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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
Current
Report
PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE
OF REPORT (DATE OF EARLIEST EVENT REPORTED):
July
28, 2023
SUPERIOR
DRILLING PRODUCTS, INC.
(Exact
name of registrant as specified in its charter)
Utah |
|
46-4341605 |
(State
of Incorporation) |
|
(I.R.S.
Employer Identification No.) |
1583
South 1700 East
Vernal,
Utah |
|
84078 |
(Address
of principal executive offices) |
|
(Zip
code) |
Commission
File Number: 001-36453
Registrant’s
telephone number, including area code: (435) 789-0594
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
☐ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
Registered Pursuant to Section 12(b) of the Exchange Act:
Title
of each class: |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered: |
Common
Stock, $0.001 par value |
|
SDPI |
|
NYSE
American |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item
1.01 | Entry
into a Material Definitive Agreement. |
Loan
Agreement
On
July 28, 2023, Superior Drilling Products, Inc. (the “Company”) entered into a Loan Agreement (the “Loan Agreement”)
among Vast Bank, National Association, as lender (the “Lender”), and various subsidiaries of the Company as guarantors (the
“Guarantors”).
The
Loan Agreement provides for loans through the following facilities (collectively, the “Loans”):
| - | Revolving
Line: The lesser of $750,000 or the borrowing base, which is as of a date is 50% of eligible
inventory as calculated under the Loan Agreement (“Revolving Line”), which matures
on July 28, 2025. |
| | |
| - | Term
Loan: $1,719,200 term loan (the “Term Loan”), which matures on July 28, 2028. |
The
proceeds of the Loans were used to repay the Company’s existing secured indebtedness as described under Item 1.02 of this Current
Report, and then shall be used by the Company for working capital and growth capital purposes of the Company and its subsidiaries.
The
interest rate per annum applicable to the Revolving Line at the greater of (a) Prime plus 1.00% and (b) 7.50%. The interest rate per
annum applicable to the Term Loan is 8.18%. The Company will make payments of principal and interest monthly on the Term Loan, and interest
only on the Revolving Line, commencing on August 28, 2023. The balance of principal and interest on both Loans will be due upon maturity,
if not sooner repaid.
The
Company has paid to the Lender a non-refundable upfront fee of 0.75% of each of the Revolving Line and the Term Loan. The Company may
prepay and/or repay the Loans, in whole or in part, at any time without premium or penalty, subject to certain conditions.
The
Loan Agreement contains customary covenants limiting, among other things, the incurrence of additional indebtedness, the creation of
liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other payments in respect of equity interests,
acquisitions, investments, loans and guarantees, subject, in each case, to customary exceptions, thresholds and baskets. The
Loan Agreement also includes certain financial covenants which include a current assets/liabilities ratio, a debt service coverage ratio
and a leverage ratio, as defined in the Loan Agreement. The Loan Agreement also contains customary
events of default.
The
Company’s obligations under the Loan Agreement are guaranteed by the Guarantors, and the obligations of the Company and any Guarantors
are secured by a perfected first priority security interest in substantially all of the existing and future personal property of the
Company and each Guarantor, subject to certain exceptions as noted in the Loan Agreement.
In
addition, in connection with entering into the Loan Agreement, the Company entered into Business Manager Agreements for the purchase
by the Lender of certain domestic and international accounts receivable of the Company. The domestic agreement includes all domestic
accounts other than those from Baker Hughes Company and its subsidiaries. The international agreement includes international accounts
from Schlumberger Oman & Company, CGZ Resources and Weatherford U.S. The face amount of the accounts under each agreement that may
be purchased cannot exceed $2,500,000 under the domestic agreement and $2,000,000 under the international agreement. The service charge
associated with the purchases is 1.25% under the domestic agreement and 2.0% under the international agreement. There are additional
charges if accounts are not paid within 45 days. The accounts are secured by a security interest in the accounts receivable in all of
the Company’s present and after-acquired accounts receivable of the customers as defined in the agreements.
The
description of the Loan Agreement set forth above is qualified in its entirety by reference to the Loan Agreement filed as Exhibit 10.1
hereto, and the promissory notes for each of the Revolving Line and the Term Loan filed as Exhibits 10.2 and 10.3 hereto, and incorporated
herein by reference. The description of the Business Manager Agreements set forth above is qualified in its entirety by reference to
the Business Manager Agreements filed as Exhibits 10.4 and 10.5 hereto, and incorporated herein by reference.
Amendment
to Lease
In
connection with entering into the Loan Agreement, Meier Properties, Series LLC, a subsidiary of the Company, entered into an amendment
(the “Amendment”) to the lease for the Company’s facilities in Vernal, Utah. Under the amendment, the tenant paid a
security deposit of approximately $80,000 in exchange for the landlord entering into Landlord Lien Waiver and Collateral Access Agreement
with the Lender.
The
description of the Amendment set forth above is qualified in its entirety by reference to the Amendment filed as Exhibit 10.4 hereto
and incorporated herein by reference.
Item
1.02 | Termination
of a Material Definitive Agreement. |
In
connection with entering into the Loan Agreement, a portion of the proceeds of the Loans was used to repay in full the amounts outstanding
under the revolving line of credit extended to the Company by Austin Financial Services, Inc. pursuant to the Loan and Security Agreement
entered into in February 2019. As a result of such repayment, such Loan and Security Agreement was terminated.
Item
2.03 | Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
of a Registrant. |
See
Item 1.01 above.
On
August 2, 2023, the Company issued a press release announcing the Loan Agreement. The press release is filed as Exhibit 99.1 to this
Form 8-K and is incorporated herein by reference.
Item
9.01 | Financial
Statements and Exhibits. |
Exhibit
Number |
| Description |
|
| |
10.1 |
| Loan Agreement among Superior Drilling Products, Inc., Vast Bank, National Association, and the guarantors named therein dated July 28, 2023. |
|
| |
10.2 |
| Term Loan Promissory Note between Superior Drilling Products, Inc. and Vast Bank, National Association dated July 28, 2023. |
|
| |
10.3 |
| Revolving Line Promissory Note between Superior Drilling Products, Inc. and Vast Bank, National Association dated July 28, 2023. |
|
| |
10.4 |
| Business Manager Agreement (Domestic) between Vast Bank, National Association and Superior Drilling Company, Inc. dated July 28, 2023. |
|
| |
10.5 |
| Business Manager Agreement (International) between Vast Bank, National Association and Superior Drilling Company, Inc. dated July 28, 2023. |
|
| |
10.6 |
| First Amendment to Commercial Lease dated July 17, 2023 between Ernest M. Cherry, Jr. Revocable Trust and Carole A. Cherry Revocable Trust, as landlord, and Meier Properties, Series LLC, as tenant. |
|
| |
99.1 |
| Press release issued on August 2, 2023. |
|
| |
104 |
| Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date:
August 2, 2023
|
SUPERIOR
DRILLING PRODUCTS, INC. |
|
|
|
/s/
Christopher D. Cashion |
|
Christopher
D. Cashion |
|
Chief
Financial Officer |
Exhibit
10.1
Execution
Version
LOAN
AGREEMENT
dated
as of
July
28, 2023
between
Superior
Drilling Products, Inc.,
as
Borrower,
SUPERIOR
DRILLING SOLUTIONS, LLC,
EXTREME TECHNOLOGIES, LLC,
and
HARD ROCK SOLUTIONS, LLC
as Guarantors,
the
other Guarantors from time-to-time party hereto,
and
VAST
BANK, NATIONAL ASSOCIATION
as
Lender
Table
of Contents
|
|
|
Page |
LOAN
AGREEMENT |
1 |
|
|
|
|
SECTION
1 DEFINITIONS. |
1 |
|
|
|
|
1.01 |
|
Defined
Terms. |
1 |
1.02 |
|
Terms
Generally |
17 |
1.03 |
|
Accounting
Terms |
18 |
1.04 |
|
Divisions |
18 |
|
|
|
|
COMMITMENTS
AND LOANS; PAYMENTS. |
19 |
|
|
|
|
2.01 |
|
Loans
and Borrowings; Notes. |
19 |
2.02 |
|
[Reserved]. |
19 |
2.03 |
|
Interest
on the Loans. |
19 |
2.04 |
|
Fees. |
20 |
2.05 |
|
Payments;
Application of Payments; Debit of Accounts. |
20 |
2.06 |
|
Taxes. |
21 |
|
|
|
|
SECTION
3 CONDITIONS OF LOANS. |
22 |
|
|
|
|
3.01 |
|
Conditions
Precedent to Closing |
22 |
3.02 |
|
Conditions
Precedent to all Revolving Loans |
24 |
3.03 |
|
Procedures
for Borrowing Day Funding Conditions Once Met |
25 |
3.04 |
|
Covenant
to Deliver |
25 |
|
|
|
|
SECTION
4 REPRESENTATIONS AND WARRANTIES. |
25 |
|
|
|
|
4.01 |
|
Existence,
Qualification and Power |
25 |
4.02 |
|
Authorization;
No Conflict; Enforceability |
25 |
4.03 |
|
Perfection
Certificate |
26 |
4.04 |
|
Intellectual
Property |
26 |
4.05 |
|
Collateral;
Security Interests |
26 |
4.06 |
|
Litigation |
27 |
4.07 |
|
Financial
Statements; Material Adverse Effect; No Default |
27 |
4.08 |
|
Solvency |
28 |
4.09 |
|
Compliance
with Laws; Investment Company Act; Margin Regulations |
28 |
4.10 |
|
ERISA
Compliance |
28 |
4.11 |
|
Government
Consents |
29 |
4.12 |
|
Subsidiaries;
Investments |
29 |
4.13 |
|
Taxes |
29 |
4.14 |
|
Insurance |
29 |
4.15 |
|
Disclosure |
29 |
4.16 |
|
Sanctions;
Anti-Corruption |
30 |
4.17 |
|
Environmental
Matters |
30 |
4.18 |
|
Capital
Structure |
30 |
4.19 |
|
Possession
of Franchises; Licenses |
31 |
4.20 |
|
Broker’s
Fee |
31 |
4.21 |
|
Use
of Proceeds |
31 |
4.22 |
|
Guarantors |
31 |
SECTION
5 AFFIRMATIVE COVENANTS. |
31 |
|
|
|
|
5.01 |
|
Financial
Statements, Reports, Certificates |
31 |
5.02 |
|
Existence;
Government Approvals. |
33 |
5.03 |
|
Maintenance
of Property; Licenses; Inventory |
33 |
5.04 |
|
Payment
of Obligations; Taxes; Pensions |
34 |
5.05 |
|
Compliance
with Laws; Sanctions; Anti-Corruption Laws |
34 |
5.06 |
|
Inspection
Rights |
34 |
5.07 |
|
Books
and Records |
34 |
5.08 |
|
Insurance |
35 |
5.09 |
|
Environmental
Matters |
36 |
5.10 |
|
Formation
or Acquisition of Subsidiaries |
36 |
5.11 |
|
Use
of Proceeds |
37 |
5.12 |
|
Further
Assurances |
37 |
5.13 |
|
Cash
Management Products |
37 |
|
|
|
|
SECTION
6 NEGATIVE COVENANTS. |
37 |
|
|
|
|
6.01 |
|
Indebtedness |
37 |
6.02 |
|
Encumbrances |
38 |
6.03 |
|
Dispositions |
38 |
6.04 |
|
Changes
in Business, Fiscal Year, Management, Control, or Business Locations |
38 |
6.05 |
|
Fundamental
Changes; Acquisitions |
39 |
6.06 |
|
Restricted
Payments |
39 |
6.07 |
|
Investments |
39 |
6.08 |
|
Transactions
with Affiliates |
39 |
6.09 |
|
Payments
on Account of Indebtedness |
39 |
6.10 |
|
Investment
Company Act; Margin Regulation; Compliance |
40 |
6.11 |
|
ERISA |
40 |
6.12 |
|
Restrictive
Agreements |
40 |
6.13 |
|
Sanctions;
Anti-Corruption |
40 |
6.14 |
|
Change
in Organizational Documents |
40 |
6.15 |
|
Financial
Covenants |
40 |
|
|
|
|
SECTION
7 EVENTS OF DEFAULT. |
41 |
|
|
|
|
7.01 |
|
Payment
Default |
41 |
7.02 |
|
Covenant
Default. |
41 |
7.03 |
|
Attachment |
41 |
7.04 |
|
Insolvency |
42 |
7.05 |
|
BM
Facilities |
42 |
7.06 |
|
Other
Agreements |
42 |
7.07 |
|
Judgments;
Penalties |
42 |
7.08 |
|
Misrepresentations |
42 |
7.09 |
|
Loan
Documents |
43 |
7.10 |
|
Change
in Control |
43 |
7.11 |
|
ERISA |
43 |
7.12 |
|
Guaranty |
43 |
7.13 |
|
Failure
of Security |
43 |
SECTION
8 LENDER’S RIGHTS AND REMEDIES. |
43 |
|
|
|
|
8.01 |
|
Rights
and Remedies |
43 |
8.02 |
|
Power
of Attorney |
45 |
8.03 |
|
Protective
Payments |
45 |
8.04 |
|
Accounts
Collection |
46 |
8.05 |
|
Application
of Payments and Proceeds Upon Default |
46 |
8.06 |
|
Lender’s
Liability for Collateral |
46 |
8.07 |
|
No
Obligation to Pursue Others |
47 |
8.08 |
|
Demand
Waiver |
47 |
|
|
|
|
SECTION
9 GENERAL PROVISIONS. |
47 |
|
|
|
|
9.01 |
|
Notices |
47 |
9.02 |
|
Successors
and Assigns |
48 |
9.03 |
|
Indemnification |
48 |
9.04 |
|
Amendments;
Waivers; Integration; Remedies Cumulative |
48 |
9.05 |
|
Time
of Essence |
49 |
9.06 |
|
Severability
of Provisions |
49 |
9.07 |
|
Counterparts |
49 |
9.08 |
|
Survival |
49 |
9.09 |
|
Costs
and Expenses |
49 |
9.10 |
|
Electronic
Execution of Documents |
50 |
9.11 |
|
Right
of Setoff |
50 |
9.12 |
|
Relationship |
50 |
9.13 |
|
Third
Parties |
50 |
9.14 |
|
Choice
of Law, Venue, Service of Process, and Jury Trial Waiver |
50 |
9.15 |
|
PATRIOT
Act; Compliance with Sanctions |
51 |
9.16 |
|
Waiver
of Consequential Damages, Etc |
52 |
9.17 |
|
Interest
Rate Limitation |
52 |
9.18 |
|
Payment
Set Aside |
52 |
9.19 |
|
Construction;
Headings; Knowledge |
52 |
|
|
|
|
SECTION
10 GUARANTY. |
53 |
|
|
|
|
10.01 |
|
Guaranty |
53 |
10.02 |
|
Limitation
of Liability |
53 |
10.03 |
|
Term;
Reinstatement |
53 |
10.04 |
|
Guaranty
Absolute and Unconditional; Waiver of Defenses |
54 |
10.05 |
|
Waivers
and Acknowledgments |
54 |
10.06 |
|
Agreement
to Pay; Subrogation; Etc |
55 |
10.07 |
|
Taxes |
55 |
10.08 |
|
Additional
Guarantors |
56 |
10.09 |
|
Cumulative
Liability |
56 |
SECTION
11 SECURITY INTEREST. |
56 |
|
|
|
|
11.01 |
|
Grant
of Security Interest |
56 |
11.02 |
|
Priority
of Security Interest; Additional Collateral Representations |
57 |
11.03 |
|
Priority
of Security Interest |
59 |
11.04 |
|
Collateral
Related Notices |
60 |
11.05 |
|
Updated
Perfection Certificate |
61 |
11.06 |
|
Maintenance
of Collateral; Compliance |
61 |
11.07 |
|
Maintenance
of Perfected Security Interest; Further Assurances |
61 |
|
|
EXHIBIT
A |
|
|
|
FORM
OF BORROWING BASE CERTIFICATE |
|
|
|
EXHIBIT
B |
|
|
|
FORM
OF COMPLIANCE CERTIFICATE |
|
EXHIBITS
Exhibit A – Form of Borrowing Base Certificate |
|
Exhibit B – Form of Compliance Certificate |
|
Exhibit C – Form of Joinder |
|
LOAN
AGREEMENT
This
LOAN AGREEMENT (this “Agreement”) is entered into as of July 28, 2023, by and among Vast Bank, National
Association (together with its successors and assigns, “Lender”), Superior Drilling Products, Inc.,
a Utah corporation (“Borrower”); Superior Drilling Solutions, LLC, formerly Superior Drilling Products,
LLC, a Utah limited liability company (“SDS”); ; Extreme Technologies, LLC, a Utah limited liability
company (“ET”); ; Hard Rock Solutions, LLC, a Utah limited liability company (together with SDS,, ET,,
the “Existing Subsidiaries” and each an “Existing Subsidiary”), and each of the Guarantors
(as defined below) party hereto from time to time.
Borrower
has requested that Lender extend credit to Borrower, and Lender is willing to do so on the terms and conditions set forth herein. In
consideration of the mutual covenants and agreements herein contained, the parties hereto agree as follows:
Section
1 Definitions.
1.01
Defined Terms. As used in this Agreement, all capitalized terms shall have the definitions set forth below. Any term used in the
UCC and not defined herein shall have the meaning given to the term in the UCC.
“Account”
is any “account” as defined in the UCC with such additions to such term as may hereafter be made, and includes all accounts
receivable and other sums owing to any Loan Party.
“Affiliate”
is, with respect to a specified Person, another Person that directly or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. For the purposes of this definition, “Control”
means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise, with “Controlling” and “Controlled”
have meanings analogous thereto.
“Agreement”
is defined in the preamble hereof.
“Applicable
Law” is, as to any Person, all applicable Laws binding upon such Person or any of its property or to which such Person
or any of its property is subject.
“Bank
Services” are any products, credit services, and/or financial accommodations previously, now, or hereafter provided to
Borrower or any of its Subsidiaries by Lender or any of Lender’s Affiliates, including any letters of credit, Cash Management Products,
interest rate swap arrangements, any letters of credit, and foreign exchange services, as any such products or services may be identified
in Lender’s or such Affiliate’s various agreements related thereto (each, a “Bank Services Agreement”).
“Bank
Services Agreement” is defined in the definition of Bank Services.
“BM
Facilities” means the Domestic BM Facility and the Foreign BM Facility.
“Borrower”
is defined in the preamble hereof.
“Borrowing
Base” is, on any date, 50% of Eligible Inventory, determined according to the first-in, first-out (FIFO) method at the
lower of cost (excluding any transportation, handling or carrying charges) or current market value.
“Borrowing
Base Certificate” means that certain certificate in the form attached hereto as Exhibit A, signed by a Responsible
Officer of Borrower.
“Borrowing
Notice” is a request by Borrower for a Revolving Loan, which shall be in such form as Lender may reasonably approve, and
which shall be signed by a Responsible Officer.
“Business
Day” is any day that is not a Saturday, Sunday or a day on which Lender is closed.
“Cash
Equivalents” are (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed
by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of
the United States of America), in each case, maturing within one (1) year from the date of acquisition thereof; (b) investments in commercial
paper maturing within two-hundred seventy (270) days from the date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from Standard & Poor’s Financial Services LLC, a subsidiary of S&P Global Inc., or Moody’s
Investors Service, Inc., and any successor to any of the foregoing; (c) investments in certificates of deposit, banker’s acceptances
and time deposits maturing within 90 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by Lender; and (d) money market funds at least ninety-five percent (95%) of the assets of which constitute
Cash Equivalents of the types described in clauses (a) through (c) of this definition.
“Cash
Management Products” are any one or more of the following types of services or facilities extended to any of the Loan Parties
by Lender or an Affiliate of Lender: (a) Automated Clearing House (ACH) transactions, electronic funds transfer, and other similar money
transfer services; (b) cash management, treasury, overdraft, lockbox arrangements, and other similar services; (c) the establishment
and maintenance of depository accounts and other depository services; (d) credit cards, debit cards, or stored value cards; and (e) other
similar or related bank products and services.
“Change
in Control” is an event or series of events by which: (a) any “person” or “group” (as such terms
are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) shall become, or obtain rights (whether by means or warrants,
options or otherwise) to become, the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange
Act of 1934), directly or indirectly, of a majority of the Equity Interests of Borrower entitled to vote for members of the board of
directors or equivalent governing body of Borrower on a fully-diluted basis (and taking into account all such securities that such person
or group has the right to acquire pursuant to any option right); or (b) during any period of twelve (12) consecutive months, a majority
of the members of the board of directors or other equivalent governing body of Borrower cease to be composed of individuals (i) who were
members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or
equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination
at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination
at least a majority of that board or equivalent governing body; or (c) Borrower shall cease to own and control, of record and beneficially,
directly or indirectly, 100% of each class of outstanding Equity Interests of each Subsidiary of Borrower free and clear of all Liens
(except Liens created by this Agreement).
“Claims”
is defined in Section 9.03.
“Closing
Date” is the first date all the conditions precedent in Section 3.01 are satisfied or waived in accordance with
Section 9.04.
“Collateral”
is defined in Section 11.01(a).
“Compliance
Certificate” is that certain certificate in the form attached hereto as Exhibit B.
“Consolidated
Net Income” is, for any period, the consolidated net income (or loss) of Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP; provided that there shall be excluded from the calculation of “Consolidated
Net Income” (a) the income (or deficit) of any such Person accrued prior to the date it becomes a Subsidiary of Borrower
or is merged into or consolidated with Borrower or one of its Subsidiaries, (b) the income (or deficit) of any such Person (other than
a Subsidiary of Borrower) in which Borrower or one of its Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by Borrower or such Subsidiary in the form of dividends or similar distributions, and (c) the undistributed
earnings of any Subsidiary of Borrower to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary
is not at the time permitted by the terms of any contractual obligation (other than under any Loan Document) or Applicable Law applicable
to such Subsidiary.
“Control
Agreement” means a deposit account control agreement in form and substance reasonably satisfactory to Lender that establishes
Lender’s Control of any Deposit Account of a Loan Party.
“Copyrights”
are any and all copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and
derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret.
“Current
Assets” is, as of any time of determination, with respect to Loan Parties and their Subsidiaries, all amounts which would,
in conformity with GAAP, be included under current assets on a consolidated balance sheet of the Loan Parties and their Subsidiaries
as of such time.
“Current
Liabilities” is, as of any time of determination, with respect to the Loan Parties and their Subsidiaries, all amounts
which would, in conformity with GAAP, be included under current liabilities on a consolidated balance sheet of the Loan Parties and their
Subsidiaries as of such time.
“Current
Ratio” is, as of any time of determination, the ratio of (a) Current Assets at such time to (b) Current Liabilities at
such time.
“Debt
Service Coverage Ratio” is, for any period, the ratio of (a) EBITDA for such period to (b) the sum of (i) Interest Expense
for such period, plus (ii) scheduled principal payments on Indebtedness due during such period (excluding, to the extent otherwise included,
principal payments on finance lease obligations or on the Revolving Line).
“Debtor
Relief Laws” is the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy,
assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief
Laws of the United States or other applicable jurisdictions from time to time in effect.
“Default”
is any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both,
would be an Event of Default.
“Default
Rate” is defined in Section 2.03(b).
“Designated
Deposit Account” is the account denominated in Dollars, account number 1093339, maintained by Borrower with Lender.
“Disposition”
or “Dispose” means the sale, transfer, license, sublicense, lease or other disposition of any property by any
Person (including any sale and leaseback transaction and any issuance of Equity Interests by a Subsidiary of such Person), including
any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.
“Disqualified
Equity Interest” is any Equity Interest that, by its terms (or the terms of any security or other Equity Interests into
which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily
redeemable (other than solely for Equity Interests that are not Disqualified Equity Interests), pursuant to a sinking fund obligation
or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence
of a change of control or asset sale event shall be subject to the prior Payment in Full), (b) is redeemable at the option of the holder
thereof, in whole or in part, (c) provides for scheduled payments of dividends in cash, or (d) is or becomes convertible into or exchangeable
for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that
is one-hundred eighty (180) days after the Revolving Maturity Date; provided that if such Equity Interests are issued pursuant
to a plan for the benefit of employees of Borrower or any Subsidiary or by any such plan to such employees, such Equity Interests shall
not constitute Disqualified Equity Interests solely because they may be required to be repurchased by Borrower or its Subsidiaries in
order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability.
“Dollars”
and “$” is the lawful money of the United States.
“Domestic
BM Facility” means the accounts receivable purchase facility described in the Business Manager Agreement with Businesses
and Professionals (Variable Service Charge) of even date herewith between Borrower and Lender.
“Dormant
Subsidiaries” means Superior Design and Fabrication, LLC, a Utah limited liability company; Meier Properties, Series LLC,
a Utah limited liability company; and Meier Leasing, LLC, a Utah limited liability company.
“EBITDA”
is, with respect to Borrower and its Subsidiaries for any period, Consolidated Net Income for such period plus, without duplication
and to the extent deducted in determining Consolidated Net Income for such period, the sum of (a) net cash interest expense (including
that attributable to obligations with respect to capital leases) of Borrower and its Subsidiaries for such period with respect to all
their outstanding Indebtedness, (b) provision for taxes based on income, (c) depreciation expense, (d) amortization expense, and (e)
other non-cash charges, expenses or losses (excluding any such non-cash charge to the extent it represents an accrual or reserve for
potential cash charge in any future period or amortization of a prepaid cash charge that was paid in a prior period) and (f) any losses
realized from the disposition of property outside of the ordinary course of business. minus, to the extent included in determining
Consolidated Net Income for such period, the sum of (i) any non-cash income or gains increasing Consolidated Net Income for such period
(excluding any such non-cash gain to the extent it represents the reversal of an accrual or reserve for potential cash charge in any
prior period) and (ii) any gains realized from the disposition of property outside of the ordinary course of business, all as determined
on a consolidated basis.
“Eligible
Inventory” means, as of any calculation date, all Inventory consisting of raw materials and finished goods (a) that is
owned by Borrower or a Guarantor, (b) that is in good and marketable condition, (c) that is in the possession and control of Borrower
or a Guarantor and stored or held at one or more facilities which has been disclosed to Lender and as to which Lender has unrestricted
access, and (d) in and to which Lender has a valid and perfected first priority security interest. The term “Eligible Inventory”
shall exclude the following:
(i)
work in process;
(ii)
Inventory that is, has been reasonably determined by Lender to be, or has been determined by Borrower’s management to be, excess,
obsolete, unsaleable, shopworn, seconds, damaged or unfit for sale;
(iii)
Inventory in transit;
(iv)
Inventory held by Borrower on consignment;
(v)
Inventory subject to any floor planning arrangement;
(vi)
Inventory in which any Person other than Lender has a purchase money security interest or any other security interest, lien or claim;
(vii)
Inventory that is located on premises leased by Borrower or any applicable Subsidiary, or stored with a bailee, warehouseman, processor
or similar Person, unless (A) Lender has given its prior consent thereto, (B) a collateral access agreement, in form and substance reasonably
satisfactory to Lender, has been delivered to Lender, or (C) reserves reasonably satisfactory to Lender have been established with respect
thereto;
(viii)
Inventory produced in violation of the Fair Labor Standards Act and subject to the “hot goods” provisions contained in Title
29 U.S.C. §215;
(ix)
Inventory that is subject to any agreement which would restrict Lender’s ability to sell or otherwise dispose of the same;
(x)
Inventory located outside the United States of America;
(xi)
Inventory in the custody of third-party vendors; and
(xii)
Inventory consisting of returned or repossessed goods.
“Environmental
Laws” means any and all federal, state, local, and foreign statutes, Laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions, including all common law, relating
to pollution or the protection of health, safety or the environment or the release of any materials into the environment, including those
related to Hazardous Materials, air emissions, discharges to waste or public systems and health and safety matters.
“Environmental
Liability” means any liability or obligation, contingent or otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), directly or indirectly, resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment, disposal or permitting or arranging for the disposal of any
Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials or (e)
any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
“Equipment”
is any “equipment” as defined in the UCC.
“Equity
Interests” is, as to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such
Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or
other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock
of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person
of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member
or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests
are outstanding on any date of determination.
“ERISA”
is the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.
“ERISA
Affiliate” is any trade or business (whether or not incorporated) under common control with Borrower within the meaning
of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the
Code or Section 302 of ERISA).
“ERISA
Event” is (a) a Reportable Event with respect to a Pension Plan; (b) the failure by Borrower or any ERISA Affiliate to
meet all applicable requirements under the Pension Funding Rules or the filing of an application for the waiver of the minimum funding
standards under the Pension Funding Rules; (c) the incurrence by Borrower or any ERISA Affiliate of any liability pursuant to Section
4063 or 4064 of ERISA or a cessation of operations with respect to a Pension Plan within the meaning of Section 4062(e) of ERISA; (d)
a complete or partial withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan
is insolvent (within the meaning of Title IV of ERISA); (e) the filing of a notice of intent to terminate a Pension Plan under, or the
treatment of a Pension Plan amendment as a termination under, Section 4041 of ERISA; (f) the institution by the PBGC of proceedings to
terminate a Pension Plan; (g) any event or condition that constitutes grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan; (h) the determination that any Pension Plan is in at-risk status (within
the meaning of Section 430 of the Internal Revenue Code or Section 303 of ERISA) or that a Multiemployer Plan is in endangered or critical
status (within the meaning of Section 432 of the Internal Revenue Code or Section 305 of ERISA); (i) the imposition or incurrence of
any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Borrower
or any ERISA Affiliate; (j) the engagement by Borrower or any ERISA Affiliate in a transaction that could be subject to Section 4069
or Section 4212(c) of ERISA; (k) the imposition of a lien upon Borrower pursuant to Section 430(k) of the Internal Revenue Code or Section
303(k) of ERISA; or (l) the making of an amendment to a Pension Plan that could result in the posting of bond or security under Section
436(f)(1) of the Internal Revenue Code.
“Event
of Default” is defined in Section 7.
“Excluded
Account” means deposit accounts identified to Lender in writing and (i) used exclusively for payroll, payroll tax, withholding
tax and other employee wage and benefit payments; provided that the funds on deposit in such deposit accounts will at no time
exceed the actual payroll, payroll taxes, withholding taxes and other employee wage and benefit payments then owing for the immediately
succeeding payroll period (or greater amount to the extent required by Applicable Law), (ii) used exclusively as trust accounts, escrow
accounts and other accounts used for holding assets of non-affiliated third parties (and only to the extent of such amounts), or (iii)
which are zero balance accounts.
“Existing
Line of Credit” means the revolving line of credit extended to Borrower by Austin Financial Services, Inc., originally
extended in February 2019.
“Existing
Subsidiary” has the meaning assigned to such term in the preamble.
“FCPA”
is defined in Section 1.01(b).
“Federal
Reserve Board” is the Board of Governors of the Federal Reserve System of the United States.
“Financial
Officer” is, as to any Person, the chief financial officer, principal accounting officer, treasurer or controller of such
Person.
“Financing
Statement” is defined in Section 11.03(a).
“Foreign
BM Facility” means the accounts receivable purchase facility related to foreign accounts receivable described in the Business
Manager Agreement with Businesses and Professionals (Variable Service Charge) of even date herewith between Borrower and Lender.
“Funding
Date” is any date on which a Loan is made to or for the account of Borrower and which shall be a Business Day.
“GAAP”
is, subject to Section 1.03, United States generally accepted accounting principles as in effect as of the date of determination
thereof.
“Governmental
Approval” is any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration,
filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.
“Governmental
Authority” is the government of the United States of America or any other nation, or of any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national
bodies such as the European Union or the European Central Bank).
“Guarantee”
is, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing
any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any
manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities
or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance
of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition
or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other
obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part) or
(b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness
or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any
such Lien); provided that the term “Guarantee” shall not include endorsements for collection or deposit
in the ordinary course of business. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount
of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee”
as a verb has a corresponding meaning.
“Guarantor”
means each Existing Subsidiary and each Subsidiary of Borrower or another Loan Party that is required to execute and deliver a joinder
pursuant to Section 5.11.
“Guaranty”
is the Guarantee of the Obligations provided by the Guarantors under Section 10 of this Agreement.
“Hazardous
Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon
gas, infectious or medical wastes, and other substances or wastes of any nature regulated under or with respect to which liability or
standards of conduct are imposed pursuant to any Environmental Law.
“Indebtedness”
is, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities
in accordance with GAAP:
(a)
all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements
or other similar instruments;
(b)
all direct or contingent obligations of such Person arising under or in respect of (i) letters of credit (including standby and commercial),
bankers’ acceptances, demand guarantees and similar independent undertakings and (ii) surety bonds, performance bonds and similar
instruments issued or created by or for the account of such Person;
(c)
net obligations of such Person under any swap contract or other hedging arrangement;
(d)
all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary
course of business not more than 90 days past due);
(e)
indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse;
(f)
(x) all capital lease obligations of such Person and (y) the principal balance outstanding under any synthetic lease, off-balance sheet
loan or similar off-balance sheet financing product of such Person;
(g)
all obligations of such Person in respect of Disqualified Equity Interests;
(h)
any advances under any factoring arrangement and any indebtedness under any sale leaseback financing; and
(i)
all Guarantees of such Person in respect of any of the foregoing.
For
all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a
joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer,
unless and solely to the extent such Indebtedness is expressly made non-recourse to such Person. The amount of any Indebtedness of any
Person for purposes of clause (e) that is expressly made non-recourse or limited-recourse (limited solely to the assets securing such
Indebtedness) to such Person shall be deemed to be equal to the lesser of (i) the aggregate principal amount of such Indebtedness and
(ii) the fair market value of the property encumbered thereby as determined by such Person in good faith.
“Indemnified
Tax” is defined in Section 1.01(a).
“Indemnitee”
is defined in Section 9.03.
“Insolvency
Proceeding” is any proceeding commenced by or against any Person or entity under any Debtor Relief Law, including assignments
for the benefit of creditors, formal or informal moratoria, compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
“Intellectual
Property” is, with respect to any Person, all of such Person’s right, title, and interest in and to the following:
(a) its Copyrights, Trademarks and Patents; (b) any and all trade secrets and trade secret rights, and all intellectual property rights
in computer software and computer software products now or hereafter existing, created, acquired or held, including any rights to unpatented
inventions, know-how and operating manuals; (c) any and all source code; (d) any and all design rights which may be available to such
Person; (e) all licenses or other rights to use any of the Copyrights, Patents or Trademarks; (f) all amendments, renewals and extensions
of any of the Copyrights, Trademarks or Patents; and (g) any and all claims for damages by way of past, present and future infringement
of any of the foregoing, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of
the Intellectual Property rights identified above.
“Interest
Expense” means, with reference to any period, total interest expense of Borrower and its Subsidiaries for such period with
respect to all outstanding Indebtedness of Borrower and its Subsidiaries, calculated for Borrower and its Subsidiaries on a consolidated
basis for such period in accordance with GAAP.
“Internal
Revenue Code” is the Internal Revenue Code of 1986, as amended from time to time.
“Inventory”
means all raw materials, work in process, finished products and all other goods of whatever nature now owned or hereafter acquired by
Borrower or a Guarantor which are held for sale or lease or are furnished or to be furnished under contracts of sale or service.
“Investment”
is, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other
acquisition of Equity Interests or debt or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee
or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person,
including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor incurs Indebtedness
of the type referred to in clause (i) of the definition of “Indebtedness” in respect of such other Person, or (c) the purchase
or other acquisition (in one transaction or a series of transactions) of all or substantially all of the property and assets or business
of another Person or assets constituting a business unit, line of business or division of such Person. For purposes of covenant compliance,
the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value
of such Investment but giving effect to any returns or distributions of capital or repayment of principal actually received in cash by
such Person with respect thereto.
“IRS”
is the United States Internal Revenue Service.
“Issuer”
means the issuer of any applicable Investment Property.
“Key
Person” means each of G. Troy Meier and Annette Meier.
“Laws”
is, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances,
codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed
duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not
having the force of law.
“Lender”
is defined in the preamble hereof.
“Lender
Expenses” are all reasonable out-of-pocket costs, fees, expenses and disbursements incurred by Lender and its Affiliates
and representatives (including the reasonable fees, charges and disbursements of counsel for Lender), and all fees and time charges and
disbursements for attorneys who may be employees of Lender, in connection with (a) the preparation, negotiation, execution, delivery,
and administration of this Agreement and the other Loan Documents, or any amendment, modification or waiver of the provisions hereof
or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (b) auditors, accountants, appraisers,
consultants, advisors and agents employed or retained by Lender and its counsel in connection with this Agreement or any other Loan Document,
and (c) the enforcement or protection of its rights (i) in connection with this Agreement and the other Loan Documents, or (ii) in connection
with the Loans made hereunder, including (1) its rights under Section 9, (2) enforcement of the Guaranty, (3) in connection with
any refinancing or restructuring of the Obligations and the other credit or financing arrangements provided or otherwise contemplated
hereunder or under any other Loan Document in the nature of a “work out” or pursuant to any insolvency or bankruptcy cases
or proceedings, and (4) the protection, preservation or preparation or marketing for sale or disposition of all or any part of the Collateral
or any realization of the Collateral, in each case, including all such out-of-pocket costs, fees, expenses and disbursements incurred,
whether before or after a Default or Event of Default, acceleration or Insolvency Proceeding has occurred under any of the Loan Documents.
