Document:

armp_Ex10_3

		
			Exhibit 10.3
		

		
			 
		

		
			ASSIGNMENT AND FIRST AMENDMENT OF OFFICE LEASE
		

		
			This Assignment and First Amendment of Office Lease (“Amendment”) is made and entered into as of this, the __ day of April, 2020 (the “Effective Date”) in the City of Los Angeles, County of Los Angeles, State of California, by and among MARINA BUSINESS CENTER, LLC, a California limited liability company, hereafter called “Landlord”, C3 JIAN, a California Corporation, hereafter called “Original Tenant”, and ARMATA PHARMACEUTICALS, INC., a Washington corporation, hereinafter called “Assignee”.
		

		
			WHEREAS, a certain Office Lease (the ”Lease”) was made and entered into on September 28, 2011 between Landlord and Tenant, wherein and whereby Tenant leased from Landlord certain premises (the “Premises”) consisting of approximately 35,453 rentable square feet located on the first (1st) and second (2nd) floors of that certain building located in the City of Los Angeles, County of Los Angeles, State of California, commonly known as 4503 Glencoe Avenue, Los Angeles (Marina del Rey), CA 90292 (the “Building”), and
		

		
			WHEREAS, Tenant has requested, and Landlord has agreed, to assign Tenant’s interest in the Lease to Assignee, and
		

		
			WHEREAS, Tenant, Landlord and Assignee have agreed to document such assignment and amend the Lease on the following terms and conditions. All capitalized terms which are not defined herein shall have the meaning ascribed to them in the Lease.
		

		
			NOW, THEREFORE, in consideration of the Premises and the covenants herein contained, it is hereby mutually agreed as follows, to wit:
		

		
			1)         Extended Lease Term. The Lease Term is currently scheduled to expire on December 31, 2021 and shall be extended by ten (10) years (the “Extended Lease Term”), commencing on January 1, 2022 (the “Extended Term Commencement Date”) to expire on December 31, 2031 (the “Extended Term Expiration Date”).
		

		
			2)         Base Rent.   Prior to the Extended Lease Term Commencement Date, Assignee shall continue to pay the Monthly Installments of Base Rent as provided in the Lease.  Commencing as of the Extended Term Commencement Date, the Monthly Installments of Base Rent for the Extended Lease Term shall be as follows:
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						Lease Year

					
					
						Monthly Base Rent

				
	
					
						 

					
					
						 

				
	
					
						1 – January 1, 2022 to December 31, 2022 

					
					
						$ 157,765.85

				
	
					
						2 – January 1, 2023 to December 31, 2023

					
					
						$ 162,498.83

				
	
					
						3 – January 1, 2024 to December 31, 2024

					
					
						$ 167,373.79

				
	
					
						4 – January 1, 2025 to December 31, 2025

					
					
						$ 172,395.00

				
	
					
						5 – January 1, 2026 to December 31, 2026

					
					
						$ 177,566.85

				
	
					
						6 – January 1, 2027 to December 31, 2027

					
					
						$ 182,893.86

				
	
					
						7 – January 1, 2028 to December 31, 2028

					
					
						$ 188,380.68

				
	
					
						8 – January 1, 2029 to December 31, 2029

					
					
						$ 194,032.10

				

		
			 
		

		
			
		

		
			

		 

		

			1

		

		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						9 – January 1, 2030 to December 31, 2030

					
					
						$ 199,853.06

				
	
					
						10 – January 1, 2031 to December 31, 2031

					
					
						$ 205,848.66

				

		
			 
		

		
			Base Rent is calculated on a triple-net basis and Assignee shall continue to pay Direct Expenses as provided in the Lease. Electricity and janitorial services for the Premises shall be paid by Tenant as provided in the Lease.
		

		
			3)         Rent Abatement. Provided that no Event of Default then exists and Landlord has received and approved the Letter of Credit to be provided by Assignee as set forth below, Base Rent for a period of six (6) months shall be abated commencing as of May 1, 2020 through October 30, 2020.  If Assignee has not provided the Letter of Credit required in Paragraph 7, Assignee’s right to abated rent will be deferred to the first 6 months following the month in which Assignee provides the required Letter of Credit.
		

		
			4)         Tenant Improvements/Alterations.  In connection with the extension of the Term, Landlord shall provide to Assignee an allowance for Assignee to complete any desired “Alterations” to the Premises equal to $23.00 per square foot (i.e., $815,419.00) (the “TI Allowance”). All such Alterations desired by Assignee shall be subject to approval by Landlord to the extent required in Section 8 of the Original Lease and shall be performed by Tenant as “Alterations” in accordance with the terms of Section 8 of the Original Lease, provided in no event shall Assignee be required to post any bonds for the completion of any such Alterations and Assignee shall have no obligation to remove any Alterations at the expiration or earlier termination of the Lease unless Landlord shall notify Assignee at the time of its approval of such Alterations that they must be removed at such time.  The Work Letter included in the Original Lease as Exhibit C shall have no application to Assignee’s completion of any Alterations or Landlord’s disbursement of the TI Allowance.  Subject to the satisfaction of the conditions precedent set forth below, and not earlier than January 1, 2021, Landlord shall disburse the TI Allowance to Assignee in installments, not more often than once per month, within five (5) business days of Assignee’s delivery to Landlord of a written draw request stating the amount of the TI Allowance Assignee desires to reimburse Assignee for costs incurred by Assignee for any Alterations, including signage, design and permit fees, if any, and materials, contractor fees and costs (“Alterations Costs”).  Assignee shall include with each such draw request, receipts and other evidence of payment for all such Alterations Costs for which reimbursement is requested by Assignee.  Assignee must use all of the TI Allowance on or before December 31, 2021.  If not, commencing January 1, 2022, Assignee may apply any remaining TI Allowance as a monthly credit towards Monthly Instalments of Rent in an amount not to exceed $25,000 per month until all unused portions of the TI Allowance have been applied towards Alterations or Rent.  Landlord shall disburse the TI Allowance provided each of the following conditions has been met:(a) Assignee’s market capitalization as of December 31, 2020 exceeds $20,000,000, and (b) no Event of Default exists on January 1, 2021. Provided no Event of Default then exists, in the event the TI Allowance is not released in accordance with the above, commencing January 1, 2021, Base Rent shall be reduced by $8,331.00 per month for the duration of the Extended Lease Term.
		

