Document:

Exhibit 10.5

 

 

SECURITY
AGREEMENT

 

THIS
SECURITY AGREEMENT (this “Agreement”),
dated as of April 15, 2020, is executed by Nemaura Medical Inc., a Nevada corporation (“Nemaura”), Dermal Diagnostics
Limited, an England and Wales corporation (“Dermal Diagnostics”), and Trial Clinic Limited, an England and Wales
corporation (“Trial Clinic,” and together with Nemaura and Dermal Diagnostics, “Debtor”),
in favor of Chicago Venture Partners, L.P., a Utah limited partnership (“Secured Party”).

 

A.              
Debtor has issued to Secured Party a certain Secured Promissory Note of even date herewith, as may be amended from
time to time, in the original face amount of $6,015,000.00 (the “Note”).

 

B.              
In order to induce Secured Party to extend the credit evidenced by the Note, Debtor has agreed to enter into this
Agreement and to grant Secured Party a security interest in the Collateral (as defined below).

 

NOW, THEREFORE,
in consideration of the above recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Debtor hereby agrees with Secured Party as follows:

 

1.               
Definitions and Interpretation. When used in this Agreement, the following terms have the following respective meanings:

 

“Collateral” has the meaning given to
that term in Section 2 hereof.

 

“Final
Funding Date” means the date that the Initial Cash Purchase Price (as defined in the Purchase Agreement) has been funded
and both Investor Notes (as defined in the Purchase Agreement) have been paid in full.

 

“Intellectual
Property” all patents and all rights corresponding to such patents throughout the world, now owned and existing.

 

“Lien”
shall mean, with respect to any property, any security interest, mortgage, pledge, lien, claim, charge or other encumbrance in,
of, or on such property or the income therefrom, including, without limitation, the interest of a vendor or lessor under a conditional
sale agreement, capital lease or other title retention agreement, or any agreement to provide any of the foregoing, and the filing
of any financing statement or similar instrument under the UCC or comparable law of any jurisdiction.

 

“Obligations”
means (a) all loans, advances, future advances, debts, liabilities and obligations, howsoever arising, owed by Debtor or any of
its affiliates and/or subsidiaries to Secured Party or any affiliate of Secured Party of every kind and description, now existing
or hereafter arising, whether created by the Note, this Agreement, that certain Note Purchase Agreement of even date herewith,
entered into by and between Debtor and Secured Party (the “Purchase Agreement”), any other Transaction Documents
(as defined in the Purchase Agreement), any other agreement between Debtor or any affiliate or subsidiary of Secured Party) and
Secured Party (or any affiliate of Secured Party) or any other promissory note issued by Debtor (or any affiliate or subsidiary
of Debtor) in favor of Secured Party (or any affiliate of Secured Party), any modification or amendment to any of the foregoing,
guaranty of payment or other contract or by a quasi-contract, tort, statute or other operation of law, whether incurred or owed
directly to Secured Party or as an affiliate of Secured Party or acquired by Secured Party or an affiliate of Secured Party by
purchase, pledge or otherwise, (b) all costs and expenses, including attorneys’ fees, incurred by Secured Party or any affiliate
of Secured Party in connection with the Note or in connection with the collection or enforcement of any portion of the indebtedness,
liabilities or obligations described in the foregoing clause (a), (c) the payment of all other sums, with interest thereon, advanced
in accordance herewith to protect the security of this Agreement, and (d) the performance of the covenants and agreements of Debtor
(or any of its affiliates or subsidiaries) contained in this Agreement and all other Transaction Documents.

 

    	1  

    	 

    

 

 

“Permitted
Liens” means (a) Liens for taxes not yet delinquent or Liens for taxes being contested in good faith and by appropriate
proceedings for which adequate reserves have been established, and (b) Liens in favor of Secured Party under this Agreement or
arising under the other Transaction Documents or prior agreements between Debtor and Secured Party.

 

“UCC”
means the Uniform Commercial Code as in effect in the jurisdiction whose laws would govern the security interest in, including
without limitation the perfection thereof, and foreclosure of the applicable Collateral, or any equivalent laws in any other jurisdiction
that govern the grant of a security interest in the types of assets encumbered by this Agreement.

 

Unless otherwise defined herein,
all terms defined in the UCC have the respective meanings given to those terms in the UCC.