“Leverage
Ratio” is, for any period ending on a certain date, the ratio of (a) Indebtedness, less all cash and Cash Equivalents
of Borrower and its Subsidiaries on such date, less all Indebtedness consisting of lease obligations, and less all Indebtedness
related to the BM Facilities, to (b) EBITDA for such period.
“Lien”
is any mortgage, pledge, hypothecation, collateral assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional
sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing
lease having substantially the same economic effect as any of the foregoing).
“Loan”
is a loan by Lender to Borrower under Section 2 in the form of a Term Loan or a Revolving Loan.
“Loan
Documents” are, collectively, this Agreement and any schedules, exhibits, certificates, notices, and any other documents,
instruments, and agreements related to or executed in connection with this Agreement, the Notes, the Perfection Certificate, any Bank
Services Agreement, any subordination agreement, any pledge and/or security agreement, notes or guaranties in each case executed by a
Loan Party, and any other present or future agreement by Borrower or any other Loan Party with or for the benefit of Lender in connection
with this Agreement or Bank Services, each as amended, restated, or otherwise modified.
“Loan
Party” is Borrower and each Guarantor, collectively, “Loan Parties”.
“Margin
Stock” is defined in Section4.09(d).
“Material
Adverse Effect” is (a) a material adverse change in, or a material adverse effect on, the operations, business, properties,
liabilities (actual or contingent), condition (financial or otherwise) or prospects of the Loan Parties and their Subsidiaries taken
as a whole; or (b) a material adverse effect on (i) the ability of any Loan Party to perform its Obligations, (ii) the legality, validity,
binding effect or enforceability against any Loan Party of any Loan Document to which it is a party or (iii) the rights, remedies and
benefits available to, or conferred upon, Lender under any Loan Documents; or (c) a material impairment in the perfection or priority
of Lender’s Lien in the Collateral.
“Maximum
Rate” is defined in Section 9.17.
“Multiemployer
Plan” is any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which Borrower or any ERISA
Affiliate makes or is obligated to make contributions, during the preceding five plan years has made or been obligated to make contributions,
or has any liability.
“Multiple
Employer Plan” is a Plan with respect to which Borrower or any ERISA Affiliate is a contributing sponsor, and that has
two or more contributing sponsors at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.
“Negotiable
Collateral” means all of the Loan Parties’ present and future letters of credit of which it is a beneficiary, Checks
and other Drafts, Instruments (including Promissory Notes), Securities, Documents, and Chattel Paper, and any Loan Party’s books
and records relating to any of the foregoing.
“Note”
means a promissory note in form acceptable to Lender evidencing, in part, a Loan.
“Obligations”
are all advances to, and debts, liabilities, obligations, covenants and duties of, Borrower arising under any Loan Document or otherwise
with respect to any Loan or with respect to any Bank Services or Bank Service Agreements, or with respect to either of the BM Facilities,
whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter
arising and including interest and fees that accrue after the commencement by or against Borrower or any Affiliate thereof of any proceeding
during the pendency of any Insolvency Proceeding naming such Person as the debtor in such proceeding, regardless of whether such interest
and fees are allowed claims in such proceeding. Without limiting the foregoing, the Obligations include (a) the obligation to pay principal,
interest, charges, expenses, fees, indemnities and other amounts payable by Borrower under any Loan Document, and (b) the obligation
of Borrower to reimburse any amount in respect of any of the foregoing that Lender, in its sole discretion, may elect to pay or advance
on behalf of Borrower.
“Overadvance”
is defined in Section 2.05(b)(iv).
“Patents”
are all patents, patent applications and like protections including improvements, divisions, continuations, renewals, reissues, extensions
and continuations-in-part of the same.
“PATRIOT
Act” is the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).
“Payment
in Full” is (a) the termination of Lender’s commitment to make a Loan hereunder and (b) the indefeasible payment
in full in cash of (i) all outstanding Loans, together with accrued and unpaid interest thereon, (ii) the accrued and unpaid fees under
the Loan Documents, if any, (iii) all Lender Expenses, and (iv) all other outstanding Obligations (other than inchoate indemnity obligations
and other obligations extending beyond maturity (including obligations with respect to Bank Services) that have been cash collateralized
in an amount and manner satisfactory to Lender or otherwise subject to arrangements satisfactory to Lender).
“Payoff
Letter” is defined in Section 3.01(a)(xii).
“PBGC”
is the Pension Benefit Guaranty Corporation.
“Pension
Funding Rules” are the rules of the Internal Revenue Code and ERISA regarding minimum funding standards and minimum required
contributions (including any installment payment thereof) to Pension Plans and Multiemployer Plans and set forth in Sections 412, 430,
431, 432 and 436 of the Internal Revenue Code and Sections 302, 303, 304 and 305 of ERISA.
“Pension
Plan” is any employee pension benefit plan (including a Multiple Employer Plan, but excluding a Multiemployer Plan) that
is maintained or is contributed to by Borrower or any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the
minimum funding standards under Section 412 of the Internal Revenue Code.
“Perfection
Certificate” is defined in Section 4.03.
“Permitted
Indebtedness” is:
(a)
Borrower’s Indebtedness to Lender under this Agreement and the other Loan Documents, or under the BM Facilities;
(b)
unsecured Indebtedness to trade creditors incurred in the ordinary course of business;
(c)
Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business;
(d)
indebtedness to Ally Financial not to exceed the aggregate principal amount of $13,617.57, plus all accrued interest thereon;
(e)
indebtedness to U.S. Bank Equipment Finance, a Division of U.S. Bank National Association not to exceed the aggregate principal amount
of $34,770.00, plus all accrued interest thereon;
(f)
indebtedness to Bank of America Leasing & Capital, LLC, successor by assignment to Mazak Corporation, not to exceed the aggregate
principal amount of $559,848.32, plus all accrued interest thereon;
(g)
subject to Section 6.01, Indebtedness not described in clauses (d), (e) or (f) above not to exceed $100,000.00 in the aggregate
outstanding at any time secured by Liens described in clause (e) of the definition of Permitted Liens; provided that such Indebtedness
does not exceed at the time it is incurred the lesser of the cost or fair market value of the Equipment financed with such Indebtedness;
and
(h)
extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness set forth in clauses (a)
through (g) above; provided that the principal amount thereof is not increased or the terms thereof are not modified to impose
more materially burdensome terms upon Borrower or the applicable Subsidiary, as the case may be.
“Permitted
Investments” are:
(a)
Investments (including Subsidiaries) existing on the Closing Date and shown on the Perfection Certificate delivered on the Closing Date;
(b)
Investments consisting of Cash Equivalents made in the ordinary course of business of the Loan Parties;
(c)
Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary
course of a Loan Party’s business;
(d)
Investments consisting of Deposit Accounts;
(e)
Investments accepted in connection with Dispositions permitted by Section 6.03;
(f)
Investments consisting of the creation of a Subsidiary for the purpose of consummating a merger transaction permitted by Section 6.05
of this Agreement, so long as such transaction is otherwise permitted under Section 6.07;
(g)
Investments consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course
of business in an aggregate amount not to exceed $25,000.00 at any time outstanding, and (ii) loans to employees, officers or directors
in an aggregate amount not to exceed $25,000.00 at any time outstanding relating to the purchase of equity securities of a Loan Party
or its Subsidiaries pursuant to employee stock purchase plans or agreements approved in good faith by Borrower’s board of directors
(or other equivalent governing body of Borrower);
(h)
Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in
settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business;
and
(i)
Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not
Affiliates, in the ordinary course of business; provided that this paragraph (i) shall not apply to Investments of a Loan Party
in any Subsidiary.
“Permitted
Liens” are:
(a)
Liens existing on the Closing Date and described in the Perfection Certificate;
(b)
Liens arising under this Agreement and the other Loan Documents;
(c)
Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings and for which the Loan Parties maintain adequate reserves;
(d)
Liens existing as of the date of this Agreement securing Indebtedness of the type set forth in clauses (d), (e) or (f) of the definition
of Permitted Indebtedness;
(e)
Liens securing Indebtedness of the type set forth in clause (g) of the definition of Permitted Indebtedness in the aggregate outstanding
(not to exceed the amount set forth in such clause (g)) (i) upon or in any Equipment acquired or held by a Loan Party or any of its Subsidiaries
to secure the purchase price of such Equipment or indebtedness incurred solely for the purpose of financing the acquisition or lease
of such Equipment, or (ii) existing on such Equipment at the time of its acquisition; provided that the Lien is confined solely
to the property so acquired and improvements thereon, and the proceeds of such Equipment;
(f)
Liens incurred in connection with the extension, renewal or refinancing of the Indebtedness secured by Liens of the type described in
clauses (a) through (g) above; provided that any extension, renewal or replacement Lien shall be limited to the property encumbered
by the existing Lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase.
(g)
deposits under worker’s compensation, unemployment insurance, social security and other similar laws, or to secure the performance
of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure indemnity, performance or other similar bonds
for the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure statutory obligations
(other than Liens arising under ERISA or Environmental Laws) or surety or appeal bonds, or to secure indemnity, performance or other
similar bonds, all in the ordinary course of any Loan Party’s business;
(h)
Liens in favor of other financial institutions arising in connection with a Loan Party’s deposit accounts held at such institutions
to secure standard fees for deposit services charged by, but not financing made available by such institutions;
(i)
statutory or common law (non-contractual) Liens of landlords;
(j)
Liens of carriers, warehousemen, suppliers, or other Persons that are possessory in nature arising in the ordinary course of business
so long as such Liens secure liabilities in the aggregate amount not to exceed $100,000.00 and which are not delinquent or remain payable
without penalty or which are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing
the forfeiture or sale of the property subject thereto;
(k)
Liens that constitute Dispositions permitted by Section 6.03; and
(l)
Liens arising from attachments or judgments, orders, or decrees in circumstances not constituting an Event of Default under Section
7.03 or Section 7.07.
“Permitted
Prior Liens” are Liens of the type described in clauses (c) Indebtedness upon Equipment, (e) worker’s compensation,
unemployment insurance, etc., (f) other financial institutions for deposit services, (g) statutory or common law landlord Liens, and
(h) claims of materialmen, etc. of the defined term “Permitted Liens”.
“Person”
is any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
“Plan”
is any employee benefit plan within the meaning of Section 3(3) of ERISA, maintained for employees of Borrower or any Subsidiary, or
any such plan to which Borrower or any Subsidiary is required to contribute on behalf of any of its employees or with respect to which
Borrower has any liability.
“Pledged
Interests” are Collateral consisting of Equity Interests or other evidence of ownership of any Loan Party.
“Prime
Rate” is the rate of interest per annum last quoted by The Wall Street Journal as the “Prime Rate” in the U.S.
or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board
in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate
is no longer quoted therein, any similar rate quoted therein (as determined by Lender) or any similar release by the Federal Reserve
Board (as determined by Lender). Any change in the Prime Rate shall take effect at the opening of business on the day such change is
publicly announced or quoted as being effective.
“Reportable
Event” is any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30-day notice period
has been waived.
“Responsible
Officer” is, (a) the chief executive officer, president, executive vice president or a Financial Officer of Borrower, (b)
solely for purposes of the delivery of incumbency certificates and certified organizational documents and resolutions delivered under
the Loan Documents, any vice president, secretary or assistant secretary of Borrower and (c) solely for purposes of Borrowing Notices,
prepayment notices, and any reduction or increase of commitments to the extent permitted hereunder, any other officer or employee of
Borrower so designated from time to time by one of the officers described in clause (a) in a notice to Lender (together with evidence
of the authority and capacity of each such Person to so act in form and substance reasonably satisfactory to Lender). Any document delivered
hereunder that is signed by a Responsible Officer shall be conclusively presumed to have been authorized by all necessary corporate,
partnership or other action on the part of Borrower and such Responsible Officer shall be conclusively presumed to have acted on behalf
of Borrower.
“Restricted
Payment” is any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity
Interest of any Person, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit,
on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interest, or on account
of any return of capital to such Person’s shareholders, partners or members (or the equivalent Persons thereof).
“Revolving
Line” is, on any date, Lender’s commitment to make a Revolving Loan if such Loan is required to be disbursed on such
date The amount of the Revolving Line is an aggregate principal amount not to exceed the lesser of $750,000.00 and the Borrowing Base
outstanding at any time of determination.
“Revolving
Loan” is a loan made by Lender to Borrower pursuant to Section 2.01(b).
“Revolving
Maturity Date” is July 28, 2025.
“Sanctions”
is defined in Section 4.16(a).
“SEC”
is the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
“Solvent”
is, as to any Person as of any date of determination, that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair saleable value of such Person
is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s
ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in a business or a transaction, and is not
about to engage in a business or a transaction, for which such Person’s property would constitute an unreasonably small capital.
The amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
“Subsidiary”
is, as to any Person, a corporation, partnership, limited liability company, association or joint venture or other business entity of
which a majority of the Equity Interests having ordinary voting power for the election of directors or other governing body (other than
securities or interests having such power only by reason of the happening of a contingency) are at the time owned or the management of
which is controlled, directly, or indirectly through one or more intermediaries, by such Person. Unless otherwise specified, all references
herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of Borrower.
“Term
Loan” is defined in Section 2.01(a).
“Term
Maturity Date” is July 28, 2028.
“Total
Outstandings” is, as of any date of determination, the sum of the outstanding principal balance of all Revolving Loans.
“Trademarks”
are any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.
“Tronco
Loan” means the existing loan to Tronco Energy Corporation described in that certain Fourth Amended and Restated Loan Agreement
dated March 31, 2023 (a copy of which Borrower has provided to Lender), which had an approximate balance of $6,567,000 as of March 31,
2023.
“UCC”
is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the State of Oklahoma; provided
that, to the extent that the UCC is used to define any term herein or in any Loan Document and such term is defined differently in different
Articles or Divisions of the UCC, the definition of such term contained in Article or Division 9 shall govern; provided further
that in the event that, by reason of mandatory provisions of Law, any or all of the attachment, perfection, or priority of, or remedies
with respect to, Lender’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than
the State of Oklahoma, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes
of definitions relating to such provisions.
1.02
Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The
word “will” shall be construed to have the same meaning and effect as the word “shall.” The word “or”
is not exclusive. Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (ii) any reference
herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein,”
“hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, (iv) all references herein to Sections, Exhibits and Schedules shall be construed to refer
to Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to any law or regulation herein shall, unless otherwise
specified, refer to such law or regulation as amended, modified or supplemented from time to time, (v) the words “asset”
and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights, (vi) references to time of day shall, unless otherwise
specified, refer to Central time, and (vii) unless the context requires otherwise (A) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein),
and (B) any reference in any definition to the phrase “at any time” or “for any period” shall refer to the same
time or period for all calculations or determinations within such definition.
1.03
Accounting Terms. Any accounting term not specifically defined in this Agreement shall be construed in accordance with GAAP and
all calculations shall be made in accordance with GAAP. The term “financial statements” shall include the accompanying
notes and schedules. All terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and
ratios referred to herein shall be made without giving effect to (i) any election under Accounting Standards Codification 825-10-25 (previously
referred to as Statement of Financial Accounting Standards 159) (or any other Accounting Standards Codification or Financial Accounting
Standard having a similar result or effect) to value any Indebtedness or other liabilities of Borrower or any Subsidiary at “fair
value,” as defined therein and (ii) any treatment of Indebtedness in respect of convertible debt instruments under Accounting
Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result
or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all
times be valued at the full stated principal amount thereof. For purposes of this Agreement and the other Loan Documents, the determination
of whether a lease is required to be classified and accounted for as a capital lease on the balance sheet of any Person shall be made
by reference to GAAP prior to the adoption of ASC 842 (or equivalent) and any change in GAAP as a result of the adoption of ASC 842 (or
equivalent) that results in any lease which is, or would be, classified as an operating lease under GAAP prior to the adoption of ASC
842 (or equivalent) being classified as a capital lease under revised GAAP shall be disregarded for purposes of all financial covenant,
basket amounts, ratios and all other purposes contained herein or in any other Loan Documents, regardless of whether such lease is entered
into, or acquired or assumed, before or after the effective date of ASC 842 (or equivalent).
1.04
Divisions. For all purposes hereunder and under the other Loan Documents, if in connection with any division or plan of division
under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) any asset, right, obligation or liability
of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred
from the original Person to the subsequent Person, and (b) any new Person comes into existence, such new Person shall be deemed to have
been organized by the holders of its Equity Interests at such time. Any reference in any Loan Document to a merger, transfer, consolidation,
amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a division of or
by a limited liability company, or an allocation of assets to a series of a limited liability company (or the unwinding of such a division
or allocation), as if it were a merger, transfer, consolidation, amalgamation, consolidation, assignment, sale or transfer, or similar
term, as applicable, to, of or with a separate Person. Any division of a limited liability company shall constitute a separate Person
under the Loan Documents (and each division of any limited liability company that is a Subsidiary, joint venture or any other like term
shall also constitute such a Person) on the first date of its existence.
Commitments
and Loans; Payments.
2.01
Loans and Borrowings; Notes.
(a)
Term Loan.
(i)
Subject to the terms and conditions of this Agreement, Lender shall make one loan to Borrower on the Closing Date in an aggregate principal
amount equal to $1,719,200.00 (such loan, the “Term Loan”).
(ii)
The Term Loan shall bear interest in accordance with Section 2.03 hereof. The Term Loan, when repaid, may not be reborrowed.
(b)
Revolving Line. Subject to the terms and conditions of this Agreement, Lender shall make Revolving Loans from time to time to
Borrower prior to the Revolving Maturity Date in an aggregate outstanding amount of all Revolving Loans not to exceed the Revolving Line.
Amounts borrowed under the Revolving Line may be repaid and, prior to the Revolving Maturity Date, reborrowed, subject to the applicable
terms and conditions precedent herein. Revolving Loans shall bear interest in accordance with Section 2.03 hereof.
(c)
Evidence of Loans; Notes.
(i)
The Term Loan shall be evidenced by this Agreement and a Note payable to Lender in an amount equal to the Term Loan.
(ii)
The Revolving Loans made by Lender are evidenced by this Agreement and a Note payable to Lender in an amount equal to the Revolving Line.
2.02
[Reserved.]
2.03
Interest on the Loans.
(a)
Interest Rate. Subject to Section 2.03(b):
(i)
the principal amount outstanding under the Revolving Line shall accrue interest at a per annum rate equal to the greater of (x) the Prime
Rate plus 1.00% and (y) 7.50%; and
(ii)
the principal amount outstanding under the Term Loan shall accrue interest at 8.18% per annum.
(b)
Default Rate. Immediately upon the occurrence and during the continuance of an Event of Default, all Obligations shall bear interest
at a rate per annum which is 5% above the rate that is otherwise applicable thereto (the “Default Rate”). Fees
and expenses which are required to be paid by Borrower pursuant to the Loan Documents (including Lender Expenses) but are not paid when
due shall bear interest until paid at a rate equal to the highest rate applicable to the Obligations inclusive of the Default Rate. Payment
or acceptance of the increased interest rate provided in this Section 2.03(b) is not a permitted alternative to timely payment
and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Lender.
(c)
Interest Computation. Interest shall be computed on the basis of a 360-day year for the actual number of days elapsed and in each
case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). In computing interest,
(i) all payments received after 12:00 p.m. on any day shall be deemed received at the opening of business on the next Business Day, and
(ii) the date of the making of any Loan shall be included and the date of payment shall be excluded; provided that if any Loan
is repaid on the same day on which it is made, such day shall be included in computing interest on such Loan. When a payment is due on
a day that is not a Business Day, the payment is due the next Business Day and additional fees or interest, as applicable, shall continue
to accrue. Interest hereunder shall accrue and be due and payable in accordance with the terms hereof before and after judgment, and
before and after the commencement of any Insolvency Proceeding.
2.04
Fees.
(a)
Upfront Fee. Borrower shall pay to Lender a fully earned, non-refundable upfront fee of .75% of each of the Revolving Line and
the Term Loan, payable on the Closing Date.
(b)
Fees Fully Earned. Unless otherwise provided in this Agreement or in a separate writing by Lender, Borrower shall not be entitled
to any credit, rebate, or repayment of any fees earned by Lender pursuant to this Agreement notwithstanding any termination of this Agreement
or the suspension or termination of Lender’s obligation to make loans and advances hereunder. Lender may, at its option, deduct
amounts owing by Borrower with respect to Lender Expenses and under the clauses of this Section 2.04, in each case, pursuant to
the terms of Section 2.05(f). Lender shall provide Borrower written notice of deductions made from the Designated Deposit Account
pursuant to the terms of the clauses of this Section 2.04.
2.05
Payments; Application of Payments; Debit of Accounts.
(a)
Term Loan Repayment. Borrower shall make combined payments of principal and interest on the Term Loan on the 28th day of each
month, in equal monthly installments, commencing August 28, 2023; provided that all principal, unpaid accrued interest, and other
remaining Obligations relating to the Term Loan shall be immediately due and payable on the Term Maturity Date.
(b)
Revolving Loans Repayment; Overadvances; Termination.
(i)
Borrower shall make payments of all unpaid accrued interest on the Revolving Loans on the 28th day of each month, commencing August 28,
2023.
(ii)
Borrower shall repay to Lender on the Revolving Maturity Date the aggregate principal amount of all Revolving Loans outstanding on such
date together with the unpaid interest thereon, and all other Obligations relating to the Revolving Line shall be immediately due and
payable on the Revolving Maturity Date.
(iii)
Unless previously terminated, the Revolving Line shall terminate on the Revolving Maturity Date.
(iv)
If, at any time, the aggregate principal amount at such time of outstanding Revolving Loans exceeds the Revolving Line, Borrower shall
immediately pay to Lender in cash the amount of such excess (such excess, the “Overadvance”). Without limiting
Borrower’s obligation to repay Lender any Overadvance, Borrower agrees to pay Lender interest on the outstanding amount of any
Overadvance, on demand, at the Default Rate applicable to the Loans.
(c)
Optional Prepayments. Borrower may, upon notice to Lender, at any time and from time to time prepay any Loan in whole or in part
without premium. fee or penalty.
(d)
Payment Date. All payments to be made by Borrower under any Loan Document shall be made in immediately available funds in Dollars,
without setoff or counterclaim, before 2:00 p.m. on the date when due. Payments of principal and/or interest received after 2:00 p.m.
are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day,
the payment shall be due the next Business Day, and additional fees or interest, as applicable, shall continue to accrue until paid.
(e)
Amounts; Application. Prepayments shall be accompanied by accrued interest on the amount prepaid. Lender has the exclusive right
to determine the order and manner in which all payments with respect to the Obligations may be applied. Borrower shall have no right
to specify the order or the accounts to which Lender shall allocate or apply any payments required to be made by Borrower to Lender or
otherwise received by Lender under this Agreement when any such allocation or application is not specified elsewhere in this Agreement.
All prepayments of the Term Loan shall be applied to principal installments on the Term Loan in the inverse order of maturity.
(f)
Debit of Accounts. Lender may, at its option, debit any of Borrower’s deposit accounts, including the Designated Deposit
Account, for principal and interest payments or any other amounts Borrower owes Lender when due. These debits shall not constitute a
set-off.
2.06
Taxes.
(a)Any and all payments by any Loan Party under any Loan Document shall be made without deduction or withholding for any taxes,
except as required by Applicable Law. If any Applicable Law requires the deduction or withholding of any tax from any such payment by
Lender, then Lender shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld
to the relevant Governmental Authority in accordance with Applicable Law, and, if such tax is imposed on or with respect to any payment
made by or on account of any obligation of any Loan Party under any Loan Document, other than a tax imposed on net income (however denominated),
franchise taxes, and branch profits taxes as a result of Lender being organized under the laws of, or having its principal office or,
its applicable lending office located in, the jurisdiction imposing such tax (or any political subdivision thereof) (an “Indemnified
Tax”), then the sum payable by such Loan Party shall be increased as necessary so that after such deduction or withholding
has been made (including such deductions and withholdings applicable to additional sums payable under this Section), Lender receives
an amount equal to the sum it would have received had no such deduction or withholding been made. As soon as practicable after any payment
of taxes by a Loan Party to the applicable Governmental Authority pursuant to this Section, such Loan Party shall deliver to Lender the
original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting
such payment or other evidence of such payment reasonably satisfactory to Lender.
(b)
Each Loan Party hereby indemnifies Lender, within ten (10) days after demand therefor, for the full amount of any (i) Indemnified Taxes
(including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by Lender
or required to be withheld or deducted from a payment to Lender, (ii) present or future stamp, court or documentary, intangible, recording,
filing or similar taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, and (iii) any penalties,
interest and reasonable expenses arising therefrom or with respect to taxes described in clauses (i) or (ii), whether or not such taxes
were correctly or legally imposed or asserted by the relevant Governmental Authority. Promptly upon having knowledge that any such taxes
have been levied, imposed or assessed, and promptly upon notice by Lender, such Loan Party shall pay such taxes directly to the relevant
Governmental Authority or Lender, as applicable; provided that Lender shall not be under any obligation to provide any such notice
to any Loan Party. A certificate as to the amount of such payment or liability delivered to Borrower by Lender shall be conclusive absent
manifest error.
Section
3 Conditions of Loans.
3.01
Conditions Precedent to Closing. The effectiveness of this Agreement and Lender’s obligation to make the initial Revolving
Loan and to make the Term Loan on the Closing Date are subject to satisfaction of the following conditions precedent:
(a)
Lender will have received, in form and substance satisfactory to Lender, the following:
(i)
a duly executed landlord lien waiver and collateral access agreement in favor of Lender for each U.S. location of each leased location
where a Loan Party maintains property, by each landlord;
(ii)
all actions necessary to perfect the Liens of Lender in the Collateral to be granted on or prior to the Closing Date, to the extent such
Liens may be perfected by the filing of UCC-1 financing statement, will have been taken or will be taken substantially concurrently with
the Closing;
(iii)
duly executed copies of this Agreement, the Notes, and the Perfection Certificate;
(iv)
an omnibus officer’s certificate that covers all the Loan Parties with respect to incumbency and resolutions authorizing the execution
and delivery of each Loan Document, and certifying as true, correct and complete attached copies of each Loan Party’s organizational
documents which are in full force and effect as of the Closing Date, including (A) formation documents, as certified by the Secretary
of State (or equivalent agency) of each Loan Party’s jurisdiction of organization on a date that is no earlier than thirty (30)
days prior to the Closing Date, and (B) each Loan Party’s bylaws, limited liability company agreement, partnership agreement or
similar governing document, as applicable;
(v)
a long-form good standing certificates (or equivalent) of each Loan Party certified by the Secretary of State (or equivalent agency)
of such Loan Party’s jurisdiction of organization or formation, each as of a date no earlier than thirty (30) days prior to the
Closing Date;
(vi)
a duly executed legal opinion of the Loan Parties’ counsel dated as of the Closing Date;
(vii)
certified copies, dated as of a recent date, of financing statement searches, as Lender may request, accompanied by written evidence
(including any UCC termination statements) that the Liens indicated in any such financing statements either constitute Permitted Liens
or have been or, in connection with the making of the Term Loan, will be terminated or released;
(viii)
a certificate from a Responsible Officer certifying (A) that the conditions specified in this Section 3.01 have been satisfied,
(B) that there has been no event or circumstance since March 31, 2023, that has had or could be reasonably expected to have, either individually
or in the aggregate, a Material Adverse Effect and (C) stating that no consents, licenses or approvals are required in connection with
the consummation by each Loan Party of the transactions contemplated hereunder and the execution, delivery and performance by each Loan
Party of the Loan Documents to which it is a party, or identifying such consents, licenses or approvals that are so required and stating
that they have been obtained, including reasonable particulars thereof;
(ix)
a certificate from a Financial Officer of Borrower attesting that Borrower, individually, and the Loan Parties and their Subsidiaries,
on a consolidated basis and taken as a whole, are Solvent as of the Closing Date;
(x)
a Borrowing Base Certificate, prepared as of a date no earlier than one (1) Business Day prior to the Closing Date, signed by a Responsible
Officer, certifying as to the matters involved in the calculation of the Borrowing Base as of such date;
(xi)
payment of the fees and Lender Expenses then due;
(xii)
a payoff letter as to the Existing Line of Credit in form acceptable to Lender (“Payoff Letter”);
(xiii)
evidence satisfactory to Lender that the insurance policies and endorsements required by Section 5.08 hereof are in full force
and effect, together with appropriate evidence showing lender loss payable and/or additional insured clauses or endorsements in favor
of Lender;
(xiv)
evidence that (A) all outstanding amounts under the Existing Line of Credit shall be repaid in full from the proceeds of the Loans and
(B) all Liens securing such Indebtedness will be terminated, including the documents and/or filings evidencing the perfection of such
Liens, concurrently with the making of the Term Loan; and
(xv)
documentation and other information requested by Lender in connection with applicable “know your customer” and anti-money-laundering
rules and regulations, including the PATRIOT Act, in each case at least five (5) days prior to the Closing Date.
(b)
The Loan Parties shall have executed, delivered and completed, as applicable, all documents, instruments and agreements related to the
BM Facilities as Lender shall require.
(c)
Lender shall have completed a due diligence investigation of each Loan Party in scope, and with results, satisfactory to Lender, and
shall have been given such access to the management, records, books of account, contracts and properties of each Loan Party and shall
have received such financial, business and other information regarding each of the foregoing Persons and businesses as Lender shall have
requested.
(d)
The representations and warranties contained herein and in any other Loan Document shall be true and correct in all respects on and as
of the Closing Date and no Default or Event of Default shall have occurred and be continuing or result from the Loans.
(e)
Such other documents or certificates, and completion of such other matters, as Lender may reasonably deem necessary or appropriate.
3.02
Conditions Precedent to all Revolving Loans. Lender’s obligations to make each Revolving Loan are subject to the following
conditions precedent:
(a)
timely receipt of a Borrowing Notice as provided in Section 3.03;
(b)
the amount of such Revolving Loan shall not exceed the amount available for advance on the Revolving Line as reflected in the most recent
Borrowing Base Certificate provided to Lender;
(c)
(i) the representations and warranties in this Agreement shall be true, accurate, and complete on the date of the Borrowing Notice and
on the Funding Date of each Loan; provided that those representations and warranties expressly referring to a specific date shall
be true, accurate and complete in all respects as of such date, and (ii) no Default or Event of Default shall have occurred and be continuing
or result from the Loan. Each Borrowing Notice and the acceptance of each Loan shall be deemed to be a representation and warranty by
Borrower on the date such Loan is made as to the accuracy of the facts referred to in this Section 3.02(c); and
(d)
Lender determines to its satisfaction that there has not been any material impairment in the general affairs, management, results of
operation, financial condition or the prospect of repayment of the Obligations, or any Material Adverse Effect.
3.03
Procedures for Borrowing Day Funding Conditions Once Met. Subject to the prior satisfaction and fulfillment of all other applicable
conditions to the making of a Loan set forth in this Agreement, to obtain a Revolving Loan, Borrower shall notify Lender (which notice
shall be irrevocable) by electronic mail by 12:00 p.m. on the Funding Date of the Revolving Loan. In connection with such notification,
Borrower must promptly deliver to Lender by electronic mail a completed Borrowing Notice, each executed by a Responsible Officer, together
with such other reports and information, including sales journals, cash receipts journals, accounts receivable aging reports, as Lender
may reasonably request in its sole discretion. Lender shall credit proceeds of a Loan to the Designated Deposit Account. Lender may make
Loans under this Agreement based on instructions from a Responsible Officer or without instructions if the Loans are necessary to meet
Obligations which have become due.
3.04
Covenant to Deliver. Except as otherwise provided in Section 5.13, Borrower agrees to deliver to Lender each item required
to be delivered to Lender under this Agreement as a condition precedent to any extension of a Loan. Borrower expressly agrees that an
extension of a Loan made prior to the receipt by Lender of any such item shall not constitute a waiver by Lender of Borrower’s
obligation to deliver such item, and the making of any future extension of a Loan in the absence of a required item shall be in Lender’s
sole discretion.
Section
4 Representations and Warranties. Each Loan Party represents and warrants for itself and its Subsidiaries to Lender as follows:
4.01
Existence, Qualification and Power. Borrower and each Subsidiary (a) is duly organized or formed, validly existing and, as applicable,
in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and
all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business
and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, and (c) is duly qualified and
is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties
or the conduct of its business requires such qualification or license, except, in each case referred to in clause (c), to the extent
that failure to do so could not reasonably be expected to have a Material Adverse Effect.
4.02
Authorization; No Conflict; Enforceability. The execution, delivery, and performance of the Loan Documents are within such Loan
Party’s powers, have been duly authorized, and (a) are not in conflict with nor constitute a breach of any provision contained
in such Loan Party’s organizational documents, (b) do not contravene, conflict with, constitute a default under or violate any
material requirement of Applicable Law, (c) do not contravene, conflict or violate any applicable order, writ, judgment, injunction,
decree, determination or award of any Governmental Authority in the United States by which any Loan Party or any of its Subsidiaries
or any of their property or assets may be bound or affected, (d) do not require any action by, filing, registration, or qualification
with, or approval from, any Governmental Authority in the United States (except such approvals which have already been obtained and are
in full force and effect), and (e) do not constitute an event of default under any material agreement by which such Loan Party is bound.
No Loan Party nor any Subsidiary of a Loan Party is in default in the performance, observance or fulfillment of any material obligations,
covenants or conditions contained in any material agreement of such Loan Party or such other Subsidiary, as applicable, in any material
respect. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered
by each Loan Party party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal,
valid and binding obligation of each Loan Party, enforceable against such Loan Party in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generally or
by equitable principles relating to enforceability.
4.03
Perfection Certificate. In connection with this Agreement, the Loan Parties have executed and delivered to Lender the completed
Perfection Certificate signed by each Loan Party in form and substance acceptable to Lender (the “Perfection Certificate”).
Each Loan Party represents and warrants to Lender that (a) such Loan Party’s exact legal name is that indicated on the Perfection
Certificate and on the signature page hereof; (b) such Loan Party is an organization of the type and is organized in the jurisdiction
set forth in the Perfection Certificate; (c) the Perfection Certificate accurately sets forth such Loan Party’s (i) organizational
identification number or accurately states that such Loan Party has none and (ii) federal employer identification number; (d) the Perfection
Certificate accurately sets forth such Loan Party’s place of business, or, if more than one, its chief executive office as well
as such Loan Party’s mailing address (if different than its chief executive office); (e) except as disclosed in the Perfection
Certificate, such Loan Party (and each of its predecessors) has not, in the past five (5) years, done business under any name other than
that specified on the signature page hereof or changed its jurisdiction of formation, organizational structure or type or any organizational
number assigned by its jurisdiction; and (f) all other information set forth on the Perfection Certificate pertaining to such Loan Party
and each of its Subsidiaries is accurate and complete (it being understood and agreed that such Loan Party may from time to time update
certain information in the Perfection Certificate after the Closing Date by providing an updated Perfection Certificate to Lender). If
such Loan Party is not now a registered organization but later becomes one, such Loan Party shall promptly (and in any event within five
(5) days of such registration) notify Lender of such occurrence and provide Lender with such Loan Party’s organizational identification
number.
4.04
Intellectual Property. Each Loan Party is the sole owner of the Intellectual Property which it owns or purports to own, except
for non-exclusive licenses granted by such Loan Party to its customers in the ordinary course of business, and off-the-shelf and similar
non-customized inbound licenses for applications of third parties used in connection with such Loan Party’s business. To each Loan
Party’s knowledge, each of the Copyrights, Trademarks and Patents is valid and enforceable, and no part of the Intellectual Property
has been judged invalid or unenforceable, in whole or in part, and no claim has been made to any Loan Party that any part of the Intellectual
Property infringes upon, misappropriates or violates the rights of any third party except to the extent such claim could not reasonably
be expected to cause a Material Adverse Effect. To the knowledge of the Loan Parties, the conduct of the business of each of each Loan
Party and its Subsidiaries does not infringe upon, misappropriate or violate the proprietary rights of any Person, except to the extent
any such infringement, misappropriation or violation could not reasonably be expected to result in a Material Adverse Effect. As of the
Closing Date, there is no pending or, to each Loan Party’s knowledge, threatened, Intellectual Property claim against any Loan
Party, any Subsidiary of a Loan Party or any of their respective Intellectual Property which could reasonably be expected to result in
a Material Adverse Effect.
4.05
Collateral; Security Interests.
(a)
Each Loan Party has rights in or the power to transfer the Collateral, and its title to the Collateral is free and clear of Liens, adverse
claims, and restrictions on transfer or pledge except Permitted Liens.
(b)
No effective Financing Statement or other public notice with respect to all or any part of the Collateral is on file or of record in
any public office, except (a) filings evidencing Permitted Liens, (b) filings for which termination statements or a Payoff Letter has
been delivered to Lender (c) filings of record which have lapsed and (d) one or more financing statements in favor of the following,
as to which no lien or security interest currently exists, the underlying Indebtedness has been paid in full, no commitment to lend or
provide credit (contingent or otherwise) remains outstanding, and the secured party is obligated to provide or authorize the filing of
a termination statement: Manufacturers Capital, A Division of CCG, MFG BANK, Ltd., and U.S. Bank Equipment Finance. Each Loan Party has
good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary
conduct of its business.