		
			5)         Signage. Landlord shall replace the existing monument sign (on or about its current location) as part of Landlord’s upgrade to exterior signage for the Building and the Project
		

		
			
		

		
			

		 

		

			2

		

		

		
			at Landlord’s sole cost and expense and without application of the TI Allowance to any of such costs. Assignee shall have the right to sign panels identifying Assignee on such monument sign and Assignee shall provide to Landlord appropriate graphics and other materials necessary to create Assignee’s identification sign panels on the monument sign.  Assignee may apply TI Allowance funds towards the costs of such Assignee signage.
		

		
			6)         Parking Lot. Prior to commencement of the Extended Lease Term, Landlord shall re-slurry and restripe the parking lot surrounding the Building with the same number or more parking spaces as exist as of the Effective Date at its sole cost and expense and without application of the TI Allowance to any of such costs.  Landlord shall complete such parking lot work in prior to December 31, 2020 and in phases so as not to unreasonably interfere with the use of the parking lots by Assignee and other tenants of the Building.  Landlord shall provide Assignee with reasonable prior notice as to phasing and scheduling for such parking lot repair work.
		

		
			7)         Letter of Credit.  Assignee shall provide Landlord with an Irrevocable Standby Letter of Credit with an initial face amount of $ 1,200,000 (the “New Letter of Credit”) to be issued from Assignee’s lender, HSBC in the form attached hereto as Exhibit A as filled in by HSBC for issuance.  Upon Assignee’s delivery of the New Letter of Credit in satisfaction or this Paragraph 7, Tenant shall no longer have any obligations with respect to the existing letter of credit as set forth in Section 21 of the Lease and Landlord shall return the existing letter of credit to Tenant. Beginning February 1, 2022, and on every anniversary thereafter, provided no Event of Default exists at the time, the New Letter of Credit and Assignee’s liability under same shall be automatically reduced by twenty percent (20%), such that, for example, as of February 1, 2022 the New Letter of Credit shall be reduced to a face amount of $960,000.00, such reduction formula to be incorporated into the New Letter of Credit.  Except as otherwise provided hereinabove, Section 21.2 of the Lease shall govern the New Letter of Credit.  Assignee shall obtain and deliver the New Letter of Credit to Landlord concurrently with or promptly following Assignee’s delivery of this Amendment executed by Assignee.  Landlord may hold this Amendment executed by Assignee as non-binding on Landlord until Landlord shall receive the New Letter of Credit and execute and return this Amendment to Assignee at which time this Amendment shall be effective.
		

		
			8)         Leasing Commission. In connection with the Lease extension, Landlord shall pay to Stream Realty a commission in the amount equal to 3% of the Base Rent for years 1-5 of the Extended Lease Term, and 1.5% of the Base Rent for years 6-10 of the Extended Lease Term (the “Commission”). The Commission shall be paid upon Landlord’s written acceptance of the New Letter of Credit as set forth above.
		

		
			9)         Lease Modification. All terms and conditions of the Lease shall continue in full force and effect during the Extended Lease Term, except as the same may have been modified by this First Amendment of Office Lease.
		

		
			10)       Assignment and Assumption.  Effective as of the Effective Date of this Amendment, (i) Tenant hereby assigns to Assignee all of Tenant’s rights, duties and obligations arising
		

		
			
		

		
			

		 

		

			3

		

		

		
			from and after the Effective Date under the Original Lease as amended hereby, (ii) Assignee hereby assumes all of such rights, duties and obligations of Tenant arising under the Original Lease as amended hereby from and after the Effective Date, and (iii) Landlord hereby consents to such assignment of the Lease by Tenant and assumption of the Lease by Assignee.
		

		
			11)       Notices.  From and after the Effective Date, notice to Assignee as Tenant under the Lease shall be to the Premises per the below:
		

		
			 
		

		
			ARMATA PHARMACEUTICALS, INC.
		

		
			4503 Glencoe Avenue
		

		
			Los Angeles (Marina del Rey), CA 90292
		

		
			Attention:  Steve Martin
		

		
			Telephone:  _________________
		

		
			Email:  smartin@armatapharma.com
		

		
			 
		

		
			[SIGNATURE PAGE TO FOLLOW]
		

		
			 
		

		
			
		

		
			

		 

		

			4

		

		

		
			IN WITNESS WHEREOF, the parties hereto have executed this First Amendment of Office Lease the day and year first written above.
		

			
					
						MARINA BUSINESS CENTER, LLC

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						Agreed:

					
					
						 

					
					
						Date: April __, 2020

				
	
					
						 

					
					
						W. Scott Dobbins, Secretary

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						C3 JIAN, INC.