 

2.               
Grant of Security Interest. As security for the Obligations, Debtor hereby pledges to Secured Party and grants to
Secured Party, effective as of the Final Funding Date, a first-position security interest in all right, title, interest, claims
and demands of Debtor in and to the property described in Schedule A hereto, and all replacements, proceeds, products, and
accessions thereof (collectively, the “Collateral”).

 

3.               
Authorization to File Financing Statements. Debtor hereby irrevocably authorizes Secured Party at any time following
the Final Funding Date and from time to time thereafter to file in any filing office in any Uniform Commercial Code jurisdiction
or other jurisdiction of Debtor or its subsidiaries any financing statements or documents having a similar effect and amendments
thereto that provide any other information required by the Uniform Commercial Code (or similar law of any non-United States jurisdiction,
if applicable) of such state or jurisdiction for the sufficiency or filing office acceptance of any financing statement or amendment,
including whether Debtor is an organization, the type of organization and any organization identification number issued to Debtor.
Debtor agrees to furnish any such information to Secured Party promptly upon Secured Party’s request.

 

4.               
General Representations and Warranties. Debtor represents and warrants to Secured Party that (a) Debtor is the owner
of the Collateral and that no other person has any right, title, claim or interest (by way of Lien or otherwise) in, against or
to the Collateral, other than Permitted Liens, (b) upon the filing of UCC-1 financing statements with the appropriate state office
(or an equivalent in the appropriate foreign office), Secured Party shall have a perfected first-position security interest in
the Collateral to the extent that a security interest in the Collateral can be perfected by such filing, except for Permitted Liens,
(c) Debtor has received at least a reasonably equivalent value in exchange for entering into this Agreement, (d) Debtor is not
insolvent, as defined in any applicable state or federal statute, nor will Debtor be rendered insolvent by the execution and delivery
of this Agreement to Secured Party; and (e) as such, this Agreement is a valid and binding obligation of Debtor.

 

		5.	Additional Covenants. Debtor hereby agrees:

 

5.1.          
to perform all acts that may be necessary to maintain, preserve, protect and perfect in the Collateral, the Lien granted
to Secured Party therein, and the perfection and priority of such Lien;

 

5.2.          
to procure, execute (including endorse, as applicable), and deliver from time to time any endorsements, assignments, financing
statements, certificates of title, and all other instruments,

 

 

    	2  

    	 

    

documents and/or writings reasonably deemed necessary
or appropriate by Secured Party to perfect, maintain and protect Secured Party’s Lien hereunder and the priority thereof;

 

5.3.          
to provide at least fifteen (15) days prior written notice to Secured Party of any of the following events: (a) any changes
or alterations of Debtor’s name, (b) any changes with respect to Debtor’s address or principal place of business, (c)
the formation of any subsidiaries of Debtor, or (d) any changes in location of the Collateral;

 

5.4.          
upon the occurrence of an Event of Default (as defined in the Note) under the Note and, thereafter, at Secured Party’s
request, to endorse (up to the outstanding amount under such promissory notes at the time of Secured Party’s request), assign
and deliver any promissory notes and all other instruments, documents, or writings included in the Collateral to Secured Party,
accompanied by such instruments of transfer or assignment duly executed in blank as Secured Party may from time to time specify;

 

5.5.          
to the extent the Collateral is not delivered to Secured Party pursuant to this Agreement, to keep the Collateral at the
principal office of Debtor (unless otherwise agreed to by Secured Party in writing), and not to relocate the Collateral to any
other locations without the prior written consent of Secured Party;

 

5.6.          
not to sell or otherwise dispose, or offer to sell or otherwise dispose, of the Collateral or any interest therein (other
than inventory in the ordinary course of business);

 

5.7.          
not to, directly or indirectly, allow, grant or suffer to exist any Lien upon any of the Collateral, other than Permitted
Liens;

 

5.8.          
not to grant any license or sublicense under any of its Intellectual Property, or
enter into any other agreement with respect to any of its Intellectual Property, except in the ordinary course of Debtor’s
business;

 

5.9.          
to the extent commercially reasonable and in Debtor’s good faith business
judgment: (a) to file and prosecute diligently any patent, trademark or service mark applications
pending as of the date hereof or hereafter until all Obligations shall have been paid
in full, (b) to make application on unpatented but patentable inventions and on trademarks
and service marks, (c) to preserve and maintain all rights in all of its Intellectual
Property, and (d) to ensure that all of its Intellectual Property is and remains enforceable.
Any and all costs and expenses incurred in connection with each of Debtor’s obligations under this Section 5.9 shall be borne
by Debtor. Debtor shall not knowingly and unreasonably abandon any right to file a
patent, trademark or service mark application, or abandon any pending patent application, or any other of its Intellectual Property,
without the prior written consent of Secured Party except for Intellectual Property that Debtor
determines, in the exercise of its good faith business judgment, is not or is
no longer material to its business;