(c)
All Inventory is in all material respects of good and merchantable quality, free from all material defects. No third party bailee (such
as a warehouse) is in possession of any Collateral except as otherwise provided in the Perfection Certificate. Other than movable items
of personal property having an aggregate book value less than $50,000.00, none of the Collateral is maintained at locations other than
as provided in the Perfection Certificate or as permitted pursuant to Section 6.03.
(d)
None of the Collateral, including any Deposit Accounts, Securities Accounts and Commodity Accounts, is maintained or invested at or with
any Bank, Securities Intermediary, Commodities Intermediary or financial institution other than Lender or Lender’s Affiliates,
except as set forth in the Perfection Certificate.
(e)
None of the Collateral constitutes, or is the Proceeds of, (i) Farm Products, (ii) as-extracted collateral, (iii) Health-Care Insurance
Receivables or (iv) vessels, aircraft or any other property subject to any certificate of title or other registration statute of the
United States, any State or other jurisdiction, except for motor vehicles owned by the Loan Parties and used by employees of the Loan
Parties in the ordinary course of business.
(f)
Subject to actions required to be taken by Lender, including the filing of UCC-1 financing statements, all security interests granted
to Lender in the Collateral are perfected security interests in and Liens on the Collateral (to the extent (i) perfection is required
by this Agreement or the other Loan Documents and (ii) such Liens may be perfected by the filing of UCC-1 financing statements and the
taking of other actions required by this Agreement or the other Loan Documents), subject only to Permitted Liens.
4.06
Litigation. Except as set forth in the Perfection Certificate, there are no actions, suits, litigation or proceedings, at law
or in equity, pending, or to the knowledge of any Responsible Officer or Financial Officer of any Loan Party, threatened by or against
any Loan Party or any Subsidiary thereof before any court, administrative agency, or arbitrator involving more than, individually or
in the aggregate, $100,000.00.
4.07
Financial Statements; Material Adverse Effect; No Default.
(a)
All consolidated financial statements related to Borrower or any Subsidiary that Borrower delivered to Lender fairly present in all material
respects Borrower’s and its Subsidiaries’ consolidated financial condition as of the date thereof and consolidated results
of operations for the period then ended.
(b)
Since the date of the most recent audited financial statements submitted to Lender, there has not been any Material Adverse Effect. The
most recent audited financial statements submitted to Lender (i) were prepared in accordance with GAAP consistently applied throughout
the period covered thereby, except as otherwise expressly noted therein, (ii) fairly present the financial condition of each Loan Party
and its Subsidiaries as of the date thereof and their results of operations, cash flows and changes in shareholders’ equity for
the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly
noted therein, and (iii) show all material indebtedness and other liabilities, direct or contingent, of each Loan Party and its Subsidiaries
as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.
(c)
No Default or Event of Default has occurred and is continuing or would result from the consummation of the transactions contemplated
by this Agreement or any other Loan Document.
4.08
Solvency. Borrower, individually, and the Loan Parties and their Subsidiaries, on a consolidated basis and taken as a whole, are
Solvent.
4.09
Compliance with Laws; Investment Company Act; Margin Regulations.
(a)
Each Loan Party and its Subsidiaries (i) has complied in all material respects with all Applicable Law (including Laws concerning or
relating to its ownership of real or personal property, hazardous materials and environmental laws, the conduct and licensing of its
business, occupational health and safety, and pensions or other employee benefits), and (ii) has not violated any Applicable Law the
violation of which could reasonably be expected to have a Material Adverse Effect.
(b)
As of the date hereof, there are no strikes, lockouts or slowdowns against any Loan Party or any Subsidiary thereof pending or, to the
knowledge of such Loan Party, threatened in writing. Each Loan Party and Subsidiary thereof has complied with all the provisions of the
Federal Fair Labor Standards Act.
(c)
No Loan Party nor any Subsidiary thereof is an “investment company” as defined in, or subject to regulation under, the Investment
Company Act of 1940.
(d)
No Loan Party is engaged nor will engage, principally or as one of its important activities, in the business of purchasing or carrying
Margin Stock, or extending credit for the purpose of purchasing or carrying margin stock within the meaning of Regulations T, U and X
of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof (such
stock, “Margin Stock”), and no part of the proceeds of any Loans hereunder will be used to buy or carry any
Margin Stock.
4.10
ERISA Compliance.
(a)
(i) Each Plan is in compliance with the applicable provisions of ERISA, the Internal Revenue Code and other federal or state Laws and
(ii) each Plan that is intended to be a qualified plan under Section 401(a) of the Internal Revenue Code has received a favorable determination
letter from the IRS to the effect that the form of such Plan is qualified under Section 401(a) of the Internal Revenue Code and the trust
related thereto has been determined by the IRS to be exempt from federal income tax under Section 501(a) of the Internal Revenue Code,
or an application for such a letter is currently being processed by the IRS, and, to the knowledge of Borrower, nothing has occurred
that would prevent or cause the loss of such tax-qualified status.
(b)
There are no pending or, to the knowledge of Borrower, threatened or contemplated claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan. There has been no prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan.
(c)
No ERISA Event has occurred, and neither Borrower nor any ERISA Affiliate is aware of any fact, event or circumstance that, either individually
or in the aggregate, could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan.
(d)
The present value of all accrued benefits under each Pension Plan (based on those assumptions used to fund such Pension Plan) did not,
as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets
of such Pension Plan allocable to such accrued benefits by a material amount. As of the most recent valuation date for each Multiemployer
Plan, the potential liability of Borrower or any ERISA Affiliate for a complete withdrawal from such Multiemployer Plan (within the meaning
of Section 4203 or Section 4205 of ERISA), when aggregated with such potential liability for a complete withdrawal from all Multiemployer
Plans, is zero.
4.11
Government Consents. Each Loan Party and each Subsidiary thereof has obtained all consents, approvals and authorizations of, made
all declarations or filings with, and given all notices to, all Government Authorities that are necessary to continue its business as
currently conducted.
4.12
Subsidiaries; Investments. No Loan Party owns any Investment except for Permitted Investments.
4.13
Taxes. Each Loan Party and each Subsidiary thereof has timely filed all federal, state and other tax returns and reports required
to be filed, and has paid all federal, state and other taxes, assessments, fees and other governmental charges levied or imposed upon
them or their properties, income or assets otherwise due and payable, except to the extent such taxes are being contested in good faith
by appropriate proceedings diligently conducted and for which adequate reserves are being maintained in accordance with GAAP. No Loan
Party is aware of any claims or adjustments proposed for any of such Loan Party’s or its Subsidiaries’ prior tax years which
could result in additional taxes becoming due and payable.
4.14
Insurance. The insurance maintained by or on behalf of such Loan Party and its Subsidiaries is adequate and is customary for companies
engaged in the same or similar businesses operating in the same or similar locations. As of the date hereof, all premiums in respect
of such insurance have been paid.
4.15
Disclosure. Borrower has disclosed to Lender all agreements, instruments and corporate or other restrictions to which Borrower
or any of its Subsidiaries is subject, and all other matters known to it, that, either individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect. The reports, financial statements, certificates and other written information (other than
projected or pro forma financial information) furnished by or on behalf of Borrower to Lender in connection with the transactions contemplated
hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (as modified or supplemented by
other information so furnished), taken as a whole, do not contain any material misstatement of fact or omit to state any material fact
necessary to make the statements therein (when taken as a whole), in the light of the circumstances under which they were made, not misleading;
provided that, with respect to projected or pro forma financial information, Borrower represents only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the time of preparation and delivery (it being understood
that such projected information may vary from actual results and that such variances may be material).
4.16
Sanctions; Anti-Corruption.
(a)
None of Borrower, any of its Subsidiaries or any director, officer, or employees, or, to the knowledge of Borrower, any agent, or affiliate
of Borrower or any of its Subsidiaries, is an individual or entity (“person”) that is, or is owned or controlled
by persons that are: (i) the subject of any sanctions administered or enforced by the U.S. Department of the Treasury’s Office
of Foreign Assets Control, the U.S. Department of State, the United Nations Security Council, the European Union, Her Majesty’s
Treasury, or other relevant sanctions authority (collectively, “Sanctions”), or (ii) located, organized or
resident in a country or territory that is the subject of Sanctions (including, Crimea, Cuba, Iran, North Korea and Syria).
(b)
Borrower, any of its Subsidiaries and their respective directors, officers and employees and, to the knowledge of Borrower, the agents
and affiliates of Borrower and its Subsidiaries, are in compliance with all applicable Sanctions and with the Foreign Corrupt Practices
Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”) and any other applicable anti-corruption
law, in all material respects. Borrower and its Subsidiaries have instituted and maintain policies and procedures designed to ensure
continued compliance with applicable Sanctions, the FCPA and any other applicable anti-corruption laws.
4.17
Environmental Matters. Neither Borrower nor any Subsidiary (a) has failed to comply with any Environmental Law or to obtain, maintain
or comply with any permit, license or other approval required under any Environmental Law in any material respect, (b) knows of any basis
for any material permit, license or other approval required under any Environmental Law to be revoked, canceled, limited, terminated,
modified, appealed or otherwise challenged, (c) has or could reasonably be expected to become subject to any material Environmental Liability,
(d) has received notice of any claim, complaint, proceeding, investigation or inquiry with respect to any material Environmental Liability
(and no such claim, complaint, proceeding, investigation or inquiry is pending or threatened in writing, or, to the knowledge of Borrower,
is contemplated) or (e) knows of any facts, events or circumstances that could give rise to any basis for any material Environmental
Liability of Borrower or any Subsidiary.
4.18
Capital Structure. The Perfection Certificate shows for each Loan Party and each Subsidiary of a Loan Party, its name, its jurisdiction
of organization, its issued Equity Interests and the holders of its Equity Interests (as to Borrower, only each holder of Equity Interests
that owns 1.5% or more of the issued and outstanding Equity Interests). Each Loan Party has good title to its Equity Interests in its
Subsidiaries, in each case, subject only to the Permitted Liens, and all such Equity Interests are validly issued, fully paid and, to
the extent applicable, non-assessable. There are no outstanding purchase options, warrants, subscription rights, agreements to issue
or sell, convertible interests, phantom rights or powers of attorney relating to Equity Interests of any Loan Party or any pledged Equity
Interests except as set forth on the Perfection Certificate.
4.19
Possession of Franchises; Licenses. Except as set forth in the Perfection Certificate and except to the extent the failure to
have or maintain or violate, as applicable, individually or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect, each Loan Party and each of its Subsidiaries has all franchises, certificates, licenses, permits and other authorizations
from governmental or political subdivisions or regulatory authorities, free from burdensome restrictions, that are necessary in any material
respect for the ownership, maintenance and operation of its properties and assets, and no Loan Party nor any of its Subsidiaries is in
violation of any thereof in any material respect.
4.20
Broker’s Fee. Except as set forth in the Perfection Certificate, no broker or finder is entitled to receive or is claiming
it is entitled to receive a fee or commission with respect to any of the transactions contemplated hereby. Lender is responsible for
the payment of any such broker’s or finder’s fee set forth on the Perfection Certificate.
4.21
Use of Proceeds. The proceeds of the Loans are intended to be and shall be used solely for the purposes set forth in and permitted
by Section 5.12.
4.22
Guarantors. Each Guarantor has, independently and without reliance upon Lender and based on such documents and information as
it has deemed appropriate, made its own risk analysis and decision to enter into this Agreement (including the Guaranty) and any other
Loan Document to which it is or may become a party, and has established adequate procedures for continually obtaining information pertaining
to, and is now and at all times will be completely familiar with, the business, condition (financial or otherwise), operations, performance,
properties, and prospects of Borrower and each other Loan Party.
4.01
Dormant Subsidiaries. The Dormant Subsidiaries have no assets and have conducted no material activities or operations since January
1, 2022, and Borrower has no plan or intention to utilize any of the Dormant Subsidiaries for any operations, or for any of them to own
or hold any assets.
Section
5 Affirmative Covenants. Each Loan Party, for itself and its Subsidiaries, hereby covenants and agrees that until Payment in Full,
such Loan Party will, and will cause each of its Subsidiaries to, do all of the following:
5.01
Financial Statements, Reports, Certificates. Provide Lender with the following:
(a)
as soon as available, but in any event within 90 days following the end of Borrower’s fiscal year, audited consolidated financial
statements of the Loan Parties and their Subsidiaries as at the end of such fiscal year and the related, shareholders’ equity and
cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, prepared in
accordance with GAAP, consistently applied, audited and accompanied by a report and opinion of independent public accountants of nationally
recognized standing reasonably acceptable to Lender, which report and opinion shall be prepared in accordance with generally accepted
auditing standards (and shall not be subject to any “going concern” or like qualification, exception or explanatory paragraph
or any qualification, exception or explanatory paragraph as to the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition, results of operations, shareholders’ equity and cash
flows of Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;
(b)
as soon as available, but in any event within 45 days following the end of each fiscal quarter of Borrower, a company prepared consolidated
balance sheet, income statement, cash flow statement, shareholders’ equity and recurring revenue report of the Loan Parties and
their Subsidiaries as at the end of such fiscal quarter and for the portion of Borrower’s fiscal year then ended, in each case
setting forth in comparative form, as applicable, the figures for the corresponding fiscal quarter of the previous fiscal year and the
corresponding portion of the previous fiscal year, prepared in accordance with GAAP, consistently applied, certified by a Responsible
Officer of Borrower (as fairly presenting in all material respects the financial condition, results of operations, shareholders’
equity and cash flows of Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP, consistently applied) and in
a form reasonably acceptable to Lender;
(c)
within 45 days following the end of each fiscal quarter of Borrower, a duly completed Compliance Certificate signed by a Responsible
Officer of Borrower, certifying that as of the end of such applicable period, the Loan Parties were in full compliance with all of the
terms and conditions of this Agreement, and setting forth calculations showing compliance with the financial covenants set forth in this
Agreement and such other information as Lender may reasonably request;
(d)
on or before 5:00 p.m. Central time on Thursday of each week, a duly completed Borrowing Base Certificate reflecting the information
required thereby and prepared as of the end of the immediately preceding Business Day, certified by a Financial Officer of Borrower;
(e)
upon the earlier of (i) three (3) Business Days after approval by Borrower’s board of directors (or other equivalent governing
body of Borrower) or (ii) April 1 of each year, (A) annual operating budgets (including income statements, balance sheets and cash flow
statements, by month) for the then current fiscal year of Borrower, and (B) annual financial projections for such fiscal year (on a quarterly
basis) as approved by Borrower’s board of directors (or other equivalent governing body of Borrower), together with any related
business forecasts used in the preparation of such annual financial projections;
(f)
within three (3) Business Days of filing, copies of all periodic and other reports, proxy statements and other materials filed with the
SEC, any Governmental Authority succeeding to any or all of the functions of the SEC or with any national securities exchange, or distributed
to its shareholders, as the case may be; provided that documents required to be delivered pursuant to the terms hereof (to the extent
any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall
be deemed to have been delivered on the date on which such Loan Party posts such
documents,
or provides a link thereto, on such Loan Party’s website on the Internet at its website address; provided further that such
Loan Party shall promptly notify Lender in writing (which may be by electronic mail) of the posting of any such documents;
As
to any information contained in materials furnished pursuant to this Section 5.01(f), Borrower shall not be separately required
to furnish such information under Section 5.01(a) or (b) above, but the foregoing shall not be in lieu of the obligation of Borrower
to furnish the information and materials described in Section 5.01(a) and (b) above at the times specified therein.
(g)
promptly (and in any event within one (1) Business Day of the occurrence thereof) notice of (i) the occurrence of any Default or Event
of Default, (ii) any legal actions (by a Government Authority or otherwise) pending or threatened in writing against any Loan Party or
any of its Subsidiaries that could reasonably be expected to result in damages or costs, individually or in the aggregate, of $100,000.00
or more or (iii) any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect;
(h)
the occurrence of any ERISA Event that, either individually or together with any other ERISA Events, could reasonably be expected to
result in liability of Borrower and its Subsidiaries in an aggregate amount exceeding $100,000.00;
(i)
notice of any action arising under any Environmental Law or of any noncompliance by Borrower or any Subsidiary with any Environmental
Law or any permit, approval, license or other authorization required thereunder that, if adversely determined, could reasonably be expected
to result in liability of Borrower and its Subsidiaries in an aggregate amount exceeding $100,000.00; and
(j)
promptly following any request therefor, (i) such other information regarding the operations, business, properties, liabilities (actual
or contingent), condition (financial or otherwise) or prospects of the Loan Parties or their Subsidiaries, or compliance with the terms
of the Loan Documents, as Lender may from time to time reasonably request; or (ii) information and documentation reasonably requested
by Lender for purposes of compliance with applicable “know your customer” requirements under the Patriot Act or other applicable
anti-money laundering laws.
5.02
Existence; Government Approvals.
(a)
(i) Maintain its legal existence and good standing in its jurisdiction of formation and (ii) maintain qualification in each jurisdiction
in which the failure to so qualify could reasonably be expected to have a Material Adverse Effect.
(b)
(i) Obtain all of the Governmental Approvals necessary for the performance by each Loan Party of its obligations under the Loan Documents
and the grant of a security interest to Lender in the Collateral and (ii) promptly provide copies of any such obtained Governmental Approvals
to Lender
5.03
Maintenance of Property; Licenses; Inventory
(a) (i)
Maintain, preserve and protect all of its material properties and Equipment necessary in the operation of its business in good
working order and condition (ordinary wear and tear excepted), and (ii) make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse
Effect.
(b)
Take all reasonable action to maintain all rights, licenses, permits, privileges and franchises necessary or desirable in the normal
conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.
(c)
(i) Keep all Inventory in good and marketable condition, free from material defects, (ii) follow such customary practices with respect
to returns and allowances as they exist on the Closing Date and (iii) promptly notify Lender of all returns, recoveries, disputes and
claims that involve more than $50,000.00.
5.04
Payment of Obligations; Taxes; Pensions. (a) Timely file all required tax returns and reports, (b) timely pay, discharge or otherwise
satisfy as the same shall become due and payable, all of its obligations and liabilities, including foreign, federal, state and local
taxes, assessments, deposits and contributions owed, unless the same are being contested in good faith by appropriate proceedings diligently
conducted and adequately reserved against in accordance with GAAP, and deliver to Lender, on demand, appropriate certificates attesting
to such payments, and (c) pay all amounts necessary to fund all Plans, Pension Plans, and all other present pension, profit sharing and
deferred compensation plans in accordance with their terms.
5.05
Compliance with Laws; Sanctions; Anti-Corruption Laws.
(a)
Comply with the requirements of all Applicable Law and all orders, writs, injunctions and decrees applicable to it or to its business
or property, except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect.
(b)
Maintain in effect policies and procedures designed to promote compliance by such Loan Party and such Subsidiary and their respective
directors, officers, employees, and agents with applicable Sanctions and with the FCPA and any other applicable anti-corruption laws.
5.06
Inspection Rights. Permit representatives and independent contractors of Lender to visit and inspect any properties, to examine
its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances
and accounts with its directors, officers, and independent public accountants, all at the reasonable expense of the Loan Parties and
at such reasonable times during normal business hours and as often as may be reasonably requested; provided that, other than with
respect to such visits and inspections during the continuation of an Event of Default, Lender shall not exercise such rights more often
than two (2) times during any calendar year; provided further that when an Event of Default exists, Lender (or any of its respective
representatives or independent contractors) may do any of the foregoing under this Section at the expense of the Loan Parties and at
any time during normal business hours and without advance notice. If any of the properties, books or records of Borrower or any Subsidiary
are in the possession of a third party, Borrower and such Subsidiary shall authorize that third party to permit any Person designated
by Lender in writing or any agents thereof to have reasonable access, accompanied by a representative of Borrower, to perform inspections
or audits and to respond to Lender’s reasonable written request for information concerning such property, books and records to
the same extent as if such information was held by Borrower or such Subsidiary.
5.07
Books and Records. Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters involving the assets and business of such Loan Party or
such Subsidiary, as the case may be.
5.08
Insurance.
(a)
Maintain with financially sound and reputable insurance companies that are not Affiliates of any Loan Party, insurance with respect to
its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar
business, at the same or similar stage of development and at the same or similar location, and of such types and in such amounts as are
customarily carried under similar circumstances by such Persons and reasonably satisfactory to Lender, and, at Lender’s request,
deliver certified copies of insurance policies and evidence of all premium payments.
(b)
Cause each provider of any such insurance required under this Section 5.08 to (1) agree, by endorsement upon the policy or policies
issued by it or by independent instruments furnished to Lender, that it will give Lender 30 days’ prior written notice before any
such policy or policies shall be materially altered or canceled (or ten (10) days’ notice in the case of cancellation due to non-payment
of premium) and (2) provide (A) endorsements to (A) all “All Risk” policies naming Lender as loss payee and (B) all general
liability and other liability policies naming Lender as additional insured; provided that if any Loan Party fails to obtain insurance
as required under this Section 5.08 or to pay any amount or furnish any required proof of payment to third persons and Lender,
Lender may make all or part of such payment or obtain such certificates of insurance policies required in this Section 5.08, and
take any action under the policies Lender deems prudent; provided further that if Lender purchases insurance, the Loan Parties shall
be responsible for the costs of that insurance, including interest and any other charges Lender may impose in connection with the placement
of insurance, until the effective date of the cancellation or expiration of the insurance, and the Loan Parties acknowledge and agree
that (x) the cost of the insurance shall be added to the Obligations and (y) the costs of the insurance may be more than the cost of
insurance the Loan Parties may be able to obtain on its own.
(c)
Ensure that proceeds payable under any property policy shall (i) so long as no Event of Default has occurred and is continuing, at Borrower’s
option, be applied toward the replacement or repair of destroyed or damaged property used or useful in Borrower’s business so long
as (x) such application is done in 90 days of the receipt of such proceeds and (y) any such replaced or repaired property (1) shall be
of equal or like value as the replaced or repaired asset and (2) shall be deemed Collateral in which Lender has been granted a first
priority security interest, or (ii) if (x) an Event of Default is continuing at the time Borrower or any of its Subsidiaries receive
such proceeds or (y) such proceeds are not applied in the time frame required by the foregoing clause (i), at the option of Lender, be
payable to Lender on account of the Obligations (and shall be applied by Borrower to the Obligations within the three (3) Business Days
of the receipt thereof (or after the time period in clause (i) expires to the extent such proceeds have not be applied pursuant to the
requirements of such clause)).
5.09
Registration and Protection of Intellectual Property Rights.
(a)
(i) Protect, defend and maintain the validity and enforceability of its Intellectual Property; (ii) use commercially reasonable efforts
to detect and monitor for infringements of the Intellectual Property, and when discovering such infringement and if such infringed Intellectual
Property is of material economic value, promptly (and in any event within 10 days of such occurrence) notify Lender after it learns thereof
and, to the extent, in its reasonable judgment, Borrower determines it appropriate under the circumstances, sue for infringement, misappropriation
or dilution, to seek injunctive relief where appropriate and to recover any and all damages for such infringement, misappropriation or
dilution; (iii) not allow any Intellectual Property material to Loan Party’s business to be abandoned, forfeited or dedicated to
the public without Lender’s written consent, (iv) not knowingly use any material Intellectual Property to infringe the intellectual
property rights of any other Person, and (v) take all commercially reasonable and necessary steps to maintain and pursue each application
(and to obtain the relevant registration) and to maintain each registration of all material Intellectual Property owned by it, unless
Borrower has determined in its reasonable business judgment that such Intellectual Property owned by a Loan Party is not materially useful
in its business.
(b)
Notify Lender within 10 days if it knows (i) that any application or registration relating to any material Intellectual Property may
become forfeited, abandoned or dedicated to the public (other than with respect to any Intellectual Property reasonably determined by
a Loan Party to be no longer useful or material in its business), or (ii) of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United
States Copyright Office or any court or tribunal in any country) regarding, a Loan Party’s ownership of, or the validity of, any
material Intellectual Property or a Loan Party’s right to register the same or to own and maintain the same (other than non-final
office actions issued in the ordinary course of prosecution of any pending applications for patents or applications for registration
of other Intellectual Property).
(c)
Register or cause to be registered on an expedited basis (to the extent not already registered) with the United States Patent and Trademark
Office or the United States Copyright Office, as the case may be, those registrable material Intellectual Property rights now owned or
hereafter developed or acquired by any Loan Party or any Subsidiary, to the extent that such Loan Party, in its reasonable business judgment,
deems it appropriate to so protect such Intellectual Property rights.
(d)
Promptly give Lender written notice (and in any event within 10 days thereof) of any applications or registrations of intellectual property
rights filed with the United States Patent and Trademark Office and United States Copyright Office, including the date of such filing
and the registration or application numbers, if any.
(e)
Give Lender prompt written notice (and in any event within 10 days thereof) of the filing of any applications or registrations with the
United States Copyright Office, including the title of such Intellectual Property rights to be registered, as such title will appear
on such applications or registrations, and the date such applications or registrations will be filed.
5.10
Environmental Matters. (a) Comply with all Environmental Laws in all material respects, (b) obtain, maintain in full force and
effect and comply with any permits, licenses or approvals required for the facilities or operations of Borrower or any of its Subsidiaries
in all material respects, and (c) conduct and complete any investigation, study, sampling or testing, and undertake any corrective, cleanup,
removal, response, remedial or other action necessary to identify, report, remove and clean up all Hazardous Materials present or released
at, on, in, under or from any of the facilities or real properties of Borrower or any of its Subsidiaries.
5.11
Formation or Acquisition of Subsidiaries; Dormant Subsidiaries. If any Loan Party forms any Subsidiary or acquires any Subsidiary
after the Closing Date, or if any Dormant Subsidiary acquires any property or commences any operations, then Borrower will promptly (and
in any event, within 5 days) notify Lender of such creation or acquisition and, concurrent with such notice, will cause such new Subsidiary
or such Dormant Subsidiary, as the case may be, to provide to Lender: (a) a joinder to this Loan Agreement to cause such Subsidiary to
become a Guarantor hereunder substantially in the form attached hereto as Exhibit C, together with such appropriate financing
statements, stock certificates and powers, and/or control agreements, all in form and substance reasonably satisfactory to Lender (including
being sufficient to grant Lender a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired
Subsidiary and pledging all of the direct or beneficial ownership interest in such new Subsidiary), and (b) all other documentation in
form and substance reasonably satisfactory to Lender, including one or more opinions of counsel satisfactory to Lender and substantially
similar to the form of opinion referenced in Section 3.01(a)(vi), which in its opinion is appropriate with respect to the execution
and delivery of the applicable documentation referred to above. Any document, agreement, or instrument executed or issued pursuant to
this Section 5.11 shall be a Loan Document.
5.12
Use of Proceeds. Use the proceeds of the Loans to pay off the Existing Line of Credit and for working and growth capital purposes,
and in any event, not in contravention of any Applicable Law or of this Loan Agreement or any other Loan Document.
5.13
Further Assurances. Execute any further instruments and take further action as Lender reasonably requests to effect the purposes
of this Agreement and the other Loan Documents. Deliver to Lender, within 5 days after the same are sent or received, copies of all correspondence,
reports, documents and other filings with any Governmental Authority regarding compliance with or maintenance of Governmental Approvals
or Applicable Law or that could reasonably be expected to have a material effect on any of the Governmental Approvals or otherwise on
the operations of any Loan Party.
5.14
Cash Management Products. At all times on or after the date that is 90 days after the Closing Date, except for Deposit Accounts
at other financial institutions with balances that at no time exceed $200,000.00 in the aggregate for all Loan Parties (provided that
nothing in this Section 5.14 shall limit the Loan Parties’ obligations under Section 11.03(e), including without
limitation the obligation to obtain an applicable Control Agreement as to any such Deposit Account in accordance therewith), Borrower
shall have established and arranged for all the Loan Parties’ and their Subsidiaries’ Bank Services to be managed and maintained
with Lender and its Affiliates, including all of their respective Cash Management Products, Deposit Accounts, Securities Accounts and
Commodity Accounts.
Section
6 Negative Covenants.
Each
Loan Party, for itself and its Subsidiaries, hereby covenants and agrees that until Payment in Full, such Loan Party will not, and will
not permit any of its Subsidiaries to, do any of the following:
6.01
Indebtedness. Create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness other than Permitted
Indebtedness. Borrower may request to increase the $100,000.00 limit in subpart (d) of the definition of Permitted Indebtedness up to
$1,000,000.00 (which, for clarity, would be a $900,000.00 increase), and Lender shall not unreasonably withhold its consent to such increase,
provided that:
(a)
such request shall be in writing and shall include reasonably detailed information on the Equipment to be financed and the repayment
terms of, and any Liens securing such Indebtedness increase;
(b)
such request shall be accompanied by a written certification to Lender from a Responsible Officer of Borrower and calculations in form
and substance reasonably satisfactory to Lender stating and demonstrating that, after giving effect to the incurrence of all such Indebtedness
and the repayment thereof in accordance with its terms, Borrower
(i)
would have been in compliance with the Leverage Ratio covenant in Section 6.15(c) as of the last day of the immediately preceding
fiscal quarter, assuming such Indebtedness were incurred as of the day immediately prior to the end of such quarter; and
(ii)
on a pro forma basis, will be in compliance with the Leverage Ratio covenant in Section 6.15(c) until payment in full of such
Indebtedness; and
(c)
no Default then exists or would otherwise be caused by the incurrence of such Indebtedness or the granting of the Lien securing such
Indebtedness.
6.02
Encumbrances. (a) Create, incur, allow, or suffer any Lien on any of its property, or assign or convey any right to receive income,
except for Permitted Liens, or (b) permit any Collateral not to be subject to the security interest granted herein and under the other
Loan Documents (other than Permitted Prior Liens).
6.03
Dispositions. Dispose all or any part of its assets, business or property, in one or a series of transactions or otherwise, or
enter into any agreement to make any such Disposition, except for Dispositions (a) of Inventory in the ordinary course of business, (b)
of worn-out or obsolete Equipment that is, in the reasonable judgment of such Loan Party, no longer economically practicable to maintain
or useful in the ordinary course of business of such Loan Party or any of its Subsidiaries, (c) of obsolete Inventory that is, in the
reasonable judgment of such Loan Party, no longer economically practicable to maintain or useful in the ordinary course of business of
such Loan Party or any of its Subsidiaries, provided that if such disposition causes an Overadvance to exist, Borrower shall immediately
upon such disposition pay down the Revolving Loans in an amount that equals or exceeds the Overadvance, (d) consisting of Permitted Liens
and Permitted Investments, (e) of money or Cash Equivalents in the ordinary course of its business, (f) of Accounts to Lender under the
BM Facilities, or (g) of non-exclusive licenses or sublicenses for the use of the property of such Loan Party or its Subsidiaries in
the ordinary course of business.
6.04
Changes in Business, Fiscal Year, Management, Control, or Business Locations.
(a)
(i) Engage in any business other than the businesses currently engaged in on the Closing Date by Loan Party or reasonably related thereto,
or (ii) change the date on which its fiscal year ends, or (iii) fail to provide notice to Lender of any Key Person departing from or
ceasing to be employed by a Loan Party within three (3) Business Days after such Key Person’s departure from such Loan Party.
(b)
Without at three (3) Business Days prior written notice to Lender, (i) relocate its chief executive office, (ii) change its jurisdiction
of organization, (iii) change its organizational structure or type, (iv) change its legal name, (v) change any organizational number
(if any) assigned by its jurisdiction of organization, or (vi) permit any of the Inventory or Equipment to be kept at a location other
than those listed in the Perfection Certificate; provided that (I) up to $100,000.00 (in the aggregate for all Loan Parties) in
fair market value of Inventory and Equipment may be kept at other locations not listed on the Perfection Certificate, (II) Inventory
or Equipment may be in the temporary possession of an employee in the ordinary course of business, or (III) this restriction shall not
apply to Inventory or Equipment that is in transit or out for repair or restoration.
6.05
Fundamental Changes; Acquisitions. (a) Dissolve, liquidate, merge or consolidate (or enter into any agreement to do any of the
same) with or into any other Person (except for dissolutions, liquidations, mergers or consolidations of a Subsidiary into another Subsidiary
or into Borrower; provided that (x) if Borrower is involved in such dissolution, liquidation, merger or consolidation, Borrower
shall be the surviving entity and (y) subject to the foregoing clause (x), if any such Subsidiary involved in such dissolution, liquidation,
merger or consolidation is a Loan Party, a Loan Party shall be the surviving entity), or (b) acquire, or permit any of its Subsidiaries
to acquire (or enter into any agreement to do any of the same), all or substantially all of the Equity Interests or property of another
Person (except for Investments of a Subsidiary into another Subsidiary or Borrower, in each case, to the extent such Investment is permitted
under Section 6.07).
6.06
Restricted Payments. Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise)
to do so, except for Restricted Payments (a) by any Subsidiary of Borrower to Borrower, or (b) in the form of dividends by Borrower (i)
while no Default or Event of Default exists, (ii) that will not otherwise cause a Default or Event of Default, and (iii) made more than
one year after the end of the fiscal quarter in which the most recent Default or Event of Default occurred or existed, regardless of
whether such Default or Event of Default is existing at the time of such dividend.
6.07
Investments. Directly or indirectly make any Investment (including by the formation of any Subsidiary) in or to any Person other
than Permitted Investments.
6.08
Transactions with Affiliates. Directly or indirectly enter into or permit to exist any arrangement, transaction or contract (including
for the purchase, lease or exchange of property or the rendering of services) with any Affiliate of any Loan Party, except for (a) transactions
that are in the ordinary course of Loan Party’s business, upon fair and reasonable terms that are no less favorable to Loan Party
than would be obtained in an arm’s length transaction with a non-Affiliate of the Loan Parties, (b) transactions among Loan Parties,
(c)(x) payment of reasonable and customary compensation and severance arrangements and benefit plans for directors, officers and employees
of the Loan Parties and their respective Subsidiaries, (y) customary fees to non-officer directors (that are not Affiliates of the Loan
Parties) of the Loan Parties and (z) customary indemnification of officers and directors of the Loan Parties, in each case of the foregoing,
approved by Borrower’s board of directors, (d) transactions permitted under Section 6.05, (e) Restricted Payments permitted
under Section 6.06, and (f) the Tronco Loan.
6.09
Payments on Account of Indebtedness. Prepay any Indebtedness or take any actions which impose on such Loan Party or Subsidiary
an obligation to prepay any Indebtedness, except Indebtedness to Lender.
6.10
Investment Company Act; Margin Regulation; Compliance. (a) Become an “investment company” or a “person directly
or indirectly controlled by or acting on behalf of an investment company”, under the Investment Company Act of 1940, or become
principally engaged in, or undertake as one of its important activities, extending credit to purchase or carry Margin Stock, or use the
proceeds of any Loan for that purpose, (b) fail to comply with the Federal Fair Labor Standards Act or violate any other Applicable Law,
in each case, if the violation would reasonably be expected to have a Material Adverse Effect or (c) withdraw from participation in,
permit partial or complete termination of, or permit the occurrence of any other event with respect to, any Plans, Pension Plans, and
any other present pension, profit sharing and deferred compensation plan, in each case, which would reasonably be expected to result
in any material liability to any Loan Party.
6.11
ERISA. Permit the occurrence of an ERISA Event.
6.12
Restrictive Agreements. Enter into or permit to exist any agreement, document, instrument or other arrangement or contractual
obligation that (a) limits or prohibits (or has the effect of limiting or prohibiting) the ability of any Subsidiary (i) to pay any dividends
or make any distribution or payment to, or redeem, retire or purchase (or make any other Restricted Payment on account of) any Equity
Interests of, any Loan Party, (ii) to guarantee or make payments on behalf of any Indebtedness of any Loan Party, (iii) to make loans,
advances, reimbursements of management and other intercompany charges, expenses and accruals or other returns on investments to any Loan
Party; or (iv) to transfer any of its property or assets to any Loan Party, or (b) limits or prohibits (or has the effect of limiting
or prohibiting) any Loan Party from creating, incurring, assuming or allowing any Lien with respect to any of such Loan Party’s
or Subsidiary’s property (other than arrangements of the type set forth in clause (d) of the definition of Permitted Indebtedness);
provided that the foregoing shall not apply to (1) any restrictions created by this Agreement and the other Loan Documents, (2)
restrictions and conditions imposed by Applicable Law, (3) restrictions and conditions existing on the Closing Date and shown on the
Perfection Certificate delivered on the Closing Date and (4) customary restrictions and conditions contained in agreements relating to
a disposition of assets or acquisition of property permitted by this Agreement (and any restrictions on any cash earnest money deposits
in connection therewith).
6.13
Sanctions; Anti-Corruption. Use the proceeds of the Loans, or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other Person, (a) in furtherance of an offer, payment, promise to pay, or authorization of the payment
or giving of money, or anything else of value, to any Person in violation of the FCPA or any other applicable anti-corruption law, or
(b) (i) to fund any activities or business of or with any Person, or in any country or territory, that, at the time of such funding,
is the subject of Sanctions, or (ii) in any other manner that would result in a violation of Sanctions by any Person (including any Person
participating in the Loans, whether as an agent, issuing bank, lender, underwriter, advisor, investor, or otherwise of such person).