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						Agreed:

					
					
						 

					
					
						Date:  April __, 2020

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						ARMATA PHARMACEUTICALS, INC.,

					
					
						 

				
	
					
						a Washington corporation

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						Agreed:

					
					
						 

					
					
						Date:  April __, 2020

				

		
			 
		

		
			
		

		
			

		 

		

			5

		

		

		
			Exhibit A
		

		
			Form of New Letter of Credit
		

		
			[SAMPLE OF STANDBY L/C FOR LEASE SECURITY]
		

		
			 
		

		
			ISSUING BANK’S LETTERHEAD
		

		
			 
		

		
			ISSUE DATE: [                  ]
		

		
			 
		

		
			IRREVOCABLE STANDBY DOCUMENTARY CREDIT NO: [-]
		

		
			 
		

		
			[BENEFICIARY’S NAME]
		

		
			[BENEFICIARY’S ADDRESS]
		

		
			ATTENTION: [                 ]
		

		
			 
		

		
			[APPLCIANT’S NAME]
		

		
			[APPLICANT’S ADDRESS]
		

		
			 
		

		
			AMOUNT: USD1,200,000.00
		

		
			 
		

		
			DATE AND PLACE OF EXPIRY: [-] AT COUNTER OF ISSUING BANK
		

		
			 
		

		
			WE HEREBY ISSUE OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO.  [                  ] (THE “LETTER OF CREDIT”) IN YOUR FAVOR BY ORDER OF [APPLICANT’S NAME] FOR AN AGGREGATED SUM NOT TO EXCEED USD1,200,000.00 (U.S. DOLLARS ONE MILLION AND TWO HUNDRED THOUSAND ONLY)  (THE “STATED AMOUNT”) EFFECTIVE IMMEDIATELY AND EXPIRING AT OUR COUNTERS LOCATED AT HSBC BANK USA, N.A., GLOBAL TRADE AND RECEIVABLES FINANCE (GTRF), 452 FIFTH AVENUE, NEW YORK, NY 10018 WITH OUR CLOSE OF BUSINESS ON [INSERT AN INITIAL EXPIRY DATE].
		

		
			THIS STANDBY LETTER OF CREDIT IS AVAILABLE BY YOUR DRAFT(S) AT SIGHT DRAWN ON US MENTIONING OUR LETTER OF CREDIT NUMBER INDICATED ABOVE AND ACCOMPANIED BY THE FOLLOWING:
		

		
			1.     BENEFICIARY'S SIGNED STATEMENT PURPORTEDLY SIGNED BY AN AUTHORIZED OFFICER OF BENEFICIARY, READING:  ''THE AMOUNT OF THIS DRAW UNDER IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER _________ IS BEING MADE PURSUANT TO THAT LEASE DATED [                  ] BETWEEN [BENEFICIARY], AS LANDLORD AND [APPLICANT], AS TENANT FOR PREMISES LOCATED AT [                  ].
		

		
			2.      THE ORIGINAL LETTER OF CREDIT AND THE ORIGINAL OF ANY SUBSEQUENT AMENDMENTS.
		

		
			PARTIAL AND MULTIPLE DRAWINGS ARE ALLOWED.
		

		
			IT IS A CONDITION OF THIS LETTER OF CREDIT THAT THE STATED AMOUNT WILL REDUCED IN ACCORDANCE WITH THE FOLLOWING SCHEDULE:
		

			
					
						DATE

					
					
						AMOUNT OF REDUCTION

					
					
						NEW AMOUNT

				
	
					
						02/01/2022

					
					
						USD240,000.00

					
					
						USD960,000.00

				
	
					
						02/01/2023

					
					
						USD240,000.00

					
					
						USD720,000.00

				

		
			
		

		
			

		 

		

			6

		

		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						02/01/2024

					
					
						USD240,000.00

					
					
						USD480,000.00

				
	
					
						02/01/2025

					
					
						USD240,000.00

					
					
						USD240,000.00

				
	
					
						02/01/2026

					
					
						USD240,000.00

					
					
						-0-

				

		
			 
		

		
			IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IT SHALL BE DEEMED AUTOMATICALLY EXTENDED, WITHOUT AMENDMENT, FOR ONE YEAR FROM THE PRESENT OR ANY FUTURE EXPIRATION DATE HEREOF, UNLESS WE NOTIFY YOU NO LATER THAN (60) DAYS IN WRITING PRIOR TO ANY EXPIRATION DATE BY OVERNIGHT COURIER SERVICE THAT WE ELECT NOT TO CONSIDER THIS LETTER OF CREDIT RENEWED FOR ANY SUCH ADDITIONAL PERIOD. HOWEVER, THIS LETTER OF CREDIT WILL NOT BE EXTENDED BEYOND FEBRUARY 01, 2026 (THE FINAL EXPIRY DATE).
		

		
			THIS CREDIT IS TRANSFERABLE IN FULL, BUT NOT IN PART, AND MAY BE TRANSFERRED SUCCESSIVELY. WE SHALL NOT RECOGNIZE ANY TRANSFER OF THIS CREDIT UNTIL A TRANSFER REQUEST IN THE FORM OF EXHIBIT (A) ATTACHED HERETO IS FILED WITH US, AND OUR TRANSFER CHARGES HAVE BEEN PAID BY THE [APPLICANT/BENEFICIARY] (PROVIDED THAT BENEFICIARY MAY, BUT SHALL NOT BE OBLIGATED TO, PAY SUCH FEES TO US ON BEHALF OF APPLICANT, AND SEEK REIMBURSEMENT FROM APPLICANT).  OUR TRANSFER FEE IS 0.25% ON THE AMOUNT OF THE TRANSFER (MINIMUM $300). THE ORIGINAL LETTER OF CREDIT AND ANY ORIGINAL AMENDMENTS MUST ACCOMPANY THE TRANSFER FORM.  THE SIGNATURE AND THE TITLE OF THE PERSON SIGNING THE TRANSFER FORM MUST BE VERIFIED BY YOUR BANK.
		

