Exhibit 10.1

 

AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

This AMENDMENT (“Amendment”) to that certain Loan and Security Agreement is
entered into as of this 28th day of March, 2016, by and among Superior Drilling
Products, Inc., a Utah corporation (“Superior”), Superior Drilling Solutions,
LLC, a Utah limited liability company (“Drilling”), Hard Rock Solutions, LLC, a
Utah limited liability company (“Hard Rock”), Extreme Technologies, LLC, a Utah
limited liability company (“Extreme”, and together with Superior, Drilling and
Hard Rock, “Borrower” or “Borrowers”), and FEDERAL NATIONAL PAYABLES, INC., a
Delaware corporation doing business as Federal National Commercial Credit
(“Lender”).

 

BACKGROUND

 

On March 8, 2016, Borrower and Lender entered into a certain Loan and Security
Agreement (the “Loan Agreement”) and other Credit Documents, as that term is
defined in the Loan Agreement. Lender and Borrower have agreed to modify and
amend certain provisions of the Loan Agreement, as more fully provided herein.

 

NOW THEREFORE, with the foregoing Background deemed incorporated by reference
and for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
covenant and agree as follows:

 

Section 1. AMENDMENT.

 

Section 7.15 (a) of the Loan Agreement is hereby amended to read as follows:

 

(a) Maintain Fixed Charge Coverage Ratio of not less than:

 

1.0.10x tested monthly from June 30, 2016 through August 31, 2016;

 

2.0.35x tested on September 30, 2016 and October 31, 2016; then

 

3.1.00x tested on November 30, 2016 and each month thereafter.

 

The ratio will be measured monthly on a rolling three month basis. The Fixed
Charge Ratio is defined as the ratio of (i) Earnings Before Interest, Taxes,
Depreciation, Amortization and Non-Cash Stock Compensation Expense (“EBITDA”)
less (a) income taxes paid in cash for each period of measurement and less (b)
the cash portion paid for any capital expenditures made for each period of
measurement, all as determined in accordance with GAAP, to (ii) fixed charges. 
For purposes of this calculation, fixed charges shall mean the sum of, interest
expense actually paid, loan fees, fees with respect to Indebtedness, principal
payments made with respect to Indebtedness, payments on capitalized leases,
taxes, dividends or distributions, unfinanced capital expenditures, plus loans
or advances to any officers, directors or shareholders of Borrower for each 
period of measurement.

 

 

 

 

Section 2. MISCELLANEOUS

 

2.1 Counterparts. This Amendment may be executed in any number of counterparts,
each of which will constitute an original and all of which together shall
constitute one instrument. Signature by facsimile shall bind the parties hereto.

 

2.2 Third-Party Rights. No rights are intended to be created hereunder for the
benefit of any third-party donee, creditor, or incidental beneficiary.

 

2.3 Modifications. No modification hereof or any agreement referred to herein
shall be binding or enforceable unless in writing and signed on behalf of the
party against whom enforcement is sought.

 

2.5 Integrated Agreement. This Amendment shall be deemed incorporated into and
made a part of the Credit Documents. Except as expressly set forth herein, all
of the terms, conditions and agreements of the Credit Documents are ratified and
confirmed. The Credit Documents and this Amendment shall be construed as
integrated and complementary of each other, and as augmenting and not
restricting Lender’s rights, remedies and security. If, after applying the
foregoing, an inconsistency still exists, the provisions of this Amendment shall
control.

 

2.6 Survival. All warranties, representations and covenants made by Borrower
herein, or in any agreement referred to herein or on any certificate, document
or other instrument delivered by them or on their behalf under this Amendment,
shall be considered to have been relied upon by Lender. All statements in any
such certificate or other instrument shall constitute warranties and
representations by Borrower hereunder. All warranties, representations,
indemnities and covenants made by Borrower hereunder or under any other
agreement or instrument shall be deemed continuing until the Obligations are
indefeasibly paid and satisfied in full.

 

2.7 Successors and Assigns. This Amendment shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties hereto. No
delegation by Borrower of any duty or obligation of performance may be made or
is intended to be made to Lender. No rights are intended to be created hereunder
or under any related instruments, documents or agreements for the benefit of any
third party donee, creditor, incidental beneficiary or affiliate of Borrower.

 

2.8 Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Maryland. The provisions of this
Amendment are to be deemed severable, and the invalidity or unenforceability of
any provision shall not affect or impair the remaining provisions which shall
continue in full force and effect.