6.14
Change in Organizational Documents. Except as permitted under Section 6.05, no Loan Party shall, and no Loan Party shall
permit any of its Subsidiaries to, change or amend any of its organizational documents in a manner adverse to Lender.
6.15
Financial Covenants.
(a)
Current Ratio. Permit the Current Ratio, determined as of the last day of any fiscal quarter, starting with the fiscal quarter
ending December 31, 2023, to be less than 1.15 to 1.00.
(b)
Debt Service Coverage Ratio. Permit the Debt Service Coverage Ratio, determined as of the last day of any fiscal quarter starting
with the fiscal quarter ending December 31, 2023, based on the twelve-month period ending on such day, to be less than 1.50 to 1.00.
(c)
Leverage Ratio. Permit the Leverage Ratio, determined as of the last day of any fiscal quarter starting with the fiscal quarter
ending December 31, 2023, based on the twelve-month period ending on such day, to be greater than 3.50 to 1.00.
Section
7 Events of Default.
Any
one of the following shall constitute an event of default (an “Event of Default”) under this Agreement:
7.01
Payment Default. If any Loan Party fails to (a) make any payment of principal or interest on any Loan when due, or (b) pay any
other Obligations (other than those set forth in the foregoing clause (a)) within three (3) Business Days after such Obligations are
due and payable.
7.02
Covenant Default.
(a)
Any Loan Party fails or neglects to perform any obligation in Sections 5.01 (other than clause (j) thereof), 5.04, 5.05,
5.06, 5.08, 5.11, 5.12, and 5.13, or violates any covenant in Section 6.
(b)
Any Loan Party fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or agreement contained in
this Agreement or any other Loan Document, and as to any default (other than those specified in Section 7.01 or Section 7.02(a)
above) under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure the default within
15 days after the occurrence thereof; provided, that if the default cannot by its nature be cured within the 15 day period or
cannot after diligent attempts by Loan Party be cured within such 15 day period, and such default is likely to be cured within a reasonable
time, then Loan Party shall have an additional period (which shall not in any case exceed an additional 15) days) to attempt to cure
such default, and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default (but no
Loans shall be made during such cure period).
7.03
Attachment. (a) Any material portion of any Loan Party’s or any of its Subsidiary’s assets is attached, seized, subjected
to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within 10 days,
(b) any Loan Party or Subsidiary is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any
material part of its business affairs and such enjoinment, restraint, writ or distress warrant or levy has not been removed, discharged
or rescinded within 10 days, or (c)(x) a judgment or other claim becomes a Lien or other encumbrance upon any material portion of any
Loan Party’s or its Subsidiaries’ assets, or (y) a notice of Lien, levy, or assessment is filed of record with respect to
any material portion of any Loan Party’s or its Subsidiaries’ assets by the United States government, or any Governmental
Authority, and, in each case of this clause (c), the same is not paid within 10 days after such Loan Party or the applicable Subsidiary
receives notice thereof; provided that none of the foregoing shall constitute an Event of Default where such action or event is
stayed or an adequate bond has been posted pending a good faith contest by such Loan Party (provided, however, that no
Loans will be made during such cure period).
7.04
Insolvency. (a) Any Loan Party or any of its Subsidiaries becomes insolvent or is unable to pay (or admit in writing its inability
or unwillingness generally to pay) its debts (including trade debts) as they become due, (b) any Loan Party or any of its Subsidiaries
(i) commences an Insolvency Proceeding, (ii) consents to the institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (c) of this Section 7.04, (iii) applies for or consents to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for any such Loan Party or any of its Subsidiaries or for a material
part of its assets, (iv) files an answer admitting the allegations of a petition filed against it in any such proceeding, or (v) takes
any action for the purpose of effecting any of the foregoing, or (c)(i) an Insolvency Proceeding is begun against any Loan Party or any
of its Subsidiaries or (ii) a receiver, trustee, custodian, sequestrator, conservator or similar official is appointed for any Loan Party
or any of its Subsidiaries or for a substantial part of its assets, and, in any such case in this clause (c), such proceeding or petition
shall continue undismissed for a period of thirty (30) or more days or an order or decree approving or ordering any of the foregoing
shall be entered is not dismissed or stayed within thirty (30) days (provided that no Loans shall be made while any of the conditions
described in clause (a) exist and/or until any Insolvency Proceeding clause (c) is dismissed).
7.05
BM Facilities. There is a default or other failure to perform by any Loan Party under the provisions of any agreement relating
to or governing either of the BM Facilities.
7.06
Other Agreements. There is a default or other failure to perform in any agreement (other than the Loan Documents) (whether relating
to the failure to make a payment when due or the failure to observe any other agreement or condition) to which a Loan Party or any of
its Subsidiaries is a party with a third party or parties and (a) such default or failure results in a right by the third party or parties,
whether or not exercised, to accelerate the maturity of any Indebtedness of Loan Party or its Subsidiaries in an amount individually
or in the aggregate of at least $250,000.00; or (b) such default or failure could reasonably be expected to result in a Material Adverse
Effect.
7.07
Judgments; Penalties. One or more fines, penalties or final judgments, orders or decrees for the payment of money in an amount,
individually or in the aggregate, of at least $250,000.00 (to the extent not covered by independent third-party insurance as to which
the insurer has been notified of such judgment or order and has not denied or failed to acknowledge coverage) shall be rendered against
any Loan Party or any of its Subsidiaries by any Governmental Authority, and the same are not, within 10 days after the entry, assessment
or issuance thereof, discharged, satisfied, or paid, or after execution thereof, stayed or bonded pending appeal, or such judgments are
not discharged prior to the expiration of any such stay (provided that no Loans will be made prior to the satisfaction, payment,
discharge, stay, or bonding of such fine, penalty, judgment, order or decree).
7.08
Misrepresentations. Any Loan Party or any Person acting for any Loan Party makes any representation, warranty, or other statement
now or later in this Agreement, any Loan Document or in any writing delivered to Lender or to induce Lender to enter into (or in connection
with) this Agreement or any Loan Document, and such representation, warranty, or other statement is incorrect in any material respect
when made (or, in the case of any such representation or warranty under this Agreement or any other Loan Document already qualified by
materiality, such representation or warranty shall prove to have been incorrect).
7.09
Loan Documents. Any Loan Document, or any material provision thereof, at any time after its execution and delivery and for any
reason other than as expressly permitted hereunder or thereunder or Payment in Full of the Obligations, ceases to be in full force and
effect; or any Loan Party or any other Affiliate of a Loan Party contests in writing the validity or enforceability of any Loan Document
or any provision thereof; or any Loan Party denies in writing that it has any or further liability or obligation under any Loan Document,
or purports in writing to revoke, terminate or rescind any Loan Document.
7.10
Change in Control. The occurrence of a Change in Control.
7.11
ERISA. An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan that has resulted or could reasonably be expected
to result in liability of Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount
that could reasonably be expected to have a Material Adverse Effect.
7.12
Guaranty. (a) Any Guarantee of any Obligations terminates or ceases for any reason to be in full force and effect except in accordance
with the terms thereof or as permitted in writing by Lender or (b) any Guarantor does not perform any obligation or covenant under any
Guarantee of the Obligations (subject to any applicable grace periods with respect thereto).
7.13
Lease Defaults. Any default by any Loan Party under the lease for any U.S. location where any Loan Party maintains property.
7.14
Failure of Security. Except as expressly sets forth under any Loan Document, any Lien securing any Obligation shall, in whole
or in part, cease or terminate except as a result of a transaction expressly permitted hereunder or solely as a result of acts or omissions
of Lender.
Section
8 Lender’s Rights and Remedies.
8.01
Rights and Remedies. Upon the occurrence and during the continuance of an Event of Default, Lender may, without notice or demand,
do any or all of the following, in addition to and not in limitation of any other rights or remedies available to Lender at law or in
equity:
(a)
declare all Obligations immediately due and payable and terminate any and all commitments of Lender under the Loan Documents (provided
that upon the occurrence of an Event of Default described in Section 7.04, all Obligations will automatically and immediately
become due and payable and all commitments of Lender under the Loan Documents will automatically and immediately terminate, in each case,
without any action or notice by Lender);
(b)
stop advancing money or extending credit for Borrower’s benefit under this Agreement or under any other agreement between Borrower
and Lender;
(c)
set off and apply to the Obligations any and all (i) balances and deposits of any Loan Party it holds, or (ii) any amount held by Lender
owing to or for the credit or the account of any Loan Party;
(d)
demand and receive possession of the Loan Parties’ books and records including ledgers, federal and state tax returns, records
regarding the Loan Parties’ assets or liabilities, business operations or financial condition, and all computer programs or storage
or any Equipment containing such information;
(e)
settle or adjust disputes and claims directly with account debtors for amounts, upon terms and in whatever order that Lender reasonably
considers advisable;
(f)
credit bid and purchase at any public sale;
(g)
apply for the appointment of a receiver, trustee, liquidator or conservator of the Collateral, without notice and without regard to the
adequacy of the security for the Obligations and without regard to the solvency of the Loan Parties and their Subsidiaries or any other
Person liable for any of the Obligations;
(h)
make any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest in the
Collateral, and in connection therewith: (i) the Loan Parties will assemble the Collateral if Lender requests and make it available as
Lender designates, (ii) Lender may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral,
and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses
incurred and (iii) each Loan Party grants Lender a license to enter and occupy any of its premises, without charge, to exercise any of
Lender’s rights or remedies;
(i)
ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral, and, in furtherance
of its rights hereunder, Lender (and its successors, assigns and transferees, whether by voluntary conveyance, operation of law, assignment,
transfer, foreclosure, deed in lieu of foreclosure or otherwise) is hereby granted a non-exclusive, royalty-free license or other right
to use, without charge and without consent of any other Person, each Loan Party’s labels, Patents, Copyrights, mask works, rights
of use of any name, trade secrets, trade names, Trademarks, and advertising matter, or any other Intellectual Property or similar property
as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with
Lender’s exercise of its rights under this Section, each Loan Party’s rights under all licenses and all franchise agreements
inure to Lender’s benefit;
(j)
sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms,
in such manner and at such places (including any Loan Party’s premises) as Lender determines is commercially reasonable, and apply
any proceeds to the Obligations in whatever manner or order Lender deems appropriate, and in connection therewith: (i) Lender may sell
the Collateral without giving any warranties as to the Collateral, (ii) Lender may specifically disclaim any warranties of title or the
like, (iii) the Loan Parties acknowledge and agree that this procedure will not be deemed or considered to adversely affect the commercial
reasonableness of any sale of the Collateral, (iv) if Lender sells any of the Collateral upon credit, Borrower will be credited only
with payments actually made by the purchaser, received by Lender, and applied to the indebtedness of the purchaser, (v) Such sales may
be adjourned and continued from time to time with or without notice (except for any notice required by Applicable Law), (vi) Lender shall
have the right to conduct such sales on any Lender’s premises or elsewhere and shall have the right to use any Lender’s premises
without charge for such time or times as Lender deems necessary, and (vii) if the purchaser fails to pay for the Collateral, Lender may
resell the Collateral and Borrower will be credited with the proceeds of the sale;
(k)
place a “hold” on any account maintained with Lender; and
(l)
exercise all other rights and remedies available to Lender under the Loan Documents or at law or equity, including all remedies provided
under the UCC (including a Disposition of the Collateral pursuant to the terms thereof).
Lender
shall apply the net proceeds of any action taken by it pursuant to this Section 8.01 after deducting all reasonable and invoiced
out-of-pocket costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of Lender hereunder, including reasonable attorneys’ fees and
disbursements, to the payment of the Obligations in accordance with Section 8.05. To the extent permitted by Applicable Law, each
Loan Party waives all claims, damages, and demands it may acquire against Lender arising out of the exercise by them of any rights hereunder.
If any notice of a proposed sale or other Disposition of Collateral shall be required by Applicable Law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other Disposition.
8.02
Power of Attorney. Each Loan Party hereby constitutes and appoints Lender as such Loan Party’s attorney-in-fact with full
authority in the place and stead of such Loan Party and in the name of such Loan Party, Lender or otherwise, from time to time in Lender’s
discretion while an Event of Default is continuing to take any action and to execute any instrument that Lender may deem reasonably necessary
or advisable to accomplish the purposes of this Agreement, including: (a) endorse such Loan Party’s name on any checks or other
forms of payment or security; (b) make, settle, and adjust all claims under such Loan Party’s insurance policies; (c) pay, contest
or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based thereon,
or otherwise take any action to terminate or discharge the same; (d) transfer the Collateral into the name of Lender or a third party
as the UCC permits; (e) exercise voting rights with respect to Equity Interests, which rights may be exercised, if Lender so elects,
with a view to causing the liquidation of assets of the issuer of any such Equity Interests; and (f) generally to take any act required
of such Loan Party under Section 5 and any other applicable provision of this Agreement, and to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though Lender were the absolute owner
thereof for all purposes, and to do, at Lender’s option and Loan Parties’ expense, at any time or from time to time, all
acts and things that Lender deems necessary to protect, preserve or realize upon the Collateral. Each Loan Party hereby appoints Lender
as its lawful attorney-in-fact to sign such Loan Party’s name on any documents necessary to perfect or continue the perfection
of Lender’s security interest in the Collateral regardless of whether an Event of Default has occurred until the Payment in Full.
Each of Lender’s foregoing appointment as such Loan Party’s attorney in fact, and all of Lender’s rights and powers,
are coupled with an interest and are irrevocable until the Payment in Full.
8.03
Protective Payments. If any Loan Party fails to pay any amounts or furnish any required proof of payment due to third persons
or entities, as required under the terms of this Agreement, then Lender may do any or all of the following after reasonable notice to
Borrower: (a) make payment of the same or any part thereof; or (b) obtain and maintain insurance policies of the type discussed in Section
5.08 of this Agreement, and take any action with respect to such policies as Lender deems reasonable and prudent in accordance with
this Section 8.03. Any amounts so paid or deposited by Lender shall constitute Lender Expenses, shall constitute part of the Obligations,
shall be immediately due and payable, and shall bear interest at the then applicable rate hereinabove provided for the Revolving Loans,
and, for the avoidance of doubt, shall be secured by the Collateral. Any payments made by Lender shall not constitute an agreement by
Lender to make similar payments in the future or a waiver by Lender of any Event of Default under this Agreement.
8.04
Accounts Collection. At any time after the occurrence and during the continuation of an Event of Default, except to the extent
any such Account is subject to either of the BM Facilities: (a) Lender may notify any Person owing funds to any Loan Party of Lender’s
security interest in such funds and verify the amount of such Account, (b) each Loan Party shall collect all amounts owing to such Loan
Party for Lender, receive in trust all payments as Lender’s trustee, and immediately deliver such payments to Lender in their original
form as received from the Account debtor, with proper endorsements for deposit, (c) at Lender’s reasonable written request, each
Loan Party shall deliver to Lender all original and other documents evidencing, and relating to, the agreements and transactions which
gave rise to the Accounts, including all original orders, invoices and shipping receipts or, to the extent originals are not available,
copies of such documents, and (d) upon Lender’s written request and at the expense of the relevant Loan Party, such Loan Party
shall cause independent public accountants or others reasonably satisfactory to Lender to furnish to Lender reports showing reconciliations,
agings and test verifications of, and trial balances for, the Accounts.
8.05
Application of Payments and Proceeds Upon Default. If an Event of Default has occurred and is continuing, Lender shall have the
sole and exclusive right to apply in any order any funds in its possession, whether from a Loan Party’s account balances, payments,
proceeds realized as the result of any collection of Accounts or other Disposition of the Collateral, or otherwise, to the Obligations
(and each Loan Party irrevocably waives the right to direct the application of any and all payments at any time or times thereafter received
by Lender from or on behalf of any Loan Party). Lender shall pay any surplus to Borrower by credit to the Designated Deposit Account
or to other Persons legally entitled thereto; Borrower shall remain liable to Lender for any deficiency. If Lender, directly or indirectly,
enters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral, Lender shall have the option,
exercisable at any time, of either reducing the Obligations by the principal amount of the purchase price or deferring the reduction
of the Obligations until the actual receipt by Lender of cash therefor. Each Loan Party waives, to the extent permitted by Applicable
Law, and agrees not to assert any rights or privileges which it may acquire under Section 9-626 of the UCC.
8.06
Lender’s Liability for Collateral. Lender has no obligation to clean up or otherwise prepare the Collateral for sale. Beyond
the safe custody thereof and the accounting of moneys, Lender shall have no duty with respect to any Collateral in its possession (or
in the possession of any agent or bailee) or with respect to any income thereon or the preservation of rights against prior parties or
any other rights pertaining thereto other than as may be required by Applicable Law. Lender shall be deemed to have exercised reasonable
care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal
to that which Lender accords its own property. Lender shall not be liable or responsible for any loss or damage to any of the Collateral,
or for any diminution in the value thereof, by reason of the act or omission of any warehouse, carrier, forwarding agency, consignee,
broker or other agent or bailee selected by Loan Parties or selected by Lender in good faith. In furtherance therefor, Borrower acknowledges
and agrees that all risk of loss, damage or destruction of the Collateral shall be borne by Borrower.
8.07
No Obligation to Pursue Others. Lender has no obligation to attempt to satisfy the Obligations by collecting them from any other
person liable for them and Lender may release, modify or waive any collateral provided by any other Person to secure any of the Obligations,
all without affecting Lender’s rights against the Loan Parties. Each Loan Party waives any right it may have (including with respect
to the Guaranty) to require Lender to pursue any other Person for any of the Obligations or otherwise to enforce its payment against
any collateral securing all or any part of the Obligations.
8.08
Demand Waiver. Except as required by Applicable Law, each Loan Party waives demand, protest, notice of protest, notice of default
or dishonor, notice of payment and nonpayment and any other notices relating to the Obligations.
Section
9 General Provisions.
9.01
Notices. All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (a) actual
receipt by the relevant party hereto and (b) (i) if delivered by hand or by courier, when signed for by or on behalf of the relevant
party hereto; (ii) if delivered by mail, three (3) Business Days after deposit in the mails, postage prepaid; and (iii) if delivered
by electronic mail, when delivered, all of which shall be addressed to the party to be notified and sent to the address, or email address
indicated below. Lender or any Loan Party may change its mailing or email address by giving the other parties written notice thereof
in accordance with the terms of this Section 9.01.
|
If
to Borrower |
Superior
Drilling Products, Inc. |
|
or
any Loan Party: |
1583
S. 1700 East |
|
|
Vernal,
UT 84078 |
|
|
Attn:
Chris Cashion, Chief Financial Officer |
|
|
Email:
chrisc@teamsdp.com |
|
|
|
|
with
a copy to: |
Ewing
& Jones |
|
|
6363
Woodway, Suite 1000 |
|
|
Houston,
TX 77057 |
|
|
Attn:
Randolph Ewing |
|
|
Email:
rewing@ewingjones.com |
|
|
|
|
If
to Lender: |
Vast
Bank, National Association |
|
|
110
North Elgin, Suite 500 |
|
|
Tulsa,
OK 74120 |
|
|
Attn:
Rex Berg, Vice President Commercial Lending |
|
|
Email:
rex.berg@vast.bank |
|
|
|
|
with
a copy to: |
GableGotwals |
|
|
100
North Elgin, Suite 200 |
|
|
Tulsa,
OK 74120 |
|
|
Attn:
Jeffrey D. Hassell, Esq. |
|
|
Email:
jhassell@gablelaw.com |
9.02
Successors and Assigns. This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns
of each of the parties and shall bind all persons who become bound as a debtor to this Agreement; provided that neither this Agreement
nor any rights hereunder may be assigned by any Loan Party without Lender’s prior written consent, which consent may be granted
or withheld in Lender’s sole discretion (and any attempted assignment or transfer by any Loan Party without Lender Consent shall
be null and void). Lender shall have the right without the consent of or notice to any Loan Party to sell, transfer, negotiate, pledge,
assign, grant a security interest in or grant participation in all or any part of, or any interest in, Lender’s obligations, rights
and benefits under this Agreement and the other Loan Documents.
9.03
Indemnification. Loan Parties shall, jointly and severally, indemnify Lender, any Affiliates of Lender, and the partners, directors,
officers, employees, agents, brokers, trustees, administrators, managers, advisors and representatives, including accountants, auditors,
and legal counsel, of Lender and Lender’s Affiliates (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including Lender
Expense and the fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any
Indemnitee by any Person (including any Loan Party or Subsidiary thereof) arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance
by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby
or thereby, (ii) any Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by Borrower or any of its Subsidiaries, or any Environmental Liability related in
any way to Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating
to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by Borrower, and regardless
of whether any Indemnitee is a party thereto (collectively, “Claims”), in each case, except to the extent of
Claims and/or losses directly caused by such Indemnified Person’s gross negligence or willful misconduct as determined by a final
and non-appealable decision of a court of competent jurisdiction.
9.04
Amendments; Waivers; Integration; Remedies Cumulative.
(a)
No purported amendment or modification of any Loan Document, or waiver, discharge or termination of any obligation under any Loan Document,
shall be enforceable or admissible unless, and only to the extent, expressly set forth in a writing signed by the party against which
enforcement or admission is sought. Without limiting the generality of the foregoing, no oral promise or statement, nor any action, inaction,
delay, failure to require performance or course of conduct shall operate as, or evidence, an amendment, supplement or waiver or have
any other effect on any Loan Document. Any waiver granted shall be limited to the specific circumstance expressly described in it, and
shall not apply to any subsequent or other circumstance, whether similar or dissimilar, or give rise to, or evidence, any obligation
or commitment to grant any further waiver. The Loan Documents represent the entire agreement about this subject matter and supersede
prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties
about the subject matter of the Loan Documents merge into the Loan Documents.
(b)
Notwithstanding Section 9.04(a), Lender may correct patent errors and fill in any blanks in the Loan Documents consistent with
the agreement of the parties.
(c)
Lender’s failure or delay, at any time or times, to require strict performance by any Loan Party of any provision of this Agreement
or any other Loan Document shall not waive, affect, or diminish any right of Lender thereafter to demand strict performance and compliance
herewith or therewith. Lender’s rights and remedies under this Agreement, the Loan Documents and all other agreements shall be
cumulative. Lender shall have all other rights and remedies not inconsistent herewith as provided under the UCC, by law, or in equity.
No exercise by Lender of one right or remedy shall be deemed an election, and no waiver by Lender of any Event of Default on any Loan
Party’s part shall be deemed a continuing waiver. No delay by Lender shall constitute a waiver, election, or acquiescence by it.
No waiver by Lender shall be effective unless made in a written document signed on behalf of Lender and then shall be effective only
in the specific instance and for the specific purpose for which it was given. Each Loan Party expressly agrees that this Section 9.04(c)
may not be waived or modified by Lender by course of performance, conduct, estoppel or otherwise.
9.05
Time of Essence. Time is of the essence for the performance of all Obligations in this Agreement.
9.06
Severability of Provisions. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable,
(a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be
affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable
provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable
provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
9.07
Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, is an original, and all taken together, constitute one Agreement. Delivery of an executed
counterpart of a signature page of this Agreement in electronic (e.g., “pdf” or “tif”) format shall be effective
as delivery of a manually executed counterpart of this Agreement.
9.08
Survival. All covenants, agreements, representations and warranties made by the Loan Parties herein and in any Loan Document or
other documents delivered in connection herewith or therewith or pursuant hereto or thereto shall be considered to have been relied upon
by the other parties hereto and shall survive the execution and delivery hereof and thereof and the making of the Loans hereunder, regardless
of any investigation made by any such other party or on its behalf and notwithstanding that Lender may have had notice or knowledge of
any Default at the time of any such Loan, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder
shall remain unpaid or unsatisfied and so long as all the commitments have not expired or been terminated. The provisions of Sections
2.06, 9.03, 9.09, and 9.14 shall survive and remain in full force and effect regardless of the consummation
of the transactions contemplated hereby, the payment in full of the Obligations, the expiration or termination of the commitments of
Lender, or the termination of this Agreement or any provision hereof.
9.09
Costs and Expenses. The Loan Parties shall, jointly and severally, pay (a) all reasonable out-of-pocket Lender Expenses and any
other expenses incurred by Lender and its Affiliates (including the reasonable fees, charges and disbursements of counsel for Lender),
in connection with the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents,
or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby
or thereby shall be consummated), and (b) all out-of-pocket expenses incurred by Lender (including the fees, charges and disbursements
of any counsel for Lender), in connection with the enforcement or protection of its rights (i) in connection with this Agreement and
the other Loan Documents, including its rights under this Section, or (ii) in connection with the Loans made hereunder, including all
such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans. All amounts due under
this Section shall be payable not later than 10 days after demand therefor (or upon any Event of Default, on demand).
9.10
Electronic Execution of Documents. The words “execution,” “signed,” “signature,”
and words of like import in this Agreement and the other Loan Documents shall be deemed to include electronic signatures or electronic
records, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a
paper-based recordkeeping system, as the case may be, to the extent and as provided for in any Applicable Law, including the Federal
Electronic Signatures in Global and National Commerce Act, or any other similar state laws based on the Uniform Electronic Transactions
Act.
9.11
Right of Setoff. If an Event of Default shall have occurred and be continuing, Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other obligations at any time owing by Lender or any Affiliate to or for the
credit or the account of any Loan Party against any and all of the Obligations, irrespective of whether or not Lender shall have made
any demand under this Agreement or any other Loan Document and although such obligations of the Loan Parties may be contingent or unmatured
or are owed to a branch office or Affiliate of Lender different from the branch office or Affiliate holding such deposit or obligated
on such indebtedness. The rights of Lender under this Section 9.11 are in addition to other rights and remedies (including other
rights of setoff) which Lender may have.
9.12
Relationship. The relationship of the parties to this Agreement is determined solely by the provisions of this Agreement. The
parties do not intend to create any agency, partnership, joint venture, trust, fiduciary or other relationship with duties or incidents
different from those of parties to an arm’s-length contract.
9.13
Third Parties. Nothing in this Agreement, whether express or implied, is intended to: (a) confer any benefits, rights or remedies
under or by reason of this Agreement on any persons other than the express parties to it and their respective permitted successors and
assigns; (b) relieve or discharge the obligation or liability of any person not an express party to this Agreement; or (c) give any person
not an express party to this Agreement any right of subrogation or action against any party to this Agreement.
9.14
Choice of Law, Venue, Service of Process, and Jury Trial Waiver.
(a)
Governing Law. This Agreement and the other Loan Documents and any claim, controversy, dispute or cause of action (whether in
contract, tort or otherwise) arising out of or relating thereto (except, as to any Loan Document, as expressly set forth therein) and
the transactions contemplated by such documents shall be governed by, and construed in accordance with, the law of the State of Oklahoma,
without regard to conflicts of law principles.
(b)
Jurisdiction. Each Loan Party irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding
of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against Lender or any Affiliate of
Lender or other related party thereof in any way relating to this Agreement or any other Loan Document or the transactions relating hereto
or thereto, in any forum other than the courts of the State of Oklahoma sitting in Tulsa County, and of the United States District Court
for the Northern District of Oklahoma, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally
submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be
heard and determined in such Oklahoma State court or, to the fullest extent permitted by Applicable Law, in such federal court. Each
of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or in any other Loan
Document shall affect any right that Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other
Loan Document against any Loan Party or its properties in the courts of any jurisdiction.
(c)
Waiver of Venue; Service of Process. Each Loan Party irrevocably and unconditionally waives, to the fullest extent permitted by
any Applicable Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of
or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by any Applicable Law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court. Each party hereto further irrevocably consents to service of process in the
manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party hereto to serve process
in any other manner permitted by any Applicable Law.
(d)
JURY TRIAL WAIVER. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS SECTION.
9.15
PATRIOT Act; Compliance with Sanctions. Lender hereby notifies Borrower that, pursuant to the requirements of the PATRIOT Act,
it may be required to obtain, verify and record information that identifies Borrower, which information includes the name and address
of Borrower and other information that will allow such Lender to identify Borrower in accordance with the PATRIOT Act.
9.16
Waiver of Consequential Damages, Etc. To the fullest extent permitted by any Applicable Law, no Loan Party shall assert, and each
Loan Party hereby waives, any claim against Lender and any Affiliate and the partners, directors, officers, employees, agents, brokers,
trustees, administrators, managers, advisors and representatives, including accountants, auditors, and legal counsel, of Lender and Lender’s
Affiliates (each such Person being called a “Protected Person”), on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this
Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby,
any Loan, or the use of the proceeds thereof. No Protected Person shall be liable for any damages arising from the use by unintended
recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission
systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.
9.17
Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any
Loan or other Obligation owing under this Agreement, together with all fees, charges and other amounts that are treated as interest on
such Loan or other Obligation under Applicable Law (collectively, “charges”), shall exceed the maximum lawful
rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved by Lender or other
Person holding such Loan or other Obligation in accordance with Applicable Law, the rate of interest payable in respect of such Loan
or other Obligation hereunder, together with all charges payable in respect thereof, shall be limited to the Maximum Rate. To the extent
lawful, the interest and charges that would have been paid in respect of such Loan or other Obligation but were not paid as a result
of the operation of this Section shall be cumulated and the interest and charges payable to such Lender or other Person in respect of
other Loans or Obligations or periods shall be increased (but not above the amount collectible at the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Rate for each day to the date of repayment, shall have been received
by such Lender or other Person. Any amount collected by such Lender or other Person that exceeds the maximum amount collectible at the
Maximum Rate shall be applied to the reduction of the principal balance of such Loan or other Obligation or refunded to Borrower so that
at no time shall the interest and charges paid or payable in respect of such Loan or other Obligation exceed the maximum amount collectible
at the Maximum Rate.
9.18
Payment Set Aside. To the extent that any payment by or on behalf of Borrower is made to Lender, or Lender exercises its right
of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent
or preferential, set aside or required (including pursuant to any settlement entered into by Lender in its discretion) to be repaid to
a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then to the extent
of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and
effect as if such payment had not been made or such setoff had not occurred.
9.19
Construction; Headings; Knowledge.
(a)
Construction. The parties hereto mutually acknowledge that they and their attorneys have participated in the preparation and negotiation
of this Agreement. In cases of uncertainty this Agreement shall be construed without regard to which of the parties caused the uncertainty
to exist.
(b)
Headings. The headings used in this Agreement are for convenience only and shall not affect the construction or interpretation
of this Agreement.
(c)
Knowledge. For purposes of the Loan Documents, whenever a representation or warranty is made to a Loan Party’s knowledge
or awareness or with a similar qualification, knowledge or awareness means the actual knowledge, after reasonable investigation, of any
Responsible Officer.
Section
10 Guaranty.
10.01
Guaranty. Each Guarantor hereby absolutely, unconditionally and irrevocably guarantees, as primary obligor and not merely as surety,
to Lender the due and prompt payment (whether at stated maturity, upon acceleration or otherwise and at all times thereafter), performance
and discharge of all Obligations. Each Guarantor further agrees that the Obligations may be increased, amended, extended, renewed or
otherwise modified in whole or in part without notice to or consent from such Guarantor, and that such actions will not affect the liability
of such Guarantor under this Guaranty. All terms of this Guaranty apply to and may be enforced by or on behalf of any domestic or foreign
branch or Affiliate of Lender that extended any portion of the Obligations. Each Guarantor hereby agrees that it is jointly and severally
liable for this Guaranty. This guaranty of the Obligations includes in all cases all such Obligations which arise after the filing of
a bankruptcy petition with respect to any Loan Party and all such Obligations which would become due but for the operation of (i) the
automatic stay under Section 362(a) of the United States Bankruptcy Code, (ii) Section 502(b) of the United States Bankruptcy Code, or
(iii) Section 506(b) of the United States Bankruptcy Code, including interest accruing under the Loan Documents after the filing of a
bankruptcy petition, whether or not allowed or allowable as a claim in the Insolvency Proceeding. This Guaranty is a guaranty of prompt
and punctual payment of the Obligations, whether at stated maturity, by acceleration or otherwise, and is not merely a guaranty of collection.
10.02
Limitation of Liability. Notwithstanding any other provision of this Guaranty, the amount guaranteed by each Guarantor hereunder
shall be limited to the extent, if any, required so that its obligations under this Guaranty will not constitute a fraudulent transfer
or conveyance and not be subject to avoidance under any applicable Debtor Relief Law or any state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act, Uniform Voidable Transactions Act or similar statute or common law.
10.03
Term; Reinstatement.
(a)
This Guaranty is a continuing guaranty and shall terminate only upon Payment in Full. If, notwithstanding the foregoing, any Guarantor
shall have any nonwaivable right under applicable law or otherwise to terminate or revoke this Guaranty, such Guarantor agrees that such
termination or revocation shall not be effective until Lender receives written notice of such termination or revocation. Such notice
shall not affect Lender’s right and power to enforce rights arising prior to receipt thereof. If Lender makes Loans or takes any
other action after such Guarantor’s termination or revocation but prior to receipt of the requisite notice, Lender’s rights
with respect thereto shall be the same as if such termination or revocation had not occurred.
(b)
Each Guarantor’s liability hereunder shall be reinstated and revived, and Lender’s rights shall continue, if at any time
all or part of any payment of any Obligation is rescinded or must otherwise be returned by Lender or any other Person upon the bankruptcy,
insolvency or reorganization of Borrower or any other Guarantor or for any other reason, all as though such payment had not been made
and this Guaranty shall be reinstated if the Agreement had expired or terminated and all of the Obligations had been satisfied prior
to the restoration or return of the payment.
10.04
Guaranty Absolute and Unconditional; Waiver of Defenses. The liability of each Guarantor under this Guaranty is irrevocable, continuing,
unconditional and absolute and the obligations of each Guarantor under this Guaranty will not be reduced, limited, impaired, discharged,
subject to setoff, counterclaim, recoupment, or termination, or otherwise affected for any reason (other than Payment in Full), and each
Guarantor hereby irrevocably waives any defenses to enforcement it may have (now or in the future) based on or arising out of any defense
of any Loan Party or the unenforceability of all or any part of the Obligations or any Loan Document or any related agreement or instrument
from any cause, or the cessation from any cause of the liability of any Loan Party or any other Person liable for the Obligations, other
than Payment in Full. Without limiting the foregoing, the obligations of any Loan Party hereunder are not discharged or impaired or otherwise
affected by, without limitation: (a) any claim of waiver, release, extension, renewal, settlement, surrender, alteration, change in terms
or compromise of any of the Obligations or any other obligation of any Loan Party under any Loan Document, by operation of law or otherwise;
(b) any rescission, waiver, amendment or other modification of any Loan Document or any other agreement, including any increase in the
Obligations; (c) any change in the corporate existence, structure or ownership of any Loan Party or any of its Subsidiaries; (d) any
Insolvency Proceeding affecting any Person, or their assets or any resulting release or discharge of any obligation of any Person; (e)
the existence of any claim, setoff or other rights which any Loan Party may have at any time against any Lender or any other Person,
whether in connection herewith or in any unrelated transactions; (f) any sale, disposition, application of proceeds, taking, exchange,
substitution, release, impairment, or non-perfection of any collateral, or any taking, release, impairment, amendment, waiver, or other
modification of any guaranty, for the Obligations; (g) any default in the performance of the Obligations; (h) any failure of Lender or
Lender’s Affiliates to disclose to any Loan Party any information relating to the business, condition, operations, performance,
properties, or prospects of any other Loan Party now or hereafter known to such Person; (i) the release or reduction of liability of
any Loan Party, or other guarantor or surety, with respect to the Obligations; (j) the failure of Lender to assert any claim or demand
or to exercise or enforce any right or remedy under the provisions of any Loan Document or otherwise; or (k) any other circumstance (including
any statute of limitations) or manner of administering the Loans or any existence of or reliance on any representation by Lender that
might vary the risk of any Loan Party or otherwise operate as a defense available to, or a legal or equitable discharge of, any Loan
Party or any other guarantor or surety (other than Payment in Full). Each Loan Party agrees that the payment of all sums payable under
the Loan Documents or any part thereof or other act which tolls any statute of limitations applicable to the Loan Documents shall similarly
operate to toll the statute of limitations applicable to such Loan Party’s liability under this Guaranty.
10.05
Waivers and Acknowledgments.
(a)
Each Guarantor hereby unconditionally and irrevocably waives (i) any right to revoke this Guaranty and acknowledges that this Guaranty
is continuing in nature and applies to all presently existing and future Obligations, (ii) promptness, diligence, notice of acceptance,
presentment, demand for performance, notice of nonperformance, default, acceleration, protest or dishonor, and any other notice with
respect to any of the Obligations and this Guaranty, and any requirement that Lender protect, secure, perfect, or insure any Lien or
any property subject thereto and (iii) any defense based on any right of set-off or recoupment or counterclaim against or in respect
of the obligations of such Guarantor under this Guaranty.
(b)
Each Guarantor acknowledges that it has received adequate consideration for entering into this Guaranty and that all waivers and acknowledgments
under this Section 10 by such Guarantor are knowingly made and that Lender would not enter into the Agreement but for this Guaranty.
(c)
Each Guarantor (i) acknowledges and agrees that Lender will not have any duty to advise of or otherwise disclose any information known
to it regarding Borrower’s financial condition or assets or of all other circumstances bearing upon the risk of nonpayment of the
Obligations or the nature, scope and extent of the risks that each Guarantor assumes and incurs under this Guaranty and (ii) assumes
all responsibility for being and keeping itself informed of such circumstances and risks.