		
			WE HEREBY ENGAGE WITH YOU THAT ALL DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF THIS IRREVOCABLE STANDBY LETTER OF CREDIT WILL BE DULY HONORED UPON DELIVERY OF DOCUMENTS AS SPECIFIED HEREIN IF PRESENTED AT OUR COUNTERS ON OR BEFORE THE EXPIRY DATE INDICATED HEREIN.
		

		
			THE ISSUING BANK WILL NOT EFFECT A TRANSFER (IF APPLICABLE) OR MAKE ANY PAYMENT UNDER THIS STANDBY LETTER OF CREDIT TO ANY PERSON WHO IS LISTED ON A UNITED NATIONS, EUROPEAN UNION OR UNITED STATES OF AMERICA SANCTIONS LIST, NOR TO ANY PERSON WITH WHOM THE ISSUING BANK IS PROHIBITED FROM ENGAGING IN TRANSACTIONS UNDER APPLICABLE UNITED STATES FEDERAL OR STATE ANTI-BOYCOTT, ANTI-TERRORISM OR ANTI-MONEY LAUNDERING LAWS OR US SANCTIONS LAWS.
		

		
			THIS STANDBY LETTER OF CREDIT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE TERMS OF THE INTERNATIONAL STANDBY PRACTICES (ISP98), INTERNATIONAL CHAMBER OF COMMERCE PUBLICATIONS NO. 590. AS TO MATTERS NOT GOVERNED BY THE ISP98, THIS STANDBY LETTER OF CREDIT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, THE UNIFORM COMMERCIAL CODE, AS IN EFFECT IN THE STATE OF NEW YORK.
		

		
			PLEASE SEND ALL CLAIMS AND CORRESPONDENCE TO THE FOLLOWING ADDRESS:
		

		
			HSBC BANK USA, N.A.,
		

		
			GLOBAL TRADE AND RECEIVABLES FINANCE (GTRF)
		

		
			TRANSACTIONS SERVICES
		

		
			452 FIFTH AVENUE
		

		
			NEW YORK, NY 10018
		

		
			FOR ANY QUERIES, PLEASE CONTACT OUR CLIENT SERVICES TEAM AT:
		

		
			GTRF.USCS@US.HSBC.COM OR PHONE NO. 1 866 327 0763 OR FAX NO. 1 718 488 4909
		

		
			
		

		
			

		 

		

			7

		

		

		
			EXHIBIT A
		

		
			TRANSFER REQUEST FORM FOR STANDBY LETTER OF CREDIT
		

		
			DATE:
		

		
			TO:  HSBC BANK USA, N.A.
		

		
			GLOBAL TRADE AND RECEIVABLES FINANCE (GTRF)
		

		
			452 FIFTH AVENUE
		

		
			NEW YORK, NY 10018
		

		
			RE:       YOUR STANDBY LETTER OF CREDIT NO.
		

		
			GENTLEMEN:
		

		
			FOR VALUE RECEIVED, THE UNDERSIGNED BENEFICIARY HEREBY IRREVOCABLY TRANSFERS TO:
		

		
			_____________________________________
		

		
			(NAME OF TRANSFEREE)
		

		
			_____________________________________
		

		
			(ADDRESS)
		

		
			_____________________________________
		

		
			(ADDRESS)
		

		
			ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY TO DRAW UNDER THE ABOVE LETTER OF CREDIT IN ITS ENTIRETY.
		

		
			BY THIS TRANSFER ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY IN SUCH LETTER OF CREDIT ARE TRANSFERRED TO THE TRANSFEREE AND THE TRANSFEREE SHALL HAVE THE SOLE RIGHTS AS BENEFICIARY THEREOF, INCLUDING SOLE RIGHTS RELATING TO ANY AMENDMENTS, WHETHER INCREASES OR EXTENSIONS, OR OTHER AMENDMENTS AND WHETHER NOW EXISTING OR HEREAFTER MADE. ALL AMENDMENTS ARE TO BE ADVISED DIRECTLY TO THE TRANSFEREE WITHOUT YOUR CONSENT OR NOTICE TO THE UNDERSIGNED BENEFICIARY.
		

		
			THE ORIGINAL OF SUCH LETTER OF CREDIT IS RETURNED HEREWITH AND WE ASK YOU TO ENDORSE THE TRANSFER ON THE REVERSE THEREOF, AND FORWARD IT DIRECTLY TO THE TRANSFEREE WITH YOUR CUSTOMARY NOTICE OF TRANSFER.
		

			
					
						 

					
					
						 

				
	
					
						NAME OF BENEFICIARY:

					
					
						 

				
	
					
						BY:

					
					
						 

				
	
					
						PRINT NAME:

					
					
						 

				
	
					
						TITLE:

					
					
						 

				
	
					
						TELEPHONE NUMBER:

					
					
						 

				

		
			 
		

			
					
						THE ABOVE SIGNATURE, WITH TITLE AS STATED, CONFORMS TO THAT ON FILE WITH US, AND IS AUTHORIZED FOR THE EXECUTION OF THIS DOCUMENT.

