Document:

Exhibit
10.1

 

AMENDED
AND RESTATED

LICENSE
AGREEMENT

 

THIS
Amended and Restated License Agreement, (hereinafter “Agreement”), dated July 16, 2019 (the, “Effective
Date”) is between Taronis Technologies, Inc., a Delaware Corporation,
f/k/a MagneGas Applied Technology Solutions, Inc. and f/k/a MagneGas Corporation, and MAGNEGAS IP, LLC, a Delaware limited liability
company (collectively, “Company”); and Taronis Fuels, Inc.,
a Delaware Corporation (“Licensee”).

 

RECITALS

 

WHEREAS,
on July 16, 2019, the Company and the Licensee entered into that certain Distribution and License Agreement (“Original
Agreement”);

 

WHEREAS,
the Company and the Licensee have agreed to amend and restate the Original Agreement as set forth in this Agreement;

 

WHEREAS,
the Company and the Licensee acknowledge and confirm that all payments which have been received, earned, are due, or pending under
the Original Agreement shall be merged into this Agreement;

 

WHEREAS,
Company owns all right, title and interest in the Licensed IP (defined below); and

 

WHEREAS,
Licensee is and desires to continue to be the exclusive worldwide manufacturer and distributor of certain Products using the Licensed
IP, and Company desires to grant to Licensee a license to the Licensed IP, as set forth in this Agreement.

 

NOW,
THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:

 

AGREEMENT

 

	1.	Definitions.

 

	 	1.1.	“Affiliate”
    means, with respect to the parties, any Third-Party that now or hereafter directly or indirectly, through one or more intermediaries,
    Controls, is Controlled by, or is under common Control with, such party, or entity, but only for so long as and during the
    period that such Control exists.
	 	 	 
	 	1.2.	“Confidential
    Information” means any nonpublic business or technical information of each party regardless of whether such information
    is marked or identified as confidential, including, without limitation, Licensed IP, Documentation, any trade secrets and
    unpublished patents provided by either party, excluding any information that (a) is in or enters the public domain without
    breach of this Agreement through no fault of the receiving party, (b) the receiving party was demonstrably in possession of
    prior to first receiving it from the disclosing party, or (c) the receiving party receives from a Third-Party without restriction
    on disclosure and without breach of a nondisclosure obligation.
	 	 	 
	 	1.3.	“Change
    of Control” means (a) any merger, reorganization or consolidation of a party into or with another Person in which
    the owners of the party immediately prior to such merger, reorganization or consolidation own less than fifty percent (50%)
    of the surviving entity immediately after such merger, reorganization or consolidation; (b) any sale, transfer or other disposition
    of all or substantially all of the assets of the party; or (c) the effectuation by the party of a transaction or series of
    related transactions in which more than thirty percent (30%) of the voting power of the party is transferred.

 

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	 	1.4.	“Control”
    means: (a) ownership of more than fifty percent (50%) of the outstanding stock or securities entitled to vote for the election
    of directors or similar managing authority of the subject entity; (b) ownership of more than fifty percent (50%) of the ownership
    interest that represents the right to make decisions for the subject entity; (c) any other ability to elect more than fifty
    percent (50%) of the board of directors or similar managing authority of the subject entity, whether by contract or otherwise;
    or (d) the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies
    of the subject entity whether through the ownership of voting securities, though other voting rights, by contract or otherwise.
	 	1.5.	“Documentation”
    means all documentation or other materials (including manuals, instructions, training materials, specifications, flow charts,
    logic diagrams, developer notes, and other support materials) relating to the design, operation and functionality of the Software.
	 	 	 
	 	1.6.	“Know-How”
    means technical information, trade secrets, formulas, prototypes, specifications, directions, instructions, test protocols,
    procedures, data, manufacturing data, formulation or production technology, conceptions, ideas, processes, methods, materials,
    formulae, enhancements, modifications, technological developments, techniques, systems, tools, designs, and other knowledge,
    information, skills, and materials owned or licensed by Company which Company provides to Licensee under this Agreement.
	 	 	 
	 	1.7.	“Licensed
    IP” means the Patents, Trademarks, Know-How, and Software, and, subject to the terms and conditions of this Agreement,
    any Licensee Inventions to any of the foregoing. 
	 	 	 
	 	1.8.	“Net
    Product Sales” means all cash and non-cash consideration (including, securities, discounts or credits provided to
    Licensee) obtained from the Sale, use or other exploitation of any Products by Licensee or its Affiliates (including any payment
    or other consideration received by Licensee or any of its Affiliates directly or indirectly from any end user for any use
    or other exploitation of any Product) less the following items directly attributable to the Sale of any such Product that
    are both itemized on a customer invoice and actually paid by Licensee or its Affiliate to a Third-Party: (a) sales, value
    added, use or other taxes or government charges actually paid, excluding income taxes; (b) import or export duties actually
    paid; (c) freight, transport, packing or transit insurance charges actually paid; or (d) other amounts actually refunded,
    allowed or credited due to rejections or returns, but not exceeding the original invoiced amount. Where a Product is not Sold,
    but is otherwise disposed of (such as given away for free for promotional purposes) or is sold in connection with another
    items or services, the “Net Product Sales” of such Product for the purposes of computing Royalties will
    be the net selling price at which a Product of similar kind and quality are currently being offered for sale by Licensee or
    any of its Affiliates (whichever is greater). For clarity, dispositions between or among Licensee and any of its Affiliates
    will not be deemed a Sale (except where such Affiliate is an end user of such goods or services), but Net Product Sales will
    include subsequent final sales to Third Parties by Licensee or its Affiliates. 
	 	 	 
	 	1.9.	“Other
    Product” means any product (including, any device, good, or gas) or service that uses plasma arc technology for
    fuel generation (but excluding any product or service pertaining to water treatment or treated water), that: (a) uses or is
    made using the Know-How, (b) constitutes, contains, uses or pertains to any of the Software, or (c) is branded under or bearing
    any of the Trademarks.

 

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	 	1.10.	“Third
    Party” means any Person other than Company or Licensee that is not an Affiliate of Company or Licensee.
	 	 	 
	 	1.11.	“Trademark(s)”
    means any registered trademark or trademark application listed in Schedule A or otherwise approved (in writing) by
    Company for use under this Agreement.
	 	 	 
	 	1.12.	“Patent(s)”
    means any registered patent or patent application listed in Schedule B; any patent or patent application pertaining
    to any Licensee Inventions; and, any continuation, continuation-in-part, divisional, reissue, renewal, or extension of any
    of the foregoing applications or registrations.
	 	 	 
	 	1.13.	“Patented
    Product” means any product (including, any device, good, or gas) or service which on a country-by-country basis,
    the making, using, selling, offering for sale, importing or exporting thereof in the country in question would (without the
    licenses granted hereunder) infringe directly, indirectly by inducement of infringement, or indirectly by contributory infringement,
    at least one pending Valid Claim (were it to have issued) or issued Valid Claim in that country, but excluding any product
    or service pertaining to water treatment or treated water.
	 	 	 
	 	1.14.	“Person”
    means any individual, corporation, limited liability company, partnership, joint venture, trust, business, association or
    other entity.
	 	 	 
	 	1.15.	 “Product”
    means collectively the Patented Products and the Other Products. 
	 	 	 
	 	1.16.	“Royalty(ies)”
    means collectively the Patent Royalties and the Other Royalties. 
	 	 	 
	 	1.17.	“Sell”,
    “Sale” or “Sold” means any sale, transfer or other disposition of goods or services
    for which consideration is received by Licensee.
	 	 	 
	 	1.18.	“Software”
    means the object code (executable) and Source Code versions of the software products owned or licensed by Company which Company
    provides to Licensee under this Agreement.
	 	 	 
	 	1.19.	“Source
    Code” means the human readable version of a software program that requires compilation or other manipulation before
    it can be executed by a computer.
	 	 	 
	 	1.20.	“Third-Party(ies)”
    means any individual or entity that is not a party to this Agreement.
	 	 	 
	 	1.21.	“Valid
    Claim” means (a) a claim of an issued and unexpired Patent that has not been abandoned, revoked, or held unenforceable
    or invalid in a decision from which an appeal cannot be taken, or (b) a claim in any pending application for a Patent.

 

	2.	License
    Grants. Subject to Licensee’s continuing compliance with the terms of this Agreement, Company hereby grants to Licensee
    the below licenses. 

 

	 	2.1.	Trademark
    License. A royalty-bearing, exclusive (solely with respect to the Patented Products) and non-exclusive (with respect to
    Other Products or any other goods or services), world-wide, non-transferable (except as set forth in Section 19) and
    non-sublicensable (except as set forth in Section 3) license to use, copy, distribute, perform and display the Trademarks
    in conjunction with the Products and services pertaining thereto.
	 	 	 
	 	2.2.	Patent
    License. A royalty-bearing, exclusive, non-transferable (except as set forth in Section 19) and non-sublicensable
    (except as set forth in Section 3) license under the Patents to make, use, Sell, offer for Sale, import, export and
    otherwise commercialize the Patented Products.

 

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	 	2.3.	Know-How
    License. A royalty-bearing, non-exclusive, non-transferrable (except as set forth in Section 19) and non-sublicensable
    (except as set forth in Section 3) license to use the Know-How to make, use, Sell, offer for Sale, import, export and
    otherwise commercialize the Products.
	 	 	 