(d)
Each Guarantor confirms that it is not a surety under any state law and shall not raise any such law as a defense to its obligations
hereunder.
(e)
Each Guarantor acknowledges that Lender may, at its election and without notice to or demand upon such Guarantor, foreclose on any Collateral
or other collateral held by it by one or more judicial or non-judicial sales, accept an assignment of any such Collateral or other collateral
in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other accommodation with Borrower or any other Loan
Party or guarantor, or exercise any other right or remedy available to it against Borrower or any other Loan Party or guarantor, without
affecting or impairing in any way the liability of any Guarantor hereunder except on the occurrence of Payment in Full. Each Guarantor
hereby waives any defense arising out of such election even though such election operates, pursuant to applicable law, to impair or to
extinguish any right of subrogation, reimbursement, exoneration, contribution, or indemnification, or other right or remedy of such Guarantor
against Borrower or any other Loan Party or guarantor or any Collateral or any other collateral.
10.06
Agreement to Pay; Subrogation; Etc. Without limiting any other right that Lender has at law or in equity against any Loan Party,
if any Loan Party fails to pay any Obligation when and as due, whether at maturity, by acceleration, after notice of prepayment, or otherwise,
each other Loan Party agrees to promptly pay the amount of such unpaid Obligations to Lender in cash. Each Loan Party hereby waives and
no Loan Party shall exercise any rights which it may acquire by reason of any payment made under this Guaranty, whether by way of subrogation,
reimbursement or otherwise, in each case, until the prior Payment in Full. Any amount paid to any Loan Party on account of any payment
made under this Guaranty prior to Payment in Full shall be held in trust for the benefit of Lender and promptly turned over to Lender.
So long as any Obligations remain outstanding, each Loan Party will not take any action or commence any proceeding against any Loan Party,
whether in connection with an Insolvency Proceeding or otherwise, to recover any amounts in respect of payments made to Lender under
this Guaranty.
10.07
Taxes. For the avoidance of doubt, each Guarantor agrees to observe and perform each of the terms and conditions set forth in
Section 2.06 as such Section relates to such Guarantor in connection with any payments or performance under this Guaranty.
10.08
Additional Guarantors. Each Person that is required to become a Guarantor pursuant to Section 5.11 will become a Guarantor,
with the same force and effect as if they were originally named as a Guarantor herein, for all purposes of this Agreement upon the execution
and delivery by such Person of a Joinder in the form attached hereto as Exhibit C. Each reference to “Guarantor”
or “Loan Party” (or any words of like import referring to a Guarantor) in this Agreement or any other Loan
Document shall also mean such additional Guarantor; and each reference in this Agreement or any other Loan Document to this “Guaranty”
or “Agreement” (or words of like import referring to this Agreement) shall mean this Agreement as supplemented
by such joinder. No consent of any other Loan Party will be required for the execution and delivery of any such joinder. The rights and
obligations of each Loan Party will remain in full force and effect notwithstanding the addition of any Guarantor as a party to this
Agreement.
10.09
Cumulative Liability. The liability of each Loan Party as a Guarantor under this Section 10 is in addition to and shall
be cumulative with all liabilities of such Loan Party to Lender under this Agreement and the other Loan Documents to which such Loan
Party is a party or in respect of any obligations or liabilities of the other Loan Parties, without any limitation as to amount, unless
the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.
Section
11 Security Interest.
11.01
Grant of Security Interest.
(a)
To secure the prompt payment and performance in full when due, whether by lapse of time, acceleration, mandatory prepayment or otherwise,
of the Obligations, each Loan Party hereby unconditionally grants, pledges and assigns to Lender a continuing security interest in, and
a right to set off against, any and all right, title and interest of such Loan Party in and to all personal and real property of every
kind, including, without limitation, all of the following, whether now owned or existing or hereafter owned, acquired, existing or arising
and wherever located (collectively, the “Collateral”):
(i)
all personal and fixture property of every kind and nature (whether or not subject to the UCC) including without limitation: all Goods,
Inventory, Equipment, Instruments (including Promissory Notes), Documents (including, if applicable, electronic Documents), Accounts
(including Health-Care-Insurance Receivables), Chattel Paper (including Tangible Chattel Paper and Electronic Chattel Paper), Deposit
Accounts (and all assets on deposit therein), Commodity Accounts (and all assets on deposit therein), Securities Accounts (and all assets
on deposit therein), Letter-Of-Credit Rights (whether or not the letter of credit is evidenced by a writing), Money (including all cash
and currency and equivalents), Commercial Tort Claims (including those set forth on the Perfection Certificate), Securities and all other
Investment Property, Supporting Obligations, Contracts and all Contract Rights (including any rights to the payment of Money), and General
Intangibles (including all Payment Intangibles and including all Intellectual Property), but excluding any Accounts as to which Baker
Hughes Company is the Account Debtor; and
(ii)
all Accessions, Supporting Obligations, Proceeds and products of any and all of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing, together with all books and records, customer lists, credit files, computer
files, programs and other computer materials and records related thereto and the computers and Equipment containing said books, records,
and materials.
(b)
Each Loan Party acknowledges that it or its Subsidiaries previously has entered, and/or may in the future enter, into Bank Services Agreements
with Lender or Lender’s Affiliates. Regardless of the terms of any Bank Services Agreement, each Loan Party agrees that any amounts
such Loan Party or any of its Subsidiaries owes Lender or Lender’s Affiliates thereunder will be deemed to be Obligations hereunder
and that it is the intent of each Loan Party and its Subsidiaries and Lender to have all such Obligations secured by the security interest
in the Collateral granted herein (subject only to Permitted Liens).
(c)
If this Agreement is terminated, Lender’s Lien in the Collateral will continue until the Payment in Full. Upon the Payment in Full
and at such time as Lender’s obligation to make Loans has terminated, Lender will, at the sole cost and expense of the Loan Parties,
release its Liens in the Collateral and all rights therein will revert to the applicable Loan Parties. In such event, Lender will execute
such documents as reasonably requested by Borrower to evidence the release of its liens in the Collateral.
11.02
Priority of Security Interest; Additional Collateral Representations.
(a)
Valid Security Interest; Perfection. This Agreement creates a valid security interest in favor of Lender in the Collateral and,
when properly perfected by filing UCC-1 financing statements in the appropriate offices against the Loan Parties, shall constitute a
valid and perfected, first priority security interest in the Collateral (including all Uncertificated Securities and other uncertificated
Equity Interests constituting Collateral), to the extent such security interest can be perfected by filing a UCC-1 financing statement
under the UCC, free and clear of all Liens except for Permitted Prior Liens. The taking of possession by Lender of the Certificated Securities
or other certificated Equity Interests evidencing the Pledged Interests and all other Instruments constituting Collateral will perfect
and establish the first priority of Lender’s security interest in all the Pledged Interests evidenced by such Certificated Securities
and other uncertificated Equity Interests and such Instruments. With respect to any Collateral consisting of a Deposit Account, Securities
Entitlement or held in a Securities Account or Commodity Account (in each case, other than Excluded Accounts), upon execution and delivery
by the applicable Loan Party, the applicable depository bank or Securities Intermediary and Lender of an applicable Control Agreement,
Lender shall have a valid and perfected, first priority security interest in such Collateral. With respect to any Collateral consisting
of Intellectual Property, upon execution and delivery by the applicable Loan Party of a notice of grant of security interest in Copyrights,
Patents or Trademarks and the filing of such notice in the United States Patent and Trademark Office or in the United States Copyright
Office, as applicable, in combination with the filing of UCC-1 financing statements in the appropriate offices referenced above, Lender
shall have a valid and perfected, first priority security interest in such Collateral.
(b)
Investment Property.
(i)
The Pledged Interests pledged by each Loan Party hereunder constitute all the issued and outstanding Equity Interests owned by such Loan
Party. No issuer of Pledged Interests that is a Subsidiary of Borrower has elected pursuant to the provisions of Section 8-103 of the
UCC to provide that its Equity Interests are securities governed by Article 8 of the UCC unless such Equity Interests are certificated
and immediately delivered to Lender in accordance with this Agreement. None of the Pledged Interests (i) is dealt in or traded on a securities
exchange or in a securities market, (ii) is an investment company security, (iii) is held in a Securities Account or (v) constitutes
a Security or a Financial Asset.
(ii)
All of the Pledged Interests comprising Equity Interests have been duly and validly issued and are fully paid and, if applicable nonassessable.
(iii)
Each of the Pledged Interests comprising Promissory Notes constitutes the legal, valid and binding obligation of the obligor with respect
thereto, enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.
(iv)
The Perfection Certificate lists all Investment Property owned by each Loan Party as of the Closing Date. Each Loan Party is the record
and beneficial owner of, and has good and marketable title to, the Investment Property pledged by it hereunder, free of any and all Liens
or options in favor of, or claims of, any other Person, except for Permitted Prior Liens (and other than Dispositions permitted under
this Agreement or a Disposition that results in Payment in Full).
(c)
Depositary and Other Accounts. All Deposit Accounts, Securities Accounts, Commodities Accounts and all other depositary and other
accounts (other than Excluded Accounts) maintained by each Loan Party as of the Closing Date are described in the Perfection Certificate,
which description includes for each such account the name of the Loan Party maintaining such account, the name, address, and telephone
number of the financial institution (or other applicable institution) at which such account is maintained, the account number, the type
of account and the account officer, if any, of such account.
(d)
Accounts.
(i)
No material amount payable to any Loan Party under or in connection with any Account is evidenced by any Instrument or Chattel Paper
which has not been delivered to Lender.
(ii)
The amounts represented by such Loan Party to Lender from time to time as owing to such Loan Party in respect of the Accounts (to the
extent such representations are required by any of the Loan Documents) will at all such times be accurate in all material respects.
(e)
Commercial Tort Claims. The only commercial tort claims for the benefit of any Loan Party existing and asserted on the Closing
Date in excess of $50,000.00, are those listed in the Perfection Certificate, which sets forth such information separately for each Loan
Party.
11.03
Priority of Security Interest.
(a)
Authorization for Filing of Financing Statements. Each Loan Party authorizes (including pursuant to Section 9-402 of the
UCC and any other Applicable Law) Lender to file at any time financing statements, continuation statements, and amendments thereto and
other filing or recording documents or instruments (such statements, documents or instruments, “Financing Statements”)
with respect to the Collateral without the signature of such Loan Party in such form and in such offices as Lender determines appropriate
to perfect the security interests of Lender under this Agreement. Such Financing Statements may, at the option of Lender: (i) specifically
describe the Collateral or describe the Collateral as “all assets” of Borrower and any other Loan Party of the kind pledged
hereunder, and/or (ii) contain any other information required by the UCC or other Applicable Law for the sufficiency of filing office
acceptance of any such Financing Statement, including whether such Loan Party is an organization, the type of organization and any organizational
identification number issued to such Loan Party, if applicable. Any such Financing Statements may be filed by Lender at any time in any
jurisdiction whether or not Revised Article 9 of the UCC is then in effect in that jurisdiction.
(b)
Additional Perfection and Similar Related Actions with Certain Collateral.
(i)
Within thirty (30) days following request therefor by Lender, each applicable Loan Party will endorse and deliver to Lender (which such
requirement maybe waived in writing by Lender), all Negotiable Collateral and other documents that Lender may reasonably request, in
form satisfactory to Lender, to perfect and continue perfection of Lender’s security interests in such Collateral and in order
to fully consummate all of the transactions contemplated under the Loan Documents.
(ii)
If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument, Certificated
Security or Chattel Paper, such Instrument, Certificated Security or Chattel Paper shall be delivered to Lender within thirty (30) days
after being requested by Lender, duly indorsed in a manner reasonably satisfactory to Lender, to be held as Collateral pursuant to this
Agreement. No Loan Party will create any Chattel Paper without placing a legend on the Chattel Paper acceptable to Lender indicating
that Lender has a security interest in the Chattel Paper.
(iii)
If any Collateral will consist of Electronic Chattel Paper, Letter-Of-Credit Rights or uncertificated Investment Property (or other Uncertificated
Securities), within thirty (30) days after demand by Lender, the applicable Loan Party will execute and deliver (and, with respect to
any Collateral consisting of a Securities Account or uncertificated Investment Property (or other Uncertificated Securities), cause the
Securities Intermediary or the Issuer, as applicable, with respect to such Investment Property to execute and deliver) to Lender all
Control Agreements or other control arrangements, assignments, instruments or other documents in form and substance reasonably satisfactory
to Lender and as reasonably requested by Lender for the purposes of obtaining and maintaining control of and/or perfection of the Liens
on such Collateral.
(c)
Maintenance and Possession of Collateral; Bailee Agreements.
(i)
Each Loan Party will have possession of the Collateral, except where expressly otherwise provided in this Agreement or where Lender chooses
to perfect its security interest by possession in addition to the filing of a Financing Statement. Where Collateral is in possession
of a third party bailee, such Loan Party will take such steps as Lender reasonably requests and within thirty (30) days of Lender’s
request for Lender to obtain an acknowledgment, in form and substance reasonably satisfactory to Lender, of the bailee that the bailee
holds such Collateral for the benefit of Lender.
(ii)
Each Loan Party from time to time may deposit with Lender specific cash collateral to secure specific Obligations. Each Loan Party authorizes
Lender to hold such specific balances in pledge and to decline to honor any drafts thereon or any request by such Loan Party or any other
Person to pay or otherwise transfer any part of such balances for so long as the specific Obligations are outstanding.
(d)
Commercial Tort Claims. If any Loan Party will acquire a commercial tort claim with a value in excess of $25,000.00, such Loan
Party will notify Lender of the general details thereof in the immediately following Compliance Certificate required to be delivered
under this Agreement following such event and will grant to Lender in a writing signed by such Loan Party and delivered with such Compliance
Certificate a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in
form and substance reasonably satisfactory to Lender.
(e)
Deposit Accounts; Security Accounts; Collateral Accounts. No Loan Party will open or maintain any Deposit Account, Securities
Account or Commodity Account other than (i) Deposit Accounts, Securities Accounts or Commodity Accounts (A) maintained with Lender, or
(B) subject to a Control Agreement duly executed on behalf of the applicable depository institution or securities or commodities intermediary
maintaining such account within the later of 90 days following (x) the Closing Date or (y) the date such Loan Party opened or acquired
such account, pursuant to which Lender obtains control (within the meaning of the UCC or any other Applicable Law) over such account
or (ii) Deposit Accounts that are identified to Lender in writing and are Excluded Accounts (and so long as they remain Excluded Accounts).
(f)
Collateral Access Matters. At all times, each of the Loan Parties shall use reasonable efforts to cause to be delivered within
thirty (30) days following the date such Loan Party opened or acquired such applicable location to Lender a collateral access agreement
with respect to each such Loan Party’s leased locations, in a form and substance reasonably satisfactory to Lender. Such requirement
may be waived at the option of Lender.
11.04
Collateral Related Notices. Each Loan Party will advise Lender promptly, in reasonable detail, of:
(a)
any Lien (other than Permitted Prior Liens) on any of the Collateral which would adversely affect the ability of Lender to exercise any
of its remedies hereunder; and
(b)
the occurrence of any other event which could reasonably be expected to have a Material Adverse Effect on the aggregate value of the
Collateral or on the Liens created hereby.
11.05
Updated Perfection Certificate. Concurrently with the delivery of the financial statements required to be delivered under Section
5.01(a), Borrower will provide an updated and duly executed and delivered Perfection Certificate to Lender.
11.06
Maintenance of Collateral; Compliance. Each Loan Party will keep the Collateral in good order and repair and will not use the
same in violation of Applicable Law or any policy of insurance thereon. Each Loan Party will pay promptly when due all taxes, assessments,
governmental charges and levies upon the Collateral or incurred in connection with the use or operation of the Collateral or incurred
in connection with this Agreement, will continue to operate its business in compliance with all applicable provisions of the Federal
Fair Labor Standards Act and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control,
shipment, storage or Disposition of hazardous materials or substances. Each Loan Party will not sell or otherwise Dispose, or offer to
sell or otherwise Dispose, of the Collateral or any interest therein except for Dispositions permitted by Section 6.03.
11.07
Maintenance of Perfected Security Interest; Further Assurances.
(a)
Each Loan Party shall maintain the security interest created by this Agreement as a perfected security interest (to the extent such security
interest may be perfected by the filing of UCC-1 financing statement) having at least the priority described in Section 11.02(a)
and shall use commercially reasonable efforts to defend such security interest against the claims and demands of all Persons whomsoever,
except for Permitted Liens and sales, transfers and other Dispositions of assets under Section 6.03.
(b)
Each Loan Party further agrees to take any and all other actions as are necessary or useful for the attachment, perfection and first
priority of, and the ability of Lender to enforce Lender’s security interest in any and all of the Collateral, including without
limitation: (i) executing, delivering and, where appropriate, filing Financing Statements under the UCC or other Applicable Law of any
relevant jurisdiction whether or not a Loan Party’s signature is required, (ii) causing Lender’s name to be noted as secured
party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability
of Lender to enforce Lender’s security interest in such Collateral, (iii) complying with any provision of any statute, regulation
or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority
of, or ability of Lender to enforce Lender’s security interest in such Collateral, (iv) obtaining governmental and other third
party waivers, consents and approvals in form reasonably satisfactory to Lender, including, without limitation, any consent of any licensor,
lessor or other Person obligated on Collateral, (v) obtaining waivers from mortgagees and landlords in form reasonably satisfactory to
Lender and (vi) taking all actions under any earlier versions of the UCC or under any other law applicable in any relevant UCC or other
jurisdiction, including any foreign jurisdiction.
11.08
Investment Property; Pledged Interests.
(a)
Promptly following the later of (x) receipt by a Loan Party of any such certificate or instrument and (y) 15 days after demand therefor
by Lender, such Loan Party will deliver to Lender all certificates or other instruments representing or evidencing any Pledged Interests
or any other Investment Property constituting Collateral (including any Pledged Interests comprising Equity Interests in a Loan Party
held by another Loan Party), accompanied by appropriate duly executed instruments of transfer or assignment (including, without limitation,
stock powers) in blank, all in form and substance reasonably satisfactory to Lender. The Loan Parties represent and warrant that the
Perfection Certificate identifies which Pledged Interests and other Investment Property are certificated as of the Closing Date.
(b)
Each Loan Party hereby authorizes and instructs each Issuer of any Pledged Interests pledged by such Person hereunder to agree (and in
the case such Issuer is not a Loan Party, use commercially reasonable efforts to agree) that such Issuer will (x) be bound by the terms
of this Agreement relating to the Investment Property issued by it and will comply with such terms insofar as such terms are applicable
to it, (y) comply with any instruction received by it from Lender in writing that (1) states that an Event of Default has occurred and
is continuing and (2) is otherwise in accordance with the terms of this Agreement, without any further instructions from such Loan Party,
and each Loan Party agrees that each such Issuer will be fully protected in so complying and will have no duty or right to inquire as
to Lender’s authority to give such instruction, and (z) when required hereby, pay any dividends or other payments with respect
to such Pledged Interests directly to Lender.
(c)
Each Loan Party shall ensure that the Issuer of any uncertificated Pledged Interests does not issue any certificate representing such
interest or take any step to ‘opt in’ or have such uncertificated Pledged Interest treated as a “security” within
the meaning of Article 8 of the UCC without the prior written consent of Lender.
(d)
So long as no Event of Default shall have occurred and be continuing, each Loan Party (i) will be permitted to receive dividends and
other distributions in respect of the Pledged Interests paid in the normal course of business or otherwise as a result of the exercise
of reasonable business judgment of the relevant issuer, to the extent permitted by this Agreement and (ii) will have the right to vote
and give consents with respect to its Pledged Interests or any of its other Collateral; provided that without the prior written
consent of Lender, each such Loan Party will not (i) vote to enable, or take any other action to permit, any Issuer to issue any Equity
Interests of any nature or to issue any other securities or interests convertible into or granting the right to purchase or exchange
for any Equity Interests of any nature of any Issuer, other than to the extent permitted by this Agreement, (ii) sell, assign, transfer,
exchange, or otherwise Dispose of, or grant any option with respect to (other than Dispositions permitted under this Agreement or a Disposition
that results in Payment in Full), the Investment Property or Proceeds thereof (except pursuant to a transaction which is permitted by
this Agreement) or (iii) create, incur or permit to exist any Lien or option in favor of, or any claim of any Person with respect to,
any of the Investment Property or Proceeds thereof, or any interest therein, except for Permitted Liens (and other than Dispositions
permitted under this Agreement or a Disposition that results in Payment in Full).
(e)
No vote will be cast, and no consent will be given or action taken, which would be inconsistent with or result in any violation of any
provision of this Agreement or any other Loan Document or have the effect of impairing the position or interest of Lender in respect
of the Collateral.
(f)
Immediately upon the occurrence of an Event of Default and so long as it is continuing, (i) Lender will have the sole and exclusive right
to receive any and all dividends, payments or other proceeds paid in respect of the Pledged Interests and make application thereof to
the Obligations, and any or all of the Pledged Interests may, at Lender’s option, be registered in the name of Lender or its nominee,
and (ii) Lender or its nominee may thereafter have the sole and exclusive right to exercise (1) all voting, corporate and other rights
pertaining to such Pledged Interests at any meeting of shareholders of the relevant issuer or issuers or otherwise and (2) any and all
rights of conversion, exchange and subscription and any other rights, privileges or options pertaining to such Pledged Interests as if
it were the absolute owner thereof (including, without limitation, the right to exchange, at its discretion, any and all of the Pledged
Interests upon the merger, consolidation, reorganization, recapitalization or other fundamental change in the corporate structure of
any applicable issuer, or upon the exercise by any Loan Party or Lender of any right, privilege or option pertaining to such Pledged
Interests, and in connection therewith, the right to deposit and deliver any and all of the Pledged Interests with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and conditions as Lender may determine), all without liability except
to account for property actually received by it, but Lender will have no duty to any Loan Party to exercise any such right, privilege
or option and will not be responsible for any failure to do so or delay in so doing.
(g)
Each Loan Party hereby grants to Lender, an irrevocable proxy to, during the continuation
of an Event of Default, vote all or any part of such Loan Party’s Pledged Interests from time to time, in each case in any manner
Lender deems advisable in its sole discretion, either for or against any or all matters submitted, or which may be submitted to a vote
of shareholders, partners, or members, as the case may be, and to exercise all other rights, powers, privileges, and remedies to which
any such shareholders, partners, or members would be entitled (including, without limitation, giving or withholding written consents,
ratifications, and waivers with respect to the Pledged Interests, calling special meetings of the holders of the Pledged Interests of
any issuer and voting at such meetings). Such irrevocable proxy will be automatically
re-granted three years after the date hereof (or such earlier times as Lender may reasonably request from time to time). The irrevocable
proxy granted hereby is effective immediately without the necessity that any other action (including, without limitation, that
any transfer of any of the Pledged Interests be recorded on the books and records of the relevant Loan Party) be taken by any Person
(including the relevant Loan Party of any Pledged Interest or any officer or agent thereof), is coupled with an interest, and shall be
irrevocable, shall survive the bankruptcy, dissolution or winding up of any relevant Loan Party, and shall terminate only once this Agreement
shall have been terminated and the Obligations (other than inchoate indemnity obligations) are repaid in full in cash.
11.09
Registration Rights.
(a)
Each Loan Party recognizes that Lender may be unable to effect a public sale of any or all the Pledged Interests, by reason of certain
prohibitions contained in the Securities Act of 1933 and applicable state securities laws or otherwise, and may be compelled to resort
to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the distribution or resale thereof. Each Loan Party acknowledges
and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding
such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. Lender shall
be under no obligation to delay a sale of any of the Pledged Interests for the period of time necessary to permit the Issuer thereof
to register such securities or other interests for public sale under the Securities Act of 1933, or under applicable state securities
laws, even if such Issuer would agree to do so.
(b)
Each Loan Party agrees to use commercially reasonable efforts to do or cause to be done all such other acts as may be reasonably necessary
to make such sale or sales of all or any portion of the Pledged Interests pursuant to this Section 9 valid and binding and in
compliance with Applicable Law. Each Loan Party further agrees that a breach of any of the covenants contained in this Section 9
will cause irreparable injury to Lender, that Lender has no adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section 9 shall be specifically enforceable against such Loan Party, and such Loan Party
hereby waives, to the extent permitted by Applicable Law, and agrees not to assert any defenses against an action for specific performance
of such covenants except for a defense that no Event of Default has occurred and is continuing under this Agreement.
11.10
Proceeds to be Turned Over To Lender. In addition to the rights of Lender specified herein, if an Event of Default shall occur
and be continuing, all Proceeds of Collateral received by any Loan Party consisting of cash, checks and other cash equivalent items shall
be held by such Loan Party in trust for the benefit of Lender, segregated from other funds of such Loan Party, and shall, promptly upon
receipt by such Loan Party, be turned over to Lender in substantially the same form received by such Loan Party (duly indorsed by such
Loan Party to Lender, if required). All Proceeds received by Lender hereunder shall be applied to the Obligations as provided in Section
8.05.
[Signature
pages follow.]
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under seal as of the Closing Date.
|
BORROWER: |
|
|
|
SUPERIOR
DRILLING PRODUCTS, INC., |
|
a
Utah corporation |
|
|
|
By |
/s/
G. Troy Meier |
|
|
G.
Troy Meier, Chief Executive Officer |
|
|
|
GUARANTORS: |
|
|
|
SUPERIOR
DRILLING SOLUTIONS, LLC, |
|
a
Utah limited liability company |
|
EXTREME
TECHNOLOGIES, LLC |
|
a
Utah limited liability company |
|
HARD
ROCK SOLUTIONS, LLC |
|
a
Utah limited liability company |
|
|
|
By |
/s/
Annette Meier |
|
|
Annette
Meier, Manager |
SIGNATURE
PAGE
LOAN AGREEMENT
|
LENDER: |
|
|
|
VAST
BANK, NATIONAL ASSOCIATION, |
|
a
national banking association |
|
|
|
By
|
/s/
Rex Berg |
|
Name: |
Rex
Berg |
|
Title: |
Vice
President Commercial Lending |
SIGNATURE
PAGE
LOAN AGREEMENT
EXHIBIT
A
BORROWING
BASE CERTIFICATE
Date:
______________, 20___
This
Borrowing Base Certificate (“Certificate”) made as of above date, is executed and delivered by Superior
Drilling Products, Inc., a Utah corporation (“Borrower”), to Vast Bank, National Association, a
national banking association (“Lender”), pursuant to and in accordance with the provisions of that certain
Loan Agreement dated as of July ___, 2023 (the “Loan Agreement”) between Borrower, the Guarantors party thereto,
and Lender. Capitalized terms used but not defined in this Certificate shall have the meanings assigned to them in the Loan Agreement.
In
order to induce Lender to make Loans to Borrower, the undersigned Financial Officer hereby certifies on behalf of Borrower and not in
his or her individual capacity that, as of the date hereof, he or she is the [Insert Title] of Borrower, and that, as such, he or she
is authorized to execute and deliver this Certificate to Lender on behalf of Borrower, and that Borrower warrants and represents to Lender
that the total of the Eligible Inventory and Borrowing Base are accurately reflected below:
Eligible
Inventory: |
|
|
|
Total
Inventory |
$___________________ |
Less: |
|
Work
in Process |
($__________________) |
Excess,
Obsolete, Unsaleable, Etc. |
($__________________) |
Inventory
with Third Party and No Collateral Access |
|
Agt,
Lender Consent, or Reserves |
($__________________) |
Returned
and Repossessed Goods |
($__________________) |
Other
Inventory Not Eligible Inventory |
($__________________) |
Eligible
Inventory |
$___________________ |
|
|
Times:
Borrowing Base Factor of 50% = Borrowing Base |
$___________________ |
|
|
Calculated
Revolving Line vs. Note Amount |
|
|
|
Revolving
Line = lesser of Borrowing Base and $750,000 |
$___________________ |
|
|
Less:
Outstanding Balance |
($___________________) |
|
|
AVAILABLE
FOR ADVANCE |
$___________________ |
|
|
AMOUNT
REQUESTED, IF ANY |
$___________________ |
|
SUPERIOR
DRILLING PRODUCTS, INC., |
|
a
Utah corporation |
|
|
|
|
By: |
|
|
|
Chief Financial Officer |
Exhibit A – Borrowing Base Certificate
EXHIBIT
B
COMPLIANCE
CERTIFICATE
This
Certificate, dated as of [Insert Date], is delivered pursuant to Section 5.01(c) of the Loan Agreement dated as of July ___, 2023
(“Loan Agreement”), between Superior Drilling Products, Inc., a Utah corporation (“Borrower”),
the Guarantors party thereto, and Vast Bank, National Association, a national banking association (“Lender”).
Capitalized terms used but not otherwise defined herein shall have the meanings assigned to them in the Loan Agreement.
The
undersigned Responsible Officer hereby certifies on behalf of the Borrower and not in his or her individual capacity that, as of the
date hereof, he or she is the [Insert Title] of the Borrower, and that, as such, he or she is authorized to execute and deliver
this Certificate to Lender on behalf of Borrower, and that:
(a)
Borrower has delivered the quarterly financial statements for the fiscal quarter ending [Insert Month and Year] as required pursuant
to Section 5.01(b) of the Loan Agreement.
(b)
The undersigned has reviewed and is familiar with the terms of the Loan Agreement and [select one:]
[to
his knowledge, no Default or Event of Default has occurred]
—or—
[to
his knowledge, the following is a list of each Default or Event of Default that has occurred and is continuing, and its nature and status:]
[describe
any Default or Event of Default.]
(c)
The attached Schedule I contains calculations of the Financial Covenants described in Section 6.15 of the Loan Agreement,
for the fiscal quarter ending [Insert Month and Year].
(d)
The Loan Party(s) listed below has/have acquired the commercial tort claim(s) described below with a value in excess of $25,000.00, which
have not previously been reported to Lender in writing:
Loan
Party |
|
Description
of Commercial Tort Claim |
|
Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IN
WITNESS WHEREOF, the undersigned has executed this Certificate as of [Insert Date].
[Signature
Page Attached]
Exhibit B to Loan Agreement – Compliance Certificate
|
SUPERIOR
DRILLING PRODUCTS, INC., |
|
a
Utah corporation |
|
|
|
By: |
|
|
Name: |
|
|
Title: |
|
Exhibit B to Loan Agreement – Compliance Certificate
EXHIBIT
C
JOINDER
AGREEMENT
THIS
JOINDER AGREEMENT (this “Agreement”), dated as of [___________], is entered into between [________________________________],
a [_________________] (the “New Loan Party”) and VAST BANK, NATIONAL ASSOCIATION (“Lender”), in regard
to that certain Loan Agreement dated as of July ___, 2023, between and among Lender; Superior Drilling Products, Inc., a Utah corporation
(“Borrower”); and the Guarantors party thereto (as the same may be amended, modified, extended or restated
from time to time, the “Loan Agreement”). All capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in the Loan Agreement.
The
New Loan Party and Lender hereby agree as follows:
1.
The New Loan Party hereby acknowledges, agrees and confirms that, by its execution of this Agreement, the New Loan Party will be deemed
to be a Loan Party under the Loan Agreement and a “Guarantor” for all purposes of the Loan Agreement and shall have all of
the obligations of a Loan Party and a Guarantor thereunder as if it had executed the Loan Agreement. The New Loan Party hereby ratifies,
as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Loan Agreement, including
without limitation (a) all of the representations and warranties of the Loan Parties set forth in Section 4 of the Loan Agreement,
(b) all of the covenants set forth in Sections 5 and 6 of the Loan Agreement, (c) all of the guaranty obligations set forth
in Section 10 of the Loan Agreement, and (d) all of the obligations in regard to Collateral described in Section 11 of the Loan
Agreement. Without limiting the generality of the foregoing terms of this paragraph 1, the New Loan Party hereby (x) guarantees to Lender,
jointly and severally with the other Guarantors, as provided in Section 10 of the Loan Agreement, the prompt payment and performance
of the Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise) strictly in
accordance with the terms thereof and agrees that if any of the Obligations are not paid or performed in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration or otherwise), the New Loan Party will, jointly and severally together with the
other Guarantors, promptly pay and perform the same, without any demand or notice whatsoever, and that in the case of any extension of
time of payment or renewal of any of the Obligations, the same will be promptly paid in full when due (whether at extended maturity,
as a mandatory prepayment, by acceleration or otherwise) in accordance with the terms of such extension or renewal, and (y) as provided
in Section 11 of the Loan Agreement, grants, pledges and assigns to Lender, to secure the prompt payment and performance in full
when due, whether by lapse of time, acceleration, mandatory prepayment or otherwise, of the Obligations, a continuing security interest
in, and a right to set off against, any and all right, title and interest of such New Loan Party in and to all personal and real property
of every kind, including, without limitation, all of the Collateral of such New Loan Party or in which such New Loan Party has an interest,
whether now owned or existing or hereafter owned, acquired, existing or arising and wherever located.
2.
If required, the New Loan Party is, simultaneously with the execution of this Agreement, executing and delivering such documents and
instruments as requested by Lender in accordance with the Loan Agreement.
Exhibit
C to Loan Agreement – Joinder
3.
The address of the New Loan Party for purposes of Section 9.01 of the Loan Agreement is the same as set forth in such section.
4.
The New Loan Party hereby waives acceptance by Lender of the guaranty by the New Loan Party upon the execution of this Agreement by the
New Loan Party.
5.
This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed
and delivered, is an original, and all taken together, constitute one agreement. Delivery of an executed counterpart of a signature page
of this Agreement in electronic (e.g., “pdf” or “tif”) format shall be effective as delivery of a manually executed
counterpart of this Agreement.
6.
The provisions of Section 9.14 of the Loan Agreement are applicable to this Agreement, mutatis mutandis.
IN
WITNESS WHEREOF, the New Loan Party has caused this Agreement to be duly executed by its authorized officer or manager, and Lender has
caused the same to be accepted by its authorized officer, as of the day and year first above written.
|
|
|
[NEW
LOAN PARTY] |
|
|
|
|
|
|
|
|
|
|
|
|
|
By: |
|
|
|
|
Name:
|
|
|
|
|
Title:
|
|
|
|
|
|
|
Acknowledged
and accepted: |
|
|
|
|
|
|
|
VAST
BANK, NATIONAL ASSOCIATION |
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
|
|
|
|
Exhibit
C to Loan Agreement – Joinder
Exhibit
10.2
Execution
Version
PROMISSORY
NOTE
(Term
Loan)
$1,719,200.00 |
July 28, 2023 |
|
Tulsa, Oklahoma |
FOR
VALUE RECEIVED, the undersigned, Superior Drilling Products, Inc., a Utah corporation (“Borrower”),
hereby promises to pay to the order of Vast Bank, National Association, a national banking association (“Lender”),
on or before July 28, 2028 (the “Term Maturity Date”), the principal amount of One Million Seven Hundred Nineteen
Thousand Two Hundred and No/100 Dollars ($1,719,200.00), the amount of the Term Loan made by Lender to Borrower under that certain Loan
Agreement of even date herewith between and among Borrower, Lender, and the Guarantors party thereto (as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, the “Loan Agreement”, capitalized terms used
but not defined herein having the meanings assigned to them in the Loan Agreement).
Interest
shall accrue on the Term Loan at such interest rates as set forth in the Loan Agreement.
The
entire unpaid principal balance of the Term Loan, together with all unpaid interest accrued thereon, will be due and payable in full
on the Term Maturity Date.
All
payments, including prepayments, of principal of, or interest on, this Note shall be made to Lender as provided in the Loan Agreement.
If any amount is not paid in full when due, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof
until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Loan Agreement.
This
Promissory Note (as amended, restated, amended and restated, supplemented and/or otherwise modified from time to time, this “Note”)
is one of the Notes referred to in the Loan Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject
to the terms and conditions provided therein. Upon the occurrence and continuation of one or more of the Events of Default specified
in the Loan Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable
all as provided in the Loan Agreement. The Term Loan shall be evidenced by a loan account or records maintained by Lender in the ordinary
course of business. Lender may also attach schedules to this Note and endorse thereon the date of all payments with respect to the Term
Loan.
Borrower
may, at any time and from time to time, prepay the outstanding principal balance of this Note, in whole or in part, subject to the applicable
provisions of the Loan Agreement.
This
Note is secured by the Collateral described in the Loan Agreement. Reference is hereby made to the Loan Agreement for a description of
the property, assets and interests thereby pledged and/or assigned, as the case may be, the nature and extent of the security thereunder
and the security interests created thereby, and the rights of Lender (or other holder of this Note) in respect thereof.
Borrower,
for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor
and non-payment of this Note.
The
provisions of Section 9.14 of the Loan Agreement (relating to, among other things, choice of law, consent to jurisdiction, service of
process, and waiver of jury trial) are incorporated herein and made fully applicable hereto, mutatis mutandis.
In
no event shall the amount or rate of interest due and payable under this Note exceed the maximum amount or rate of interest allowed by
applicable law. Reference is hereby made to the Loan Agreement for additional provisions relating to the foregoing.