				

		
			 
		

			
					
						NAME OF BANK:

					
					
						 

				

		
			 
		

		
			
		

		
			

		 

		

			8

		

		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						(PRINTED)

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						BANK ADDRESS:

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						BY:

					
					
						 

					
					
						 

				
	
					
						 

					
					
						AUTHORIZED SIGNATURE

					
					
						 

				
	
					
						NAME:

					
					
						 

					
					
						 

				
	
					
						 

					
					
						(PRINTED)

					
					
						 

				
	
					
						TITLE:

					
					
						 

					
					
						 

				
	
					
						 

					
					
						(PRINTED)

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						TELEPHONE NUMBER:

					
					
						 

					
					
						 

				

		
			 
		

		 

		

			9a101changeintermsagreeme

DocuSign Envelope ID: ED670D5A-2A5A-487C-BF11-BB22CDB2011E                                                   CHANGE            IN   TERMS         AGREEMENT          Principal            Loan   Date        Maturity             Loan   No              Call / Coll           Account            Officer      Initials    $8,500,000.00            05-11-2020        06-05-2022             310036                 4A  / 013            XAA0004              RSG         References  in the boxes  above  are for Lender's use only and do  not limit the applicability of this document to any particular loan or item.                                      Any item  above  containing "***"  has been  omitted  due to text length limitations.     Borrower:        XPEL,  Inc.                                                    Lender:         THE  BANK   OF SAN   ANTONIO                     618  West  Sunset  Road                                                        HEADQUARTERS                     San  Antonio, TX   78216                                                       1900  NW   LOOP  410                                                                                                    SAN  ANTONIO,    TX  78213        Principal  Amount:      $8,500,000.00                                                                   Date  of  Agreement:       May   11,   2020       DESCRIPTION    OF  EXISTING   INDEBTEDNESS.      Promissory  Note  and Business  Loan  Agreement   both  dated November    5, 2019  in the amount  of       $8,500,000.00    and a current  outstanding balance  of $6,000,000.00    (the "Promissory   Note"), which  Borrower  acknowledges    and  agrees was       properly executed  and is valid and enforceable, subject to no defenses  of any kind.       DESCRIPTION    OF  CHANGE     IN TERMS.     Borrower   has requested   that Lender  renew   and  extend  the maturity  date.  This Change   in Terms       Agreement   extends  and renews   the Promissory  Note  and Business  Loan  Agreement   and  all other loan documents  and  agreements  from  May  5,       2020  to May  5, 2022.       PROMISE   TO  PAY.    XPEL,  Inc. ("Borrower")  promises  to pay  to THE  BANK    OF  SAN  ANTONIO    ("Lender"),  or order, in lawful money   of the       United States of America,   the principal amount  of Eight Million Five Hundred  Thousand   & 00/100   Dollars ($8,500,000.00)   or so much   as may       be outstanding, together  with interest on the unpaid outstanding  principal balance of each  advance.  Interest shall be calculated from the date of       each advance  until repayment  of each  advance  or maturity, whichever  occurs  first.       CHOICE   OF USURY    CEILING  AND   INTEREST   RATE.   The  interest rate on this Agreement   has been  implemented   under  the "Weekly  Ceiling" as       referred to in Sections 303.002  and  303.003  of the Texas  Finance  Code.       PAYMENT.     Borrower  will pay this loan in one payment  of all outstanding principal plus all accrued unpaid interest on June 5, 2022.  In addition,       Borrower  will pay  regular monthly  payments   of all accrued  unpaid  interest due  as of each  payment   date,  beginning  July 5, 2020,   with all       subsequent  interest payments   to be  due on  the same  day  of each  month   after that. Unless  otherwise  agreed  or required by  applicable law,       payments   will be applied first to any accrued  unpaid  interest; then to principal; and then  to any  late charges.   Borrower  will pay  Lender  at       Lender's  address  shown   above  or  at such  other  place as  Lender  may   designate  in writing.  Notwithstanding   any  other  provision of  this       Agreement,  Lender  will not charge interest on any  undisbursed  loan proceeds.   No  scheduled  payment,  whether  of principal or interest or both,       will be due unless sufficient loan funds have been  disbursed by  the scheduled  payment  date to justify the payment.       VARIABLE   INTEREST    RATE.   The  interest rate on this loan is subject to change  from  time to time  based  on changes  in an  independent  index       which  is the Wall Street Journal Prime Rate  as published  in the "Money  Rates"  table in the Wall Street Journal from  time to time (the "Index").       The Index  is not necessarily the lowest  rate charged  by Lender  on its loans.  Lender  will tell Borrower the current Index rate upon  Borrower's       request.  