 

5.10.       
upon the request of Secured Party at any time or from
time to time, and at the sole cost and expense (including, without limitation,
reasonable attorneys’ fees) of Debtor, Debtor shall take all actions and execute and deliver any and all instruments, agreements,
assignments, certificates and/or documents reasonably required by Secured Party to collaterally assign any and all of
Debtor’s patent, copyright and trademark registrations and applications now owned or hereafter acquired to and in
favor of Secured Party; and

 

5.11.       
at any time amounts paid by Secured Party under the Transaction Documents are
used to purchase Collateral, Debtor shall perform all acts that may be necessary,
and otherwise fully cooperate with Secured Party, to cause (a) any such amounts paid by Secured Party to be disbursed directly
to the sellers of any such Collateral, (b) all certificates of title pertaining to such Collateral (as applicable) to be properly
filed and reissued to reflect Secured Party’s Lien on such Collateral, and (c) all such reissued certificates of title to
be delivered to and held by Secured Party.

 

    	3  

    	 

    

 

 

6.               
Authorized Action by Secured Party. Debtor hereby irrevocably appoints Secured Party as its attorney-in-fact (which
appointment is coupled with an interest) and agrees that Secured Party may perform (but Secured Party shall not be obligated to
and shall incur no liability to Debtor or any third party for failure so to do) any act which Debtor is obligated by this Agreement
to perform, and to exercise such rights and powers as Debtor might exercise with respect to the Collateral, including the right
to (a) collect by legal proceedings or otherwise and endorse, receive and receipt for all dividends, interest, payments, proceeds
and other sums and property now or hereafter payable on or on account of the Collateral; (b) enter into any extension, reorganization,
deposit, merger, consolidation or other agreement pertaining to, or deposit, surrender, accept, hold or apply other property in
exchange for the Collateral; (c) make any compromise or settlement, and take any action Secured Party deems advisable, with respect
to the Collateral, including without limitation bringing a suit in Secured Party’s own name to enforce any Intellectual Property;
(d) endorse Debtor’s name on all applications, documents, papers and instruments necessary or desirable for Secured Party
in the use of any Intellectual Property; (e) grant or issue any exclusive or non-exclusive license under any Intellectual Property
to any person or entity; (f) assign, pledge, sell, convey or otherwise transfer title in or dispose of any Intellectual Property
to any person or entity; (g) cause the Commissioner of Patents and Trademarks, United States Patent and Trademark Office (or as
appropriate, such equivalent agency in foreign countries) to issue any and all patents and related rights and applications to Secured
Party as the assignee of Debtor’s entire interest therein; (h) file a copy of this Agreement with any governmental agency,
body or authority, including without limitation the United States Patent and Trademark Office and, if applicable, the United States
Copyright Office or Library of Congress, at the sole cost and expense of Debtor; (i) insure, process and preserve the Collateral;
(j) pay any indebtedness of Debtor relating to the Collateral; (k) execute and file UCC financing statements and other documents,
certificates, instruments and agreements with respect to the Collateral or as otherwise required or permitted hereunder; and (l)
take any and all appropriate action and execute any and all documents and instruments that may be necessary or useful to accomplish
the purposes of this Agreement; provided, however, that Secured Party shall not exercise any such powers granted pursuant
to clauses (a) through (g) above prior to the occurrence of an Event of Default and shall only exercise such powers during the
continuance of an Event of Default. The powers conferred on Secured Party under this Section 6 are solely to protect its interests
in the Collateral and shall not impose any duty upon it to exercise any such powers. Secured Party shall be accountable only for
the amounts that it actually receives as a result of the exercise of such powers, and neither Secured Party nor any of its stockholders,
directors, officers, managers, employees or agents shall be responsible to Debtor for any act or failure to act, except with respect
to Secured Party’s own gross negligence or willful misconduct. Nothing in this Section 6 shall be deemed an authorization
for Debtor to take any action that it is otherwise expressly prohibited from undertaking by way of other provision of this Agreement.

 

		7.	Default and Remedies.

 

7.1.          
Default. Debtor shall be deemed in default under this Agreement upon the occurrence of an Event of Default.