[Signature
Page Attached]
IN
WITNESS WHEREOF, the undersigned has executed this Note as of the date first above written.
|
SUPERIOR DRILLING PRODUCTS, INC., |
|
a Utah corporation |
|
|
|
By: |
/s/ G. Troy Meier |
|
|
G. Troy Meier, Chief Executive Officer |
Signature
Page
Promissory Note – Term Loan
Exhibit
10.3
Execution
Version
PROMISSORY
NOTE
(Revolving
Line)
$750,000.00 |
July 28, 2023 |
|
Tulsa, Oklahoma |
FOR
VALUE RECEIVED, the undersigned, Superior Drilling Products, Inc., a Utah corporation (“Borrower”),
hereby promises to pay to the order of Vast Bank, National Association, a national banking association (“Lender”),
on or before July 28, 2025 (the “Revolving Maturity Date”), the principal amount of the Revolving Loans made
by Lender to Borrower under that certain Loan Agreement of even date herewith between and among Borrower, Lender, and the Guarantors
party thereto (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Loan
Agreement”, capitalized terms used but not defined herein having the meanings assigned to them in the Loan Agreement).
Borrower
promises to pay interest on the unpaid principal amount of each Revolving Loan from the date of such Revolving Loan until such principal
amount is paid in full, at such interest rates and at such times as provided in the Loan Agreement. If any amount is not paid in full
when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual
payment (and before as well as after judgment) computed at the per annum rate set forth in the Loan Agreement.
The
entire unpaid principal balance of the Revolving Loans, together with all unpaid interest accrued thereon, will be due and payable in
full on the Revolving Maturity Date.
All
payments, including prepayments, of principal of, or interest on, this Note shall be made to Lender as provided in the Loan Agreement.
This
Promissory Note (as amended, restated, amended and restated, supplemented and/or otherwise modified from time to time, this “Note”)
is one of the Notes referred to in the Loan Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject
to the terms and conditions provided therein. Upon the occurrence and continuation of one or more of the Events of Default specified
in the Loan Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable
all as provided in the Loan Agreement. The Revolving Loans made by Lender shall be evidenced by one or more loan accounts or records
maintained by Lender in the ordinary course of business. Lender may also attach schedules to this Note and endorse thereon the date,
amount and maturity of its Revolving Loans and payments with respect thereto.
Borrower
may, at any time and from time to time, prepay the outstanding principal balance of this Note, in whole or in part, subject to the applicable
provisions of the Loan Agreement.
This
Note is secured by the Collateral described in the Loan Agreement. Reference is hereby made to the Loan Agreement for a description of
the property, assets and interests thereby pledged and/or assigned, as the case may be, the nature and extent of the security thereunder
and the security interests created thereby, and the rights of Lender (or other holder of this Note) in respect thereof.
Borrower,
for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor
and non-payment of this Note.
The
provisions of Section 9.14 of the Loan Agreement (relating to, among other things, choice of law, consent to jurisdiction, service of
process, and waiver of jury trial) are incorporated herein and made fully applicable hereto, mutatis mutandis.
In
no event shall the amount or rate of interest due and payable under this Note exceed the maximum amount or rate of interest allowed by
applicable law. Reference is hereby made to the Loan Agreement for additional provisions relating to the foregoing.
[Signature
Page Attached]
IN
WITNESS WHEREOF, the undersigned has executed this Note as of the date first above written.
|
SUPERIOR DRILLING PRODUCTS, INC., |
|
a Utah corporation |
|
|
|
By: |
/s/ G. Troy Meier |
|
|
G.
Troy Meier, Chief Executive Officer |
Signature
Page
Promissory Note – Revolving Loan
Exhibit
10.4
BUSINESSMANAGER® AGREEMENT
WITH
BUSINESSES AND PROFESSIONALS (Variable Service Charge)
TO: |
Vast
Bank, National Association |
|
FROM: |
Superior
Drilling Products, Inc. |
|
110
N. Elgin, Suite 500 |
|
|
1583
S. 1700 East |
|
Tulsa,
OK 74120 |
|
|
Vernal,
UT 84078 |
|
(the
“Financial Institution”) |
|
|
(the
“Business”) |
This
BusinessManager® Agreement with Businesses and Professionals (“Agreement”) is between Financial Institution and Business
and is intended to govern Business’ sale of Accounts, as defined below, to Financial Institution which Accounts arise from the
sale of goods or provision of services to Business’ Customers and which Accounts Financial Institution may purchase pursuant to
the terms of the Agreement. The accepted terms are as follows:
SECTION
1: DEFINITIONS
1.1
“Accounts” means a right to payment of a monetary Obligation, whether or not earned by performance, (i) for property
that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, or (ii) for services rendered or to be rendered.
The term Account shall include all obligations owing for what is commonly referred to as a receivable.
1.2
“Additional Security Documents” means as that term is described in section 4.3.
1.3
“Basis Point” means 1/100th of 1 percent. For example, 1 basis point is equal to 0.01% or 0.0001.
1.4
“Business Judgment” means, in connection with decisions made by Financial Institution, the exercise of such decisions
in Financial Institution’s sole and exclusive business judgment and discretion.
1.5
“Change in Control” means an event or series of events by which: (a) any “person” or “group”
(as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) shall become, or obtain rights (whether by
means or warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934), directly or indirectly, of a majority of the stock of Business entitled to vote for members of the
board of directors or equivalent governing body of Business on a fully-diluted basis (and taking into account all such securities that
such person or group has the right to acquire pursuant to any option right); or (b) during any period of twelve (12) consecutive months,
a majority of the members of the board of directors or other equivalent governing body of Business cease to be composed of individuals
(i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to
that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board
or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of
such election or nomination at least a majority of that board or equivalent governing body; or (c) Business shall cease to own and control,
of record and beneficially, directly or indirectly, 100% of each class of outstanding membership interests and other equity interests
of each subsidiary of Business, free and clear of all liens (except liens in favor of Financial Institution).
1.6
“Collateral” means all of Business’s now owned and hereafter acquired Accounts, Chattel Paper, Deposit Accounts,
Inventory, Instruments, Documents, Letter of Credit Rights, Commercial Tort Claims, General Intangibles, Supporting Obligations and the
Reserve and Reserve Account.
1.7
“Complete Termination” occurs upon satisfaction of the following conditions:
1.7.1
Payment in full of all Obligations of Business to Financial Institution and Financial Institution’s issuance of a UCC termination
statement;
1.7.2
If Financial Institution has issued or caused to be issued guarantees, promises, or letters of credit on behalf of Business, acknowledgement
from any beneficiaries thereof that Financial Institution or any other issuer has no outstanding direct or contingent liability therein;
and
1.7.3
Business has executed and delivered to Financial Institution a general release in Section 14 of this document.
1.8
“Credit Application” means any Credit Application executed by a Business’ Customer.
1.9
“Credit Memo” means a credit memo or similar evidence (whether in written or electronic form) reflecting a deduction
to the Face Amount of a Customer’s account with Business, other than a credit arising from a payment.
1.10
“Customer” means a person obligated to pay one or more Accounts arising from goods sold or services Business rendered
to the Customer, otherwise known as an Account Debtor under the Uniform Commercial Code.
1.11
“Customer Agreement” means any agreement, whether written or verbal, between Business and its Customer evidencing
the terms of a sale of goods or rendition of services giving use to an Account.
1.12
“Dispute” means any form of Customer Agreement dispute, including, but not limited to, a charge back, act to reject
or return goods, alleged deduction, defense, offset, counterclaim or any other act or event in respect to an Account Debtor which may
in any way diminish Financial Institution’s ability to fully or timely collect a Purchased Account, whether or not provable or
bona fide.
1.13
“Exposed Payment(s)” means payments received by Financial Institution from or for the account of a Payor that
has become subject to a bankruptcy proceeding, to the extent such payments cleared the Payor’s deposit account within ninety (90)
days of the commencement of said bankruptcy case.
1.14
“Face Amount” means the outstanding balance of each Account for the price of the sale of goods or provision of
services as reflected on an Invoice evidencing an Account offered for sale to Financial Institution.
1.15
“Invoice” means each invoice or similar evidence (whether in written or electronic form) of the terms of a non-cash
sale of goods or provision of services previously made by Business to a Customer in connection with each Account.
1.16
“Net Amount” of an Account means the Face Amount of an Account less the Service Charge.
1.17
“Obligations” means all of Business’ monetary and non-monetary Obligations to Financial Institution, whether
pursuant to this Agreement, under any note, contract, guaranty, accommodation or otherwise, however and whenever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or later existing or due.
1.18
“Posting Date” means the day that the Account is purchased by the Financial Institution
1.19
“Purchased Accounts” means all Accounts purchased by Financial Institution under this Agreement.
1.20
“Purchase Price” means as that term is described in section 2.2.
1.21
“Repurchase Obligations” means the liability of Business to Financial Institution under this Agreement to repurchase
any Purchased Account for an amount, on any date, equal to the unpaid Face Amount, plus (if incurred) attorneys’ fees and accrued
and unpaid finance charges related to such Purchased Accounts. For the purpose of this Section, any Exposed Payments shall be included
as a Repurchase Obligation.
1.22
“Reserve” means whatever amount is maintained by Financial Institution in the Reserve Account that may serve to
secure Business’ Repurchase Obligations or any other monetary obligations under this Agreement.
1.23
“Reserve Account” means an interest bearing Deposit Account maintained by Financial Institution in connection
with all Accounts sold to Financial Institution by Business under this Agreement reflecting an amount that is expected to equal the Reserve
as established pursuant to Section 2.5 of this Agreement.
1.24
“Service Charge” means a discount to the Face Amount of a Purchased Account equal to one and 1/4 percent (1.25
%). The Service Charge also includes Variable Service Charges for each Account that is purchased by the Financial Institution which is
not paid in full by the end of the Base Period, as further defined in Section 1.25. Business acknowledges that the Service Charge and
Variable Service Charges in no event constitutes interest or a similar charge and that the transactions described in this Agreement are
not transactions for the use, forbearance or detention of money. The Service Charge has been agreed upon by the parties and represents
a reasonable and customary fair market value discount.
1.25
“Variable Service Charge” means the amount charged by the Financial Institution to the Business for each Account
purchased by the Financial Institution, which is not fully paid within the Base Period. After the Base Period, the Business will pay
(3.0) Basis Points of the Face Amount of the outstanding Account per day that the Account remains outstanding, until the Cap Period expires.
The Variable Service Charge has been agreed upon by the parties and represents a reasonable and customary fair market value discount.
1.26
“Base Period” means the period of time equaling (45) days from the Posting Date of each Account. During this period
of time, the Financial Institution does not assess the Variable Service Charge for that particular Account.
1.27
“Cap Period” means the period of time equaling (120) days from the Posting Date of each Account. After this Cap
Period, the Business will no longer be charged a Variable Service Charge for that particular Account.
Unless
the context otherwise requires, all capitalized terms used but not defined herein shall have the meaning set forth in the Uniform Commercial
Code (“UCC”).
SECTION
2: SALE; PURCHASE PRICE; BILLING; RESERVE
2.1
Assignment and Sale.
2.1.1
Financial Institution hereby agrees to evaluate for purchase from Business and Business hereby irrevocably agrees to offer to assign
and sell to Financial Institution, as absolute owner, Business’ entire interest in that portion of its currently outstanding Accounts
as are detailed in the attached Exhibit A to this Agreement. In addition, Business will offer for sale all of its hereafter created future
Accounts, evidenced by Invoices that Business will simultaneously deliver to the applicable account debtor(s) and Financial Institution
(by email bcc or otherwise) in support of such future Accounts, other than Accounts as to which the account debtor is (a) Baker Hughes
Company or any direct or indirect subsidiary thereof, or (b) an account debtor that Final Institution separately agrees to exclude in
its Business Judgment as to a particular invoice or invoices, on an invoice by invoice basis.
2.1.2
Business acknowledges that its currently outstanding Accounts listed on Exhibit A are not now, nor have they ever been declared to
be, in default.
2.1.3 Business
and Financial Institution each acknowledge and agree that in connection with each Account offered to Financial Institution for sale
that: (a) Business will submit to Financial Institution for Financial Institution’s determination as to the eligibility of the
Accounts, all Invoices evidencing the terms underlying each Account; (b) the transactions contemplated by this Agreement are account
purchase transactions; (c) the Accounts shall at all times be purchased by Financial Institution from Business at a discount in
accordance with the Service Charge; (d) the purchase and sale of the Accounts shall vest absolute right, title and ownership of
such Purchased Accounts together with all benefits of ownership; and (e) Business has no right and may not seek to require Financial
Institution to authorize Business to reacquire, redeem, or otherwise re-vest title to any Purchased Accounts or any proceeds
thereof. If Business commits any Event of Default, then during the continuance thereof, the Financial Institution may verify any
desired information in connection with Purchased Accounts with Customers. In connection with the sale and assignment of Purchased
Accounts, Financial Institution shall become subrogated to all of Business’ rights as an unpaid vendor, lienholder, all of its
related rights of stoppage in transit, replevin and reclamation, and rights against third parties (all of which will constitute part
of the Purchased Accounts) and Business agrees to cooperate with Financial Institution in its exercise of these rights.
2.1.4
The total outstanding Face Amount of Purchased Accounts by Financial Institution will never exceed $2,500,000.00, unless agreed to
by Financial Institution, which decision will be in Financial Institution’s Business Judgment.
2.1.5
Business agrees to execute and deliver such further instruments, documents and endorsements to or for the benefit of Financial Institution
as may be necessary to accomplish the sale and purchase described herein and to carry out the purposes of this Agreement.
2.2
Purchase Price. The Purchase Price payable for Purchased Accounts will be equal to the Net Amount and payment of the Purchase
Price, less the Reserve, shall be paid to Business on or before the next banking day after delivery of the Invoices evidencing the Accounts
offered to Financial Institution, unless in Financial Institution’s Business Judgment it requires additional time for evaluation.
2.3 Variable
Service Charge. For each account not paid in full during the Base Period, the Business will be charged the Variable
Service Charge until the Cap Period for each Account expires. The Variable Service Charge will be due and payable from the Business
at the end of each month, as determined by the Financial Institution in their sole discretion. The Financial Institution will debit
the amount of the Variable Service Charge against the Business’ deposit account with the Financial Institution or at the
Financial Institution’s sole discretion, the Business’ Reserve Account.
2.4
Documentation.
2.4.1
In respect to all Accounts offered for sale, Business will provide Financial Institution with any Credit Applications, Customer Agreements,
Invoices, payment information and, if applicable, Credit Memos related to all sales of goods and rendition of services, and such other
documents and proof of delivery of goods or rendering of services as Financial Institution may reasonably require. As to the currently
outstanding Accounts described on Exhibit A that become Purchased Accounts, payment of the Purchase Price by Financial Institution will
be conclusive evidence of their assignment and sale to Financial Institution.
2.5
Billing.
2.5.1
All Customers will be instructed by Business (and if not so instructed by Business, then by the Financial Institution on behalf of
Business) to make payments to, at the sole discretion of Financial Institution, a post office box or electronic lockbox controlled exclusively
by Financial Institution or through Automatic Clearing House (“ACH”) credit entries.
2.5.2
All payments received from or for the account of a Customer will be applied to the Obligations of that Customer and payment will
be deemed made upon receipt by Financial Institution.
2.5.3
All variations, modifications or extensions of indebtedness on Purchased Accounts under this Agreement may only be negotiated and/or
authorized by Financial Institution.
2.5.4
Nothing in this Agreement authorizes Business nor may Business seek to collect Purchased Accounts sold to Financial Institution.
If Business receives payment on any Purchased Account (or any Accounts upon an Event of Default), it will receive those payments in trust
for Financial Institution and will remit such payments, if made by Negotiable Instrument, in kind, to Financial Institution; or, if made
electronically, will remit an amount equal to the amount of all funds received, both of which shall be completed by no later than three
business days.
2.6
Reserve. Financial Institution will be entitled to create and maintain from the Purchase Price payments payable to Business,
a Reserve in an amount which Financial Institution may adjust from time to time in its Business Judgment, to provide security for Business’
Repurchase Obligations as described in section 3 below. The Reserve will be held in a separate interest-bearing account for the benefit
of the Financial Institution. The Reserve will be maintained in this account which, if not necessary for use by Financial Institution
for Business’ Repurchase Obligations or as otherwise contemplated by this Agreement, will be available to Business upon a Complete
Termination.
2.6.1
The amount of the Reserve in connection with the currently outstanding Accounts will be calculated to equal the sum of a., b., c.,
and d. below:
|
a. |
10%
of the Face Amount of all Purchased Accounts initially purchased by Financial Institution that are less than 61 days from invoice
date or less than 31 days past due; |
|
b. |
25%
of the Face Amount of all Purchased Accounts initially purchased by Financial Institution that are between 61 and 90 days from invoice
date or between 31 and 60 days past due; |
|
c. |
50%
of the Face Amount of all Purchased Accounts initially purchased by Financial Institution that are between 91 and 120 days from invoice
date or between 61 and 90 days past due; |
|
d. |
if
Financial Institution elects to purchase such Accounts, 100% of the Face Amount of all Purchased Accounts initially purchased by
Financial Institution that are greater than 120 days from invoice date or greater than 90 days past due. |
2.6.2
Thereafter, and subject to Financial Institution’s right to adjust the Reserve in its Business Judgment, Financial Institution
will establish as a Reserve in the Reserve Account 10% of the Face Amount of all new Purchased Accounts subsequent to its initial purchase
of the Purchased Accounts. Financial Institution may require the minimum amount of Reserve, after deduction for required repurchases,
to be equal to the sum of e., f., and g. below:
|
e. |
10%
of the Face Amount of all outstanding Purchased Accounts that are less than 61 days from invoice date or less than 31 days past due; |
|
f. |
25%
of the Face Amount of all outstanding Purchased Accounts that are between 61 and 90 days from invoice date or between 31 and 60 days
past due; |
|
g. |
50%
of the Face Amount of all outstanding Purchased Accounts that are between 91 and 120 days from invoice date or between 61 and 90
days past due. |
2.7
Exposed Payments. Upon termination of this Agreement, Business shall pay to Financial Institution (or Financial Institution
may retain or hold in the Reserve Account) the amount of all Exposed Payments. Financial Institution may charge the Reserve Account with
the amount of any Exposed Payments that Financial Institution may become obligated to pay to a bankruptcy estate of a Customer that made
the Exposed Payment to Financial Institution, on account of a claim asserted under Section 547 of Bankruptcy Code. Financial Institution
shall pay to Business from time to time that balance of the Reserve Account for which a claim under Section 547 of Bankruptcy Code can
no longer be asserted due to the passage of the statute of limitations, settlement with bankruptcy estate of the Customer or otherwise.
Business shall indemnify Financial Institution from any loss arising out of the assertion of any Avoidance Claim and shall pay to Financial
Institution on demand the amount thereof. Business shall notify Financial Institution within two business days of it becoming aware of
the assertion of an Exposed Payment. This provision shall survive termination of this Agreement.
2.8
Account Stated.
2.8.1
Financial Institution, in its Business Judgment, may either provide Business with information on the Purchased Accounts and a monthly
reconciliation of the relationship relating to billing, collection and account maintenance such as aging, posting, error resolution and
mailing of statements or may instead make such information available electronically through an internet website. Either of the foregoing
shall be in a format and in such detail as Financial Institution deems appropriate.
2.8.2
Financial Institution’s books and records or all electronically stored information shall be admissible in evidence without
objection as prima facie evidence of the status of the Purchased Accounts, non-purchased Accounts and Reserve Account between Financial
Institution and Business. Each statement, report, or accounting rendered or issued by Financial Institution to Business and all electronically
stored information shall be deemed conclusively accurate and binding on Business unless within thirty (30) days after the date of issuance
or, in the case of electronically stored information, the first of each month, Business notifies Financial Institution to the contrary
by registered or certified mail, setting forth with specificity the reasons why Business believes such statement, report, or accounting
or electronically stored information is inaccurate, as well as what Business believes to be correct. Business’ failure to receive
any monthly statement or access the electronically stored information shall not relieve it of the responsibility to request such information
and Business’ failure to do so shall nonetheless bind Business to whatever Financial Institution’s records or electronically
stored information report.
SECTION
3: REPURCHASE OF PURCHASED ACCOUNTS
3.1
Required Repurchase. With respect to any Purchased Accounts initially purchased by Financial Institution, Financial Institution
may require Business to repurchase all or any portion of such Purchased Accounts owed by any particular Customer if any minimum payment
due on one or more of such Purchased Accounts remains unpaid following 120 days after its invoice date. With respect to any Purchased
Accounts purchased after Financial Institution’s initial purchase, Financial Institution may require Business to repurchase all
or any portion of such Purchased Accounts owed by any particular Customer if any minimum payment due on one or more of such Purchased
Accounts remains unpaid following 120 days after its invoice date. For purposes of this Agreement, the aging status of Purchased Accounts
purchased from Business, as shown on the aging report of Purchased Accounts produced or generated by Financial Institution, will be deemed
conclusive (absent manifest error) in determining which Purchased Accounts Financial Institution may require Business to repurchase.
Regardless of when purchased, Financial Institution may require Business to repurchase all or any portion of such Purchased Accounts
from any particular Customer if such Customer is bankrupt or insolvent, or if any Dispute arises with a Customer regarding such Purchased
Accounts. Financial Institution may require Business to repurchase any or all outstanding Purchased Accounts (a) upon a Default, as defined
in Section 9, or (b) upon the termination of this Agreement. Any decision by Financial Institution to require repurchase of less than
the maximum amount permitted by this Agreement will not be deemed a waiver of Financial Institution’s rights to require such repurchase
to the maximum extent permitted in this Agreement.
3.2
Effecting Repurchase. Should Financial Institution require repurchase of one or more Purchased Accounts, Business will be
liable to Financial Institution for payment of the Repurchase Obligation with respect to such Purchased Accounts. Upon an event of Default
or termination under this Agreement, the Repurchase Obligation will also include the amount of all indemnities and other Obligations
of Business arising under this Agreement. Without notice to or demand on Business, Financial Institution may debit the amount of such
Repurchase Obligation (and any amount necessary to bring the Reserve to a level as may be required by Financial Institution in its Business
Judgment) against Business’ Reserve Account, or any deposit account of Business maintained with Financial Institution. Business
agrees to and irrevocably waives any right to withdraw Financial Institution’s authority, block or otherwise seek to preclude or
interfere with the debit authority provided herein until section 11.3 is fully satisfied. In the event any deposit account contains insufficient
funds for Financial Institution’s debit, or Financial Institution elects not to make such debit, Business agrees to pay any such
deficiency or shortfalls on demand. Financial Institution will have no duty to bill or collect any Repurchased Accounts although such
accounts shall continue to serve as Financial Institution’s Collateral.
SECTION
4: SECURITY INTEREST.
4.1
In order to secure Business’ performance of all Obligations under this Agreement and any other agreement that may now or hereafter
be entered into between Business and Financial Institution, Business grants to Financial Institution a continuing first priority ownership
interest in the Purchased Accounts and first priority security interest in the Collateral. The priority rights granted by this section
are designed to provide Financial Institution with sole rights of enforcement insofar as the collection of all Accounts.
4.2
Notwithstanding the creation of this security interest, it is the express intention of the parties that their relationship shall
be that of seller and purchaser of Purchased Accounts and once acquired by Financial Institution, Business shall no longer have any rights
or title to any Purchased Account pursuant to § 9-318(a) of the UCC.
4.3
Business agrees to execute such additional documents and take such further action as Financial Institution may deem necessary or
desirable in order to perfect the security interest granted herein and otherwise to effectuate the purposes of the Agreement. In the
event that Financial Institution requires additional security for Business’ Obligations under this Agreement, and Business or other
party executes additional security agreements, pledge agreements, guaranties and documents of similar significance (collectively, the
“Additional Security Documents”), terms used therein such as, but not limited to, “loans,” “indebtedness,”
and “obligations,” will be deemed to include the Repurchase Obligations. Despite the provisions of the Additional Security
Documents, the Repurchase Obligations secured by those documents will not constitute a loan.
4.4
Financial Institution is authorized to have filed any initial financing statements and amendments thereto that: indicate the Collateral
as “all assets” of Business or words of similar effect, regardless of whether any particular asset comprising the Collateral
falls within the scope of Article 9 of the UCC, or as being of an equal or lesser scope or with greater detail; contain any other information
required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including:
(i) whether Business is an organization, the type of organization, and any organization identification number issued to Financial Institution
and, (ii) in the case of a financing statement filed as a fixture filing or indicating Collateral as extracted Collateral or timber to
be cut, a sufficient description of real property to which the Collateral relates; and (iii) containing a notification that Business
has granted a negative pledge to Financial Institution and that any subsequent lienor may be tortiously interfering with Financial Institution’s
right and advise third parties that any notification to any of Business’ Account Debtors will interfere with Financial Institution’s
collection rights.
SECTION
5: REPRESENTATIONS, WARRANTIES AND COVENANTS
5.1
Representations and Warranties. Business represents and warrants to Financial Institution that: (a) it is fully authorized
to enter into and perform under this Agreement, and that this Agreement constitutes its legal, valid and binding obligation; (b) Business
is solvent and in good standing in the State of its organization; (c) it is not the present intent of Business to seek protection under
any chapter of Title 11 of the United States Financial Bankruptcy Code or under any state insolvency laws or any statutory Assignment
for the Benefit of Creditor laws; (d) its Accounts are currently and were at the time of their creation, bona fide and existing Obligations
of Customers of Business arising out of its sales of goods or performance of services to independent and not affiliated Customers, free
and clear of all security interests, liens, and claims whatsoever of third parties; (e) the documentation under which the Accounts are
payable authorize the charge and collection of interest at the rate provided in such documentation; (f) all Accounts and all documents
and practices related to them comply with all applicable federal and state laws; (g) the Accounts will be paid by Customers prior to
the date of required repurchase or will be repurchased by Business pursuant to Sections 3.1 and 3.2; (h) the Collateral in which a security
interest is granted in Section 4.1 or in any Additional Security Documents is not subject to any other security interest, lien or encumbrance
whatsoever (except in favor of Financial Institution), and Business will not permit such Collateral to become so encumbered without Financial
Institution’s prior written consent, which consent may be withheld in its Business Judgment; (i) Business’ inventory is not
subject to any security interest, lien or encumbrance whatsoever and Business will not permit its inventory to become so encumbered without
Financial Institution’s prior written consent.
5.2
Covenants.
5.2.1
Business covenants that: (i) it will allow Financial Institution to review and inspect during reasonable business hours, and Business
will supply all financial information, financial records, and documentation on Business, any guarantors, or any Customer, that Financial
Institution may request; (ii) with respect to each Purchased Account as it arises: (a) Business will have made delivery of the goods
and/or will have rendered the services represented by the Invoice, and the goods and/or services will have been accepted; (b) Business
will have preserved and will continue to preserve any liens and any rights to liens available by virtue of the sales and/or services;
(c) the Customer will not be an affiliate of Business (e.g., parent, subsidiary, etc.); (d) Financial Institution’s copy of the
Invoice will be genuine and will comply with this Agreement; (e) Business will have no knowledge of any Dispute that may impair the validity
of the transaction or the Customer’s Obligation to pay Purchased Accounts in accordance with the terms; (f) Business will have
the right to render the services and/or to sell the goods creating the Purchased Accounts, and will do so in compliance with all applicable
laws; (g) Business will have paid or provided for the payment of all taxes arising from the transaction in respect to all Purchased Accounts;
(h) the Purchased Accounts will not be subject to any deduction, offset, defense, or counterclaim; and (i) Business will notify Financial
Institution immediately of any upgrades and/or changes to its accounting software; (iii) the transactions described in Section 2.1 are
account purchase transactions, and Business will reflect such transactions in its accounting books and records as absolute sales of Purchased
Accounts to Financial Institution; Business will reimburse and indemnify Financial Institution for all loss, damage and expenses, including
reasonable attorneys’ fees, incurred in defending such transactions as absolute sales of Purchased Accounts, or as a result of
the recharacterization of such transactions; and (iv) in the event of the commencement of any case under any bankruptcy or insolvency
laws by or against Business, Business will not oppose or object and will consent to any motion by Financial Institution seeking relief
from the automatic stay provisions of such laws with respect to the Reserve or the Reserve Account, or to any motion by Financial Institution
with respect to any Purchased Account or the Collateral.
5.2.2
Business shall not, without the prior written consent of Financial Institution in each instance: (a) grant any extension of time
for payment of any Purchased Accounts, (b) compromise or settle any Purchased Accounts for less than the full amount thereof, (c) release
in whole or in part any Customer, or (d) grant any credits, discounts, allowances, deductions, return authorizations or the like with
respect to any Purchased Account.
5.2.3
From time to time as requested by Financial Institution, at the sole expense of Business, Financial Institution or any designees
shall have access, during reasonable business hours if prior to an Event of Default and at any time if on or after an Event of Default,
to all premises where Collateral is located for the purposes of inspecting (and removing, if after the occurrence of an Event of Default)
any of the Collateral, including Business’ books and records, and Business shall permit Financial Institution to make copies of
such books and records or extracts therefrom as Financial Institution may request. Without expense to Financial Institution, Financial
Institution may use any of Business’ business premises, personnel and equipment, including computer equipment, programs, printed
output and computer readable media, supplies for the collection of Accounts and realization on other Collateral as Financial Institution
deems appropriate in its Business Judgment. Business hereby irrevocably authorizes all accountants and third parties, upon written or
verbal request, to promptly disclose and deliver to Financial Institution at Business’ expense all financial information, books
and records, work papers, management reports and other information in their possession relating to Business.
5.2.4
Before sending any Invoice to a Customer, Business shall mark same with a notice of assignment in compliance with 9-406 of the UCC
in the form and manner as may be required by Financial Institution in the event Financial Institution deems it advisable for Business
to do so, Financial Institution deems itself insecure or Business commits any Event of Default and during the continuance thereof.
5.2.5
[Reserved]
SECTION
6: FORMS AND PROCEDURES; RESPONSIBILITY FOR USE
6.1
Forms and Procedures. Business will use only forms and agreements supplied to or approved by Financial Institution in connection
with the Purchased Accounts, and will follow all procedures that are satisfactory to Financial Institution in connection with the use
of such forms and agreements. Financial Institution does not desire to manage or operate Business but to insure that Business is properly
representing the billing terms to its Customers.
6.2
Responsibility for Use. Business shall provide to Financial Institution all information used to create the form of Credit
Application and Customer Agreement and other documentation. Business is solely responsible for the adequacy, completeness, delivery and
accuracy of the raw data relating to the Purchased Accounts, its preparation in the form required by Financial Institution, and its transmission
to Financial Institution. Business understands that these documents should be reviewed by Business’ counsel, as Financial Institution
makes no representation or warranty as to their enforceability in Business’ state or their compliance with applicable federal and
state laws. Financial Institution and Business agree that Financial Institution is the owner of all Accounts purchased by Financial Institution,
and that all activities of Financial Institution in connection with the purchase of Accounts, receipt of payments for the Purchased Accounts,
generation of information, and processing of data, is for the account of Financial Institution’s own affairs, and that the information
generated in connection with those activities is the property of Financial Institution. Financial Institution shall at no time perform
as a collection agency under this Agreement.
SECTION
7: POWER OF ATTORNEY
7.1
Business appoints Financial Institution as its attorney-in-fact for all appropriate purposes under this Agreement including: to receive,
open, and dispose of all mail addressed to Business relating to Accounts; to endorse Business’ name upon any notes, acceptances,
checks, drafts, money orders, and other evidences of payment of Accounts that may come into Financial Institution’s possession,
and to deposit or otherwise handle the same; and to do all other acts and things necessary to carry out the terms of this Agreement.
This power, being coupled with an interest, is irrevocable while any Purchased Account owned by Financial Institution remains unpaid
or any Obligation remains outstanding.
7.2
As permitted by applicable state law, if the Repurchase Obligation is not paid in full after demand, Business authorizes any attorney
to appear for Business in any court of record in the United States, and to confess judgment for such amount as may appear to be unpaid,
together with any allowable fees for collection of the judgment.
SECTION
8: APPLICABLE LAW
This
Agreement will be governed by, construed and enforced according to the laws of the State of Oklahoma.
SECTION
9: DEFAULT
9.1
Events of Default. The following events will constitute a default (an “Event of Default”) under the terms of this
Agreement: (a) Business fails, on demand, to pay any Repurchase Obligations or any other monetary Obligation under this Agreement; (b)
Business fails to perform any non-monetary duty Business owes to Financial Institution under this Agreement that is not cured within
ten (10) days of receipt of written notice of such failure, specifying in reasonable detail the default that is not being performed by
the Business; (c) the Business fails to pay any indebtedness of the Business owed to the Financial Institution according to its terms;
(d) Business breaches the representations set forth in Section 5.1(d) or fails to turn over payments on Purchased Accounts to Financial
Institution, as set out in Section 2.5.4; (e) except for the Obligations described in Sections 9.1(a), and 9.1(b) hereof, Business fails
to perform any Obligation, covenant or liability in connection with this Agreement within ten (10) days after the date that written notice
is given to Business; (f) any warranty, representation or statement whenever made by Business in connection with this Agreement proves
to be false in any material respect when made, or Business fails to disclose to Financial Institution that any such warranty, representation
or statement has become false in any material respect; (e) dissolution or termination of Business if Business is a corporation, partnership,
or other entity, or if Business is an individual, the death or incompetency of such individual; (g) without prior written consent by
Financial Institution, a Change in Control occurs; (h) Business’ insolvency; (i) the institution of any Assignment for the Benefit
of Creditors, the appointment of a receiver or trustee for it or its assets, the commencement of any proceeding under any bankruptcy
or insolvency laws by or against Business, or any proceeding for the dissolution or liquidation, settlement of claims against or winding
up of its affairs that if commenced by a third party is not dismissed within sixty (60) days of filing; (k) the attempted termination
or withdrawal of any guaranty executed by any person in respect to Business’ Obligations; (l) Business fails to pay when due any
tax imposed on it except where there is a bona fide, good faith dispute and the Business has set aside a reserve in the amount of such
tax, or any tax lien is filed against Business or any of its assets; (m) any judgment against Business remains unpaid, or has not been
stayed on appeal, discharged, bonded or dismissed, for a period of 30 days; (n) Business discontinues its business as a going concern;
or (o) Financial Institution, in good faith, believes the prospect of Business’ payment or performance of its Obligations has been
impaired.
9.2
Effect of Default. Upon the occurrence of any Event of Default, Business irrevocably authorizes Financial Institution at Business’
expense, to exercise at any time any one or more of the following powers until all of the Obligations have been paid in full:
9.2.1
Receive, take, endorse, assign, deliver, accept and deposit, in the name of Financial Institution or Business, any and all proceeds
of any Collateral securing the Obligations or the proceeds thereof;
9.2.2
Take or bring, in the name of Financial Institution or Business, all steps, actions, suits or proceedings deemed by Financial Institution
necessary or desirable to effect collection of or other realization upon Financial Institution’s Accounts;
9.2.3
Pay any sums necessary to discharge any lien or encumbrance which may become senior to Financial Institution’s security interest
in any Collateral, which sums shall be included as Obligations hereunder, and in connection with which sums a late charge shall accrue
and shall be due and payable;
9.2.4
Communicate directly with Business’ Customers to, among other things, verify the amount and validity of any Account created
by Business;
9.2.5
In order to satisfy any of the Obligations, Business authorizes Financial Institution to initiate electronic debit or credit entries
through the ACH system to any deposit account maintained by Business.
9.2.6
Change the address for delivery of mail to Business and to receive and open mail addressed to Business;
9.2.7
Notify any Customer obligated with respect to any Account, that the underlying Account has been assigned to Financial Institution
by Business and that payment thereof is to be made to the order of and directly and solely to Financial Institution;
9.2.8
Extend the time of payment of, compromise or settle for cash, credit, return of merchandise, and upon any terms or conditions, any
and all Accounts and discharge or release any Customer (including filing of any public record releasing any lien granted to Business
by such account debtor), without affecting any of the Obligations.
9.2.9
Financial Institution shall be entitled to any form of equitable relief that may be appropriate without having to establish any inadequate
remedy at law or other grounds other than to establish that its Collateral is subject to being improperly used, moved, dissipated or
withheld from Financial Institution. Financial Institution shall be entitled to freeze, debit and/or effect a set-off against any fund
or account Business may maintain with any Financial Institution and so notify such financial institution without regard to any draft
that may have been issued and have not cleared. In the event as a result of an Event of Default, Financial Institution deems it necessary
to seek equitable relief, including, but not limited to, injunctive or receivership remedies, Business waives any requirement that Financial
Institution post or otherwise obtain or procure any bond. Alternatively, in the event Financial Institution, in its sole and exclusive
discretion, desires to procure and post a bond, Financial Institution may procure and file with the court a bond in an amount up to and
not greater than $10,000.00 notwithstanding any common or statutory law requirement to the contrary. Upon Financial Institution’s
posting of such bond it shall be entitled to all benefits as if such bond was posted in compliance with state law. Business also waives
any right it may be entitled to, including an award of attorney’s fees or costs, in the event any equitable relief sought by and
awarded to Financial Institution is thereafter, for whatever reason(s), vacated, dissolved or reversed. All post-judgment interest shall
bear interest at either the contract rate or such higher rate as may be allowed by law.