The interest rate change  will not occur more  often than each  day.  Borrower  understands   that Lender may  make   loans based  on other       rates as well. The Index  currently is 3.250%  per annum.   Interest prior to maturity on the unpaid principal balance of this loan will be calculated       as described  in the "INTEREST    CALCULATION     METHOD"     paragraph  using  a rate of 1.000  percentage   point under  the Index  (the "Margin"),       adjusted if necessary for any minimum   and  maximum    rate limitations described below, resulting in an initial rate of 3.500% per annum  based  on       a year  of 360  days.   If Lender  determines,  in its sole discretion, that the  Index  has become    unavailable or unreliable, either temporarily,       indefinitely, or permanently, during the  term of this loan, Lender  may  amend   this loan by  designating a  substantially similar substitute index.       Lender may   also amend   and adjust  the Margin  to accompany    the substitute index.  The  change   to the Margin  may  be  a positive or negative       value, or zero.   In making   these  amendments,    Lender  may   take into consideration  any  then-prevailing  market  convention   for selecting a       substitute index and  margin  for the specific Index that is unavailable or unreliable. Such  an amendment    to the terms  of this loan will become       effective and bind  Borrower  10  business  days  after Lender gives  written notice to Borrower   without  any action  or consent  of the Borrower.       NOTICE:   Under  no circumstances   will the interest rate on this loan be less than 3.500%  per annum   or more  than (except for any higher default       rate or Post Maturity Rate  shown   below)  the lesser of 18.000%   per  annum  or the  maximum    rate allowed by  applicable law.  For purposes  of       this Agreement,  the "maximum    rate allowed by  applicable law" means   the greater of  (A) the maximum    rate of interest permitted under federal       or other law applicable to the indebtedness   evidenced  by this Agreement,   or (B)  the "Weekly   Ceiling" as referred to in Sections 303.002   and       303.003  of the Texas  Finance  Code.       INTEREST   CALCULATION     METHOD.     Interest on this loan is computed on  a 365/360   basis; that is, by applying the ratio of the interest rate over       a year of 360 days,  multiplied by the outstanding  principal balance, multiplied by the actual number  of days the principal balance is outstanding,       unless such  calculation would  result in a usurious rate, in which case  interest shall be calculated on a per diem  basis of a year of 365  or 366       days, as the case may  be.  All interest payable under this loan is computed  using this method.       PREPAYMENT.      Borrower  may  pay  without penalty all or a portion of the amount  owed  earlier than it is due. Prepayment  in full shall consist of       payment  of the remaining  unpaid  principal balance together with  all accrued and  unpaid interest and all other amounts,  costs  and expenses   for       which  Borrower  is responsible under  this Agreement  or any  other agreement   with Lender  pertaining to this loan, and in no event  will Borrower       ever be required to pay  any  unearned  interest. Early payments   will not, unless agreed  to by Lender  in writing, relieve Borrower of Borrower's       obligation to continue to make   payments   of accrued  unpaid interest.  Rather, early payments   will reduce the principal balance  due.  Borrower       agrees not to send  Lender  payments   marked  "paid in full", "without recourse", or similar language.  If Borrower  sends such  a payment,   Lender       may  accept it without losing any of Lender's rights under this Agreement,   and Borrower  will remain obligated to pay  any further amount  owed  to       Lender.  All written  communications   concerning   disputed  amounts,  including any  check  or other  payment   instrument  that indicates that the       payment  constitutes  "payment   in full" of the amount  owed  or that is tendered  with  other conditions or limitations or as full satisfaction of a       disputed amount  must  be  mailed or delivered to: THE  BANK   OF SAN   ANTONIO,    1900  NW  Loop  410  San  Antonio, TX   78213.       LATE  CHARGE.     If a payment   is 10  days or  more  late, Borrower  will be charged  5.000%    of the  unpaid portion  of the regularly scheduled       payment.       INTEREST   AFTER   DEFAULT.     Upon   default, including failure to pay upon  final maturity, the interest rate on  this loan shall be  increased to       18.000%   per  annum  based  on  a year of 360   days.  However,   in no event  will the interest rate exceed the maximum    interest rate limitations       under applicable law.       DEFAULT.    Each of the following shall constitute an Event of Default under  this Agreement:            Payment  Default.  Borrower  fails to make any payment   when  due  under the Indebtedness.            Other Defaults.  Borrower  fails to comply with  or to perform any  other term, obligation, covenant  or condition contained  in this Agreement            or in any of the Related  Documents    or to comply  with  or to perform  any  term, obligation, covenant  or condition  contained  in any other