 

    	4  

    	 

    

 

 

7.2.          
Remedies. Upon the occurrence of any such Event of Default, Secured Party shall have the rights of a secured creditor
under the UCC, all rights granted by this Agreement and by law, including, without limiting the foregoing, (a) the right to require
Debtor to assemble the Collateral and make it available to Secured Party at a place to be designated by Secured Party, and (b)
the right to take possession of the Collateral, and for that purpose Secured Party may enter upon premises on which the Collateral
may be situated and remove the Collateral therefrom. Debtor hereby agrees that fifteen (15) days’ notice of a public sale
of any Collateral or notice of the date after which a private sale of any Collateral may take place is reasonable. In addition,
Debtor waives any and all rights that it may have to a judicial hearing in advance of the enforcement of any of Secured Party’s
rights and remedies hereunder, including, without limitation, Secured Party’s right following an Event of Default to take
immediate possession of Collateral and to exercise Secured Party’s rights and remedies with respect thereto. Secured Party
may also have a receiver appointed to take charge of all or any portion of the Collateral and to exercise all rights of Secured
Party under this Agreement. Secured Party may exercise any of its rights under this Section 7.2 without demand or notice of any
kind. The remedies in this Agreement, including without limitation this Section 7.2, are in addition to, not in limitation of,
any other right, power, privilege, or remedy, either in law, in equity, or otherwise, to which Secured Party may be entitled. No
failure or delay on the part of Secured Party in exercising any right, power, or remedy will operate as a waiver thereof, nor will
any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right hereunder.
All of Secured Party’s rights and remedies, whether evidenced by this Agreement or by any other agreement, instrument or
document shall be cumulative and may be exercised singularly or concurrently.

 

7.3.          
Standards for Exercising Rights and Remedies. To the extent that applicable law imposes duties on Secured Party
to exercise remedies in a commercially reasonable manner, Debtor acknowledges and agrees that it is not commercially unreasonable
for Secured Party (a) to fail to incur expenses reasonably deemed significant by Secured Party to prepare Collateral for disposition,
(b) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other
law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or
disposed of, (c) to fail to exercise collection remedies against account debtors or other persons obligated on Collateral or to
fail to remove liens or encumbrances on or any adverse claims against Collateral, (d) to exercise collection remedies against
account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection
specialists, (e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not
the Collateral is of a specialized nature, (f) to contact other persons, whether or not in the same business as Debtor, for expressions
of interest in acquiring all or any portion of the Collateral, (g) to hire one or more professional auctioneers to assist in the
disposition of Collateral, whether or not the Collateral is of a specialized nature, (h) to dispose of Collateral by utilizing
Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability
of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j)
to disclaim disposition warranties, (k) to purchase insurance or credit enhancements to insure Secured Party against risks of
loss, collection or disposition of Collateral or to provide to Secured Party a guaranteed return from the collection or disposition
of Collateral, or (l) to the extent deemed appropriate by Secured Party, to obtain the services of other brokers, investment bankers,
consultants and other professionals to assist Secured Party in the collection or disposition of any of the Collateral. Debtor
acknowledges that the purpose of this Section is to provide non-exhaustive indications of what actions or omissions by Secured
Party would fulfill Secured Party’s duties under the UCC in Secured Party’s exercise of remedies against the Collateral
and that other actions or omissions by Secured Party shall not be deemed to fail to fulfill such duties solely on account of
not being indicated in this Section. Without limitation upon the foregoing, nothing contained in this Section shall be
construed to grant any rights to Debtor or to impose any duties on Secured Party that would not have been granted or imposed by
this Agreement or by applicable law in the absence of this Section.

 

 

    	5  

    	 

    

 

7.4.          
Marshalling. Secured Party shall not be required to marshal any present or future Collateral for, or other assurances
of payment of, the Obligations or to resort to such Collateral or other assurances of payment in any particular order, and all
of its rights and remedies hereunder and in respect of such Collateral and other assurances of payment shall be cumulative and
in addition to all other rights and remedies, however existing or arising. To the extent that it lawfully may, Debtor hereby agrees
that it will not invoke any law relating to the marshalling of Collateral which might cause delay in or impede the enforcement
of Secured Party’s rights and remedies under this Agreement or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof
is otherwise assured, and, to the extent that it lawfully may, Debtor hereby irrevocably waives the benefits of all such laws.

 

7.5.          
Application of Collateral Proceeds. The proceeds and/or avails of the Collateral, or any part thereof, and the proceeds
and the avails of any remedy hereunder (as well as any other amounts of any kind held by Secured Party at the time of, or received
by Secured Party after, the occurrence of an Event of Default) shall be paid to and applied as follows:

 

(a)             
First, to the payment of reasonable costs and expenses, including all amounts expended to preserve the value of the Collateral,
of foreclosure or suit, if any, and of such sale and the exercise of any other rights or remedies, and of all proper fees, expenses,
liability and advances, including reasonable legal expenses and attorneys’ fees, incurred or made hereunder by Secured Party;

 

(b)            
Second, to the payment to Secured Party of the amount then owing or unpaid on the Note (to be applied first to accrued interest
and fees and second to outstanding principal) and all amounts owed under any of the other Transaction Documents or other documents
included within the Obligations; and

 

(c)             
Third, to the payment of the surplus, if any, to Debtor, its successors and assigns, or to whosoever may be lawfully entitled
to receive the same.

 

In the absence of final payment
and satisfaction in full of all of the Obligations, Debtor shall remain liable for any deficiency.

 

		8.	Miscellaneous.

 

8.1.          
Notices. Any notice required or permitted hereunder shall be given in the manner provided in the subsection titled
“Notices” in the Purchase Agreement, the terms of which are incorporated herein by this reference.

 

8.2.          
Non-waiver. No failure or delay on Secured Party’s part in exercising any right hereunder shall operate as
a waiver thereof or of any other right nor shall any single or partial exercise of any such right preclude any other further exercise
thereof or of any other right.

 

8.3.          
Amendments and Waivers. This Agreement may not be amended or modified, nor may any of its terms be waived, except
by written instruments signed by Debtor and Secured Party. Each waiver or consent under any provision hereof shall be effective
only in the specific instances for the purpose for which given.

 

8.4.          
Assignment. This Agreement shall be binding upon and inure to the benefit of Secured Party and Debtor and their respective
successors and assigns; provided, however, that Debtor may not sell, assign or delegate rights and obligations hereunder
without the prior written consent of Secured Party.

 

8.5.          
Cumulative Rights, etc. The rights, powers and remedies of Secured Party under this Agreement shall be in addition
to all rights, powers and remedies given to Secured Party by virtue of any applicable law, rule or regulation of any governmental
authority, or the Note, all of which rights, powers, and remedies shall be cumulative and may be exercised successively or concurrently
without impairing Secured Party’s rights hereunder. Debtor waives any right to require Secured Party to proceed against any
person or entity or to exhaust any Collateral or to pursue any remedy in Secured Party’s power.

 

    	6  

    	 

    

 

 

8.6.          
Partial Invalidity. If any part of this Agreement is construed to be in violation of any law, such part shall be
modified to achieve the objective of the parties to the fullest extent permitted and the balance of this Agreement shall remain
in full force and effect.

 

8.7.          
Expenses. Debtor shall pay on demand all reasonable fees and expenses, including reasonable attorneys’ fees
and expenses, incurred by Secured Party in connection with the custody, preservation or sale of, or other realization on, any of
the Collateral or the enforcement or attempt to enforce any of the Obligations which are not performed as and when required by
this Agreement.

 

8.8.          
Entire Agreement. This Agreement and the other Transaction Documents, taken together, constitute and contain the
entire agreement of Debtor and Secured Party with respect to this particular matter and supersede any and all prior agreements,
negotiations, correspondence, understandings and communications between the parties, whether written or oral, respecting the subject
matter hereof.

 

8.9.          
Governing Law; Venue. Except as otherwise specifically set forth herein, the parties expressly agree that this Agreement
shall be governed solely by the laws of the State of Utah, without giving effect to the principles thereof regarding the conflict
of laws; provided, however, that enforcement of Secured Party’s rights and remedies against the Collateral as provided
herein will be subject to the UCC. The provisions set forth in the Purchase Agreement to determine the proper venue for any disputes
are incorporated herein by this reference.

 

8.10.       
Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO DEMAND THAT
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE RELATIONSHIPS OF THE PARTIES
HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE
STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT IT IS KNOWINGLY AND VOLUNTARILY WAIVING ITS RIGHT
TO DEMAND TRIAL BY JURY.

 

8.11.       
Purchase Agreement; Arbitration of Disputes. By executing this Agreement, each party agrees to be bound by the terms,
conditions and general provisions of the Purchase Agreement and the other Transaction Documents, including without limitation the
Arbitration Provisions (as defined in the Purchase Agreement) set forth as an exhibit to the Purchase Agreement.