 

2.9 Waiver of Jury Trial. Borrower and Lender each hereby waives any and all
rights any of them may have to a jury trial in connection with any litigation
commenced by or against any of the parties to this Amendment with respect to
rights and obligations of the parties hereto under this Amendment or under the
Credit Documents.

 

 

 

 

2.10 Exclusive Jurisdiction. Borrower and Lender each irrevocably consent to the
non-exclusive jurisdiction of the State of Maryland and the United States
District Court for the District of Maryland, in any and all actions and
proceedings whether arising hereunder or under the Credit Documents. Borrower
irrevocably agrees to service of process by certified mail return receipt
requested to the address currently contained in Lender’s records.

 

2.11 Charges and Fees. Nothing contained in this Amendment shall be deemed to
limit, affect or impair the imposition of or provision for late charges, default
charges and default interest as provided in the Credit Documents.

 

2.12 Capitalized Terms. Any Capitalized terms not otherwise defined pursuant to
this Amendment shall have their meaning pursuant to the Agreement and/or the
Credit Documents.

 

2.13 Severability. The provisions of the Agreement, as amended by this
Amendment, are to be deemed severable; the illegality, invalidity or
unenforceability of any provision shall not affect or impair the remaining
provisions, which shall continue in full force and effect, as if such illegal,
invalid or unenforceable provision were not part of the Agreement, as amended by
this Amendment (but only to the extent of such illegality, invalidity or
unenforceability).

 

[signatures continue on next page]

 

 

 

 

IN WITNESS WHEREOF, the undersigned parties have executed this Agreement the day
and year first above written.

 

BORROWERS: SUPERIOR DRILLING PRODUCTS, INC.         By: /s/ Troy Meier     ,
[Title]   Name: Troy Meier   Title: Chief Executive Officer         Address:
1583 South 1700 East     Vernal, UT 84078         SUPERIOR DRILLING SOLUTIONS,
LLC         By: /s/ Troy Meier     , [Title]   Name: Troy Meier   Title: Chief
Executive Officer         Address: 1583 South 1700 East     Vernal, UT 84078    
    HARDROCK SOLUTIONS, LLC         By: /s/ Troy Meier     , [Title]   Name:
Troy Meier   Title: Chief Executive Officer         Address: 1583 South 1700
East     Vernal, UT 84078         EXTREME TECHNOLOGIES, LLC         By: /s/ Troy
Meier     , [Title]   Name: Troy Meier   Title: Chief Executive Officer        
Address: 1583 South 1700 East     Vernal, UT 84078

  

 

 

 

LENDER: FEDERAL NATIONAL PAYABLES, INC.         By: /s/ William Seibold   Name:
William Seibold   Title: Chief Credit Officer         Address: 7315 Wisconsin
Avenue, Suite 600W     Bethesda, MD 20814

  

ACKNOWLEDGMENT AND CONSENT OF VALIDITY GUARANTOR

 

The undersigned guarantor hereby acknowledges and consents to the provisions of
the foregoing Amendment and agrees that the each of the undersigned’s
obligations under the Validity Guaranty executed in accordance with the Loan
Agreement and the Credit Documents shall be unimpaired by the said Amendment and
that the undersigned has no defenses or set offs against Lender, its officers,
directors, employees, agents or attorneys, with respect to such Validity
Guaranty, and that all of the terms, conditions and covenants in such Validity
Guaranty remain unaltered and in full force and effect and are hereby ratified
and confirmed. The undersigned hereby certifies that the representations and
warranties made in the Validity Guaranty are true and correct as of the date
hereof. The undersigned hereby ratifies and confirms the waiver of jury trial
provision (if applicable) contained in the Validity Guaranty.

 

WITNESS the due execution hereof as a document under seal, as of March 28th,
2016, intending to be legally bound hereby.

 

  /s/ G. Troy Meier                        (SEAL)   G. Troy Meier  

 

STATE OF TEXAS :     :   COUNTY OF HARRIS :  

  

 

 

 

On this, the 28th day of March, 2016, before me, the undersigned Notary Public,
personally appeared G. Troy Meier , known to me (or satisfactorily proven) to be
the individual described in and who executed the foregoing, instrument and he
duly acknowledged to me that he executed the same for the purposes therein
contained.

 

WITNESS my hand and seal the day and year aforesaid.

 

      Notary Public   My Commission Expires: