

 

Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant
to this Section 2(c).

 

    3

     

    

 

d)          Mechanics
of Exercise.

 

i.            Delivery
of Warrant Shares Upon Exercise. Warrant Shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder
by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through
its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and
either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant
Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations
pursuant to Rule 144, and otherwise by physical delivery of a certificate, registered in the Company’s share register in
the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise
to the address specified by the Holder in the Notice of Exercise by the date that is the earlier of (i) three (3) Trading Day and
(ii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise
(such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be
deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant
has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise
Price (other than in the case of a cashless exercise) is received within the earlier of (i) three Trading Days and (ii) the number
of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for
any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the
Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject
to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day
(increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day
after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees
to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable.
As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of
Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery
of the Notice of Exercise.

 

ii.             Delivery
of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder
and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.

 

iii.          Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i)
by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

    4

     

    

 

iv.          Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder,
if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder
is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise
purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated
receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount,
if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common
Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required
to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such
purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver
to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise
and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000
to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such
purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the
Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the
Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right
to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon
exercise of the Warrant as required pursuant to the terms hereof.

 

v.           No
Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the
Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share.

 

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vi.          Charges,
Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or
other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the
Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder;
provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder
and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental
thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees
to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day
electronic delivery of the Warrant Shares.

 

vii.         Closing
of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.

 

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e)           Holder’s
Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution
Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes
of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution
Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination
is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining,
nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii)
exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation,
any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein
beneficially owned by the Holder or any of its Affiliates or Attribution Parties.  Except as set forth in the preceding sentence,
for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing
to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible
for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e)
applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together
with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion
of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this
Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties)
and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, 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 thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder
may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual
report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent
written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon
the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder
the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder
or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported.
The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon
notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that
the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions
of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the
61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof)
which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall
apply to a successor holder of this Warrant.

 

Section 3.            Certain
Adjustments.

 

a)          Stock
Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable
in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon
exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including
by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification
of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately
after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the
aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become
effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

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b)          Adjustment
Upon Issuance of Common Stock or Common Stock Equivalents. If and whenever on or after the Initial Exercise Date, the Company
issues, sells, publicly announces the contemplated issuance or sale of, or in accordance with this Section 3(b) is deemed to have
issued or sold, any shares of Common Stock (including the issuance, sale or public announcement of the issuance or sale, of shares
of Common Stock owned or held by or for the account of the Company, but excluding shares of Common Stock deemed to have been issued
or sold by the Company in connection with any Exempt Issuance) for a consideration per share (the “New Issuance Price”)
less than a price (the “Applicable Price”) equal to the Exercise Price in effect immediately prior to such issuance
or sale or deemed issuance or sale (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive
Issuance, the Exercise Price then in effect shall be reduced to an amount equal to the New Issuance Price; provided, however,
that (i) in no event shall an adjustment be made under this Section 3(b) to a price that is less than $0.392 and (ii) prior to
the Company’s receipt of Shareholder Approval, no adjustment shall be made under this Section 3(b) to a price that is less
than $____ [insert closing bid price on Nasdaq on December 15] (the “Floor Price”) (in each case of (i) and
(ii), as adjusted for any stock splits, reverse splits and similar capital adjustments effected subsequent to the date of the Purchase
Agreement). For purposes of determining the adjusted Exercise Price under this Section 3(b), the following shall be applicable.

 

(i)          Issuance
of Options. If the Company in any manner grants or sells, or the Company publicly announces the issuance or sale of, any rights,
warrants or options to subscribe for or purchase shares of Common Stock or Common Stock Equivalents (rights, warrants or options,
“Options”) and the lowest price per share for which one share of Common Stock is issuable upon the exercise
of any such Options or upon conversion, exercise or exchange of any Common Stock Equivalents issuable upon exercise of any such
Options is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued
and sold by the Company at the time of the granting or sale of such Options for such price per share. For purposes of this Section
3(b)(i), the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Options
or upon conversion, exercise or exchange of any Common Stock Equivalents issuable upon exercise of any such Options” shall
be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one
share of Common Stock upon the granting or sale of the Options, upon exercise of the Options and upon conversion, exercise or exchange
of any Common Stock Equivalents issuable upon exercise of such Options less any consideration paid or payable by the Company with
respect to such one share of Common Stock upon the granting or sale of such Options, upon exercise of such Options and upon conversion
exercise or exchange of any Common Stock Equivalents issuable upon exercise of such Options. No further adjustment of the Exercise
Price shall be made upon the actual issuance of such shares of Common Stock or of such Common Stock Equivalents upon the exercise
of such Options or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Common
Stock Equivalent.

 

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(ii)         Issuance
of Common Stock Equivalents. If the Company in any manner issues or sells, or the Company publicly announces the issuance or
sale of, any Common Stock Equivalents and the lowest price per share for which one share of Common Stock is issuable upon the conversion,
exercise or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding
and to have been issued and sold by the Company at the time of the issuance or sale of such Common Stock Equivalents for such price
per share. For the purposes of this Section 3(b)(ii), the “lowest price per share for which one share of Common Stock is
issuable upon the conversion, exercise or exchange thereof” shall be equal to the sum of the lowest amounts of consideration
(if any) received or receivable by the Company with respect to any one share of Common Stock upon the issuance or sale of the Common
Stock Equivalents and upon conversion, exercise or exchange of such Common Stock Equivalents less any consideration paid or payable
by the Company with respect to such one share of Common Stock upon the issuance or sale of such Common Stock Equivalents and upon
conversion, exercise or exchange of such Common Stock Equivalents. No further adjustment of the Exercise Price shall be made upon
the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Common Stock Equivalents, and
if any such issuance or sale of such Common Stock Equivalents is made upon exercise of any Options for which adjustment of the
Exercise Price has been or is to be made pursuant to other provisions of this Section 3(b), no further adjustment of the Exercise
Price shall be made by reason of such issuance or sale.

 

(iii)        Change
in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion, exercise or exchange of any Common Stock Equivalents, or the rate at which any Common
Stock Equivalents are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any
time, the Exercise Price in effect at the time of such increase or decrease shall be adjusted to the Exercise Price, which would
have been in effect at such time had such Options or Common Stock Equivalents provided for such increased or decreased purchase
price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued
or sold. For purposes of this Section 3(b)(iii), if the terms of any Option or Common Stock Equivalents that was outstanding as
of the Initial Exercise Date are increased or decreased in the manner described in the immediately preceding sentence, then such
Option or Common Stock Equivalents and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof
shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 3(b) shall
be made if such adjustment would result in an increase of the Exercise Price then in effect.

 

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(iv)        Calculation
of Consideration Received. If any Option and/or Common Stock Equivalents is issued in connection with the issuance or sale
or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary Security”,
and such Option and/or Common Stock Equivalents, the “Secondary Securities”, and together with the Primary Security,
each a “Unit”), together comprising one integrated transaction, the aggregate consideration per share of Common
Stock with respect to such Primary Security shall be deemed to be the lower of (x) the purchase price of such Unit, (y) if such
Primary Security is an Option and/or Common Stock Equivalent, the lowest price per share for which one share of Common Stock is
at any time issuable upon the exercise or conversion of the Primary Security in accordance with Section 3(b)(i) or 3(b)(ii) above
and (z) the lowest VWAP of the Common Stock on any Trading Day during the eight Trading Day period immediately following the public
announcement of such Dilutive Issuance (for the avoidance of doubt, if such public announcement is released prior to the opening
of the principal Trading Market on a Trading Day, such Trading Day shall be the first Trading Day in such eight Trading Day period).
If any shares of Common Stock, Options or Common Stock Equivalents are issued or sold or deemed to have been issued or sold for
cash, the consideration received therefor will be deemed to be the net amount of consideration received by the Company therefor. 
If any shares of Common Stock, Options or Common Stock Equivalents are issued or sold or deemed to have been issued or sold for
cash, the consideration received therefor (for the purpose of determining the consideration paid for such Common Stock, Option
or Common Stock Equivalents, but not for the purpose of the calculation of the Black Scholes Value) will be deemed to be the net
amount of consideration received by the Company therefor.  If any shares of Common Stock, Options or Common Stock Equivalents
are issued or sold for a consideration other than cash, the amount of such consideration received by the Company (for the purpose
of determining the consideration paid for such Common Stock, Option or Common Stock Equivalents, but not for the purpose of the
calculation of the Black Scholes Value) will be the fair value of such consideration, except where such consideration consists
of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the
arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt. 
If any shares of Common Stock, Options or Common Stock Equivalents are issued to the owners of the non-surviving entity in connection
with any merger in which the Company is the surviving entity, the amount of consideration therefor (for the purpose of determining
the consideration paid for such Common Stock, Option or Common Stock Equivalents, but not for the purpose of the calculation of
the Black Scholes Value) will be deemed to be the fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such shares of Common Stock, Options or Common Stock Equivalents (as the case may be).  The fair
value of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Holder. 
If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation
Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th)
day following such Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. 
The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses
of such appraiser shall be borne by the Company.

 

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(v)         Record
Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in shares of Common Stock, Options or in Common Stock Equivalents or (B) to subscribe
for or purchase shares of Common Stock, Options or Common Stock Equivalents, then such record date will be deemed to be the date
of the issuance or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may
be.

 

(vi)        No
Readjustments. For the avoidance of doubt, in the event the Exercise Price has been adjusted pursuant to this Section 3(b)
and the Dilutive Issuance that triggered such adjustment does not occur, is not consummated, is unwound or is cancelled after the
facts for any reason whatsoever, in no event shall the Exercise Price be readjusted to the Exercise Price that would have been
in effect if such Dilutive Issuance had not occurred or been consummated.