 

DocuSign Envelope ID: ED670D5A-2A5A-487C-BF11-BB22CDB2011E                                                       CHANGE          IN  TERMS       AGREEMENT       Loan   No:  310036                                               (Continued)                                                                 Page   2             agreement  between   Lender and  Borrower.            Default in Favor of Third Parties. Borrower   defaults under any  loan, extension of credit, security agreement,  purchase  or sales agreement,            or any other agreement,  in favor of any  other creditor or person that may  materially affect any of Borrower's  property  or ability to perform            Borrower's  obligations under this Agreement  or any  of the Related Documents.            False Statements.   Any  warranty, representation  or statement  made  or furnished  to Lender by Borrower   or on Borrower's  behalf under  this            Agreement   or the Related Documents   is false or misleading in any material respect, either now or at the time made  or furnished or becomes            false or misleading at any time thereafter.            Insolvency.  The  dissolution or termination of Borrower's  existence  as a going business,  the insolvency  of Borrower,  the appointment  of a            receiver for  any  part of  Borrower's   property,  any  assignment   for the  benefit  of creditors,  any  type  of creditor  workout,   or the            commencement     of any proceeding  under any  bankruptcy  or insolvency laws  by or against Borrower.            Creditor or Forfeiture Proceedings.    Commencement     of  foreclosure or  forfeiture proceedings, whether   by  judicial proceeding, self-help,            repossession  or  any other  method,   by  any  creditor of Borrower   or by  any  governmental   agency   against  any  collateral securing the            Indebtedness.   This includes a garnishment   of any of Borrower's  accounts,  including deposit  accounts,  with Lender.  However,   this Event            of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness  of the claim which  is the basis of            the creditor or forfeiture proceeding and  if Borrower gives Lender  written notice  of the creditor or forfeiture proceeding and deposits  with            Lender monies  or a surety bond  for the creditor or forfeiture proceeding, in an amount  determined  by Lender,  in its sole discretion, as being            an adequate  reserve or bond  for the dispute.            Events Affecting  Guarantor.  Any  of the preceding  events  occurs with  respect to any guarantor,  endorser, surety, or accommodation    party            of any  of the Indebtedness   or any  guarantor,  endorser,  surety, or accommodation     party dies  or becomes   incompetent,   or revokes  or            disputes the validity of, or liability under, any Guaranty of the Indebtedness evidenced by this Note.            Change  In Ownership.   Any  change  in ownership  of twenty-five percent (25%)   or more of the common    stock of Borrower.            Adverse  Change.    A  material adverse  change   occurs  in Borrower's  financial condition, or Lender  believes  the prospect  of payment   or            performance  of the Indebtedness  is impaired.            Insecurity. Lender in good  faith believes itself insecure.       LENDER'S   RIGHTS.    Upon  default, Lender may  declare  the entire indebtedness, including the unpaid  principal balance under  this Agreement,  all       accrued  unpaid  interest, and all other amounts,   costs  and expenses   for which   Borrower  is responsible  under  this Agreement   or any  other       agreement  with Lender  pertaining to this loan, immediately due, without  notice, and then Borrower  will pay that amount.       ATTORNEYS'     FEES; EXPENSES.     Lender  may  hire an attorney  to help collect this Agreement  if Borrower  does  not pay, and  Borrower  will pay       Lender's reasonable  attorneys' fees.  Borrower  also will pay Lender all other amounts  Lender actually incurs as court costs, lawful fees for filing,       recording, releasing to  any public  office any  instrument  securing  this Agreement;   the reasonable   cost actually expended   for repossessing,       storing, preparing for sale, and selling any security; and fees for noting a lien on or transferring a certificate of title to any motor vehicle offered       as security for this Agreement, or premiums   or identifiable charges received in connection with  the sale of authorized insurance.       JURY  WAIVER.    Lender  and Borrower  hereby  waive  the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender       or Borrower  against the other.       GOVERNING     LAW.   This Agreement   will be governed   by federal law applicable to Lender  and, to the extent  not preempted   by federal law, the       laws of the State of Texas  without regard  to its conflicts of law provisions. This Agreement  has been  accepted  by Lender  in the State of Texas.       CHOICE  OF  VENUE.    If there is a lawsuit, and if the transaction evidenced by this Agreement  occurred  in BEXAR   County,  Borrower  agrees upon       Lender's request to submit  to the jurisdiction of the courts of BEXAR  County, State  of Texas.       DISHONORED     CHECK   CHARGE.     Borrower  will pay a processing  fee of $25.00  if any check  given by  Borrower  to Lender as  a payment  on  this       loan is dishonored.       RIGHT  OF  SETOFF.   To the extent  permitted by applicable law,  Lender reserves  a right of setoff in all Borrower's accounts with Lender (whether       checking, savings, or some   other account).  This includes all accounts Borrower   holds jointly with someone  else and  all accounts Borrower  may       open in the future.  However,   this does not include any  IRA or Keogh   accounts,  or any trust accounts  for which  setoff would  be prohibited by       law.  Borrower  authorizes Lender,  to the extent permitted  by applicable law, to charge  or setoff all sums owing  on the  debt against any  and all       such accounts.       COLLATERAL.      Borrower  acknowledges    this Agreement   is secured  by a  Security Agreement    dated November    5, 2019,   which  was  properly       executed  and is valid and enforceable subject to no defenses  of any kind.       LINE OF  CREDIT.   This Agreement   evidences  a revolving line of credit. Advances  under  this Agreement,  as well as  directions for payment  from       Borrower's  accounts,  may  be requested  orally or in writing by Borrower  or by an authorized  person.  Lender  may,  but need  not, require that all       oral requests be confirmed  in writing. Borrower  agrees  to be liable for all sums either: (A) advanced   in accordance  with the instructions of an       authorized person  or  (B)  credited to any of Borrower's  accounts   with Lender.   The unpaid  principal balance owing   on this Agreement   at any       time may  be  evidenced  by  endorsements   on  this Agreement   or by Lender's  internal records, including daily computer  print-outs.  Lender  will       have no obligation to advance  funds  under this Agreement   if: (A)  Borrower  or any guarantor  is in default under the terms of this Agreement  or       any  agreement   that Borrower   or any   guarantor  has  with  Lender,  including any  agreement   made   in  connection  with  the  signing of  this       Agreement;   (B)  Borrower  or any  guarantor  ceases  doing business  or is insolvent; (C)  any  guarantor seeks,  claims or otherwise  attempts  to       limit, modify or revoke such  guarantor's guarantee  of this Agreement   or any other  loan with Lender;  (D)  Borrower   has applied funds  provided       pursuant  to this Agreement   for purposes  other  than those  authorized  by Lender;  or  (E)  Lender  in good  faith believes itself insecure. This       revolving line of credit shall not be subject to Ch. 346 of the Texas Finance Code.       CONTINUING     VALIDITY.    Except  as expressly  changed   by  this Agreement,   the terms  of  the original obligation or obligations, including all       agreements  evidenced   or securing the obligation(s), remain unchanged   and  in full force and effect. Consent  by Lender  to this Agreement   does       not waive Lender's  right to strict performance of the obligation(s) as changed, nor  obligate Lender to make  any  future change  in terms.  Nothing       in this Agreement   will constitute a satisfaction of the  obligation(s). It is the intention of  Lender  to retain as liable parties all makers  and       endorsers of the original obligation(s), including accommodation  parties, unless a party is expressly released by  Lender in writing. Any  maker  or       endorser, including accommodation    makers,  will not be released  by virtue of this Agreement.   If any person  who   signed the original obligation       does not  sign this Agreement   below,   then all persons  signing below  acknowledge    that this Agreement   is given  conditionally, based  on the       representation to Lender  that the non-signing party consents   to the changes  and provisions  of this Agreement  or otherwise  will not be released       by it. This waiver applies not only to any initial extension, modification or release, but also to all such subsequent actions.       RENEWAL    AND   EXTENSION.     This Agreement   is given in renewal  and  extension  and not  in novation of the following described  indebtedness:       RENEWAL    AND   EXTENSION    OF REVOLVING     LINE OF  CREDIT  #310036.