	 	2.4.	Software
    License. A worldwide, royalty-bearing, non-exclusive, non-transferable (except as set forth in Section 19) license
    to (a) modify, and make derivative works of the Source Code and Documentation, and (b) compile, distribute (pursuant to a
    sublicense agreement that is in a form that is acceptable to Company) the Software in executable object code form, solely
    incorporated in or bundled with the Products. Except as set forth in Section 3, no other right to sublicense is granted.
    

 

	3.	Prohibition
    of Sublicensing. Licensee may sublicense the Trademarks, Know-How, Software or the Patents only with express prior written
    consent of Company.
	 	 
	4.	Ownership
    of Licensed IP; Quality Control; Marking; Licensee Improvements.

 

	 	4.1.	As
    between Company and Licensee, Company is the owner of the Licensed IP, all applications and registrations therefor, all associated
    common law rights, and all associated goodwill. Licensee’s use of the Trademarks inures to the benefit of Company. Licensee
    will not acquire or claim any title to the Licensed IP adverse to Company by the license granted herein, or through Licensee’s
    use of the Licensed IP. Licensee will, at Company’s cost, promptly sign all lawful documents, make lawful declarations
    and/or provide affidavits, reasonably requested by Company, in connection with the protection (including the application or
    maintenance of Company’s trademarks), enforcement or defense of the Licensed IP. Licensee will not perform, do, or cause
    any act to be done, or fail to take any action that was previously taken by Company, which would materially injure or impair
    Company’s rights, title, interest, and/or ownership in and to any Trademark (including any applications for registration
    and/or registrations therefore) and all goodwill therein. Licensee will not attempt to register any of the Licensed IP or
    any Licensee Invention, or any marks or names confusingly similar to any Trademarks.
	 	 	 
	 	4.2.	Licensee
    will use the Trademarks in conjunction with the Products under the quality standards and business practices that Company will
    from time to time establish and promulgate. Company maintains the right, at any reasonable time, and without prior notice,
    to inspect Licensee’s use of the Trademarks in conjunction with any of its products or services for the purpose of insuring
    that the quality of such products and services meets or exceeds Company’s then current standards. 
	 	 	 
	 	4.3.	Licensee
    will use reasonable efforts to mark all Patented Products in accordance with 35 USC 287(a) as follows: “U.S. Pat. No.
    [Patent number(s) from Schedule B] and all materials bearing the Trademarks with appropriate legend (TM or ®, and
    such other legend as required by Company from time to time). 
	 	 	 
	 	4.4.	Licensee
    hereby assigns to Company all right, title and interest in and to any improvement, derivative work, enhancement, or modification
    of any of the Licensed IP or any other works (including work of authorship) or materials used in connection with the Licensed
    IP or any advertising or marketing materials therefore (including all intellectual property rights thereto and all enforcement
    rights and remedies for past, present, and future infringement thereof) made by or on behalf of Licensee, or its employees
    and members (“Licensee Invention”). Licensee irrevocably waives (and to the extent necessary, has caused
    its employees, contractors and others to waive) any intellectual property or other rights therein, including moral rights,
    that cannot (as a matter of law) be assigned to Company. If Licensee believes that it has created a Licensee Invention, Licensee
    will promptly notify Company of such. At the request of Company and at no additional charge, Licensee will (and to the extent
    necessary, will cause its employees, contractors and others to) promptly execute and deliver all documents required to evidence,
    perfect, obtain, protect, defend, convey and enforce the rights of Company in the Licensee Inventions, as may be necessary
    or desirable for effecting and perfecting the foregoing rights.
	 	 	 
	 	4.5.	Company
    is solely responsible for managing and paying all fees and costs associated with maintaining registration of the Trademarks
    and the Patents. Company is not required to prosecute or maintain any of the Patents or Trademarks.

 

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	5.	New
    Intellectual Property. 

 

	 	5.1.	Licensing
    New Trademarks to Licensee. Company may seek to use and/or register additional trademarks. If the additional trademarks
    are related to the Products, Company may, in its sole discretion, add the additional trademarks to Schedule A, upon
    written notice to Licensee. Licensee will cooperate with Company to facilitate registration of additional trademarks, including
    helping Company to provide proof of use to the relevant trademark office and executing any documents reasonably necessary
    for the procurement of registrations. Such additional trademarks will be licensed on the same terms and the conditions as
    the license set forth in Section 2.1.
	 	 	 
	 	5.2.	Licensing
    New Patents to Licensee. Company may file additional patent applications and be awarded additional patents. If the additional
    patents/applications pertain to the Patented Product, Company may, in its sole discretion, add the additional patents/applications
    to Schedule B, upon written notice to Licensee. Such additional patents will be licensed on the same terms and the
    conditions as the license set forth in Section 2.2. 

 

	6.	Third
    Party Infringement. 

 

	 	6.1.	Licensee
    will provide Company with written notice promptly after becoming aware of any infringement or suspected infringement of any
    Licensed IP. Company may, in its sole discretion, choose to enforce the Licensed IP against such infringing Third-Party (including
    the right to seek past damages and injunctive relief) by filing suit in its own name. Licensee will not enforce the Licensed
    IP against any Third-Party. Licensee will use commercially reasonable efforts to provide items and cooperation reasonably
    requested by Company in connection with any such suit and Company shall promptly reimburse Licensee for any out-of-pocket
    costs and expenses it incurs in connection therewith.
	 	 	 
	 	6.2.	To
    the extent any information or documentation exchanged by the Parties with respect to the enforcement or prosecution of Licensed
    IP is privileged or work product information, the parties acknowledge such information may be protected from disclosure to
    any Person by the joint defense privilege, the common interest doctrine, the attorney-client privilege, the work product doctrine
    or other applicable privilege, right, immunity, doctrine or protection from disclosure (collectively, “Common Interest
    Information”). The sharing and exchange of any such Common Interest Information between or among the parties and/or
    their respective counsel pursuant to the terms of this Agreement will not constitute a waiver of any such privilege, immunity,
    doctrine or protection attaching thereto, and to the contrary all such privileges, immunities, doctrines and protections will
    be preserved, maintained and invoked to the fullest possible extent.

 

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	7.	Royalty
    Payments. Within thirty (30) days following the end of each calendar quarter after the date of this Agreement (“Reporting
    Period”), Licensee will deliver to Company a report describing all Product Sales by Licensee in such calendar quarter,
    and such report will be furnished to Company whether or not any royalties are payable with respect to the relevant calendar
    quarter. Concurrent with the delivery of the Sales report, Licensee will remit payment to Company for any Patent Royalties
    and Other Royalties due for such calendar quarter as described below. All Royalties will be made in U.S. dollars and wired
    or deposited electronically to an account specified in writing by Company.

 

	 	7.1.	Patent
    Royalty. Licensee will pay Company a royalty of one-half percent (0.5%) of any Net Product Sales from the Sale, use, or
    other exploitation of any Patented Products (“Patent Royalty(ies)”). 
	 	 	 
	 	7.2.	Other
    Royalty. Licensee will pay Company a royalty of six and a half percent (6.5%) of any Net Product Sales from the Sale,
    use, or other exploitation, by Licensee or any of its Affiliates, of (a) Other Products, (b) any services sold in connection
    with or that pertain to any Other Products, or (c) any services (i) sold or marketed directly or indirectly under any of the
    Trademarks, (ii) that are made with or use any of the Know-How, or (iii) constitute, contain, use or pertain to any Software,
    in each case (i) through (iii), that are sold in connection with or that pertain to any Patented Product (collectively, “Other
    Royalty(ies)”).
	 	 	 
	 	7.3.	For
    the avoidance of doubt, if a Product is both a Patented Product and an Other Product each of the Patent Royalty and Other
    Royalty apply to such Product. 

 

	8.	Reports
    and Audits.

 

	 	8.1.	Sales
    Reports. Contemporaneously with the payments made pursuant to Section 7, Licensee will deliver to Company a true
    and accurate report, certified by an officer of Licensee, giving such particulars of the business conducted by Licensee and
    its Affiliates (including copies of reports provided by Affiliates to Licensee) during the applicable Reporting Period under
    this Agreement as necessary for Company to account for Licensee’s payments, including Royalties, hereunder, even if
    no payments are due. Receipt or acceptance by Company of any report or of any sums paid by Licensee, will not preclude Company
    from questioning or auditing the completeness or accuracy of such statement or payment at any time. Licensee will include
    the following information in the report:

 

	 	8.1.1.	The
    period covered by the report;
	 	 	 
	 	8.1.2.	The
    name of any Affiliates whose activities are also covered by the report;
	 	 	 
	 	8.1.3.	Identification
    of each type of good or service for which any Royalty payments have become payable; 
	 	 	 
	 	8.1.4.	Sales
    segregated on a product-by-product, and a country-by-country basis, or an affirmative statement that no Sales were made. 
	 	 	 
	 	8.1.5.	Any
    changes in accounting methodologies used to account for and calculate the items included in the report since the previous
    report.

 

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	 	8.2.	Records.
    Licensee will keep, and will cause its Affiliates to keep, complete and accurate records of their Sales and other information
    reasonably requested by Company in sufficient detail to enable the payments made under this Agreement to be determined and
    audited for a period of seven (7) years after the applicable Reporting Period. Licensee will timely provide to Company any
    tax information and documents (such as form 1099) as required by law or reasonably requested by Company from time to time.
    
	 	 	 
	 	8.3.	Audit
    Rights. Licensee will make its (and its applicable Affiliates’) internal control report, and all other documents,
    reports and the books of account available to Company with respect to the production and Sales of Products for inspection,
    copying and audit by Company, its agents and representatives, during normal business hours, upon not less than five (5) business
    days advance notice, which will be made by Company at its own expense, except as provided below. Licensee will make available
    qualified employees and agents to promptly answer questions pertaining to such audit. If any amounts owed to Company have
    been underpaid, then Licensee will immediately pay Company the amount of such underpayment. If an audit reveals that Licensee’s
    reporting and/or record keeping are not in accordance with the requirements under this Agreement, or that there is an error
    in the payment of any Royalties with respect to the period being audited in excess of the lesser of ten thousand dollars ($10,000)
    or five percent (5%) of the Royalties, then without prejudice to any other amounts due to Company or to any of its rights
    hereunder, all costs and expenses incurred by Company in connection with such inspection and audit will be borne and promptly
    paid by Licensee. 

 

	9.	Term
    and Termination. This Agreement will be in effect from the Effective Date and will remain in force with respect to Licensed
    IP hereunder, until the rights under the applicable Licensed IP terminate, or unless terminated earlier as set forth herein:
    

 

	 	9.1.	This
    Agreement may be terminated by Company:

 

	 	9.1.1.	Upon
    written notice, if Licensee fails to make a Royalty payment when due and Licensee does not cure the failure to pay within
    fifteen (15) days of notice from Company of such failure; 
	 	 	 
	 	9.1.2.	Upon
    written notice, if Licensee ceases the Sale or production of any Patented Products for a period of three (3) or more months;
	 	 	 
	 	9.1.3.	Upon
    written notice, if the aggregate Royalties paid by Licensee to Company for any calendar year are fifty percent (50%) or less
    than the largest amount of aggregate Royalties paid by Licensee in any calendar year; or 
	 	 	 
	 	9.1.4.	In
    accordance with Section 19. 

 

	 	9.2.	This
    Agreement may be terminated by a party if the other party defaults in the performance of any of its obligations under this
    Agreement and such default continues for a period of thirty (30) days after the non-breaching party has provided written notice
    thereof.

 

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	10.	Confidential
    Information. The party receiving Confidential Information (the “Recipient”) from the other Party (the
    “Discloser”) will maintain the Confidential Information in confidence using no less than reasonable care.
    The Recipient will use the Confidential Information only during the term of the Agreement and as solely expressly permitted
    herein, and will disclose such Confidential Information only to Third-Parties with a need to know in connection with the exercise
    of rights and obligations under this Agreement (and only subject to binding use and disclosure restrictions at least as protective
    as those set forth herein executed in writing by such Third-Parties). The Recipient’s duty to maintain the Confidential
    Information in confidence will survive for a period of three (3) years following the earlier of the termination of the Agreement,
    except with respect to any Confidential Information that is a trade secret for which the Recipient’s duty to hold such
    trade secrets in confidence will survive the termination of this Agreement and remain in effect until the Confidential Information
    no longer qualifies as a trade secret. In the event the Recipient is legally compelled by any Third-Party, through deposition
    questions, interrogatories, requests for information or documents, subpoenas, civil investigative demands or similar processes,
    to make any disclosure of Confidential Information, the Recipient will advise the Discloser (unless prevented from doing so
    by law) and will: (a) inform such Third-Party to whom the disclosure will be made that such Third-Party must keep the Confidential
    Information strictly confidential; and (b) use reasonable efforts to take steps to ensure that any such disclosure of Confidential
    Information is kept confidential pursuant to an appropriate protective order or otherwise.
	 	 
	11.	Mutual
    Warranties. Each party represents and warrants that: (a) it is a duly organized and validly existing company; (b) it has
    the full authority to enter into this Agreement; and (c) the Person signing this Agreement on behalf of such party has the
    full right, power and authority to sign this Agreement and to bind such party to its respective obligations under this Agreement.
	 	 
	12.	Disclaimer
    of Warranties. EXCEPT AS EXPRESSLY SET FORTH IN SECTION 11, COMPANY DOES NOT MAKE ANY (AND HEREBY EXPRESSLY DISCLAIMS)
    ALL REPRESENTATIONS AND WARRANTIES OF ANY KIND, EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, INCLUDING IN CONNECTION WITH THIS
    AGREEMENT, THE PRODUCTS, AND THE LICENSED IP, INCLUDING ANY WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY, OR FITNESS
    FOR A PARTICULAR PURPOSE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, COMPANY MAKES NO REPRESENTATION OR WARRANTY CONCERNING
    THE VALIDITY, ENFORCEABILITY, OR SCOPE OF THE PATENTS OR TRADEMARKS, OR WHETHER THERE ARE ANY PATENTS OR OTHER RIGHTS NOW
    HELD, OR WHICH WILL BE HELD, BY OTHERS THAT MIGHT BE REQUIRED FOR THE PRODUCTS.
	 	 
	13.	Indemnification.
    Licensee will indemnify, hold harmless, and defend Company and its Affiliates and their respective officers, directors, employees,
    agents and contractors (the “Company Indemnified Parties”) against any and all claims, demands, liens,
    actions, suits, causes of action, obligations, controversies, debts, costs, attorneys’ fees, expenses, damages, judgments,
    orders, and liabilities of whatever kind or nature at law arising out of, occurring or asserted against any of the Company
    Indemnified Parties arising out of: (a) any breach or alleged breach by Licensee of any representation, warranty or covenant
    made, or obligation assumed, by Licensee pursuant to this Agreement; (b) any unauthorized exercise of rights by Licensee under
    the Licensed IP; (c) Licensee’s non-compliance with any applicable federal, state or local laws or with any applicable
    regulations; (d) any injury or death of persons, damage to property, or any other damage or loss arising out of or in connection
    with the Products or the exercise or practice of rights (granted by Company under this Agreement) by Licensee or any Affiliate;
    (e) the Products or any other goods or services sold under the licenses granted under this Agreement, including, the design,
    manufacture, distribution, marketing, or Sale thereof, including any alleged defects, imperfection, and/or inherent dangers
    (whether obvious or hidden) in the Products or such other goods and services, or the use thereof, any product liability issues
    or claims, the packaging or labeling of any Product or such other goods or services, the failure of a Product to confirm to
    its published specifications or promotional or other informational materials, or a failure to warn; or (f) any willful misconduct
    or negligent conduct of Licensee.

 

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	14.	Limitation
    of Liability. TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, EXCEPT FOR A BREACH OF SECTION 10, LICENSEE’S
    OBLIGATIONS UNDER SECTION 4 OR 13 OR THE UNAUTHORIZED USE OF THE OTHER PARTY’S INTELLECTUAL PROPERTY, REGARDLESS
    OF WHETHER ANY REMEDY SET FORTH HEREIN FAILS OF ITS ESSENTIAL PURPOSE OR OTHERWISE, IN NO EVENT WILL EITHER PARTY BE LIABLE
    TO THE OTHER PARTY OR TO ANY THIRD-PARTY FOR ANY LOST PROFITS, INTERRUPTION OF BUSINESS, OR OTHER SPECIAL, INDIRECT, INCIDENTAL
    OR CONSEQUENTIAL DAMAGES OF ANY KIND, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS OR DAMAGES AND WHETHER
    OR NOT SUCH LOSS OR DAMAGES ARE FORESEEABLE.
	 	 
	15.	Entire
    Agreement; Amendment; Waiver. This Agreement sets forth the entire agreement and understanding of the parties relating
    to the subject matter herein, and supersedes all prior and contemporaneous agreements, proposals, negotiations, conversations,
    discussions and understandings, written or oral, with respect to such subject matter and all past dealing or industry custom,
    including that certain Original Agreement. No modification, addition or deletion, or waiver of any rights under this Agreement
    is binding on a party unless made in writing and signed by a duly authorized representative of each party. No failure or delay
    (in whole or in part) on the part of a party to exercise any right or remedy hereunder will operate as a waiver thereof or
    effect any other right or remedy. 
	 	 
	16.	Independent
    Contractors. Neither party is an agent, franchisor, franchise, employee, representative, owner or partner of the other
    party, and the relationship between the Parties will only be that of independent contractors. Neither party has any right
    or authority to assume or create any obligations or to make any representations or warranties on behalf of any other party,
    whether express or implied, or to bind the other party in any respect whatsoever.
	 	 
	17.	Governing
    Law. This Agreement is interpreted and governed by the laws of Delaware, and the United States of America, as appropriate.
	 	 
	18.	Notices.
    All notices relating to this Agreement must be in writing, and are deemed given when personally delivered, or upon delivery
    when sent by a method that permits tracking and signature confirmation (e.g., FedEx), or when emailed and confirmation provided
    by return email. Notices are to be addressed as follows (except that either party may change its address for notices by giving
    notice to the other party in the manner set forth in this Section 18): 

 

	 	Company	 
	 	 	TARONIS
    TECHNOLOGIES, INC.,
	 	 	Attention:
    Chief Executive Officer
	 	 	Address:
    300 W. Clarendon Avenue #230, 
	 	 	Phoenix,
    Arizona 85013
	 	Licensee	 
	 	 	TARONIS
    FUELS, INC. 
	 	 	Attention:
    General Counsel
	 	 	Address:
    24980 N. 83rd Avenue, Ste. 100, 
	 	 	Phoenix,
    Arizona 85383

 

    	9

     

    

 

	19.	Assignment.
    This Agreement and all of Licensee’s rights and licenses hereunder will automatically terminate upon the occurrence
    of any Change of Control of Licensee or Licensee’s assignment, transfer or delegation of this Agreement or any right,
    license or obligation under this Agreement to a Person, directly or indirectly, including by operation of law or through bankruptcy,
    merger, acquisition, contract, sale or transfer of all, substantially all or any part of the business or assets of Licensee,
    unless, prior to the occurrence of such Change of Control or assignment, delegation or transfer, Licensee obtains Company’s
    written consent, which Company may withhold in Company’s sole discretion. Company may undergo a Change of Control or
    assign, transfer or delegate this Agreement or any right, license or obligation hereunder in its sole discretion.
	 	 
	20.	Survival.
    Sections 1, 4.1, 4.4, 6.2, 7 (only with respect to amounts accruing prior to expiration or termination), 8, 10, 12
    through 22 survive the expiration or termination of this Agreement.
	 	 
	21.	Severability.
    Each provision contained in this Agreement constitutes a separate and distinct provision severable from all other provisions.
    If any provision (or any part thereof) is unenforceable under or prohibited by any present or future law, then such provision
    (or part thereof) will be amended, and is hereby amended, so as to be in compliance with such law, while preserving to the
    maximum extent possible the intent of the original provision. Any provision (or part thereof) that cannot be so amended will
    be severed from this Agreement; and, all the remaining provisions of this Agreement will remain unimpaired.
	 	 
	22.	Counterparts.
    This Assignment may be executed in two or more counterparts, each of which shall be deemed an original, but which together
    shall constitute one and the same instrument. The execution of this Assignment may be evidenced by way of a facsimile, portable
    document format (.pdf) transmission or electronic production or reproduction, photostatic or otherwise, of such party’s
    or person’s signature, and such portable document format (.pdf), or electronic production or reproduction signature
    shall be deemed to constitute the original signature of such party or person.

 

[Signature
Page Follows]

 

[The
Remainder of This Page is Intentionally Blank]

 

    	10

     

    

 

IN
WITNESS WHEREOF, this Agreement is executed and agreed to on behalf of the parties by their respective, duly authorized officers
or representatives identified below.

 

COMPANY:

 

	By:	/s/
    Scott Mahoney	 
	Name:	Scott
    Mahoney	 
	Title:	Chief
    Executive Officer	 

 

LICENSEE:

 

	By:	/s/
    Tyler B. Wilson	 
	Name:	Tyler
    B. Wilson, Esq.	 
	Title:	Chief
    Financial Officer	 

 

    	11

     

    

 

Schedule
A – Trademarks

 

	Mark	 	Class Goods/Services	 	Country	 	Serial No.	 	Reg. No.	 	Owner of Mark	 	Registration Date
	MagneGas	 	IC 004. US 001 006 015. G & S: Fuel for motor vehicles, namely an oxygen-rich, hydrocarbon-free gas produced as a byproduct of recycling liquid waste such as anti-freeze, oil waste and sewage.	 	US	 	78039484	 	2812824	 	MAGNEGAS CORPORATION DELAWARE 
150 Rainville Road Tarpon Springs Florida 34689	 	February 10, 2004
	 	 	 	 	 	 	 	 	 	 	 	 	 
	MagneGas 2	 	IC 004. US 001 006 015. G & S: Fuels.	 	US	 	86642367	 	5156799	 	MAGNEGAS CORPORATION DELAWARE 
11885 44th Street North Clearwater Florida 33762	 	March 7, 2017
	 	 	 	 	 	 	 	 	 	 	 	 	 
	mAgnetote	 	IC 007. US 013 019 021 023 031 034 035. G & S: Portable tank system being a gas welding apparatus and containing a gas used for cutting and welding metal	 	US	 	86816532	 	5157232	 	MAGNEGAS CORPORATION DELAWARE 
11885 44th Street North Clearwater Florida 33762	 	March 7, 2017
	 	 	 	 	 	 	 	 	 	 	 	 	 
	venturi	 	IC 007. US 013 019 021 023 031 034 035. G & S: machines for gasification, namely, industrial electrochemical reactors for converting liquid waste into gaseous hydrocarbon fuels	 	US	 	86454770	 	4952283	 	MAGNEGAS CORPORATION DELAWARE 
150 Rainville Road Tarpon Springs Florida 34689	 	May 3, 2016
	 	 	 	 	 	 	 	 	 	 	 	 	 
	VENTURI Plasma Arc Flow	 	IC 008. Machines for producing synthetic gas and decontaminating and sterilizing liquefied waste streams	 	US	 	TBD	 	TBD	 	Taronis Technologies, Inc. DELAWARE 11885 44 th Street North Clearwater, FL 33762	 	TBD

 

    	12

     

    

 

Schedule
B – Patents

 

	Serial Number	 	Date of Filing	 	Publication Number	 	Patent Number	 	Patent or Patent Application Title
	09/372,277	 	8/11/1999	 	 	 	6,183,604	 	DURABLE AND EFFICIENT EQUIPMENT FOR THE PRODUCTION OF A COMBUSTIBLE AND NON-POLLUTANT GAS FROM UNDERWATER ARCS AND METHOD THEREFOR
	 	 	 	 	 	 	 	 	 
	09/970,405	 	10/03/2001	 	2003/0133855	 	6,663,752	 	CLEAN BURNING LIQUID FUEL PRODUCED VIA A SELF-SUSTAINING PROCESSING OF LIQUID FEEDSTOCK
	 	 	 	 	 	 	 	 	 
	09/896,422	 	6/29/2001	 	2002/0004022	 	6,673,322	 	APPARATUS FOR MAKING A NOVEL, HIGHLY EFFICIENT, NONPOLLUTANT, OXYGEN RICH AND COST COMPETITIVE COMBUSTIBLE GAS AND ASSOCIATED METHOD
	 	 	 	 	 	 	 	 	 
	10/008,813	 	12/07/2001	 	2003/0106787	 	6,926,872	 	APPARATUS AND METHOD FOR PRODUCING A CLEAN BURNING COMBUSTIBLE GAS WITH LONG LIFE ELECTRODES AND MULTIPLE PLASMA-ARC-FLOWS
	 	 	 	 	 	 	 	 	 
	10/020,091	 	12/14/2001	 	2003/0113597	 	6,972,118	 	APPARATUS AND METHOD FOR PROCESSING HYDROGEN, OXYGEN AND OTHER GASES
	 	 	 	 	 	 	 	 	 
	12/828,905	 	07/01/2010	 	2012/0000787	 	8,236,150	 	PLASMA-ARC-THROUGH APPARATUS AND PROCESS FOR SUBMERGED ELECTRIC ARCS
	 	 	 	 	 	 	 	 	 
	14/244,229	 	04/03/2014	 	2014/0299463	 	9,700,870	 	Method and Apparatus for the Industrial Production of New Hydrogen-Rich Fuels
	 	 	 	 	 	 	 	 	 
	14/288,807	 	05/28/2014	 	N/A	 	9,433,916	 	Plasma-arc-through Apparatus and Process for Submerged Electric Arcs with Venting
	 	 	 	 	 	 	 	 	 
	15/230,537	 	8/08/2016	 	US 2016-0340790 A1	 	10,100,416	 	Plasma-arc-through Apparatus and Process for Submerged Electric Arcs with Venting
	 	 	 	 	 	 	 	 	 
	15/612,457	 	6/02/2017	 	US 2017-0321130 A1	 	10,100,262	 	Method and Apparatus for the Industrial Production of New Hydrogen-Rich Fuels
	 	 	 	 	 	 	 	 	 
	62/542,689	 	8/08/2017	 	-	 	-	 	System, Method, and Apparatus for Gasification of a Solid or Liquid
	 	 	 	 	 	 	 	 	 
	15/720,816	 	9/29/2017	 	US 2018-0093248 A1	 	-	 	Apparatus for Flow-Through of Electric Arcs
	 	 	 	 	 	 	 	 	 
	16/052,759	 	8/02/2018	 	-	 	-	 	System, Method, and Apparatus for Gasification of a Solid or Liquid

 

    	13ex_181793.htm

Exhibit 10.1

 

	
			Paycheck Protection Program Term Note

				
			

			

 

	$753,300.00	April 14, 2020

     

 

FOR VALUE RECEIVED, MIKROS SYSTEMS CORPORATION (the “Borrower”), with an address at 200 COMMERCE DRIVE SUITE 300, FORT WASHINGTON, PENNSYLVANIA 19034-2404, promises to pay to the order of PNC BANK, NATIONAL ASSOCIATION (the “Bank”), in lawful money of the United States of America in immediately available funds at its offices located at 222 Delaware Avenue, Wilmington, Delaware 19801, Attn: Business Banking, or at such other location as the Bank may designate from time to time, the principal sum of $753,300.00 (the “Facility”), together with interest accruing on the outstanding principal balance from the date hereof, all as provided below. This Note is being issued pursuant to the Coronavirus Aid, Relief, and Economic Security (CARES) Act’s Paycheck Protection Program (the “Program”).

 

1.        Rate of Interest. Amounts outstanding under this Note will bear interest at a rate per annum (“Fixed Rate”) which is at all times equal to 1.00%. Interest will be calculated based on the actual number of days that principal is outstanding over a year of 360 days. In no event will the rate of interest hereunder exceed the maximum rate allowed by law.

 

2.        Structure; Payment Terms. During the period (the “Deferral Period”) beginning on the date of this Note and ending on the 6 month anniversary of the date of this Note (the “Deferral Expiration Date”), interest on the outstanding principal balance will accrue at the Fixed Rate, but neither principal nor interest shall be due and payable during the Deferral Period. On the Deferral Expiration Date, the outstanding principal of the Facility that is not forgiven under the Program (the “Conversion Balance”) shall convert to an amortizing term loan payable as set forth below.

 

On the 15th day of the 7th month following the date of this Note (the “First Payment Date”), all accrued interest that is not forgiven under the Program shall be due and payable. Additionally, on the First Payment Date, and continuing on the 15th day of each month thereafter until the 2nd anniversary of the date of this Note (the “Maturity Date”), equal installments of principal shall be due and payable, each in an amount determined by dividing the Conversion Balance by 18 (the “Monthly Principal Amount”). Interest shall be payable at the same times as the Monthly Principal Amount. Any outstanding principal and accrued interest shall be due and payable in full on the Maturity Date.

 

If any payment under this Note shall become due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in computing interest in connection with such payment. “Business Day” shall mean any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required by law to be closed for business in the State of Delaware. The Borrower hereby authorizes the Bank to charge the Borrower’s deposit account at the Bank for any payment when due. Payments received will be applied to charges, fees and expenses (including attorneys’ fees), accrued interest and principal in any order the Bank may choose, in its sole discretion.

 

3.        Forgiveness of the Facility. The Borrower may apply to the Bank for forgiveness of the amount due on this Facility in an amount based on the sum of the following costs incurred by the Borrower during the 8-week period beginning on the date of first disbursement of this Facility: (a) payroll costs; (b) any payment of interest on a covered mortgage 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 forgiveness shall be calculated (and may be reduced) in accordance with the requirements of the Program, including the provisions of Section 1106 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (P.L. 116-136). Not more than 25% of the amount forgiven can be attributable to non-payroll costs. If the Borrower has received an EIDL (as defined in the attached Certification), the amount of such loan shall be subtracted from the loan forgiveness amount.

 

PPP – Term Note April 2020

 

 

 

4.        Late Payments; Default Rate. If the Borrower fails to make any payment of principal, interest or other amount coming due pursuant to the provisions of this Note within fifteen (15) calendar days of the date due and payable, the Borrower also shall pay to the Bank a late charge equal to the lesser of five percent (5%) of the amount of such payment or $100.00 (the “Late Charge”). Such fifteen (15) day period shall not be construed in any way to extend the due date of any such payment. Upon maturity, whether by acceleration, demand or otherwise, and at the Bank’s option upon the occurrence of any Event of Default (as hereinafter defined) and during the continuance thereof, each advance outstanding under this Note shall bear interest at a rate per annum (based on the actual number of days that principal is outstanding over a year of 360 days) which shall be five percentage points (5.00%) in excess of the interest rate in effect from time to time under this Note but not more than the maximum rate allowed by law (the “Default Rate”). The Default Rate shall continue to apply whether or not judgment shall be entered on this Note. Both the Late Charge and the Default Rate are imposed as liquidated damages for the purpose of defraying the Bank’s expenses incident to the handling of delinquent payments, but are in addition to, and not in lieu of, the Bank’s exercise of any rights and remedies hereunder, under the other Loan Documents (as defined below) or under applicable law, and any fees and expenses of any agents or attorneys which the Bank may employ. In addition, the Default Rate reflects the increased credit risk to the Bank of carrying a loan that is in default. The Borrower agrees that the Late Charge and Default Rate are reasonable forecasts of just compensation for anticipated and actual harm incurred by the Bank, and that the actual harm incurred by the Bank cannot be estimated with certainty and without difficulty. As used in this Note, “Loan Documents” means, individually and collectively, this Note, together with all other agreements and documents executed and/or delivered in connection with this Note or referred to in this Note, as amended, modified or renewed from time to time.

 

5.         Prepayment. The Borrower shall have the right to prepay any amounts outstanding under this Note at any time and from time to time, in whole or in part, without penalty.

 

6.        Increased Costs; Yield Protection. On written demand, together with written evidence of the justification therefor, the Borrower agrees to pay the Bank all direct costs incurred, any losses suffered or payments made by the Bank as a result of any Change in Law (hereinafter defined), imposing any reserve, deposit, allocation of capital or similar requirement (including without limitation, Regulation D of the Board of Governors of the Federal Reserve System) on the Bank, its holding company or any of their respective assets relative to the Facility. “Change in Law” means the occurrence, after the date of this Note, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any governmental authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any governmental authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

7.        Representations, Warranties and Covenants. 

 

(a)     The Borrower hereby represents and warrants that, if not a natural person, the Borrower is duly organized, validly existing and in good standing under the laws of the state of its incorporation or organization and has the power and authority to own and operate its assets and to conduct its business as now or proposed to be carried on, and is duly qualified, licensed and in good standing to do business in all jurisdictions where its ownership of property or the nature of its business requires such qualification or licensing. The Borrower further hereby represents and warrants that it was duly organized, validly existing and in good standing as of February 15, 2020 and had employees for whom it paid salaries and payroll taxes or paid independent contractors, as reported on a Form 1099-MISC.

 

PPP - Term Note April 2020

- 2 -

 

 

(b)     The Borrower certifies, acknowledges and agrees that the certifications contained in the Paycheck Protection Program Certification and the Program application delivered to the Bank are true and correct, which certifications are hereby incorporated herein by this reference as if set forth herein.

 

(c)     The Borrower covenants and agrees that the Borrower will do all things necessary to (i) maintain, renew and keep in full force and effect its organizational existence and all rights, permits and franchises necessary to enable it to continue its business as currently conducted; (ii) continue in operation in substantially the same manner as at present, to the extent permitted by applicable law (including without limitation any statute, ordinance, rule or regulation relating to employment practices, pension benefits or environmental, occupational and health standards and controls); and (iii) comply with all laws applicable to the Borrower and to the operation of its business (including without limitation any statute, ordinance, rule or regulation relating to employment practices, pension benefits or environmental, occupational and health standards and controls).

 

(d)     The Borrower covenants and agrees that, without the Bank’s prior written consent, the Borrower shall not make or permit any change in (i) the composition of its current executive management; (ii) its ownership or equity structure; or (iii) its form of organization, including a division into two or more entities. The Borrower will not make any distribution of company assets that would adversely affect its financial condition, or transfer (including pledging) or dispose of any assets, except in the ordinary course of business.

 

(e)     The Borrower represents and warrants that (i) the Borrower has full power and authority to enter into the transactions provided for in this Note and the other Loan Documents; (ii) all necessary action to authorize the execution and delivery of this Note and the other Loan Documents has been properly taken; (iii) this Note and the other Loan Documents, when executed and delivered by the Borrower, will constitute the legal, valid and binding obligations of the Borrower enforceable in accordance with their terms; (iv) the Borrower is and will continue to be duly authorized to perform all of the terms and provisions of this Note and the other Loan Documents; (v) there does not exist, either before or after giving effect to the terms of this Note, any default or violation by the Borrower of or under any of the terms, conditions or obligations of any of its governing documents; and (vi) the Borrower does not require the consent of any party with respect to this Note, the other Loan Documents or the Facility except for such consents that have been obtained.

 

(f)     The Borrower covenants and agrees to take all such additional actions and promptly provide to the Bank all additional documents, statements and information as the Bank may require from time to time, in its discretion, in connection with the SBA’s requirements or requests under or in respect of the Program or the general standard operating procedures of the SBA.

 

(g)     The Borrower authorizes and directs the Bank to disburse the proceeds of the Facility and to direct payments due under the Facility in accordance with the Disbursement and Payment Authorization Instructions attached to this Note as Exhibit A. 

 

8.       Other Loan Documents. Notwithstanding any provision to the contrary in any Loan Document or any other collateral security documents that may have been or may in the future be executed and delivered to the Bank, or an agent acting on behalf of the Bank, to secure any obligations of the Borrower to the Bank, this Note is not intended to be secured by real property, and the applicability of any lien on such real property to secure this Note is expressly disclaimed by the Bank.

 

PPP - Term Note April 2020

- 3 -

 

 

9.       Events of Default. The occurrence of any of the following events will be deemed to be an “Event of Default” under this Note: (i) the nonpayment of any principal, interest or other indebtedness under this Note when due; (ii) the occurrence of any event of default or any default and the lapse of any notice or cure period, or the Borrower’s failure to observe or perform any covenant or other agreement, under or contained in any Loan Document; (iii) the filing by or against the Borrower of any proceeding in bankruptcy, receivership, insolvency, reorganization, liquidation, conservatorship or similar proceeding (and, in the case of any such proceeding instituted against the Borrower, such proceeding is not dismissed or stayed within 30 days of the commencement thereof, provided that the Bank shall not be obligated to advance additional funds hereunder during such period); (iv) any assignment by the Borrower for the benefit of creditors, or any levy, garnishment, attachment or similar proceeding is instituted against any property of the Borrower held by or deposited with the Bank; (v) the commencement of any foreclosure or forfeiture proceeding, execution or attachment against any collateral securing the obligations of the Borrower to the Bank; (vi) the entry of a final judgment against the Borrower and the failure of the Borrower to discharge the judgment within ten (10) days of the entry thereof; (vii) any merger, consolidation, division or other reorganization of, with or by the Borrower, or the sale or other transfer of all or any substantial part of the Borrower’s property or assets; (viii) any change in the Borrower’s business, assets, operations, financial condition or results of operations or equity ownership that has or could reasonably be expected to have any material adverse effect on the Borrower; (ix) the Borrower ceases doing business as a going concern; (x) any representation or warranty made by the Borrower to the Bank in any Loan Document or any other documents now or in the future evidencing or securing the obligations of the Borrower to the Bank, is false, erroneous or misleading in any material respect; (xi) the death, incarceration, indictment or legal incompetency of any individual Borrower or, if the Borrower is a partnership or limited liability company, the death, incarceration, indictment or legal incompetency of any individual general partner or member; or (xii) failure of the Borrower to notify the Bank within ten (10) days of any change of the Borrower’s address.

 

Upon the occurrence of an Event of Default: (a) the Bank shall be under no further obligation to make advances hereunder; (b) if an Event of Default specified in clause (iii) or (iv) above shall occur, the outstanding principal balance and accrued interest hereunder together with any additional amounts payable hereunder shall be immediately due and payable without demand or notice of any kind; (c) if any other Event of Default shall occur, the outstanding principal balance and accrued interest hereunder together with any additional amounts payable hereunder, at the Bank’s option and without demand or notice of any kind, may be accelerated and become immediately due and payable; (d) at the Bank’s option, this Note will bear interest at the Default Rate from the date of the occurrence of the Event of Default; and (e) the Bank may exercise from time to time any of the rights and remedies available under the Loan Documents or under applicable law. The Borrower acknowledges that upon the occurrence of an Event of Default, SBA, as defined below, may be required to pay the Lender under the SBA guarantee, and SBA may then seek recovery on the Facility (to the extent any balance remains after loan forgiveness).

 

10.     Right of Setoff. In addition to all liens upon and rights of setoff against the Borrower’s money, securities or other property given to the Bank by law, the Bank shall have, with respect to the Borrower’s obligations to the Bank under this Note and to the extent permitted by law, a contractual possessory security interest in and a contractual right of setoff against, and the Borrower hereby grants the Bank a security interest in, and hereby assigns, conveys, delivers, pledges and transfers to the Bank, all of the Borrower’s right, title and interest in and to, all of the Borrower’s deposits, moneys, securities and other property now or hereafter in the possession of or on deposit with, or in transit to, the Bank or any other direct or indirect subsidiary of The PNC Financial Services Group, Inc., whether held in a general or special account or deposit, whether held jointly with someone else, or whether held for safekeeping or otherwise, excluding, however, all IRA, Keogh, and trust accounts. Every such security interest and right of setoff may be exercised without demand upon or notice to the Borrower. Every such right of setoff shall be deemed to have been exercised immediately upon the occurrence of an Event of Default hereunder without any action of the Bank, although the Bank may enter such setoff on its books and records at a later time.

 

PPP - Term Note April 2020

- 4 -

 

 

11.     Financial and Other Information. Within forty five (45) days after the Bank’s request, the Borrower agrees to deliver any financial and other business and ownership information concerning the Borrower that the Bank may request from time to time, such as annual and interim financial statements (all of which shall be prepared in accordance with generally accepted accounting principles), federal income tax returns. The Borrower also agrees to deliver to the Bank, promptly upon the Bank’s request, certification(s) of beneficial owners in the form requested by the Bank (as executed and delivered to the Bank on or prior to the date of this Note and updated from time to time, the “Certification of Beneficial Owners”). If the Borrower was required to execute and deliver to the Bank a Certification of Beneficial Owners, (a) the Borrower represents and warrants, as of the date of this Note and as of the date each updated Certification of Beneficial Owners is provided to the Bank, that the information in the Certification of Beneficial Owners is true, complete and correct, and (b) the Borrower agrees to provide confirmation of the accuracy of the information set forth in the Certification of Beneficial Owners, or deliver a new Certification of Beneficial Owners in form and substance acceptable to the Bank, as and when requested by the Bank and/or when any individual identified on the most recent Certification of Beneficial Owners provided to the Bank as a controlling party and/or a direct or indirect individual owner has changed. The Borrower further agrees to provide such other information and documentation as may reasonably be requested by the Bank from time to time for purposes of compliance by the Bank with applicable laws (including without limitation the USA PATRIOT Act and other “know your customer” and anti-money laundering rules and regulations), and any policy or procedure implemented by the Bank to comply therewith. Additionally, the Borrower will keep books and records in a manner satisfactory to the Bank and allow the Bank and SBA to inspect and audit books, records and papers relating to the Borrower’s financial or business condition.

 

12.     Anti-Money Laundering/International Trade Law Compliance. The Borrower represents and warrants to the Bank, as of the date of this Note, the date of each advance of proceeds under the Facility, the date of any renewal, extension or modification of the Facility, and at all times until the Facility has been terminated and all amounts thereunder have been indefeasibly paid in full, that: (a) no Covered Entity (i) is a Sanctioned Person; (ii) has any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person; or (iii) does business in or with, or derives any of its operating income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any law, regulation, order or directive enforced by any Compliance Authority; (b) the proceeds of the Facility will not be used to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Country or Sanctioned Person in violation of any law, regulation, order or directive enforced by any Compliance Authority; (c) the funds used to repay the Facility are not derived from any unlawful activity; and (d) each Covered Entity is in compliance with, and no Covered Entity engages in any dealings or transactions prohibited by, any laws of the United States, including but not limited to any Anti-Terrorism Laws. Borrower covenants and agrees that it shall immediately notify the Bank in writing upon the occurrence of a Reportable Compliance Event.

 

As used herein: “Anti-Terrorism Laws” means any laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, money laundering, or bribery, all as amended, supplemented or replaced from time to time; “Compliance Authority” means each and all of the (a) U.S. Treasury Department/Office of Foreign Assets Control, (b) U.S. Treasury Department/Financial Crimes Enforcement Network, (c) U.S. State Department/Directorate of Defense Trade Controls, (d) U.S. Commerce Department/Bureau of Industry and Security, (e) U.S. Internal Revenue Service, (f) U.S. Justice Department, and (g) U.S. Securities and Exchange Commission; “Covered Entity” means the Borrower, its affiliates and subsidiaries, all guarantors, pledgors of collateral, all owners of the foregoing, and all brokers or other agents of the Borrower acting in any capacity in connection with the Facility; “Reportable Compliance Event” means that any Covered Entity becomes a Sanctioned Person, or is indicted, arraigned, investigated or custodially detained, or receives an inquiry from regulatory or law enforcement officials, in connection with any Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or self-discovers facts or circumstances implicating any aspect of its operations with the actual or possible violation of any Anti-Terrorism Law; “Sanctioned Country” means a country subject to a sanctions program maintained by any Compliance Authority; and “Sanctioned Person” means any individual person, group, regime, entity or thing listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred person or entity, or subject to any limitations or prohibitions (including but not limited to the blocking of property or rejection of transactions), under any order or directive of any Compliance Authority or otherwise subject to, or specially designated under, any sanctions program maintained by any Compliance Authority.

 

PPP - Term Note April 2020

- 5 -

 

 

13.     Indemnity. The Borrower agrees to indemnify each of the Bank, each legal entity, if any, who controls, is controlled by or is under common control with the Bank, and each of their respective directors, officers and employees (the “Indemnified Parties”), and to defend and hold each Indemnified Party harmless from and against any and all claims, damages, losses, liabilities and expenses (including all fees and charges of internal or external counsel with whom any Indemnified Party may consult and all expenses of litigation and preparation therefor) which any Indemnified Party may incur or which may be asserted against any Indemnified Party by any person, entity or governmental authority (including any person or entity claiming derivatively on behalf of the Borrower), in connection with or arising out of or relating to the matters referred to in this Note or in the other Loan Documents or the use of any advance hereunder, whether (a) arising from or incurred in connection with any breach of a representation, warranty or covenant by the Borrower, or (b) arising out of or resulting from any suit, action, claim, proceeding or governmental investigation, pending or threatened, whether based on statute, regulation or order, or tort, or contract or otherwise, before any court or governmental authority; provided, however, that the foregoing indemnity agreement shall not apply to any claims, damages, losses, liabilities and expenses solely attributable to an Indemnified Party's gross negligence or willful misconduct. The indemnity agreement contained in this Paragraph shall survive the termination of this Note, payment of any advance hereunder and the assignment of any rights hereunder. The Borrower may participate at its expense in the defense of any such action or claim.