9.2.10
All of Business’ rights of access to any online, internet services that Financial Institution makes available to Business,
shall be provisional pending Business’ curing of all such Events of Default. During such period of time, Financial Institution
may limit or terminate Business’ access to Financial Institution’s online services. Business acknowledges that the information
Financial Institution makes available to Business constitutes and satisfies any duty to respond to a Request for an Accounting or Request
regarding a Statement of Account that is referenced in § 9-210 of the UCC.
9.2.11
The Parties acknowledge that it shall be presumed commercially reasonable and Financial Institution shall have no duty to undertake
to collect any Account or Purchased Account including those in which Financial Institution receives information from an Account Debtor
that a Dispute exists. Furthermore, in the event Financial Institution undertakes to collect from or enforce an Obligation of an Account
Debtor or other person obligated on Collateral and ascertains that the possibility of collection is outweighed by the likely costs and
expenses that will be incurred, Financial Institution may at any such time cease any further collection efforts and such action shall
be considered commercially reasonable. Before Business may, under any circumstances, seek to hold Financial Institution responsible for
taking any uncommercially reasonable action, Business shall be required to first notify Financial Institution, in writing, of all reasons
why Business believes Financial Institution has acted in any uncommercially reasonable manner and advise Financial Institution of the
action that Business believes Financial Institution should take.
SECTION
10: NON-LIABILITY OF FINANCIAL INSTITUTION; RELEASE; INDEMNITY; WAIVER
10.1
Except for a breach by Financial Institution of this Agreement, Business releases, discharges, and acquits Financial Institution,
its officers, directors, employees, participants, agents, successors and assigns from any and all claims, demands, losses, and liability
of any nature which Business ever had, now or later can, will or may have in connection with, or arising out of, the transactions described
in this Agreement and the documentation thereof. Financial Institution will not be liable for any indirect, special or consequential
damages, such as loss of anticipated revenues or other economic loss in connection with, or arising out of, any default in performance
or other matter arising under this Agreement. Nor will Financial Institution be liable for any errors of judgment or mistake of fact
when acting as Business’ attorney-in-fact, pursuant to Section 7, or liable for delay in the performance of Financial Institution’s
duties caused by strike, lawsuit, riot, civil disturbance, fire, shortage of supplies or materials, or any other cause reasonably beyond
Financial Institution’s control. Business indemnifies and holds Financial Institution, its officers, directors, employees, participants,
agents, successors and assigns harmless from (and will pay all reasonable attorneys’ fees with respect to) any loss or claim involving
breach of warranty or representation by Business, any claim or liability sustained by virtue of acting in reliance upon data or information
furnished by Business to Financial Institution, and any loss or claim by any Customer relating to goods and/or services (or the manner
or type of their sale or provision) giving rise to Accounts purchased by Financial Institution hereunder. IF ANY FORM OF LITIGATION IS
INSTITUTED BY BUSINESS AGAINST FINANCIAL INSTITUTION FOR VIOLATION OF THIS AGREEMENT, OR ANY WRONGFUL CONDUCT ASSOCIATED WITH THIS AGREEMENT,
BUSINESS HEREBY EXPRESSLY WAIVES ITS RIGHT TO A JURY TRIAL. BUSINESS FURTHER AGREES THAT ITS DAMAGES WILL BE LIMITED, IN ANY CASE, TO
THE AMOUNT OF THE SERVICE CHARGE PAID BY BUSINESS TO FINANCIAL INSTITUTION DURING THE PRECEDING TWELVE (12) MONTH PERIOD.
SECTION
11: EFFECTIVE DATE; TERMINATION; BINDING EFFECT
11.1
This Agreement will be effective when accepted by Financial Institution, and will continue in full force and effect until the earlier
of: (a) one year after the effective date of this Agreement, or (b) sixty (60) days after written notice of termination has been given
by one party to the other (in each case subject to immediate termination upon a Default); and the term of this Agreement will automatically
be extended for periods of one year each following its otherwise scheduled termination, subject to Section 9.2 above, and to the parties’
rights to terminate this Agreement under clause (b) of this Section 11.1.
11.2
Upon termination of this Agreement, Business will pay all of its Obligations to Financial Institution, and in any event, Business
will remain liable to Financial Institution for any deficiency remaining after liquidation of any Collateral. Financial Institution may
withhold any payment to Business unless supplied with an indemnity satisfactory to Financial Institution. This Agreement will bind Business
and Business’ successors and assigns and will inure to the benefit of Financial Institution and Financial Institution’s successors
and assigns. Business agrees that Financial Institution may assign this Agreement or delegate its duties under this Agreement, but that
Business may not do so without Financial Institution’s prior written approval.
11.3
In recognition of Financial Institution’s right to have its attorneys’ fees and other expenses incurred in connection
with this Agreement secured by the Collateral, notwithstanding payment in full of all Obligations by Business, Financial Institution
shall not be required to record any terminations or satisfaction of Financial Institution’s security interest in the Collateral
or its ownership interest in the Purchased Accounts unless and until Complete Termination has occurred. Business understands that this
provision constitutes a waiver of its rights under § 9-513 of the UCC.
SECTION
12: ATTORNEY’S FEES; PAST-DUE OBLIGATIONS; WAIVER; SEVERABILITY; HEADINGS; ENTIRE AND CONTROLLING AGREEMENT; NOTICES; COUNTERPARTS;
SAVINGS AND MISCELLANEOUS PROVISIONS
12.1
Business will pay all reasonable expenses incurred by Financial Institution in connection with the execution of this Agreement, including
expenses incurred in connection with the filing of financing statements, continuation statements and record searches. All past-due Obligations
of Business arising under this Agreement will bear interest at the maximum nonusurious rate permitted under applicable state or federal
law. Business hereby waives grace, demand (other than demand pursuant to Section 3.2 hereof), presentment for payment, notice of dishonor
or default, notice of intent to accelerate, notice of acceleration, protest and notice of protest, and bringing of suit against Business.
Upon liquidation of any Collateral, settlement or prosecution of a dispute with any Customer, or enforcement of any Obligations of Business
under this Agreement, Business will pay to Financial Institution, and Financial Institution may charge to Business’ account, all
costs and expenses incurred, including reasonable attorneys’ fees, and such costs, expenses and fees will constitute part of Business’
Obligations. No delay or failure on Financial Institution’s part in exercising any right, privilege, or option will operate as
a waiver of such, or of any other right, privilege, or option, and no waiver, amendment or modification of any provision of this Agreement
will be valid unless in writing signed by Financial Institution, and then only to the extent stated. Should any provision of this Agreement
be prohibited by or invalid under applicable law, the validity of the remaining provisions will not be affected. The section headings
are for convenience only, and will not define or limit the scope, extent, meaning or intent of this Agreement. This Agreement embodies
Business’ entire agreement as to its affiliation with Financial Institution’s BusinessManager program, although Business
anticipates that Financial Institution will subsequently outline certain depository and other Financial Institution procedures. In the
event of any inconsistency between this Agreement and any other agreement signed by Business and Financial Institution in connection
with this Agreement, including but not limited to, any Additional Security Documents, the terms and provisions of this Agreement will
control, and the terms and provisions of any such other document will be ineffective to the extent of any such inconsistency. Any notice,
request or demand to be given will be deemed given when deposited with a delivery service addressed to, or sent by registered or certified
mail to, the address of the recipient listed at the beginning of this Agreement or to subsequent addresses which have been properly noticed
to the other party. This Agreement may be executed in multiple counterparts, which when taken together, will constitute one and the same
Agreement.
12.2
The parties acknowledge that the transactions contemplated by this Agreement are account purchase transactions; however, if they
should ever be recharacterized by any court, nothing contained in this Agreement or in any Additional Security Documents will be construed,
or will operate in any event, so as to require Business to pay interest at a rate greater than the highest lawful rate of interest permitted
by the laws then in force and governing this Agreement. In no event, whether by reason of acceleration of the maturity of the Obligations
due or otherwise, will Service Charges contracted for, charged, received, paid or agreed to be paid to Financial Institution, exceed
the maximum amount permissible under applicable law. If, from any circumstance whatsoever, Service Charges would otherwise be payable
to Financial Institution in excess of the maximum lawful amount, the Service Charges will be reduced to the maximum amount permitted
under applicable law, and if from any circumstance Financial Institution will have received anything of value deemed interest by applicable
law in excess of the maximum lawful amount, an amount equal to any excess will be applied to the reduction of the principal amount of
Obligations and not to the payment of Service Charges. If such excess interest exceeds the unpaid balance of the principal amount of
Obligations, such excess will be refunded to Business. All Service Charges paid or agreed to be paid to Financial Institution, to the
extent permitted by applicable law, will be amortized, prorated, allocated and spread throughout the full term of the Agreement until
payment in full of all principal Obligations owing by Business, so that the Service Charges for such full term will not exceed the maximum
amount permitted by applicable law.
12.3
This Agreement shall be deemed to be one of financial accommodation and not assumable by Business as debtor or debtor-in-possession,
or any trustee in any bankruptcy proceeding without Financial Institution’s express written consent and may be suspended in the
event a petition in bankruptcy is filed by or against Business.
12.4
In the event Business’ principals, officers or directors, directly or indirectly, form a new entity, whether corporate, partnership,
limited liability company or otherwise, similar to that of Business during the term of this Agreement, such newly formed entity shall
be deemed to have expressly assumed the Obligations due Financial Institution by Business under this Agreement. Upon the formation of
any such newly formed entity, Financial Institution shall be deemed to have been granted an irrevocable power of attorney with authority
to execute, on behalf of the newly formed entity, one or more financing statements and have each filed with the appropriate secretary
of state or UCC filing office. Financial Institution shall be held-harmless and be relieved of any liability statement or the resulting
perfection of a security interest in any of the newly formed entity’s assets. In addition, Financial Institution shall have the
right to notify the new formed entity’s account debtors of Financial Institution’s security interest rights, its right to
collect all Accounts, and to notify any new factor or lender who has sought to procure a competing lien of Financial Institution’s
rights in such newly formed entity’s assets.
12.5
Business’ principal(s) acknowledge that the duty to accurately complete each form of Exhibit A transmitted to Financial Institution
is critical to this Agreement and as such all Obligations with respect thereto are non-delegable. Each of Business’ principal(s)
acknowledge that he/she shall remain fully responsible for the accuracy of each form of Exhibit A transmitted to Financial Institution
regardless of who is delegated the responsibility to prepare and/or complete such Exhibit A.
12.6
Business shall fully complete and execute, as taxpayer, prior to or immediately upon the execution of this Agreement, IRS Form 8821
supplied by the Department of the Treasury, Internal Revenue Service or such other forms as may be requested by Financial Institution,
irrevocably authorizing Financial Institution to inspect or receive tax information relating to any type of tax, tax form, years or periods
or otherwise desired by Financial Institution on an ongoing basis.
12.7
Business will cooperate with Financial Institution in obtaining a control agreement in form and substance satisfactory to Financial
Institution with respect to Collateral consisting of a Deposit Account, if such Deposit Account is maintained with any financial institution
besides Financial Institution.
12.8
As to any Account proceeds that do not represent payment of any Purchased Accounts and notwithstanding Financial Institution’s
security interest therein, so long as Business has not committed an Event of Default, Financial Institution shall be deemed to have received
such proceeds of Accounts as a pure pass-through for and on account of Business unless Financial Institution asserts any rights to such
proceeds as is authorized by this Agreement.
12.9
Any claim or cause of action that Business may have or seek to assert against Financial Institution, whether predicated on this Agreement
or otherwise, shall neither constitute a defense nor serve as any basis to excuse non-performance of the Business’ duty to hold
in trust and turn over all proceeds of Accounts to Financial Institution as provided in Section 2.5.4. Business’ duties and Obligations
contained herein shall at all times be deemed independent covenants such that Business’ duty to honor the provisions of this Section
may at no time be excused or otherwise adversely affected due to, inter alia, any breach that Business may assert against Financial
Institution.
12.10
Any claim, dispute or controversy arising out of or relating to this Agreement must be brought in Business’ individual capacity
and not as a plaintiff or class member in any purported class, collective, representative, multiple plaintiff, or similar proceeding
(collectively, “Class Action”). Accordingly, Business expressly waives any right in respect to any such claim, dispute or
controversy to initiate, join or maintain any Class Action in any form.
12.11
In the event this Agreement is duly terminated in accordance with section 11, and for whatever reason, after such termination, any
claim in connection with, related to or arising under this Agreement is asserted or made against Financial Institution by any person,
including Business, Financial Institution shall be entitled to treat all protections afforded to Financial Institution under this Agreement
as revived, including, but not limited to, the protections contained in sections 4, 8 and 12.1.
SECTION
13: ACKNOWLEDGMENT
THE
UNDERSIGNED ACKNOWLEDGES THAT THIS AGREEMENT CONTAINS A RELEASE OF CLAIMS AND WAIVERS OF CERTAIN RIGHTS, AND THAT THIS AGREEMENT HAS
BEEN FULLY UNDERSTOOD PRIOR TO EXECUTION. BUSINESS FURTHER REPRESENTS AND WARRANTS THAT IT HAS HAD THE OPPORTUNITY TO CONSULT WITH ITS
OWN LEGAL COUNSEL REGARDING THIS AGREEMENT AND ITS FULL LEGAL EFFECT, AND THAT IT IS NOT RELYING UPON ANY ORAL REPRESENTATIONS ON THE
PART OF FINANCIAL INSTITUTION, ITS EMPLOYEES OR AGENTS IN ENTERING INTO THIS AGREEMENT.
SECTION
14: GENERAL RELEASE
Business
agrees that pursuant to section 11.3, the following release language shall be effective upon the termination of this Agreement and Financial
Institution shall have the right, but not the obligation, to require Business to reaffirm and acknowledge the effectiveness of this release
at the time of termination pursuant to section 11:
FOR
GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which are hereby acknowledged, the undersigned and each of them (collectively
“Releasor”) hereby forever releases, discharges and acquits Vast Bank, National Association (“Releasee”),
its parent, directors, shareholders, agents and employees, of and from any and all claims of every type, kind, nature, description or
character, and irrespective of how, why, or by reason of what facts, whether heretofore existing, now existing or hereafter arising,
or which could, might, or may be claimed to exist, of whatever kind or name, whether known or unknown, suspected or unsuspected, liquidated
or unliquidated, each as though fully set forth herein at length, to the extent that they arise out of or are in any way connected to
or are related to this Business Manager Agreement with Businesses and Professionals.
Releasor
agrees that the matters released herein are not limited to matters which are known or disclosed, and the Releasor waives any and all
rights and benefits which it now has, or in the future may have.
Releasor
acknowledges that factual matters now unknown to it may have given or may hereafter give rise to claims which are presently unknown,
unanticipated and unsuspected, and it acknowledges that this Release has been negotiated and agreed upon in light of that realization
and that it nevertheless hereby intends to release, discharge and acquit the Releasee from any such unknown claims.
Acceptance
of this Release shall not be deemed or construed as an admission of liability by any party released.
Releasor
acknowledges that either (a) it has had advice of counsel of its own choosing in negotiations for and the preparation of this release,
or (b) it has knowingly determined that such advice is not needed.
SECTION 15: SPECIAL STIPULATIONS
BUSINESS:
SUPERIOR
DRILLING PRODUCTS, INC., |
|
a
Utah corporation |
|
|
|
By: |
/s/
G. Troy Meier |
|
|
G.
Troy Meier, Chief Executive Officer |
|
SIGNATURE
PAGE
BUSINESSMANAGER®
AGREEMENT
ACCEPTANCE: |
|
|
|
This
Agreement is accepted this 28th day of July, 2023. |
|
|
|
VAST
BANK, NATIONAL ASSOCIATION: |
|
|
|
|
By:
|
/s/
Rex Berg |
|
|
Rex
Berg, Vice President, Commercial Lending |
|
This
BusinessManager® Agreement with Businesses and Professionals has been prepared by the law firm of Ullman & Ullman,
P.A. located at 150 East Palmetto Park Road, Boca Raton, Fl. and if you have any questions, you may contact either Michael W. Ullman
or Jared A. Ullman at 561-338-3535.
2015
Jack Henry & Associates, Inc. All Rights Reserved. BusinessManager® is a registered trademark of Jack Henry &
Associates, Inc. 06/2015
SIGNATURE
PAGE
BUSINESSMANAGER®
AGREEMENT
Exhibit
10.5
BUSINESSMANAGER®
AGREEMENT
WITH
BUSINESSES AND PROFESSIONALS (Variable Service Charge)
TO: |
Vast
Bank, National Association |
|
FROM: |
Superior
Drilling Products, Inc. |
|
110
N. Elgin, Suite 500 |
|
|
1583
S. 1700 East |
|
Tulsa,
OK 74120 |
|
|
Vernal,
UT 84078 |
|
(the
“Financial Institution”) |
|
|
(the
“Business”) |
This
BusinessManager® Agreement with Businesses and Professionals (“Agreement”) is between Financial Institution and Business
and is intended to govern Business’ sale of Accounts, as defined below, to Financial Institution which Accounts arise from the
sale of goods or provision of services to Business’ Customers and which Accounts Financial Institution may purchase pursuant to
the terms of the Agreement. The accepted terms are as follows:
SECTION
1: DEFINITIONS
1.1
“Accounts” means a right to payment of a monetary Obligation, whether or not earned by performance, (i) for property
that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, or (ii) for services rendered or to be rendered.
The term Account shall include all obligations owing for what is commonly referred to as a receivable.
1.2
“Additional Security Documents” means as that term is described in section 4.3.
1.3
“Basis Point” means 1/100th of 1 percent. For example, 1 basis point is equal to 0.01% or 0.0001.
1.4
“Business Judgment” means, in connection with decisions made by Financial Institution, the exercise of such decisions
in Financial Institution’s sole and exclusive business judgment and discretion.
1.5
“Change in Control” means an event or series of events by which: (a) any “person” or “group”
(as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) shall become, or obtain rights (whether by
means or warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934), directly or indirectly, of a majority of the stock of Business entitled to vote for members of the
board of directors or equivalent governing body of Business on a fully-diluted basis (and taking into account all such securities that
such person or group has the right to acquire pursuant to any option right); or (b) during any period of twelve (12) consecutive months,
a majority of the members of the board of directors or other equivalent governing body of Business cease to be composed of individuals
(i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to
that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board
or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of
such election or nomination at least a majority of that board or equivalent governing body; or (c) Business shall cease to own and control,
of record and beneficially, directly or indirectly, 100% of each class of outstanding membership interests and other equity interests
of each subsidiary of Business, free and clear of all liens (except liens in favor of Financial Institution).
1.6
“Collateral” means all of Business’s now owned and hereafter acquired Accounts, Chattel Paper, Deposit Accounts,
Inventory, Instruments, Documents, Letter of Credit Rights, Commercial Tort Claims, General Intangibles, Supporting Obligations and the
Reserve and Reserve Account.
1.7
“Complete Termination” occurs upon satisfaction of the following conditions:
1.7.1
Payment in full of all Obligations of Business to Financial Institution and Financial Institution’s issuance of a UCC termination
statement;
1.7.2
If Financial Institution has issued or caused to be issued guarantees, promises, or letters of credit on behalf of Business, acknowledgement
from any beneficiaries thereof that Financial Institution or any other issuer has no outstanding direct or contingent liability therein;
and
1.7.3
Business has executed and delivered to Financial Institution a general release in Section 14 of this document.
1.8
“Credit Application” means any Credit Application executed by a Business’ Customer.
1.9
“Credit Memo” means a credit memo or similar evidence (whether in written or electronic form) reflecting a deduction
to the Face Amount of a Customer’s account with Business, other than a credit arising from a payment.
1.10
“Customer” means a person obligated to pay one or more Accounts arising from goods sold or services Business rendered
to the Customer, otherwise known as an Account Debtor under the Uniform Commercial Code.
1.11
“Customer Agreement” means any agreement, whether written or verbal, between Business and its Customer evidencing
the terms of a sale of goods or rendition of services giving use to an Account.
1.12
“Dispute” means any form of Customer Agreement dispute, including, but not limited to, a charge back, act to reject
or return goods, alleged deduction, defense, offset, counterclaim or any other act or event in respect to an Account Debtor which may
in any way diminish Financial Institution’s ability to fully or timely collect a Purchased Account, whether or not provable or
bona fide.
1.13
“Exposed Payment(s)” means payments received by Financial Institution from or for the account of a Payor that
has become subject to a bankruptcy proceeding, to the extent such payments cleared the Payor’s deposit account within ninety (90)
days of the commencement of said bankruptcy case.
1.14
“Face Amount” means the outstanding balance of each Account for the price of the sale of goods or provision of
services as reflected on an Invoice evidencing an Account offered for sale to Financial Institution.
1.15
“Invoice” means each invoice or similar evidence (whether in written or electronic form) of the terms of a non-cash
sale of goods or provision of services previously made by Business to a Customer in connection with each Account.
1.16
“Net Amount” of an Account means the Face Amount of an Account less the Service Charge.
1.17
“Obligations” means all of Business’ monetary and non-monetary Obligations to Financial Institution, whether
pursuant to this Agreement, under any note, contract, guaranty, accommodation or otherwise, however and whenever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or later existing or due.
1.18
“Posting Date” means the day that the Account is purchased by the Financial Institution
1.19
“Purchased Accounts” means all Accounts purchased by Financial Institution under this Agreement.
1.20
“Purchase Price” means as that term is described in section 2.2.
1.21
“Repurchase Obligations” means the liability of Business to Financial Institution under this Agreement to repurchase
any Purchased Account for an amount, on any date, equal to the unpaid Face Amount, plus (if incurred) attorneys’ fees and accrued
and unpaid finance charges related to such Purchased Accounts. For the purpose of this Section, any Exposed Payments shall be included
as a Repurchase Obligation.
1.22
“Reserve” means whatever amount is maintained by Financial Institution in the Reserve Account that may serve to
secure Business’ Repurchase Obligations or any other monetary obligations under this Agreement.
1.23
“Reserve Account” means an interest bearing Deposit Account maintained by Financial Institution in connection
with all Accounts sold to Financial Institution by Business under this Agreement reflecting an amount that is expected to equal the Reserve
as established pursuant to Section 2.5 of this Agreement.
1.24
“Service Charge” means a discount to the Face Amount of a Purchased Account equal to two percent (2.0 %). The
Service Charge also includes Variable Service Charges for each Account that is purchased by the Financial Institution which is not paid
in full by the end of the Base Period, as further defined in Section 1.25. Business acknowledges that the Service Charge and Variable
Service Charges in no event constitutes interest or a similar charge and that the transactions described in this Agreement are not transactions
for the use, forbearance or detention of money. The Service Charge has been agreed upon by the parties and represents a reasonable and
customary fair market value discount.
1.25
“Variable Service Charge” means the amount charged by the Financial Institution to the Business for each Account
purchased by the Financial Institution, which is not fully paid within the Base Period. After the Base Period, the Business will pay
3.33 Basis Points of the Face Amount of the outstanding Account per day that the Account remains outstanding, until the Cap Period expires.
The Variable Service Charge has been agreed upon by the parties and represents a reasonable and customary fair market value discount.
1.26
“Base Period” means the period of time equaling 45 days from the Posting Date of each Account. During this period
of time, the Financial Institution does not assess the Variable Service Charge for that particular Account.
1.27
“Cap Period” means the period of time equaling 180 days from the Posting Date of each Account. After this Cap
Period, the Business will no longer be charged a Variable Service Charge for that particular Account.
Unless
the context otherwise requires, all capitalized terms used but not defined herein shall have the meaning set forth in the Uniform Commercial
Code (“UCC”).
SECTION
2: SALE; PURCHASE PRICE; BILLING; RESERVE
2.1
Assignment and Sale.
2.1.1
Financial Institution hereby agrees to evaluate for purchase from Business and Business hereby irrevocably agrees to offer to assign
and sell to Financial Institution, as absolute owner, Business’ entire interest in that portion of its currently outstanding Accounts
as are detailed in the attached Exhibit A to this Agreement. In addition, (a) Business will offer for sale all of its hereafter created
future Accounts as to which the account debtor is any of Schlumberger Oman & Company LLC, CGX Resources Inc., or Weatherford US,
LP and the applicable goods or services were provided at locations outside the United States of America, evidenced by Invoices that Business
will simultaneously deliver to the applicable account debtor and Financial Institution (by email bcc or otherwise) in support of such
future Accounts and (b) Business may offer for sale other Accounts arising from goods and/or services provided at locations outside the
United States of America, and Financial Institution may separately agree to include such Accounts in its sole discretion, on an invoice
by invoice basis.
2.1.2
Business acknowledges that its currently outstanding Accounts listed on Exhibit A are not now, nor have they ever been declared to
be, in default.
2.1.3 Business
and Financial Institution each acknowledge and agree that in connection with each Account offered to Financial Institution for sale
that: (a) Business will submit to Financial Institution for Financial Institution’s determination as to the eligibility of the
Accounts, all Invoices evidencing the terms underlying each Account; (b) the transactions contemplated by this Agreement are account
purchase transactions; (c) the Accounts shall at all times be purchased by Financial Institution from Business at a discount in
accordance with the Service Charge; (d) the purchase and sale of the Accounts shall vest absolute right, title and ownership of
such Purchased Accounts together with all benefits of ownership; and (e) Business has no right and may not seek to require Financial
Institution to authorize Business to reacquire, redeem, or otherwise re-vest title to any Purchased Accounts or any proceeds
thereof. If Business commits any Event of Default, then during the continuance thereof, the Financial Institution may verify any
desired information in connection with Purchased Accounts with Customers. In connection with the sale and assignment of Purchased
Accounts, Financial Institution shall become subrogated to all of Business’ rights as an unpaid vendor, lienholder, all of its
related rights of stoppage in transit, replevin and reclamation, and rights against third parties (all of which will constitute part
of the Purchased Accounts) and Business agrees to cooperate with Financial Institution in its exercise of these rights.
2.1.4
The total outstanding Face Amount of Purchased Accounts by Financial Institution will never exceed $2,000,000.00, unless agreed to
by Financial Institution which decision will be in Financial Institution’s Business Judgment.
2.1.5
Business agrees to execute and deliver such further instruments, documents and endorsements to or for the benefit of Financial Institution
as may be necessary to accomplish the sale and purchase described herein and to carry out the purposes of this Agreement.
2.2
Purchase Price. The Purchase Price payable for Purchased Accounts will be equal to the Net Amount and payment of the Purchase
Price, less the Reserve, shall be paid to Business on or before the next banking day after delivery of the Invoices evidencing the Accounts
offered to Financial Institution, unless in Financial Institution’s Business Judgment it requires additional time for evaluation.
2.3 Variable
Service Charge. For each account not paid in full during the Base Period, the Business will be charged the Variable
Service Charge until the Cap Period for each Account expires. The Variable Service Charge will be due and payable from the Business
at the end of each month, as determined by the Financial Institution in their sole discretion. The Financial Institution will debit
the amount of the Variable Service Charge against the Business’ deposit account with the Financial Institution or at the
Financial Institution’s sole discretion, the Business’ Reserve Account.
2.4
Documentation.
2.4.1
In respect to all Accounts offered for sale, Business will provide Financial Institution with any Credit Applications, Customer Agreements,
Invoices, payment information and, if applicable, Credit Memos related to all sales of goods and rendition of services, and such other
documents and proof of delivery of goods or rendering of services as Financial Institution may reasonably require. As to the currently
outstanding Accounts described on Exhibit A that become Purchased Accounts, payment of the Purchase Price by Financial Institution will
be conclusive evidence of their assignment and sale to Financial Institution.
2.5
Billing.
2.5.1
All Customers will be instructed by Business (and if not so instructed by Business, then by the Financial Institution on behalf of
Business) to make payments to, at the sole discretion of Financial Institution, a post office box or electronic lockbox controlled exclusively
by Financial Institution or through Automatic Clearing House (“ACH”) credit entries.
2.5.2
All payments received from or for the account of a Customer will be applied to the Obligations of that Customer and payment will
be deemed made upon receipt by Financial Institution.
2.5.3
All variations, modifications or extensions of indebtedness on Purchased Accounts under this Agreement may only be negotiated and/or
authorized by Financial Institution.
2.5.4
Nothing in this Agreement authorizes Business nor may Business seek to collect Purchased Accounts sold to Financial Institution.
If Business receives payment on any Purchased Account (or any Accounts upon an Event of Default), it will receive those payments in trust
for Financial Institution and will remit such payments, if made by Negotiable Instrument, in kind, to Financial Institution; or, if made
electronically, will remit an amount equal to the amount of all funds received, both of which shall be completed by no later than three
business days.
2.6
Reserve. Financial Institution will be entitled to create and maintain from the Purchase Price payments payable to Business,
a Reserve in an amount which Financial Institution may adjust from time to time in its Business Judgment, to provide security for Business’
Repurchase Obligations as described in section 3 below. The Reserve will be held in a separate interest-bearing account for the benefit
of the Financial Institution. The Reserve will be maintained in this account which, if not necessary for use by Financial Institution
for Business’ Repurchase Obligations or as otherwise contemplated by this Agreement, will be available to Business upon a Complete
Termination.
2.6.1
The amount of the Reserve in connection with the currently outstanding Accounts will be calculated to equal the sum of a., b., c.,
and d. below:
|
a. |
40%
of the Face Amount of all Purchased Accounts initially purchased by Financial Institution that are less than 61 days from invoice
date or less than 31 days past due; |
|
|
|
|
b. |
40%
of the Face Amount of all Purchased Accounts initially purchased by Financial Institution that are between 61 and 120 days from invoice
date or between 31 and 90 days past due; |
|
|
|
|
c. |
60%
of the Face Amount of all Purchased Accounts initially purchased by Financial Institution that are between 121 and 180 days from
invoice date or between 91 and 150 days past due; |
|
|
|
|
d. |
if
Financial Institution elects to purchase such Accounts, 100% of the Face Amount of all Purchased Accounts initially purchased by
Financial Institution that are greater than 180 days from invoice date or greater than 150 days past due. |
2.6.2
Thereafter, and subject to Financial Institution’s right to adjust the Reserve in its Business Judgment, Financial Institution
will establish as a Reserve in the Reserve Account 40% of the Face Amount of all new Purchased Accounts subsequent to its initial purchase
of the Purchased Accounts. Financial Institution may require the minimum amount of Reserve, after deduction for required repurchases,
to be equal to the sum of e., f., and g. below:
|
e. |
40%
of the Face Amount of all outstanding Purchased Accounts that are less than 61 days from invoice date or less than 31 days past due; |
|
|
|
|
f. |
40%
of the Face Amount of all outstanding Purchased Accounts that are between 61 and 120 days from invoice date or between 31 and 90
days past due; |
|
|
|
|
g. |
60%
of the Face Amount of all outstanding Purchased Accounts that are between 121 and 180 days from invoice date or between 91 and 150
days past due. |
2.7
Exposed Payments. Upon termination of this Agreement, Business shall pay to Financial Institution (or Financial Institution
may retain or hold in the Reserve Account) the amount of all Exposed Payments. Financial Institution may charge the Reserve Account with
the amount of any Exposed Payments that Financial Institution may become obligated to pay to a bankruptcy estate of a Customer that made
the Exposed Payment to Financial Institution, on account of a claim asserted under Section 547 of Bankruptcy Code. Financial Institution
shall pay to Business from time to time that balance of the Reserve Account for which a claim under Section 547 of Bankruptcy Code can
no longer be asserted due to the passage of the statute of limitations, settlement with bankruptcy estate of the Customer or otherwise.
Business shall indemnify Financial Institution from any loss arising out of the assertion of any Avoidance Claim and shall pay to Financial
Institution on demand the amount thereof. Business shall notify Financial Institution within two business days of it becoming aware of
the assertion of an Exposed Payment. This provision shall survive termination of this Agreement.
2.8
Account Stated.
2.8.1
Financial Institution, in its Business Judgment, may either provide Business with information on the Purchased Accounts and a monthly
reconciliation of the relationship relating to billing, collection and account maintenance such as aging, posting, error resolution and
mailing of statements or may instead make such information available electronically through an internet website. Either of the foregoing
shall be in a format and in such detail as Financial Institution deems appropriate.
2.8.2
Financial Institution’s books and records or all electronically stored information shall be admissible in evidence without
objection as prima facie evidence of the status of the Purchased Accounts, non-purchased Accounts and Reserve Account between Financial
Institution and Business. Each statement, report, or accounting rendered or issued by Financial Institution to Business and all electronically
stored information shall be deemed conclusively accurate and binding on Business unless within thirty (30) days after the date of issuance
or, in the case of electronically stored information, the first of each month, Business notifies Financial Institution to the contrary
by registered or certified mail, setting forth with specificity the reasons why Business believes such statement, report, or accounting
or electronically stored information is inaccurate, as well as what Business believes to be correct. Business’ failure to receive
any monthly statement or access the electronically stored information shall not relieve it of the responsibility to request such information
and Business’ failure to do so shall nonetheless bind Business to whatever Financial Institution’s records or electronically
stored information report.
SECTION
3: REPURCHASE OF PURCHASED ACCOUNTS
3.1
Required Repurchase. With respect to any Purchased Accounts initially purchased by Financial Institution, Financial Institution
may require Business to repurchase all or any portion of such Purchased Accounts owed by any particular Customer if any minimum payment
due on one or more of such Purchased Accounts remains unpaid following 180 days after its invoice date. With respect to any Purchased
Accounts purchased after Financial Institution’s initial purchase, Financial Institution may require Business to repurchase all
or any portion of such Purchased Accounts owed by any particular Customer if any minimum payment due on one or more of such Purchased
Accounts remains unpaid following 180 days after its invoice date. For purposes of this Agreement, the aging status of Purchased Accounts
purchased from Business, as shown on the aging report of Purchased Accounts produced or generated by Financial Institution, will be deemed
conclusive (absent manifest error) in determining which Purchased Accounts Financial Institution may require Business to repurchase.
Regardless of when purchased, Financial Institution may require Business to repurchase all or any portion of such Purchased Accounts
from any particular Customer if such Customer is bankrupt or insolvent, or if any Dispute arises with a Customer regarding such Purchased
Accounts. Financial Institution may require Business to repurchase any or all outstanding Purchased Accounts (a) upon a Default, as defined
in Section 9, or (b) upon the termination of this Agreement. Any decision by Financial Institution to require repurchase of less than
the maximum amount permitted by this Agreement will not be deemed a waiver of Financial Institution’s rights to require such repurchase
to the maximum extent permitted in this Agreement.
3.2
Effecting Repurchase. Should Financial Institution require repurchase of one or more Purchased Accounts, Business will be
liable to Financial Institution for payment of the Repurchase Obligation with respect to such Purchased Accounts. Upon an event of Default
or termination under this Agreement, the Repurchase Obligation will also include the amount of all indemnities and other Obligations
of Business arising under this Agreement. Without notice to or demand on Business, Financial Institution may debit the amount of such
Repurchase Obligation (and any amount necessary to bring the Reserve to a level as may be required by Financial Institution in its Business
Judgment) against Business’ Reserve Account, or any deposit account of Business maintained with Financial Institution. Business
agrees to and irrevocably waives any right to withdraw Financial Institution’s authority, block or otherwise seek to preclude or
interfere with the debit authority provided herein until section 11.3 is fully satisfied. In the event any deposit account contains insufficient
funds for Financial Institution’s debit, or Financial Institution elects not to make such debit, Business agrees to pay any such
deficiency or shortfalls on demand. Financial Institution will have no duty to bill or collect any Repurchased Accounts although such
accounts shall continue to serve as Financial Institution’s Collateral.
SECTION
4: SECURITY INTEREST.
4.1
In order to secure Business’ performance of all Obligations under this Agreement and any other agreement that may now or hereafter
be entered into between Business and Financial Institution, Business grants to Financial Institution a continuing first priority ownership
interest in the Purchased Accounts and first priority security interest in the Collateral. The priority rights granted by this section
are designed to provide Financial Institution with sole rights of enforcement insofar as the collection of all Accounts.
4.2
Notwithstanding the creation of this security interest, it is the express intention of the parties that their relationship shall
be that of seller and purchaser of Purchased Accounts and once acquired by Financial Institution, Business shall no longer have any rights
or title to any Purchased Account pursuant to § 9-318(a) of the UCC.
4.3
Business agrees to execute such additional documents and take such further action as Financial Institution may deem necessary or
desirable in order to perfect the security interest granted herein and otherwise to effectuate the purposes of the Agreement. In the
event that Financial Institution requires additional security for Business’ Obligations under this Agreement, and Business or other
party executes additional security agreements, pledge agreements, guaranties and documents of similar significance (collectively, the
“Additional Security Documents”), terms used therein such as, but not limited to, “loans,” “indebtedness,”
and “obligations,” will be deemed to include the Repurchase Obligations. Despite the provisions of the Additional Security
Documents, the Repurchase Obligations secured by those documents will not constitute a loan.
4.4
Financial Institution is authorized to have filed any initial financing statements and amendments thereto that: indicate the Collateral
as “all assets” of Business or words of similar effect, regardless of whether any particular asset comprising the Collateral
falls within the scope of Article 9 of the UCC, or as being of an equal or lesser scope or with greater detail; contain any other information
required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including:
(i) whether Business is an organization, the type of organization, and any organization identification number issued to Financial Institution
and, (ii) in the case of a financing statement filed as a fixture filing or indicating Collateral as extracted Collateral or timber to
be cut, a sufficient description of real property to which the Collateral relates; and (iii) containing a notification that Business
has granted a negative pledge to Financial Institution and that any subsequent lienor may be tortiously interfering with Financial Institution’s
right and advise third parties that any notification to any of Business’ Account Debtors will interfere with Financial Institution’s
collection rights.
