a101aqms-memorandumofagr






                       MEMORANDUM OF AGREEMENT          This Memorandum of Agreement (“ Agreement”) is hereby entered into by and between   Aqua Metals Reno, Inc. (“Aqua Metals”) and Veritex Community Bank (“Veritex”). This  Agreement is effective on the date that both parties execute the Agreement (“Effective Date”).         WHEREAS Aqua Metals is indebted to Veritex pursuant to a Promissory Note dated  November 3, 2015, and a Loan Agreement which was amended effective March 30, 2017  (collectively “Loan Agreements”); and         WHEREAS the United States Department of Agriculture Rural Development (“USDA”)  has guaranteed a portion of Aqua Metals’ indebtedness under the Loan Agreements; and         WHEREAS Aqua Metals’ indebtedness to Veritex under the Loan Agreements is secured  by collateral (“Collateral”), which includes real property, personal property, and a certificate of  deposit (“Certificate of Deposit”), each as described in the Loan Agreements, a Security  Agreement, and a Deed of Trust; and         WHEREAS on or about November 29, 2019, Aqua Metals’ property sustained damage  from a fire (“Fire Damage”) in the AquaRefining area of the property; and         WHEREAS Aqua Metals is insured for the losses resulting from the Fire Damage under a  series of property insurance policies (“Insurance Policies”) as follows:          First Layer: issued by Navigators Specialty Insurance Company, $5,000,000 limits;          Second Layer: issued by Arch Specialty Insurance Company, $7,500,000 limits;          Third Layer: issued by Starr Surplus Lines Insurance Company, $12,500,000 limits;          Fourth Layer: issued by Homeland Insurance Company of New York, $25,000,000   limits; and          WHEREAS Aqua Metals has presented a claim under the Insurance Policies for the Fire   Damage; and          WHEREAS Navigators Specialty Insurance Company has paid $5,000,000 on the First   Layer of the Insurance Policies; and          WHEREAS Aqua Metals has received $4,200,000 of the proceeds from the First Layer;   and         WHEREAS the remaining $800,000 paid from the First Layer is currently in an escrow   account at Veritex (“Escrow Account”); and         WHEREAS Arch Specialty Insurance Company has paid $5,000,000 from the Second  Layer of the Insurance Policies, which sum is currently in the Escrow Account; and    MEMORANDUM OF AGREEMENT – Page 1 of 4   ACTIVE 49720872v1 





 






      WHEREAS Aqua Metals and Veritex desire to enter into this agreement regarding  distributions and application of proceeds from the Insurance Policies, any sales of Collateral, and  the satisfaction of Aqua Metals’ indebtedness and obligations under the Loan Agreements;         NOW, THEREFORE, in consideration of the provisions below, and other good and  valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged  by all parties to this agreement, Aqua Metals and Veritex agree as follows:         1.    Agreement regarding First Layer Proceeds: Veritex and Aqua Metals agree that              within 5 business days from the Effective Date (a) Veritex will release an              additional $300,000 from the Escrow Account received from the First Layer to              Aqua Metals; and (b) Veritex will retain $500,000 in the Escrow Account from              the First Layer.         2.    Agreement regarding Second Layer Proceeds Received as of Effective Date:              Veritex and Aqua Metals agree that within 5 business days from the effective date              of this agreement (a) Veritex will release $2,750,000 from the Escrow Account to              Aqua Metals; and (b) Veritex will retain $2,250,000 in the Escrow Account.         3.    Agreement regarding Second Layer Proceeds Received after Effective Date:              Veritex and Aqua Metals agree that with respect to all future proceeds received              from the Second Layer: (a) Veritex will release to Aqua Metals 55% of the              proceeds received; and (b) Veritex will retain 40% of the proceeds received in the              Escrow Agreement.          4.    Agreement regarding Third Layer Proceeds Received: Veritex and Aqua Metals              agree that with respect to all proceeds received from the Third Layer: (a) Veritex              will release to Aqua Metals 60% of the proceeds received; and (b) Veritex will              retain 40% of the proceeds received in the Escrow Agreement.         5.    Agreement regarding Sale of Aqua Metals’ real estate collateral: To the extent              Aqua Metals sells any real estate that is part of the Collateral securing Aqua             Metals’ indebtedness under the Loan Agreements, Aqua Metals agrees that 100%              of the proceeds from such sale will be provided to Veritex and such proceeds shall              be placed into the Escrow Account.         6.    Agreement regarding Sale of Aqua Metals’ non-real estate Collateral: To the              extent Aqua Metals sells any Collateral other than real estate, Aqua Metals and              Veritex agree that the proceeds from such sale shall, subject to the USDA’ s              express consent following receipt of such proceeds, be divided as follows:              (a) 50% of the proceeds shall be provided to Aqua Metals free and clear of              Veritex’s lien; and (b) 50% of the proceeds shall be provided to Veritex and such              proceeds shall be placed into the Escrow Account.         7.    Agreement to Continue to Make Scheduled Payments Required by the Loan              Agreement: Aqua Metals agrees that it will continue to timely make all payments              due under the Loan Agreement notwithstanding the receipt, disbursement, or              application of proceeds from Insurance Policies or any sales of assets as described  MEMORANDUM OF AGREEMENT – Page 2 of 4  ACTIVE 49720872v1 





 






            above. Aqua Metals further agrees to timely make all payments to taxing              authorities and to maintain insurance coverage as required by the Loan              Agreements.         8.    Agreement regarding the Application of funds in the Escrow Account and the              Certificate of Deposit: The parties agree that when the total of the funds in the              Escrow Account plus the funds in the Certificate of Deposit becomes equal to or              greater than the sum of (a) Aqua Metals’ indebtedness under the Loan Agreement,             and (b) the “Prepayment Consideration” amount owed in the event of a              prepayment of the indebtedness as described in the Loan Agreements, then              Veritex shall apply the funds in the Escrow Account and the Certificate of              Deposit to fully satisfy (a) the indebtedness under the Loan Agreement including              all principal, accrued interest, and any other sums owed under the Loan              Agreement, and (b) the Prepayment Consideration owed as a result of the              prepayment of principal owed under the Loan Agreements. Thereafter, any              remaining funds in the Escrow Account shall be disbursed to Aqua Metals.         9.    The Parties further agree that, except as otherwise expressly provided herein, all              of Veritex’s liens and security interests in the Collateral will remain effective and              enforceable pursuant to the terms of the Loan Agreement until Aqua Metals’              indebtedness and obligations under the Loan Agreement are fully paid and              discharged pursuant to paragraph 8 above.         10.   This Agreement shall not modify any other terms under the Loan Agreement              except as expressly stated herein.      AGREED:   AQUA RENO METALS, INC.                 VERITEX COMMUNITY BANK                                                                                    By:   /s/ Judd Merrill                 By:   /s/ William Alt                    Judd Merrill                           William Alt    CFO                                     Senior Credit Officer                                           Date: 3/25/2020                        Date: 3/25/2020                                           MEMORANDUM OF AGREEMENT – Page 3 of 4  ACTIVE 49720872v1 





 






AGREED BY GUARANTORS:   AQUA METALS, INC.      By:   /s/ Judd Merrill                   Judd Merrill    CFO                Date: 3/25/2020             AQUA METALS OPERATIONS, INC.      By:   /s/ Judd Merrill                   Judd Merrill    CFO                Date: 3/25/2020                 MEMORANDUM OF AGREEMENT – Page 4 of 4  ACTIVE 49720872v1