 

8.12.       
Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original and
all of which together shall constitute one instrument. Any electronic copy of a party’s executed counterpart will be deemed
to be an executed original.

 

8.13.       
Further Assurances. Debtor shall do and perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates, instruments and documents, as Secured Party may reasonably
request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.

 

8.14.       
Time of the Essence. Time is expressly made of the essence with respect to each and every provision of this Agreement.

 

[Remainder of page intentionally
left blank; signature page follows]

 

    	7  

    	 

    

IN WITNESS WHEREOF, Secured
Party and Debtor have caused this Agreement to be executed as of the day and year first above written.

 

 

 

	 	SECURED PARTY:
	 	 
	 	CHICAGO VENTURE PARTNERS,
    L.P.
	 	 
	 	By: Chicago Venture Management, L.L.C.,

                             its General Partner

	 	 
	 	    By:  CVM, Inc., its Manager
	 	 
	 	         By: John M. Fife
	 	         	John M. Fife
 

 

	 	DEBTOR:
	 	 
	 	NEMAURA MEDICAL INC.
	 	 
	 	 
	 	By:      	/s/ Dewan F.H. Chowdhury
	 	Name:

        Title: 
	Dewan F.H. Chowdhury
Chairman and CEO

 

	 	 
	 	DERMAL DIAGNOSTICS LIMITED
	 	 
	 	 
	 	By:      	/s/ Dewan F.H. Chowdhury
	 	Name:

        Title: 
	Dewan F.H. Chowdhury
Chairman and CEO

 

	 	TRIAL CLINIC LIMITED
	 	 
	 	By:      	/s/ Dewan F.H. Chowdhury
	 	Name:

        Title: 
	Dewan F.H. Chowdhury
Chairman and CEO

 

 

 

[Signature Page to Security
Agreement]

 

 

    	  

    	 

    

 

SCHEDULE A

TO SECURITY AGREEMENT

 

All right, title, interest,
claims and demands of Debtor in and to all of Debtor’s patents and all other
proprietary rights, and all rights corresponding to Debtor’s patents throughout the world, now owned and existing, and all
replacements, proceeds, products, and accessions thereof.Exhibit 10.1

 

PROMISSORY NOTE

 

 

	Principal	Loan Date	Maturity	Loan No	SBA Loan No	Account	Officer	Initials
	$6,373,707.00	04/15/2020	04/15/2022	50002200	55284370-06	 	SBV	 

 

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:	Dawson Geophysical Company	Lender:	Dominion Bank
	Address:	
        508
        West Wall, Suite 800

        Midland,
        TX 79701
	Address:	
        17304 Preston Road, Suite 1100

        Dallas, Texas 75252

 

PROMISE TO PAY.  Borrower
promises to pay to Lender, or order, in lawful money of the United States of America, the principal amount set forth above, together
with interest on the unpaid principal balance from Loan Date, as set forth above, calculated as described in the “INTEREST
CALCULATION METHOD” paragraph using a fixed interest rate of 1.000% per annum, until paid in full. The interest rate may
change under the terms and conditions of the “INTEREST AFTER DEFAULT” section.

 

PAYMENT.  No payments
are due on the loan evidenced by this Note until October 15, 2020, although interest will continue to accrue during the deferment
period. Borrower will pay this loan in 19 equal monthly installments of principal and interest in the amount necessary to fully
amortize the loan through the maturity date, as the same may be further adjusted as provided herein. Borrower’s first payment
will be due on October 15, 2020, and all subsequent payments will be due on the same day of each month thereafter. Borrower’s
final payment will be due on the date of Maturity, as set forth above. Unless otherwise agreed or required by applicable law, payments
will be applied first to accrued interest and then to the outstanding principal balance. Borrower will pay Lender at Lender’s
address shown above or at such other place as Lender may designate in writing.

 