 

c)          Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues
or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to
any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date
on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as
of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder
exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such
extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase
Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in
the Holder exceeding the Beneficial Ownership Limitation).

 

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d)
         Pro Rata Distributions. During such time as this Warrant
is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its
assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution
of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this
Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the
Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise
of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation)
immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which
the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided,
however, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or
in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such
Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result
in the Holder exceeding the Beneficial Ownership Limitation).

 

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e)          Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets
in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether
by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common
Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization
or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted
into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group
acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person
or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent
exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon
such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard
to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant
is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise
of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to
apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in
a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder
shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental
Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor
Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after,
the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of cash
equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental
Transaction. “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing
Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day
of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental
Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained
from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental
Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered
in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a
remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and
the Termination Date. The payment of the Black Scholes Value will be made by wire transfer of immediately available funds within
five Business Days of the Holder’s election (or, if later, on the effective date of the Fundamental Transaction).
The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the
“Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other
Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance
reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction
and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced
by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number
of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable
and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such
Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock
(but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value
of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting
the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably
satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity
shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this
Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity),
and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant
and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

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f)         Calculations.
All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

g)          Notice
to Holder.

 

i.               Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly
deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment
to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

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ii.              Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the
Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer
of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email
to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least
20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which
a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon
such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice
or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified
in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant
to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the
date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

Section 4.            Transfer
of Warrant.

 

a)          Transferability.
Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions
of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration
rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated
agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder
or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue
to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.
Notwithstanding anything herein to the contrary, the Holder shall not
be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case,
the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment
form to the Company assigning this Warrant full. The Warrant, if properly assigned in accordance herewith, may be exercised
by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

    15

     

    

 

b)          New
Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the
Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants
to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial
Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c)          Warrant
Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and
for all other purposes, absent actual notice to the contrary.

 

d)
         Transfer Restrictions. If,
at the time of the surrender of this Warrant in connection with any
transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration
statement under the Securities Act and under applicable state
securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information
requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee
of this Warrant, as the case may be, comply with the provisions of Section 5.7 of the Purchase Agreement.

 

e)          Representation
by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any
exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for
distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities
law, except pursuant to sales registered or exempted under the Securities Act.

 

Section 5.          Miscellaneous.

 

a)          No
Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in
Section 3.

 

b)          Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of
the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate,
if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation,
in lieu of such Warrant or stock certificate.

 

    16

     

    

 

c)          Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or
granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding
Business Day.

 

d)          Authorized
Shares.

 

The Company covenants
that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient
number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged
with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be
listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance
herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by
the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such
issue).

 

Except and
to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions
as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting
the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable
therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant
and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory
body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking
any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.

 

    17

     

    

 

e)           Jurisdiction.
All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance
with the provisions of the Purchase Agreement.

 

f)           Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does
not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

 

g)         Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all
rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of
this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of
appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.

 

h)          Notices.
Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered
in accordance with the notice provisions of the Purchase Agreement.

 

i)           Limitation
of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase
Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder
for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.

 

j)           Remedies.
The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled
to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert
the defense in any action for specific performance that a remedy at law would be adequate.

 

k)          Successors
and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure
to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and
shall be enforceable by the Holder or holder of Warrant Shares.

 

    18

     

    

 

l)           Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

m)          Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions
of this Warrant.

 

n)          Headings.
The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of
this Warrant.

 

********************

 

(Signature Page Follows)

 

    19

     

    

 

IN WITNESS WHEREOF, the
Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

	 	u.s. energy corp.
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

    20

     

    

 

NOTICE OF EXERCISE

 

To:
       u.s. energy corp.

 

(1)     The
undersigned hereby elects to purchase                
Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment
of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2)     Payment
shall take the form of (check applicable box):

 

 ̈
in lawful money of the United States; or

 

 ̈ if
permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(c).

  

(3)     Please
issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

	 	 	 

 

The Warrant Shares shall be delivered to
the following DWAC Account Number:

 

	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

(4)     Accredited Investor.
The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933,
as amended.

 

[SIGNATURE
OF HOLDER]

 

	Name of Investing Entity:	 
	Signature of Authorized Signatory of Investing Entity:	 
	Name of Authorized Signatory:	 
	Title of Authorized Signatory:	 
	Date:	 

 

     

     

    

 

EXHIBIT B

 

ASSIGNMENT
FORM

 

(To assign the foregoing Warrant, execute
this form and supply required information. Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED, the foregoing Warrant
and all rights evidenced thereby are hereby assigned to

 

	Name:	 
	 	(Please Print)
	Address:	 
	 	(Please Print)
	Phone Number:	 
	 	 
	Email Address: 	 
	 	 
	Dated: ________________ __, ______	 
	 	 
	Holder’s Signature:	 	 
	 	 	 
	Holder’s Address:

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