 

DocuSign Envelope ID: ED670D5A-2A5A-487C-BF11-BB22CDB2011E                                                       CHANGE          IN  TERMS       AGREEMENT       Loan   No:  310036                                               (Continued)                                                                 Page   3        SUCCESSORS     AND   ASSIGNS.     Subject to any  limitations stated in this Agreement  on transfer of Borrower's  interest, this Agreement  shall be       binding upon  and inure to the  benefit of the parties, their successors and  assigns.  If ownership  of the Collateral becomes   vested  in a person       other than  Borrower,  Lender,  without  notice to Borrower,   may  deal  with Borrower's   successors  with  reference  to this Agreement   and  the       Indebtedness  by  way  of  forbearance  or extension  without  releasing  Borrower  from  the  obligations of this Agreement    or liability under the       Indebtedness.       NOTIFY  US  OF  INACCURATE     INFORMATION     WE  REPORT    TO CONSUMER      REPORTING    AGENCIES.    Please  notify us if we report any inaccurate       information about  your account(s) to a consumer   reporting agency.   Your written notice describing  the specific inaccuracy(ies) should be sent to       us at the following address: THE  BANK   OF SAN   ANTONIO    1900  NW   Loop 410  San  Antonio,  TX 78213.       MISCELLANEOUS      PROVISIONS.    If any part of this Agreement  cannot  be enforced,  this fact will not affect the rest of the Agreement. Borrower       does not  agree  or intend to pay,  and  Lender  does  not agree  or intend to contract  for, charge, collect, take, reserve  or receive (collectively       referred to herein as "charge or collect"), any amount  in the nature of interest or in the nature of a fee for this loan, which would in any way  or       event (including demand,  prepayment,   or acceleration) cause  Lender to charge  or collect more  for this loan than the maximum   Lender  would  be       permitted to charge  or collect by federal law  or the law  of the State  of Texas  (as applicable). Any   such excess  interest or unauthorized  fee       shall, instead of anything stated to the contrary,  be applied first to reduce the principal balance  of this loan, and when  the  principal has been       paid in full, be refunded to Borrower. The  right to accelerate maturity of sums  due under  this Agreement  does  not include the right to accelerate       any interest which  has not  otherwise  accrued  on the date  of such acceleration, and  Lender  does  not intend to charge  or collect any unearned       interest in the event of acceleration. All sums  paid or agreed to be  paid to Lender for the use, forbearance  or detention  of sums  due hereunder       shall, to the extent permitted by applicable law, be  amortized, prorated,  allocated and spread  throughout  the full term of the loan evidenced  by       this Agreement   until payment  in full so that the  rate or amount   of interest on  account  of the loan  evidenced  hereby  does  not  exceed  the       applicable usury ceiling. Lender may   delay or forgo enforcing any of its rights or remedies under  this Agreement  without  losing them.  Borrower       and any  other  person  who   signs, guarantees  or  endorses  this Agreement,   to  the extent  allowed  by  law, waive  presentment,   demand    for       payment,  notice of dishonor,  notice of intent to accelerate  the maturity  of this Agreement,  and  notice of acceleration  of the maturity  of this       Agreement.    Upon  any  change   in the terms  of this Agreement,   and  unless  otherwise  expressly  stated  in writing, no party  who  signs  this       Agreement,  whether   as maker,  guarantor, accommodation    maker  or endorser, shall be released from  liability. All such parties agree that Lender       may  renew  or extend  (repeatedly and  for any  length of time) this loan or release any  party or guarantor  or collateral; or impair, fail to realize       upon or perfect  Lender's security interest in the collateral without the consent  of or notice to anyone.   All such parties also agree  that Lender       may  modify  this loan without  the consent  of or notice to anyone   other than the  party with whom    the modification  is made.   The obligations       under this Agreement   are joint and several.       PRIOR  TO  SIGNING   THIS  AGREEMENT,     BORROWER     READ   AND   UNDERSTOOD      ALL THE   PROVISIONS    OF THIS  AGREEMENT,     INCLUDING    THE       VARIABLE   INTEREST   RATE   PROVISIONS.     BORROWER     AGREES   TO  THE  TERMS    OF THE  AGREEMENT.        BORROWER:         XPEL, INC.                                        5/11/2020       By:           Barry R. Wood,  CFO  of XPEL,  Inc.        LENDER:        THE  BANK  OF  SAN  ANTONIO                                       5/11/2020       X         ROBERT   S GLENN,   EXECUTIVE    VICE  PRESIDENT                                              LaserPro, Ver. 19.4.10.036 Copr. Finastra USA Corporation 1997, 2020. All Rights Reserved. - TX L:\CFI\LPL\D20C.FC TR-6484 PR-15

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