THIRD AMENDMENT to the LowCal Agreements (as defined herein)

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.

 

 

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

 

 

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.

 

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.

 

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