Document:

ex_159464.htm

Exhibit 10.2

 

AMENDMENT NO. 4

TO FINANCING AGREEMENT

 

This AMENDMENT NO. 4 TO FINANCING AGREEMENT, dated as of September 27, 2019 (this "Fourth Amendment"), amends that certain Financing Agreement, dated as of November 8, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the "Financing Agreement"), by and among SMTC CORPORATION, a Delaware corporation, each Person that is a party thereto as a borrower from time to time (collectively, the "Borrowers"), each other Loan Party that is a party thereto from time to time, each financial institution that is a party thereto from time to time (collectively, the "Lenders"), TCW ASSET MANAGEMENT COMPANY LLC, as administrative agent for the Lenders (in such capacity, the "Administrative Agent"), and TCW ASSET MANAGEMENT COMPANY LLC, as collateral agent for the Lenders (in such capacity, the "Collateral Agent").

 

WHEREAS, the Loan Parties have requested that the Agents and the Lenders amend certain terms and conditions of the Financing Agreement; and

 

WHEREAS, the Agents and the Lenders are willing to amend such terms and conditions of the Financing Agreement on the terms and conditions set forth herein.

 

NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1.      Definitions. All terms used herein that are defined in the Financing Agreement and not otherwise defined herein shall have the meanings assigned to them in the Financing Agreement, as amended by this Fourth Amendment.

 

2.      Amendments.

 

(a)      The definition of "Consolidated EBITDA" in Section 1.01 of the Financing Agreement is hereby amended by (i) deleting "and" at the end of clause (xvi) thereof, (ii) adding "and" to the end of clause (xvii) thereof, and (iii) adding a new clause (xviii) thereto as follows:

 

"(xviii)          restructuring and transition costs and charges incurred on or before December 31, 2020, in connection with the closure of business operations in Dongguan, China, not to exceed (A) with respect to cash restructuring costs, $2,300,000, (B) with respect to write-offs of accounts receivable, $1,623,000, and (C) with respect to write-offs of Inventory, $1,607,000; provided that any amount added back under clauses (B) or (C) hereof shall reduce Consolidated EBITDA dollar-for-dollar in any future period to the extent that any write-offs taken pursuant to clauses (B) or (C) hereof are reversed, or otherwise the subject of any gain, in such future period."

 

(b)      The definition of "Permitted Intercompany Investments" in Section 1.01 of the Financing Agreement is hereby amended by (i) deleting "and" before clause (g) thereof, and (ii) adding a new clause (h) thereto as follows:

 

 

 

 

", and (h) solely to facilitate the closure of business operations in Dongguan, China, a Domestic Loan Party to or in SMTC Dongguan, so long as (i) such Investments are made prior to March 31, 2020, (ii) the aggregate amount of all such Investments does not exceed $2,300,000 during the term of this Agreement, (iii) no Default or Event of Default has occurred and is continuing either before or after giving effect to such Investment, (iv) the Borrowers have Liquidity of not less than (A) at any time on or before December 31, 2019, $5,000,000, and (B) at any time after December 31, 2019, and on or before March 31, 2020, $7,500,000, in each case, after giving effect to such Investment, and (v) such Investments do not result in any failure by the Loan Parties to be in compliance with the provisions of Section 7.02(u)."

 

(c)      Section 1.01 of the Financing Agreement is hereby amended by adding the following definitions in alphabetical order:

 

""Fourth Amendment" means that certain Amendment No. 4 to Financing Agreement, dated as of September 27, 2019, by and among the Parent, the other Loan Parties party thereto, the Lenders party thereto and the Agents."

 

""Fourth Amendment Effective Date" has the meaning specified therefor in the Fourth Amendment."

 

""Fourth Amendment Fee" has the meaning specified therefor in Section 2.06(i)."

 

""SMTC Dongguan" means SMTC Electronics Dongguan Company Limited, a limited liability company organized under the laws of China.""