 

14.     Miscellaneous. All notices, demands, requests, consents, approvals and other communications required or permitted hereunder (“Notices”) must be in writing (except as may be agreed otherwise above with respect to borrowing requests or as otherwise provided in this Note) and will be effective upon receipt. Notices may be given in any manner to which the parties may agree. Without limiting the foregoing, first-class mail, postage prepaid, facsimile transmission and commercial courier service are hereby agreed to as acceptable methods for giving Notices. In addition, the parties agree that Notices may be sent electronically to any electronic address provided by a party from time to time. Notices may be sent to a party’s address as set forth above or to such other address as any party may give to the other for such purpose in accordance with this paragraph. No delay or omission on the Bank’s part to exercise any right or power arising hereunder will impair any such right or power or be considered a waiver of any such right or power, nor will the Bank’s action or inaction impair any such right or power. The Bank’s rights and remedies hereunder are cumulative and not exclusive of any other rights or remedies which the Bank may have under other agreements, at law or in equity. No modification, amendment or waiver of, or consent to any departure by the Borrower from, any provision of this Note will be effective unless made in a writing signed by the Bank, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Notwithstanding the foregoing, the Bank may modify this Note for the purposes of completing missing content or correcting erroneous content, without the need for a written amendment, provided that the Bank shall send a copy of any such modification to the Borrower (which notice may be given by electronic mail). The Borrower agrees to pay on demand, to the extent permitted by law, all costs and expenses incurred by the Bank in the enforcement of its rights in this Note and in any security therefor, including without limitation reasonable fees and expenses of the Bank’s counsel. If any provision of this Note is found to be invalid, illegal or unenforceable in any respect by a court, all the other provisions of this Note will remain in full force and effect. The Borrower and all other makers and indorsers of this Note hereby forever waive presentment, protest, notice of dishonor and notice of non-payment. The Borrower also waives all defenses based on suretyship or impairment of collateral. If this Note is executed by more than one Borrower, the obligations of such persons or entities hereunder will be joint and several. This Note shall bind the Borrower and its heirs, executors, administrators, successors and assigns, and the benefits hereof shall inure to the benefit of the Bank and its successors and assigns; provided, however, that the Borrower may not assign this Note in whole or in part without the Bank’s written consent and the Bank at any time may assign this Note in whole or in part.

 

This Note has been delivered to and accepted by the Bank and will be deemed to be made in the State of Delaware. THIS NOTE WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE BANK AND THE BORROWER DETERMINED IN ACCORDANCE WITH (I) FEDERAL REGULATIONS, AND (II) TO THE EXTENT NOT PREEMPTED BY FEDERAL LAWS OR REGULATIONS, THE LAWS OF THE STATE OF DELAWARE, EXCLUDING ITS CONFLICT OF LAWS RULES, INCLUDING WITHOUT LIMITATION THE ELECTRONIC TRANSACTIONS ACT (OR EQUIVALENT) IN EFFECT IN THE STATE OF DELAWARE (OR, TO THE EXTENT CONTROLLING, THE LAWS OF THE UNITED STATES OF AMERICA, INCLUDING WITHOUT LIMITATION THE ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT). The Borrower hereby irrevocably consents to the exclusive jurisdiction of any state or federal court in the State of Delaware; provided that nothing contained in this Note will prevent the Bank from bringing any action, enforcing any award or judgment or exercising any rights against the Borrower individually, against any security or against any property of the Borrower within any other county, state or other foreign or domestic jurisdiction. The Borrower acknowledges and agrees that the venue provided above is the most convenient forum for both the Bank and the Borrower. The Borrower waives any objection to venue and any objection based on a more convenient forum in any action instituted under this Note.

 

PPP - Term Note April 2020

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15.     Commercial Purpose. The Borrower represents that the indebtedness evidenced by this Note is being incurred by the Borrower solely for the purpose of acquiring or carrying on a business, professional or commercial activity, and not for personal, family or household purposes.

 

16.       USA PATRIOT Act Notice. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each Borrower that opens an account. What this means: when the Borrower opens an account, the Bank will ask for the business name, business address, taxpayer identifying number and other information that will allow the Bank to identify the Borrower, such as organizational documents. For some businesses and organizations, the Bank may also need to ask for identifying information and documentation relating to certain individuals associated with the business or organization.

 

17.     Authorization to Obtain Credit Reports. By signing below, each person, who is signing in his or her individual capacity, requests and provides written authorization to the Bank or its designee (and any assignee or potential assignee hereof) to obtain such individual’s personal credit profile from one or more national credit bureaus. This authorization extends to obtaining a credit profile in (i) considering an application for credit that is evidenced, guaranteed or secured by this document, (ii) assessing creditworthiness and (iii) considering extensions of credit, including on an ongoing basis, as necessary for the purposes of (a) update, renewal or extension of such credit or additional credit, (b) reviewing, administering or collecting the resulting account and (c) reporting on the repayment and satisfaction of such credit obligations. By signing below, such individual further ratifies and confirms his or her prior requests and authorizations with respect to the matters set forth herein. For the avoidance of doubt, this provision does not apply to persons signing below in their capacities as officers or other authorized representatives of entities, organizations or governmental bodies.

 

18.       Electronic Signatures and Records. Notwithstanding any other provision herein, the Borrower agrees that this Note, the Loan Documents, any amendments thereto, and any other information, notice, signature card, agreement or authorization related thereto (each, a “Communication”) may, at the Bank’s option, be in the form of an electronic record. Any Communication may, at the Bank’s option, be signed or executed using electronic signatures. For the avoidance of doubt, the authorization under this paragraph may include, without limitation, use or acceptance by the Bank of a manually signed paper Communication which has been converted into electronic form (such as scanned into PDF format) for transmission, delivery and/or retention.

 

19.        Depository. Unless the Bank otherwise agrees, the Borrower will establish and maintain with the Bank the Borrower’s primary depository accounts.

 

20.       Federal Law. When the U.S. Small Business Administration (“SBA”) is the holder, this Note will be interpreted and enforced under federal law, including SBA regulations. The Bank 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, the 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.

 

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

 

PPP - Term Note April 2020

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22.      DISPUTE RESOLUTIONS. 

 

(a)     WAIVER OF JURY TRIAL. FOR ANY DISPUTE THAT IS NOT ARBITRATED, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER AND THE BANK IRREVOCABLY WAIVES ANY AND ALL RIGHTS THE BORROWER OR THE BANK MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS NOTE, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS NOTE OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.

 

(b)     ARBITRATION OF DISPUTES. The Borrower or the Bank may elect to submit any and all disputes arising out of or relating to the Loan Documents or any breach thereof (a “Dispute”) to binding arbitration

 

(i)     Arbitration. Any arbitration shall be conducted pursuant to and in accordance with the AAA Commercial Arbitration Rules and, where applicable, the Supplementary Rules for Large, Complex Commercial Disputes, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Such arbitration shall be conducted in a mutually acceptable location. Except as expressly set forth below, the procedures specified herein shall be the sole and exclusive procedures for the resolution of Disputes; provided, however, that the Borrower or the Bank may seek provisional or ancillary remedies, such as preliminary injunctive relief, from a court having jurisdiction, before, during or after the pendency of any arbitration proceeding. The institution and maintenance of any action for such judicial relief, or pursuit of provisional or ancillary remedies, shall not constitute a waiver of the right or obligation of any party to submit any claim or dispute to arbitration. Nothing herein shall in any way limit or modify any remedies available to the Bank under the Loan Documents or otherwise at law or in equity.

 

(ii)     Motion Practice. In any arbitration hereunder, the arbitrator(s) shall decide any pre-hearing motions which are substantially similar to pre-hearing motions to dismiss for failure to state a claim or motions for summary adjudication.

 

(iii)     Discovery. Discovery shall be limited to the pre-hearing exchange of all documents which the Borrower and the Bank intend to introduce at the hearing and any expert reports prepared by any expert who will testify at the hearing.

 

(iv)     Sequential Hearing Days. At the administrative conference conducted by the AAA, the Borrower and the Bank and the AAA shall determine how to ensure that the hearing is started and completed on sequential hearing days. Potential arbitrators shall be informed of the anticipated length of the hearing and they shall not be subject to appointment unless they agree to abide by the parties’ intent that, absent exigent circumstances, the hearing shall be conducted on sequential days.

 

(v)     Award. The award of the arbitrator(s) shall be accompanied by a statement of the reasons upon which such award is based.

 

(vi)     Fees and Expenses. The Borrower and the Bank shall each bear equally all fees and costs and expenses of the arbitration, and each shall bear its own legal fees and expenses and the costs of its experts and witnesses; provided, however, that if the arbitration panel shall award to a party substantially all relief sought by such party, then, notwithstanding any applicable governing law provisions, the other party shall pay all costs, fees and expenses incurred by the prevailing party and such costs, fees and expenses shall be included in such award.

 

(vii)    Confidentiality of Disputes. The entire procedure shall be confidential and none of the parties nor arbitrator(s) may disclose the existence, content, or results of any arbitration hereunder without the written consent of all parties to the Dispute, except (i) to the extent disclosure is required to enforce any applicable arbitration award or may otherwise be required by law and (ii) that either party may make such disclosures to its regulators, auditors, accountants, attorneys and insurance representatives. No conduct, statements, promises, offers, views, or opinions of any party involved in an arbitration hereunder shall be discoverable or admissible for any purposes in litigation or other proceedings involving the parties to the Dispute and shall not be disclosed to anyone not an agent, employee, expert, witness, or representative for any of such parties.

 

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(viii)     CLASS ACTION WAIVER. THE BORROWER HEREBY WAIVES, WITH RESPECT TO ANY DISPUTE: (I) THE RIGHT TO PARTICIPATE IN A CLASS ACTION, PRIVATE ATTORNEY GENERAL ACTION OR OTHER REPRESENTATIVE ACTION IN COURT OR IN ARBITRATION, EITHER AS A CLASS REPRESENTATIVE OR CLASS MEMBER; AND (II) THE RIGHT TO JOIN OR CONSOLIDATE CLAIMS WITH CLAIMS OF ANY OTHER PERSON. The foregoing waiver is referred to herein as the “class action waiver”. The Bank and the Borrower agree that no arbitrator shall have authority to conduct any arbitration in violation of the class action waiver or to issue any relief that applies to any person or entity other than the Borrower and/or the Bank individually. The parties acknowledge that this class action waiver is material and essential to the arbitration of any claims and is non-severable from this Dispute Resolution section. If the class action waiver is voided, found unenforceable, or limited with respect to any claim for which the Borrower seeks class-wide relief, then this Dispute Resolution section (except for this sentence) shall be null and void with respect to such claim, subject to the right to appeal the limitation or invalidation of the class action waiver. However, this Dispute Resolution section shall remain valid with respect to all other claims and Disputes. The parties acknowledge and agree that under no circumstances will a class action be arbitrated.