POTENTIAL LOAN FORGIVENESS.
 This loan evidenced by this Note is being made to Borrower under the Paycheck Protection Program (“Program”) administered
by the Small Business Administration (“SBA”). Under the Program, Borrower may apply to Lender for forgiveness of the
amount due on this loan in an amount equal to the sum of the following costs incurred by Borrower during the 8-week period beginning
on the date of first disbursement on this loan: (a) payroll costs, (b) any payment of interest on a covered obligation (which shall
not include any prepayment of or payment of principal on a covered mortgage obligation), (c) any payment on a covered rent obligation,
and (d) any covered utility payment. The amount of loan forgiveness shall be calculated (and may be reduced) in accordance with
the requirements of the Program, including the provisions of Section 1106 of the CARES Act. Not more than 25% of the amount forgiven
can be attributable to non-payroll costs. However, Borrower will remain liable for the full and punctual payment and satisfaction
of the remaining outstanding principal balance of the loan plus accrued but unpaid interest, except with respect to any such portion
of the Note that has been forgiven. Borrower acknowledges that Lender makes no representation or warranty as to: (i) Borrower’s
ability to receive forgiveness for any portion of the Note under applicable law or the Program, or the amount of any such forgiveness;
(ii) the documentation required for any forgiveness; or (iii) the tax consequences, federal, state or otherwise, if any, associated
with the forgiveness of any portion of the Note. Lender will have no liability to Borrower with respect to any determination made
by Lender or SBA with respect to the amount of loan forgiveness, if any, to which Borrower may be entitled under the Program. The
amount of loan forgiveness, if any, will be applied in the same manner as all other payments under this Note, and Lender will recalculate
the fixed payments due under this Note after loan forgiveness, if any, based on a new amortization schedule and provide Borrower
with notice of such revised payment amount.

 

INTEREST CALCULATION METHOD.
 Interest on this Note is computed on a 30/360 simple interest basis; that is, by applying the ratio of the interest rate over
the number of days in a year (360 for all years, including leap years), multiplied by the outstanding principal balance, multiplied
by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this
method.

 

PREPAYMENT.  Borrower
may prepay this Note in whole or in part at any time without penalty. Borrower may prepay 20 percent or less of the unpaid principal
balance at any time without notice. If Borrower prepays more than 20 percent and the loan has been sold on the secondary market,
Borrower must: (a) give Lender written notice; (b) pay all accrued interest; and (c) if the prepayment is received less than 21
days from the date Lender received the notice, pay an amount equal to 21 days interest from the date Lender received the notice,
less any interest accrued during the 21 days and paid under clause (b) of this paragraph. If Borrower does not prepay within 30
days from the date Lender received the notice, Borrower must give Lender a new notice.

 

Prepayment in full will 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 Note or any other agreement with Lender pertaining to this loan, and
in no event will Borrower 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 under the payment schedule. 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 Note, 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 Dominion Bank, 17304 Preston Road, Suite 1100, Dallas, Texas 75252.

 

NON-RECOURSE.  Lender
and SBA shall have no recourse against any individual shareholder, member or partner of Borrower for non-payment of the loan, except
to the extent that such shareholder, member or partner uses the loan proceeds for an unauthorized purpose.

 

INTEREST AFTER DEFAULT.
 Upon default, including failure to pay upon final maturity, the interest rate on this Note will be increased to a rate per
annum equal to the maximum rate published by SBA in the Federal Register.

 

DEFAULT. 
Borrower is in default under this Note if Borrower does not make a payment when due under this Note, or if Borrower: (a)
fails to perform as required by this Note or any other documents relating to the loan; (b) defaults on any other loan with
Lender; (c) does not disclose, or anyone acting on Borrower’s behalf does not disclose, any material fact to Lender or
to the SBA; (d) makes, or anyone acting on Borrower’s behalf makes, a materially false or misleading representation to
Lender or to the SBA; (e) defaults on any loan or agreement with another creditor, if Lender believes the default may
materially affect Borrower’s ability to pay this Note; (f) fails to pay any taxes when due; (g) becomes the subject of
a proceeding under any bankruptcy or insolvency law; (h) has a receiver or liquidator appointed for any part of its business
or property; (i) makes an assignment for the benefit of creditors; (j) has any adverse change in financial condition or
business operation that Lender believes may materially affect Borrower’s ability to pay this Note; (k) reorganizes,
merges, consolidates, or otherwise changes ownership or business structure without Lender’s prior written consent; (l)
becomes the subject of a civil or criminal action that Lender believes may materially affect Borrower’s ability to pay
this Note; or (m) for any reason it is determined that the Borrower is not eligible to obtain the loan under the Program or
otherwise violates any term or requirement of the Program.

 

     

     

    

 

	Loan No 	Promissory Note 

 (Continued) 	Page 2 

 

LENDER'S RIGHTS.  Upon
default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest, and all other
amounts, costs and expenses for which Borrower is responsible under this Note 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 or pay someone else to help collect this Note if Borrower does not pay, and Borrower will pay Lender’s
reasonable attorney fees. Borrower will also pay Lender any other amounts Lender actually incurs, including court costs or other
expenses, arising out of or relating to the collection of this Note, unless otherwise prohibited by applicable law.

 

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 Note
will be governed by the laws of the State of Texas without regard to its conflicts of law provisions. This Note has been accepted
by Lender in the State of Texas.

 

SBA PROVISIONS. When the
SBA is the holder, this Note will be interpreted and enforced under Federal law, including SBA regulations. Lender or SBA may use
state or local procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using
such procedures, SBA does not waive any Federal immunity from state or local control, penalty, tax, or liability. As to this Note,
Borrower may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt
Federal law.

 

CHOICE OF VENUE. 
If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Dallas County, State
of Texas.

 

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.

 

AGREEMENT TO MAKE CHANGES
TO THIS NOTE.  Borrower acknowledges that in order to disburse the loan proceeds to Borrower at the earliest possible time,
Lender has prepared this Note based on its current understanding of the Program and the terms thereof. Notwithstanding anything
herein to the contrary, (i) Borrower agrees that this Note shall be interpreted and construed in a manner consistent with the requirements
of the Program, and (ii) Borrower agrees that, if Lender deems it necessary or appropriate to amend this Note in any respect in
order for this Note to comply with the requirements of the Program or for the SBA to guarantee all or any portion of the amounts
outstanding under this Note, Borrower will sign and deliver to Lender any amendment to this Note or a new note in replacement of
this Note, with the terms of any amendment or new Note retroactive to the date of this Note. Borrower will also execute any additional
documentation the Lender requests that Lender believes is consistent with the purposes of the Program.

 

ASSIGNMENT; SUCCESSOR INTERESTS.
 This Note benefits Lender and its successors and assigns, and binds Borrower and Borrower's heirs, successors, assigns, and
representatives. This Note may be assigned or transferred, in whole or in part, by Lender to any person or entity at any time without
notice to or the consent of Borrower. Borrower may not assign or transfer this Note or any of its rights or obligations hereunder
without the prior written consent of Lender.

 

GENERAL PROVISIONS. 
NOTICE: Under no circumstance (and notwithstanding any other provisions of this Note) shall the interest charged, collected, or
contracted for on this Note exceed the maximum rate permitted by law. The term “maximum rate permitted by law” as used
in this Note means the maximum rate of interest permitted under federal or other law applicable to the indebtedness evidenced by
this Note. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. 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 laws of the State of Texas, as
applicable. Any such excess interest or unauthorized fee will, instead of anything stated to the contrary, be applied first to
reduce the principal balance of this Note, and when the principal has been paid in full, be refunded to Borrower. The right to
accelerate maturity of sums due under this Note 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 Note 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 Note without losing them. No term of this
Note may be waived, modified, or amended, except by an instrument in writing signed by Borrower and Lender. To the extent permitted
by law, Borrower waives presentment, demand for payment, notice of dishonor, notice of intent to accelerate the maturity of this
Note, and notice of acceleration of the maturity of this Note. Upon any change in the terms of this Note, and unless otherwise
expressly stated in writing, no party who signs this Note will be released from liability. Borrower agrees that Lender may renew
or extend (repeatedly and for any length of time) this loan and take any other action deemed necessary by Lender without the consent
of or notice to anyone.

 

COUNTERPARTS; INTEGRATION;
EFFECTIVENESS.  This Note and any amendments, waivers, consents, or supplements hereto may be executed in counterparts, each
of which will constitute an original, but all taken together will constitute a single contract. THIS WRITTEN PROMISSORY NOTE REPRESENTS
THE FINAL AGREEMENT BETWEEN BORROWER AND LENDER, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN BORROWER AND LENDER.

 

ELECTRONIC EXECUTION. 
The words “execution,” “signed,” “signature,” and words of similar import in the Note will
be deemed to include electronic or digital signatures or the keeping of records in electronic form, each of which will be of the
same effect, validity and enforceability as manually executed signatures or a paper-based record-keeping system, as the case may
be, to the extent and as provided for under applicable law, including the Electronic Signatures in Global and National Commerce
Act of 2000 (15 U.S.C.A. § 7001 et seq.).

 

PRIOR TO SIGNING THIS NOTE,
BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE.

 

     

     

    

 

	Loan No 	Promissory Note 

 (Continued) 	Page  

  

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

 

BORROWER:

  

	Dawson Geophysical Company	 
	  	 
	By:	/s/ James Brata	 
	Name:  	 James Brata	 
	Title:	Secretary

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00307-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00307-of-00352.parquet"}]]