Item 1.01 Entry into a Material Definitive Agreement.
Extension and Modification Agreement
As previously reported on August 2, 2018
by Victory Oilfield Tech, Inc. (“Victory”), on July 31, 2018, Victory entered into a loan agreement (the “Loan
Agreement”) with Kodak Brothers Real Estate Cash Flow Fund, LLC, a Texas limited liability company (“Kodak”),
pursuant to which Victory borrowed from Kodak $375,000 (the “Loan”) to fund partial payment for the acquisition by
Victory of 100% of the issued and outstanding common stock (the “Acquisition”) of Pro-Tech Hardbanding Services, Inc.,
an Oklahoma corporation ( “Pro-Tech”). The closing of the Acquisition occurred on July 31, 2018. The Loan was evidenced
by a secured convertible promissory note, dated July 31, 2018 (the “Note”), in the principal amount of $375,000, which
accrued interest at an annual rate of 10% (the “Interest Rate”), and had a maturity date of March 31, 2019 (the “Maturity
Date”). Pursuant to the terms of the Note, Victory elected to extend the Maturity Date to June 30, 2019.
As previously reported on July 17, 2019
by Victory, on July 11, 2019, Victory, Kodak and Pro-Tech entered into an Extension and Modification Agreement, effective June
30, 2019 (the “Extension Agreement”), pursuant to which the Maturity Date of the Note was extended from June 30, 2019
to September 30, 2019 and the Interest Rate was increased from 10% to 15%. Upon the execution of the Extension Agreement, Victory
paid to Kodak interest on the Loan for the third quarter 2019 in the amount of $14,062.50, and an extension fee in the amount of
$14,062.50. The Extension Agreement contains standard representations and warranties.
On October 21, 2019, Victory, Kodak and
Pro-Tech entered into a Second Extension and Modification Agreement, effective September 30, 2019 (the “Second Extension
Agreement”). Pursuant to the Second Extension Agreement, the Maturity Date of the Note is extended from September 30, 2019
to December 30, 2019, and the Interest Rate is increased from 15% to 17.5% from and after September 30, 2019.
Pursuant to the Second Extension agreement,
the Note is amended such that:
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(i)
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upon the execution of the Second Extension Agreement, Victory pre-paid to Kodak interest on the
Loan for the fourth quarter of 2019 in the amount of $11,059.03;
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(ii)
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Victory shall pay a total of $12,500.00 to Kodak and its manager, which represents due diligence
fees;
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(iii)
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Victory shall pay to Kodak and its manager a total of $27,500, which represents $25,000 of loan
monitoring fees and $2,500 of loan extension fees;
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(iv)
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on or before October 31, 2019, Victory will pay to Kodak the sum of $125,000, as a payment of principal,
and Victory will incur a late of $5,000 for every seven (7) days (or portion thereof) that the balance remains unpaid after October
31, 2019;
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(v)
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on or before November 29, 2019, Victory will pay to Kodak the sum of $125,000, as a payment of
principal, and Victory will incur a late of $5,000 for every seven (7) days (or portion thereof) that the balance remains unpaid
after November 29, 2019; and
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(vi)
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on or before December 30, 2019, Victory will pay to Kodak any unpaid and/or outstanding balances
owed on the Note. If the Note and any late fees, other fees, interest, or principal is not paid in full by December 30, 2019, Victory
will pay to Kodak $25,000 as liquidated damages.
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The Second Extension Agreement contains
standard representations and warranties.
The foregoing summary of the terms and
conditions of the Second Extension Agreement does not purport to be complete and is qualified in its entirety by reference to the
full text of the Second Extension Agreement filed as exhibit 10.4 to this report.