 

(ix)     Applicability of Federal Arbitration Act. This Note evidences transaction(s) in interstate commerce, and thus the Federal Arbitration Act governs the interpretation and enforcement of this Dispute Resolution section.

 

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

 

 

 

 

 

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If the Borrower is a legal entity, the undersigned certifies to the Bank that the undersigned (individually and collectively if more than one, the “Authorized Representative”) is and was authorized and directed to (i) execute and deliver, including to electronically execute and deliver, in the name of and on behalf of the Borrower, this Note and any other documents executed in connection with this Note or the Facility, all in such form as may be requested by the Bank or required under the Program and any of which may contain a provision waiving the right to trial by jury; (ii) execute and deliver to or in favor of, including to electronically execute and deliver to or in favor of, the Bank any amendments, modifications, renewals or supplements of or to any of the foregoing agreements, documents or instruments; (iii) take any other action requested, required or deemed advisable by the Bank in order to effectuate the foregoing; and (iv) delegate the foregoing duties to other representatives of the Borrower. The undersigned further certifies that the Authorized Representative holds the office, title or status with the Borrower specified below the Authorized Representative’s signature.

 

The Borrower acknowledges that it has read and understands all the provisions of this Note, including the waiver of jury trial, arbitration and class action waiver, and has been advised by counsel as necessary or appropriate, or has elected not to seek the advice of counsel.

 

WITNESS the due execution hereof as a document under seal, as of the date first written above, with the intent to be legally bound hereby.

 

	
			 

				
			MIKROS SYSTEMS CORPORATION

			
	
			 

				
			 

				
			 

			
	
			 

				
			 

				
			E-SIGNED by Thomas J. Meaney

			on 04-15-2020 11:38:56 EDT

			
	
			 

				
			By:

				
			 

			
	
			 

				
			 

				
			 (SEAL)

			
	
			 

				
			Thomas J. Meaney, Chief Executive Officer

			
	 	 	
			E-SIGNED by Patricia A. Kapp

			on 04-15-2020 11:35:51 EDT

			
	 	By:	 
	 	 	(SEAL)
	 	Patricia A. Kapp, Vice President

 

PPP - Term Note April 2020

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EXHIBIT A

TO PAYCHECK PROTECTION PROGRAM TERM NOTE

 

DISBURSEMENT AND PAYMENT AUTHORIZATION INSTRUCTIONS

 

Loan Disbursement Authorization:

 

Borrower authorizes and directs the Bank to disburse the proceeds of the Facility as directed below. Each authorized representative of the Borrower is authorized to make this request, the Bank is entitled to rely conclusively on the below instructions to make disbursements in the amount and manner specified.

 

Disbursements 

 

Disburse the proceeds of the Facility into the Borrower’s demand deposit account with PNC Bank, Account No. 8625701065.

 

 

Automatic Payment Authorization Under Facility:

 

The Borrower irrevocably authorizes and directs the Bank to charge any deposit account identified above and maintained at the Bank (or such other account at the Bank as the undersigned may designate to the Bank in writing from time to time) for all payments of principal and interest due or fees on the Facility, and to debit such account for the amount of such payments on the date each payment is due. The Borrower acknowledges and agrees that, to the extent there are insufficient funds in any such account to pay the required amounts when due, the Borrower shall immediately pay to the Bank all sums remaining unpaid. This authorization supplements, and does not limit, the Bank’s rights under the promissory note(s) and other documents evidencing or securing the Facility. The Bank is entitled to rely conclusively on this authorization until this authorization is terminated by the Bank or the Borrower, and the Bank has had a reasonable time to act thereon.

 

PPP - Term Note April 2020

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Paycheck Protection Program Certification

 

 

April 14, 2020

 

MIKROS SYSTEMS CORPORATION (the “Borrower”) has applied to PNC Bank, National Association (the “Bank”) for a Small Business Association (“SBA”) 7(a) Paycheck Protection Program loan (the “PPP Loan”).

 

The below signer understands that the statements made in this certification are part of the agreement with the Bank and that the Bank will rely on these statements when deciding whether or not to make the PPP Loan.

 

I certify, acknowledge and agree that I am an authorized officer of the Borrower and am authorized on behalf of the Borrower to certify to the statements provided in this application, and that the following are true and correct statements:

 

	 	
			1.

				
			The Borrower was in operation on February 15, 2020 and, if Borrower is not a self-employed worker or independent contractor, had employees for whom it paid salaries and payroll taxes or paid independent contractors, as reported on a Form 1099-MISC.

			

	 	
			2.

				
			The uncertainty of current economic conditions makes necessary the PPP Loan request to support the ongoing operations of the Borrower.

			

	 	
			3.

				
			The proceeds of the PPP Loan will (a) solely be used to retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments (the “Permitted Loan Purpose”), and (b) be allocated as set forth in the Borrower’s application for the PPP Loan. At least 75 percent of the proceeds of the PPP Loan will be used for payroll expenses. If the funds are knowingly used for unauthorized purposes, the federal government may hold the undersigned and the Borrower legally liable such as for charges of fraud.

			

	 	
			4.

				
			Documentation verifying the number of full-time equivalent employees on the Borrower's payroll as well as the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight week period following the disbursement of the PPP Loan will be provided to the Bank.

			

	 	
			5.

				
			The Borrower understands and agrees that loan forgiveness may be provided if the Borrower uses all of the loan proceeds for the Permitted Loan Purpose. The actual amount forgiven will be determined in accordance with the requirements of the Program, including the provisions of Section 1106 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (P.L. 116-136), and in no event may more than 25 percent of the forgiven amount be attributable to non-payroll costs.

			

	 	
			6.

				
			The Borrower does not have any other PPP Loan applications pending and will not apply for another PPP Loan. During the period beginning on February 15, 2020 and ending on December 31, 2020 Borrower has not received and will not receive another PPP Loan.

			

	 	
			7.

				
			The Borrower shall notify the Bank if the Borrower received an EIDL between January 31, 2020 and April 3, 2020 and the proceeds of such EIDL were or are used to retain workers and maintain payroll; the proceeds of the PPP Loan must be used to refinance any such EIDL.

			

	 	
			8.

				
			The information provided in the PPP Loan application and the information provided in all supporting documents and forms is true and accurate in all material respects. The Borrower and the undersigned understand that knowingly making a false statement to obtain a guaranteed loan from SBA is punishable under the law, including under 18 USC 1001 and 3571 by imprisonment of not more than five years and/or a fine of up to $250,000; under 15 USC 645 by imprisonment of not more than two years and/or a fine of not more than $5,000; and, if submitted to a federally insured institution, under 18 USC 1014 by imprisonment of not more than thirty years and/or a fine of not more than $1,000,000.

			

 

Paycheck Protection Program Certification April 2020

- 1 -

 

 

	 	9.	The Borrower acknowledges that the Bank will confirm the eligible PPP Loan amount using the Borrower’s tax information that it has submitted, including without limitation, tax returns and tax transcripts (collectively, the “Tax Information”). The Borrower affirms that the Tax Information is identical to that submitted to the Internal Revenue Service. The Borrower also understands, acknowledges, and agrees that the Bank can share the Borrower’s Tax Information with (i) the SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, (ii) the Bank’s affiliates, and its and their respective directors, officers, employees, agents and advisors (the “Representatives”), and (iii) any actual or potential owners of a credit facility extended by the Bank or its Representatives to the Borrower, any acquirers of any beneficial or other interest in such credit facility, guarantor, servicers or service providers for such parties, and their successors and/or assigns (the “Other Loan Participants”) for the purpose of (w) compliance with SBA Loan Program Requirements and all SBA reviews, (x) originating, maintaining, managing, monitoring, servicing, selling, insuring, and securitizing a credit facility; (y) enforcing any of its rights or remedies under the loan documents applicable to such credit facility (including, without limitation, in connection with any collection action related thereto) or (z) as otherwise permitted by applicable laws, including state and federal privacy and data security laws, or if required to do so by legal process, regulation or law, or in defense of any claims or causes of action against the Bank or any of its Representatives.

 

	
			 

				
			MIKROS SYSTEMS CORPORATION

			
	
			 

				
			 

				
			 

			
	
			 

				
			 

				
			E-SIGNED by Thomas J. Meaney

			on 04-15-2020 11:36:31 EDT

			
	
			 

				
			By: 

				 
	
			 

				
			 

				
			 (SEAL)

			
	
			 

				
			Thomas J. Meaney, Chief Executive Officer

			
	 	 	
			E-SIGNED by Patricia A. Kapp

			on 04-15-2020 11:37:03 EDT

			
	 	By:	 
	 	 	(SEAL)
	 	Patricia A. Kapp, Vice President

 

Paycheck Protection Program Certification April 2020

 

- 2 -

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