SECTION
5: REPRESENTATIONS, WARRANTIES AND COVENANTS
5.1
Representations and Warranties. Business represents and warrants to Financial Institution that: (a) it is fully authorized
to enter into and perform under this Agreement, and that this Agreement constitutes its legal, valid and binding obligation; (b) Business
is solvent and in good standing in the State of its organization; (c) it is not the present intent of Business to seek protection under
any chapter of Title 11 of the United States Financial Bankruptcy Code or under any state insolvency laws or any statutory Assignment
for the Benefit of Creditor laws; (d) its Accounts are currently and were at the time of their creation, bona fide and existing Obligations
of Customers of Business arising out of its sales of goods or performance of services to independent and not affiliated Customers, free
and clear of all security interests, liens, and claims whatsoever of third parties; (e) the documentation under which the Accounts are
payable authorize the charge and collection of interest at the rate provided in such documentation; (f) all Accounts and all documents
and practices related to them comply with all applicable federal and state laws; (g) the Accounts will be paid by Customers prior to
the date of required repurchase or will be repurchased by Business pursuant to Sections 3.1 and 3.2; (h) the Collateral in which a security
interest is granted in Section 4.1 or in any Additional Security Documents is not subject to any other security interest, lien or encumbrance
whatsoever (except in favor of Financial Institution), and Business will not permit such Collateral to become so encumbered without Financial
Institution’s prior written consent, which consent may be withheld in its Business Judgment; (i) Business’ inventory is not
subject to any security interest, lien or encumbrance whatsoever and Business will not permit its inventory to become so encumbered without
Financial Institution’s prior written consent.
5.2
Covenants.
5.2.1
Business covenants that: (i) it will allow Financial Institution to review and inspect during reasonable business hours, and Business
will supply all financial information, financial records, and documentation on Business, any guarantors, or any Customer, that Financial
Institution may request; (ii) with respect to each Purchased Account as it arises: (a) Business will have made delivery of the goods
and/or will have rendered the services represented by the Invoice, and the goods and/or services will have been accepted; (b) Business
will have preserved and will continue to preserve any liens and any rights to liens available by virtue of the sales and/or services;
(c) the Customer will not be an affiliate of Business (e.g., parent, subsidiary, etc.); (d) Financial Institution’s copy of the
Invoice will be genuine and will comply with this Agreement; (e) Business will have no knowledge of any Dispute that may impair the validity
of the transaction or the Customer’s Obligation to pay Purchased Accounts in accordance with the terms; (f) Business will have
the right to render the services and/or to sell the goods creating the Purchased Accounts, and will do so in compliance with all applicable
laws; (g) Business will have paid or provided for the payment of all taxes arising from the transaction in respect to all Purchased Accounts;
(h) the Purchased Accounts will not be subject to any deduction, offset, defense, or counterclaim; and (i) Business will notify Financial
Institution immediately of any upgrades and/or changes to its accounting software; (iii) the transactions described in Section 2.1 are
account purchase transactions, and Business will reflect such transactions in its accounting books and records as absolute sales of Purchased
Accounts to Financial Institution; Business will reimburse and indemnify Financial Institution for all loss, damage and expenses, including
reasonable attorneys’ fees, incurred in defending such transactions as absolute sales of Purchased Accounts, or as a result of
the recharacterization of such transactions; and (iv) in the event of the commencement of any case under any bankruptcy or insolvency
laws by or against Business, Business will not oppose or object and will consent to any motion by Financial Institution seeking relief
from the automatic stay provisions of such laws with respect to the Reserve or the Reserve Account, or to any motion by Financial Institution
with respect to any Purchased Account or the Collateral.
5.2.2
Business shall not, without the prior written consent of Financial Institution in each instance: (a) grant any extension of time
for payment of any Purchased Accounts, (b) compromise or settle any Purchased Accounts for less than the full amount thereof, (c) release
in whole or in part any Customer, or (d) grant any credits, discounts, allowances, deductions, return authorizations or the like with
respect to any Purchased Account.
5.2.3
From time to time as requested by Financial Institution, at the sole expense of Business, Financial Institution or any designees
shall have access, during reasonable business hours if prior to an Event of Default and at any time if on or after an Event of Default,
to all premises where Collateral is located for the purposes of inspecting (and removing, if after the occurrence of an Event of Default)
any of the Collateral, including Business’ books and records, and Business shall permit Financial Institution to make copies of
such books and records or extracts therefrom as Financial Institution may request. Without expense to Financial Institution, Financial
Institution may use any of Business’ business premises, personnel and equipment, including computer equipment, programs, printed
output and computer readable media, supplies for the collection of Accounts and realization on other Collateral as Financial Institution
deems appropriate in its Business Judgment. Business hereby irrevocably authorizes all accountants and third parties, upon written or
verbal request, to promptly disclose and deliver to Financial Institution at Business’ expense all financial information, books
and records, work papers, management reports and other information in their possession relating to Business.
5.2.4
Before sending any Invoice to a Customer, Business shall mark same with a notice of assignment in compliance with 9-406 of the UCC
in the form and manner as may be required by Financial Institution in the event Financial Institution deems it advisable for Business
to do so, Financial Institution deems itself insecure or Business commits any Event of Default and during the continuance thereof.
5.2.5
[Reserved]
SECTION
6: FORMS AND PROCEDURES; RESPONSIBILITY FOR USE
6.1
Forms and Procedures. Business will use only forms and agreements supplied to or approved by Financial Institution in connection
with the Purchased Accounts, and will follow all procedures that are satisfactory to Financial Institution in connection with the use
of such forms and agreements. Financial Institution does not desire to manage or operate Business but to insure that Business is properly
representing the billing terms to its Customers.
6.2
Responsibility for Use. Business shall provide to Financial Institution all information used to create the form of Credit
Application and Customer Agreement and other documentation. Business is solely responsible for the adequacy, completeness, delivery and
accuracy of the raw data relating to the Purchased Accounts, its preparation in the form required by Financial Institution, and its transmission
to Financial Institution. Business understands that these documents should be reviewed by Business’ counsel, as Financial Institution
makes no representation or warranty as to their enforceability in Business’ state or their compliance with applicable federal and
state laws. Financial Institution and Business agree that Financial Institution is the owner of all Accounts purchased by Financial Institution,
and that all activities of Financial Institution in connection with the purchase of Accounts, receipt of payments for the Purchased Accounts,
generation of information, and processing of data, is for the account of Financial Institution’s own affairs, and that the information
generated in connection with those activities is the property of Financial Institution. Financial Institution shall at no time perform
as a collection agency under this Agreement.
SECTION
7: POWER OF ATTORNEY
7.1
Business appoints Financial Institution as its attorney-in-fact for all appropriate purposes under this Agreement including: to receive,
open, and dispose of all mail addressed to Business relating to Accounts; to endorse Business’ name upon any notes, acceptances,
checks, drafts, money orders, and other evidences of payment of Accounts that may come into Financial Institution’s possession,
and to deposit or otherwise handle the same; and to do all other acts and things necessary to carry out the terms of this Agreement.
This power, being coupled with an interest, is irrevocable while any Purchased Account owned by Financial Institution remains unpaid
or any Obligation remains outstanding.
7.2
As permitted by applicable state law, if the Repurchase Obligation is not paid in full after demand, Business authorizes any attorney
to appear for Business in any court of record in the United States, and to confess judgment for such amount as may appear to be unpaid,
together with any allowable fees for collection of the judgment.
SECTION
8: APPLICABLE LAW
This
Agreement will be governed by, construed and enforced according to the laws of the State of Oklahoma.
SECTION
9: DEFAULT
9.1
Events of Default. The following events will constitute a default (an “Event of Default”) under the terms of this
Agreement: (a) Business fails, on demand, to pay any Repurchase Obligations or any other monetary Obligation under this Agreement; (b)
Business fails to perform any non-monetary duty Business owes to Financial Institution under this Agreement that is not cured within
ten (10) days of receipt of written notice of such failure, specifying in reasonable detail the default that is not being performed by
the Business; (c) the Business fails to pay any indebtedness of the Business owed to the Financial Institution according to its terms;
(d) Business breaches the representations set forth in Section 5.1(d) or fails to turn over payments on Purchased Accounts to Financial
Institution, as set out in Section 2.5.4; (e) except for the Obligations described in Sections 9.1(a), and 9.1(b) hereof, Business fails
to perform any Obligation, covenant or liability in connection with this Agreement within ten (10) days after the date that written notice
is given to Business; (f) any warranty, representation or statement whenever made by Business in connection with this Agreement proves
to be false in any material respect when made, or Business fails to disclose to Financial Institution that any such warranty, representation
or statement has become false in any material respect; (e) dissolution or termination of Business if Business is a corporation, partnership,
or other entity, or if Business is an individual, the death or incompetency of such individual; (g) without prior written consent by
Financial Institution, a Change in Control occurs; (h) Business’ insolvency; (i) the institution of any Assignment for the Benefit
of Creditors, the appointment of a receiver or trustee for it or its assets, the commencement of any proceeding under any bankruptcy
or insolvency laws by or against Business, or any proceeding for the dissolution or liquidation, settlement of claims against or winding
up of its affairs that if commenced by a third party is not dismissed within sixty (60) days of filing; (k) the attempted termination
or withdrawal of any guaranty executed by any person in respect to Business’ Obligations; (l) Business fails to pay when due any
tax imposed on it except where there is a bona fide, good faith dispute and the Business has set aside a reserve in the amount of such
tax, or any tax lien is filed against Business or any of its assets; (m) any judgment against Business remains unpaid, or has not been
stayed on appeal, discharged, bonded or dismissed, for a period of 30 days; (n) Business discontinues its business as a going concern;
or (o) Financial Institution, in good faith, believes the prospect of Business’ payment or performance of its Obligations has been
impaired.
9.2
Effect of Default. Upon the occurrence of any Event of Default, Business irrevocably authorizes Financial Institution at Business’
expense, to exercise at any time any one or more of the following powers until all of the Obligations have been paid in full:
9.2.1
Receive, take, endorse, assign, deliver, accept and deposit, in the name of Financial Institution or Business, any and all proceeds
of any Collateral securing the Obligations or the proceeds thereof;
9.2.2
Take or bring, in the name of Financial Institution or Business, all steps, actions, suits or proceedings deemed by Financial Institution
necessary or desirable to effect collection of or other realization upon Financial Institution’s Accounts;
9.2.3
Pay any sums necessary to discharge any lien or encumbrance which may become senior to Financial Institution’s security interest
in any Collateral, which sums shall be included as Obligations hereunder, and in connection with which sums a late charge shall accrue
and shall be due and payable;
9.2.4
Communicate directly with Business’ Customers to, among other things, verify the amount and validity of any Account created
by Business;
9.2.5
In order to satisfy any of the Obligations, Business authorizes Financial Institution to initiate electronic debit or credit entries
through the ACH system to any deposit account maintained by Business.
9.2.6
Change the address for delivery of mail to Business and to receive and open mail addressed to Business;
9.2.7
Notify any Customer obligated with respect to any Account, that the underlying Account has been assigned to Financial Institution
by Business and that payment thereof is to be made to the order of and directly and solely to Financial Institution;
9.2.8
Extend the time of payment of, compromise or settle for cash, credit, return of merchandise, and upon any terms or conditions, any
and all Accounts and discharge or release any Customer (including filing of any public record releasing any lien granted to Business
by such account debtor), without affecting any of the Obligations.
9.2.9
Financial Institution shall be entitled to any form of equitable relief that may be appropriate without having to establish any inadequate
remedy at law or other grounds other than to establish that its Collateral is subject to being improperly used, moved, dissipated or
withheld from Financial Institution. Financial Institution shall be entitled to freeze, debit and/or effect a set-off against any fund
or account Business may maintain with any Financial Institution and so notify such financial institution without regard to any draft
that may have been issued and have not cleared. In the event as a result of an Event of Default, Financial Institution deems it necessary
to seek equitable relief, including, but not limited to, injunctive or receivership remedies, Business waives any requirement that Financial
Institution post or otherwise obtain or procure any bond. Alternatively, in the event Financial Institution, in its sole and exclusive
discretion, desires to procure and post a bond, Financial Institution may procure and file with the court a bond in an amount up to and
not greater than $10,000.00 notwithstanding any common or statutory law requirement to the contrary. Upon Financial Institution’s
posting of such bond it shall be entitled to all benefits as if such bond was posted in compliance with state law. Business also waives
any right it may be entitled to, including an award of attorney’s fees or costs, in the event any equitable relief sought by and
awarded to Financial Institution is thereafter, for whatever reason(s), vacated, dissolved or reversed. All post-judgment interest shall
bear interest at either the contract rate or such higher rate as may be allowed by law.
9.2.10
All of Business’ rights of access to any online, internet services that Financial Institution makes available to Business,
shall be provisional pending Business’ curing of all such Events of Default. During such period of time, Financial Institution
may limit or terminate Business’ access to Financial Institution’s online services. Business acknowledges that the information
Financial Institution makes available to Business constitutes and satisfies any duty to respond to a Request for an Accounting or Request
regarding a Statement of Account that is referenced in § 9-210 of the UCC.
9.2.11
The Parties acknowledge that it shall be presumed commercially reasonable and Financial Institution shall have no duty to undertake
to collect any Account or Purchased Account including those in which Financial Institution receives information from an Account Debtor
that a Dispute exists. Furthermore, in the event Financial Institution undertakes to collect from or enforce an Obligation of an Account
Debtor or other person obligated on Collateral and ascertains that the possibility of collection is outweighed by the likely costs and
expenses that will be incurred, Financial Institution may at any such time cease any further collection efforts and such action shall
be considered commercially reasonable. Before Business may, under any circumstances, seek to hold Financial Institution responsible for
taking any uncommercially reasonable action, Business shall be required to first notify Financial Institution, in writing, of all reasons
why Business believes Financial Institution has acted in any uncommercially reasonable manner and advise Financial Institution of the
action that Business believes Financial Institution should take.
SECTION
10: NON-LIABILITY OF FINANCIAL INSTITUTION; RELEASE; INDEMNITY; WAIVER
10.1
Except for a breach by Financial Institution of this Agreement, Business releases, discharges, and acquits Financial Institution,
its officers, directors, employees, participants, agents, successors and assigns from any and all claims, demands, losses, and liability
of any nature which Business ever had, now or later can, will or may have in connection with, or arising out of, the transactions described
in this Agreement and the documentation thereof. Financial Institution will not be liable for any indirect, special or consequential
damages, such as loss of anticipated revenues or other economic loss in connection with, or arising out of, any default in performance
or other matter arising under this Agreement. Nor will Financial Institution be liable for any errors of judgment or mistake of fact
when acting as Business’ attorney-in-fact, pursuant to Section 7, or liable for delay in the performance of Financial Institution’s
duties caused by strike, lawsuit, riot, civil disturbance, fire, shortage of supplies or materials, or any other cause reasonably beyond
Financial Institution’s control. Business indemnifies and holds Financial Institution, its officers, directors, employees, participants,
agents, successors and assigns harmless from (and will pay all reasonable attorneys’ fees with respect to) any loss or claim involving
breach of warranty or representation by Business, any claim or liability sustained by virtue of acting in reliance upon data or information
furnished by Business to Financial Institution, and any loss or claim by any Customer relating to goods and/or services (or the manner
or type of their sale or provision) giving rise to Accounts purchased by Financial Institution hereunder. IF ANY FORM OF LITIGATION IS
INSTITUTED BY BUSINESS AGAINST FINANCIAL INSTITUTION FOR VIOLATION OF THIS AGREEMENT, OR ANY WRONGFUL CONDUCT ASSOCIATED WITH THIS AGREEMENT,
BUSINESS HEREBY EXPRESSLY WAIVES ITS RIGHT TO A JURY TRIAL. BUSINESS FURTHER AGREES THAT ITS DAMAGES WILL BE LIMITED, IN ANY CASE, TO
THE AMOUNT OF THE SERVICE CHARGE PAID BY BUSINESS TO FINANCIAL INSTITUTION DURING THE PRECEDING TWELVE (12) MONTH PERIOD.
SECTION
11: EFFECTIVE DATE; TERMINATION; BINDING EFFECT
11.1
This Agreement will be effective when accepted by Financial Institution, and will continue in full force and effect until the earlier
of: (a) one year after the effective date of this Agreement, or (b) sixty (60) days after written notice of termination has been given
by one party to the other (in each case subject to immediate termination upon a Default); and the term of this Agreement will automatically
be extended for periods of one year each following its otherwise scheduled termination, subject to Section 9.2 above, and to the parties’
rights to terminate this Agreement under clause (b) of this Section 11.1.
11.2
Upon termination of this Agreement, Business will pay all of its Obligations to Financial Institution, and in any event, Business
will remain liable to Financial Institution for any deficiency remaining after liquidation of any Collateral. Financial Institution may
withhold any payment to Business unless supplied with an indemnity satisfactory to Financial Institution. This Agreement will bind Business
and Business’ successors and assigns and will inure to the benefit of Financial Institution and Financial Institution’s successors
and assigns. Business agrees that Financial Institution may assign this Agreement or delegate its duties under this Agreement, but that
Business may not do so without Financial Institution’s prior written approval.
11.3
In recognition of Financial Institution’s right to have its attorneys’ fees and other expenses incurred in connection
with this Agreement secured by the Collateral, notwithstanding payment in full of all Obligations by Business, Financial Institution
shall not be required to record any terminations or satisfaction of Financial Institution’s security interest in the Collateral
or its ownership interest in the Purchased Accounts unless and until Complete Termination has occurred. Business understands that this
provision constitutes a waiver of its rights under § 9-513 of the UCC.
SECTION
12: ATTORNEY’S FEES; PAST-DUE OBLIGATIONS; WAIVER; SEVERABILITY; HEADINGS; ENTIRE AND CONTROLLING AGREEMENT; NOTICES; COUNTERPARTS;
SAVINGS AND MISCELLANEOUS PROVISIONS
12.1
Business will pay all reasonable expenses incurred by Financial Institution in connection with the execution of this Agreement, including
expenses incurred in connection with the filing of financing statements, continuation statements and record searches. All past-due Obligations
of Business arising under this Agreement will bear interest at the maximum nonusurious rate permitted under applicable state or federal
law. Business hereby waives grace, demand (other than demand pursuant to Section 3.2 hereof), presentment for payment, notice of dishonor
or default, notice of intent to accelerate, notice of acceleration, protest and notice of protest, and bringing of suit against Business.
Upon liquidation of any Collateral, settlement or prosecution of a dispute with any Customer, or enforcement of any Obligations of Business
under this Agreement, Business will pay to Financial Institution, and Financial Institution may charge to Business’ account, all
costs and expenses incurred, including reasonable attorneys’ fees, and such costs, expenses and fees will constitute part of Business’
Obligations. No delay or failure on Financial Institution’s part in exercising any right, privilege, or option will operate as
a waiver of such, or of any other right, privilege, or option, and no waiver, amendment or modification of any provision of this Agreement
will be valid unless in writing signed by Financial Institution, and then only to the extent stated. Should any provision of this Agreement
be prohibited by or invalid under applicable law, the validity of the remaining provisions will not be affected. The section headings
are for convenience only, and will not define or limit the scope, extent, meaning or intent of this Agreement. This Agreement embodies
Business’ entire agreement as to its affiliation with Financial Institution’s BusinessManager program, although Business
anticipates that Financial Institution will subsequently outline certain depository and other Financial Institution procedures. In the
event of any inconsistency between this Agreement and any other agreement signed by Business and Financial Institution in connection
with this Agreement, including but not limited to, any Additional Security Documents, the terms and provisions of this Agreement will
control, and the terms and provisions of any such other document will be ineffective to the extent of any such inconsistency. Any notice,
request or demand to be given will be deemed given when deposited with a delivery service addressed to, or sent by registered or certified
mail to, the address of the recipient listed at the beginning of this Agreement or to subsequent addresses which have been properly noticed
to the other party. This Agreement may be executed in multiple counterparts, which when taken together, will constitute one and the same
Agreement.
12.2
The parties acknowledge that the transactions contemplated by this Agreement are account purchase transactions; however, if they
should ever be recharacterized by any court, nothing contained in this Agreement or in any Additional Security Documents will be construed,
or will operate in any event, so as to require Business to pay interest at a rate greater than the highest lawful rate of interest permitted
by the laws then in force and governing this Agreement. In no event, whether by reason of acceleration of the maturity of the Obligations
due or otherwise, will Service Charges contracted for, charged, received, paid or agreed to be paid to Financial Institution, exceed
the maximum amount permissible under applicable law. If, from any circumstance whatsoever, Service Charges would otherwise be payable
to Financial Institution in excess of the maximum lawful amount, the Service Charges will be reduced to the maximum amount permitted
under applicable law, and if from any circumstance Financial Institution will have received anything of value deemed interest by applicable
law in excess of the maximum lawful amount, an amount equal to any excess will be applied to the reduction of the principal amount of
Obligations and not to the payment of Service Charges. If such excess interest exceeds the unpaid balance of the principal amount of
Obligations, such excess will be refunded to Business. All Service Charges paid or agreed to be paid to Financial Institution, to the
extent permitted by applicable law, will be amortized, prorated, allocated and spread throughout the full term of the Agreement until
payment in full of all principal Obligations owing by Business, so that the Service Charges for such full term will not exceed the maximum
amount permitted by applicable law.
12.3
This Agreement shall be deemed to be one of financial accommodation and not assumable by Business as debtor or debtor-in-possession,
or any trustee in any bankruptcy proceeding without Financial Institution’s express written consent and may be suspended in the
event a petition in bankruptcy is filed by or against Business.
12.4
In the event Business’ principals, officers or directors, directly or indirectly, form a new entity, whether corporate, partnership,
limited liability company or otherwise, similar to that of Business during the term of this Agreement, such newly formed entity shall
be deemed to have expressly assumed the Obligations due Financial Institution by Business under this Agreement. Upon the formation of
any such newly formed entity, Financial Institution shall be deemed to have been granted an irrevocable power of attorney with authority
to execute, on behalf of the newly formed entity, one or more financing statements and have each filed with the appropriate secretary
of state or UCC filing office. Financial Institution shall be held-harmless and be relieved of any liability statement or the resulting
perfection of a security interest in any of the newly formed entity’s assets. In addition, Financial Institution shall have the
right to notify the new formed entity’s account debtors of Financial Institution’s security interest rights, its right to
collect all Accounts, and to notify any new factor or lender who has sought to procure a competing lien of Financial Institution’s
rights in such newly formed entity’s assets.
12.5
Business’ principal(s) acknowledge that the duty to accurately complete each form of Exhibit A transmitted to Financial Institution
is critical to this Agreement and as such all Obligations with respect thereto are non-delegable. Each of Business’ principal(s)
acknowledge that he/she shall remain fully responsible for the accuracy of each form of Exhibit A transmitted to Financial Institution
regardless of who is delegated the responsibility to prepare and/or complete such Exhibit A.
12.6
Business shall fully complete and execute, as taxpayer, prior to or immediately upon the execution of this Agreement, IRS Form 8821
supplied by the Department of the Treasury, Internal Revenue Service or such other forms as may be requested by Financial Institution,
irrevocably authorizing Financial Institution to inspect or receive tax information relating to any type of tax, tax form, years or periods
or otherwise desired by Financial Institution on an ongoing basis.
12.7
Business will cooperate with Financial Institution in obtaining a control agreement in form and substance satisfactory to Financial
Institution with respect to Collateral consisting of a Deposit Account, if such Deposit Account is maintained with any financial institution
besides Financial Institution.
12.8
As to any Account proceeds that do not represent payment of any Purchased Accounts and notwithstanding Financial Institution’s
security interest therein, so long as Business has not committed an Event of Default, Financial Institution shall be deemed to have received
such proceeds of Accounts as a pure pass-through for and on account of Business unless Financial Institution asserts any rights to such
proceeds as is authorized by this Agreement.
12.9
Any claim or cause of action that Business may have or seek to assert against Financial Institution, whether predicated on this Agreement
or otherwise, shall neither constitute a defense nor serve as any basis to excuse non-performance of the Business’ duty to hold
in trust and turn over all proceeds of Accounts to Financial Institution as provided in Section 2.5.4. Business’ duties and Obligations
contained herein shall at all times be deemed independent covenants such that Business’ duty to honor the provisions of this Section
may at no time be excused or otherwise adversely affected due to, inter alia, any breach that Business may assert against Financial
Institution.
12.10
Any claim, dispute or controversy arising out of or relating to this Agreement must be brought in Business’ individual capacity
and not as a plaintiff or class member in any purported class, collective, representative, multiple plaintiff, or similar proceeding
(collectively, “Class Action”). Accordingly, Business expressly waives any right in respect to any such claim, dispute or
controversy to initiate, join or maintain any Class Action in any form.
12.11
In the event this Agreement is duly terminated in accordance with section 11, and for whatever reason, after such termination, any
claim in connection with, related to or arising under this Agreement is asserted or made against Financial Institution by any person,
including Business, Financial Institution shall be entitled to treat all protections afforded to Financial Institution under this Agreement
as revived, including, but not limited to, the protections contained in sections 4, 8 and 12.1.
SECTION
13: ACKNOWLEDGMENT
THE
UNDERSIGNED ACKNOWLEDGES THAT THIS AGREEMENT CONTAINS A RELEASE OF CLAIMS AND WAIVERS OF CERTAIN RIGHTS, AND THAT THIS AGREEMENT HAS
BEEN FULLY UNDERSTOOD PRIOR TO EXECUTION. BUSINESS FURTHER REPRESENTS AND WARRANTS THAT IT HAS HAD THE OPPORTUNITY TO CONSULT WITH ITS
OWN LEGAL COUNSEL REGARDING THIS AGREEMENT AND ITS FULL LEGAL EFFECT, AND THAT IT IS NOT RELYING UPON ANY ORAL REPRESENTATIONS ON THE
PART OF FINANCIAL INSTITUTION, ITS EMPLOYEES OR AGENTS IN ENTERING INTO THIS AGREEMENT.
SECTION
14: GENERAL RELEASE
Business
agrees that pursuant to section 11.3, the following release language shall be effective upon the termination of this Agreement and Financial
Institution shall have the right, but not the obligation, to require Business to reaffirm and acknowledge the effectiveness of this release
at the time of termination pursuant to section 11:
FOR
GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which are hereby acknowledged, the undersigned and each of them (collectively
“Releasor”) hereby forever releases, discharges and acquits Vast Bank, National Association (“Releasee”),
its parent, directors, shareholders, agents and employees, of and from any and all claims of every type, kind, nature, description or
character, and irrespective of how, why, or by reason of what facts, whether heretofore existing, now existing or hereafter arising,
or which could, might, or may be claimed to exist, of whatever kind or name, whether known or unknown, suspected or unsuspected, liquidated
or unliquidated, each as though fully set forth herein at length, to the extent that they arise out of or are in any way connected to
or are related to this Business Manager Agreement with Businesses and Professionals.
Releasor
agrees that the matters released herein are not limited to matters which are known or disclosed, and the Releasor waives any and all
rights and benefits which it now has, or in the future may have.
Releasor
acknowledges that factual matters now unknown to it may have given or may hereafter give rise to claims which are presently unknown,
unanticipated and unsuspected, and it acknowledges that this Release has been negotiated and agreed upon in light of that realization
and that it nevertheless hereby intends to release, discharge and acquit the Releasee from any such unknown claims.
Acceptance
of this Release shall not be deemed or construed as an admission of liability by any party released.
Releasor
acknowledges that either (a) it has had advice of counsel of its own choosing in negotiations for and the preparation of this release,
or (b) it has knowingly determined that such advice is not needed.
SECTION
15: SPECIAL STIPULATIONS
BUSINESS: |
|
|
|
SUPERIOR
DRILLING PRODUCTS, INC., |
|
a
Utah corporation |
|
|
|
By:
|
/s/
G. Troy Meier |
|
|
G.
Troy Meier, Chief Executive Officer |
|
SIGNATURE
PAGE
BUSINESSMANAGER®
AGREEMENT
(INTERNATIONAL)
ACCEPTANCE: |
|
|
|
This
Agreement is accepted this 28th day of July, 2023. |
|
|
|
VAST
BANK, NATIONAL ASSOCIATION: |
|
|
|
|
By:
|
/s/
Rex Berg |
|
|
Rex
Berg, Vice President, Commercial Lending |
|
This
BusinessManager® Agreement with Businesses and Professionals has been prepared by the law firm of Ullman & Ullman, P.A. located
at 150 East Palmetto Park Road, Boca Raton, Fl. and if you have any questions you may contact either Michael W. Ullman or Jared A. Ullman
at 561-338-3535.
2015
Jack Henry & Associates, Inc. All Rights Reserved. BusinessManager® is a registered trademark of Jack Henry &
Associates, Inc. 06/2015
SIGNATURE
PAGE
BUSINESSMANAGER®
AGREEMENT
(INTERNATIONAL)
Exhibit
10.6
FIRST
AMENDMENT TO THE COMMERCIAL LEASE
This
First Amendment (the “First Amendment”) to the Commercial Lease by and between Commercial Lease between Ernest M.
Cherry, Jr., as Trustee of The Ernest M. Cherry, Jr. Revocable Trust Dated July 1, 1992, and Carole A. Cherry, as Trustee of The Carole
A. Cherry Revocable Trust Dated July 1, 1992 (the “Lease”) with reference to the Premises, as defined in the Lease,
is entered into between Landlord and Tenant. Capitalized terms used but not otherwise defined herein shall have the respective meanings
ascribed to such terms in the Lease.
Whereas,
Landlord and Tenant entered into the Lease dated December 7, 2020, and
Whereas,
Tenant desires to assign its all of its interests in and under the Lease to Permitted Transferee, Superior Drilling Products, Inc. (“Assignee”),
and
Whereas,
Landlord, Tenant and Assignee desire to further amend the Lease and Landlord and to evidence in writing their agreements thereto, and
Now,
therefore, in consideration of the mutual promises and obligations contained herein, the adequacy and sufficiency of which is hereby
acknowledged, Landlord, Tenant and Assignee contract and agree that the Lease shall be and is hereby amended to include the following
term regarding Tenant’s obligation to provide a security deposit:
Security
Deposit. Contemporaneously with the execution of the First Amendment, Tenant shall pay to Landlord a security deposit of $77,848.74,
being equal to three (3) month’s rent (the “Security Deposit”), which shall be held by Landlord without liability
for interest and as security for the performance by Tenant of its obligations under this Lease. The Security Deposit is not an advance
payment of Rent or a measure or limit of Landlord’s damages upon an Event of Default. Upon the occurrence of an Event of Default,
Landlord may, from time to time and without prejudice to any other remedy, use all or a part of the Security Deposit to perform any obligation
which Tenant was obligated, but failed, to perform hereunder. Within thirty (30) days after the Term ends, provided Tenant has performed
all of its obligations hereunder, Landlord shall return to Tenant the balance of the Security Deposit not applied to satisfy Tenant’s
obligations. If Landlord transfers its interest in the Premises, then Landlord shall assign the Security Deposit to the transferee and
Landlord thereafter shall have no further liability for the return of the Security Deposit.
All
terms and conditions of the Lease not altered or amended by this First Amendment shall remain in full force and effect.
Agreed
to and accepted this 17th day of July, 2023.
|
TENANT:
|
|
|
|
MEIER
PROPERTIES, SERIES, LLC |
|
|
|
|
By: |
/s/
Annette Meier |
|
|
Annette
Meier, Manager |
|
|
|
|
ASSIGNEE:
|
|
|
|
SUPERIOR
DRILLING PRODUCTS, INC. |
|
|
|
|
By: |
/s/
Troy Meier |
|
|
Troy
Meier, Chief Executive Officer |
|
|
|
|
LANDLORD: |
|
|
|
THE
ERNEST M. CHERRY, JR. REVOCABLE TRUST DATED JULY 1, 1992, AND THE CAROLE A. CHERRY REVOCABLE TRUST DATED JULY 1, 1992 |
|
|
|
|
By: |
/s/
Ernest M. Cherry |
|
|
Ernest
M. Cherry, Trustee |
|
|
|
|
By: |
/s/
Carole A. Cherry |
|
|
Carole
A. Cherry, Trustee |
Exhibit 99.1
|
NEWS
RELEASE
|
|
|
1583
S. 1700 E. ● Vernal, UT 84078 ● (435)789-0594
|
|
FOR
IMMEDIATE RELEASE
Superior
Drilling Products, Inc. Enters Into New Loan and
Line
of Credit Agreement
New
facilities extend maturity dates and include more favorable financing terms
VERNAL,
UT, August 2, 2023 — Superior Drilling Products, Inc. (NYSE American: SDPI) (“SDP” or the “Company”),
a designer and manufacturer of drilling tool technologies, announced that on July 28, 2023, it executed a new credit agreement
with Vast Bank, National Association, which included a 5-year, $1.7 million term loan, a 2-year, $750,000 revolving credit line, and
a program whereby the lender can purchase certain accounts receivable. The proceeds from the receivables program were used to repay the
full amount outstanding under the Company’s existing credit agreement. The funds available through the term loan and the revolving
line can be used for working capital and growth capital purposes.
“This
new credit agreement extends our maturity dates and includes more favorable financing terms than our previous debt arrangements, which
we believe is a reflection of our growing financial strength,” commented Chis Cashion, Chief Financial Officer. “While we
expect to continue to generate strong operating cash flow to support our growth strategy, the new credit agreement also provides additional
financial flexibility and liquidity.”
The
amount available under the revolving line will be the lesser of $750,000 or the borrowing base, which is as of a date 50% of eligible
inventory as calculated under the loan agreement. The interest rate on the revolving line will be the greater of prime plus 1.00% or
7.50%. The interest rate on the term loan is fixed at 8.18%.
In
addition, in connection with entering into the new loan agreement, the Company entered into business manager agreements for the purchase
by the lender of certain domestic and international accounts receivable of the Company. The face amount of the accounts that may be purchased
cannot exceed $2.5 million under the domestic agreement and $2.0 million under the international agreement.
About
Superior Drilling Products, Inc.
Superior
Drilling Products, Inc. is an innovative, cutting-edge drilling tool technology company providing cost saving solutions that drive
production efficiencies for the oil and natural gas drilling industry. The Company designs, manufactures, repairs and sells drilling
tools. SDP drilling solutions include the patented Drill-N-Ream® well bore conditioning tool and the patented Strider™ oscillation
system technology. In addition, SDP is a manufacturer and refurbisher of PDC (polycrystalline diamond compact) drill bits for a leading
oil field service company. SDP operates a state-of-the-art drill tool fabrication facility, where it manufactures its solutions for the
drilling industry, as well as customers’ custom products. The Company’s strategy for growth is to leverage its expertise
in drill tool technology and innovative, precision machining in order to broaden its product offerings and solutions for the oil and
gas industry.
Additional
information about the Company can be found at: sdpi.com.
Superior
Drilling Products, Inc. Enters Into New Loan and Line of Credit Agreement
August
2, 2023
Page
2 of 2
Safe
Harbor Regarding Forward Looking Statements
This
news release contains forward-looking statements and information that are subject to a number of risks and uncertainties, many of which
are beyond our control. All statements, other than statements of historical fact included in this release, including, without limitations,
the Company’s strategic review process, the continued impact of COVID-19 on the business, the Company’s strategy, future
operations, success at developing future tools, the Company’s effectiveness at executing its business strategy and plans, financial
position, estimated revenue and losses, projected costs, prospects, plans and objectives of management, and ability to outperform are
forward-looking statements. The use of words “could,” “believe,” “anticipate,” “intend,”
“estimate,” “expect,” “may,” “continue,” “predict,” “potential,”
“project”, “forecast,” “should” or “plan, and similar expressions are intended to identify
forward-looking statements, although not all forward -looking statements contain such identifying words. These statements reflect the
beliefs and expectations of the Company and are subject to risks and uncertainties that may cause actual results to differ materially.
These risks and uncertainties include, among other factors, the duration of the COVID-19 pandemic and related impact on the oil and natural
gas industry, the effectiveness of success at expansion in the Middle East, options available for market channels in North America, the
deferral of the commercialization of the Strider technology, the success of the Company’s business strategy and prospects for growth;
the market success of the Company’s specialized tools, effectiveness of its sales efforts, its cash flow and liquidity; financial
projections and actual operating results; the amount, nature and timing of capital expenditures; the availability and terms of capital;
competition and government regulations; and general economic conditions. These and other factors could adversely affect the outcome and
financial effects of the Company’s plans and described herein. The Company undertakes no obligation to revise or update any forward-looking
statements to reflect events or circumstances after the date hereof.
For
more information, contact investor relations:
Deborah
K. Pawlowski / Craig P. Mychajluk
Kei
Advisors LLC
716-843-3908
/ 716-843-3832
dpawlowski@keiadvisors.com
/ cmychajluk@keiadvisors.com
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Superior Drilling Products (AMEX:SDPI)
Historical Stock Chart
From May 2024 to Jun 2024
Superior Drilling Products (AMEX:SDPI)
Historical Stock Chart
From Jun 2023 to Jun 2024