 

(d)      Section 2.06 of the Financing Agreement is hereby amended by adding the following clause (i) at the end thereof:

 

"(i)     Fourth Amendment Fee. On or prior to the Fourth Amendment Effective Date, the Borrowers shall pay to the Administrative Agent for the account of the Lenders, in accordance with their Pro Rata Shares, a nonrefundable amendment fee (the "Fourth Amendment Fee") equal to $100,000."

 

(e)      Section 7.02(c)(i) of the Financing Agreement is hereby amended by adding "or SMTC Dongguan" after "Inactive Subsidiary" in the second proviso therein.

 

(f)      Section 7.02(u) of the Financing Agreement is hereby amended by deleting clause (ii) therein and substituting the following therefor:

 

"(ii) with respect to all other Foreign Loan Parties and Foreign Subsidiaries, (A) on or before March 31, 2020, $1,500,000 at any time outstanding, and (B) after March 31, 2020, $1,000,000 at any time outstanding"

 

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3.      Representations and Warranties. Each Loan Party hereby represents and warrants to the Agents and the Lenders as follows:

 

(a)      Representations and Warranties; Event of Default. The representations and warranties herein, in Article VI of the Financing Agreement and in each other Loan Document, certificate or other writing delivered to any Secured Party pursuant hereto or thereto on or prior to the Fourth Amendment Effective Date (as defined below) are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the Fourth Amendment Date as though made on and as of such date, except to the extent that any such representation or warranty expressly relates solely to an earlier date (in which case such representation or warranty shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of such earlier date). No Default or Event of Default has occurred and is continuing on the Fourth Amendment Effective Date or would result from this Fourth Amendment or the transactions contemplated hereby, the Financing Agreement or the other Loan Documents becoming effective in accordance with its or their respective terms.

 

(b)      Organization, Good Standing, Etc. Each Loan Party (i) is a corporation, limited liability company or limited partnership duly organized, validly existing and in good standing under the laws of the state or jurisdiction of its organization, (ii) has all requisite power and authority to conduct its business as now conducted and as presently contemplated and, in the case of the Borrowers, to make the borrowings contemplated by the Financing Agreement, and to execute and deliver this Fourth Amendment and each other Loan Document to which it is a party, and to consummate the transactions contemplated thereby, and (iii) is duly qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except (solely for the purposes of this subclause (iii)) where the failure to be so qualified and in good standing could not reasonably be expected to have a Material Adverse Effect.

 

(c)      Authorization, Etc. The execution, delivery and performance by each Loan Party of this Fourth Amendment and each other Loan Document to which it is or will be a party, (i) have been duly authorized by all necessary action, (ii) do not and will not contravene (A) any of its Governing Documents, (B) any applicable Requirement of Law or (C) any material Contractual Obligation binding on or otherwise affecting it or any of its properties, (iii) do not and will not result in or require the creation of any Lien (other than pursuant to any Loan Document) upon or with respect to any of its properties, and (iv) do not and will not result in any default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, authorization or approval applicable to its operations or any of its properties, except, in the case of clauses (ii)(B), (ii)(C) and (iv), to the extent where such contravention, default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal could not reasonably be expected to have a Material Adverse Effect.

 

(d)      Governmental Approvals. No material authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required in connection with the due execution, delivery and performance by any Loan Party of this Fourth Amendment or any other Loan Document to which it is or will be a party other than filings and recordings with respect to Collateral to be made, or otherwise delivered to the Collateral Agent for filing or recordation, on or prior to the Fourth Amendment Effective Date.

 

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(e)      Enforceability of Loan Documents. This Fourth Amendment is, and each other Loan Document to which any Loan Party is or will be a party, when delivered hereunder, will be, a legal, valid and binding obligation of such Person, enforceable against such Person in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity.

 

4.      [Reserved].

 

5.      Conditions to Effectiveness. This Fourth Amendment shall become effective only upon satisfaction in full, in a manner satisfactory to the Agents, of the following conditions precedent (the first date upon which all such conditions shall have been satisfied being hereinafter referred to as the "Fourth Amendment Effective Date"):

 

(a)      Payment of Fees, Etc. The Borrowers shall have paid all fees and expenses, including the Fourth Amendment Fee, required to be paid on or prior to the Fourth Amendment Effective Date pursuant to Section 2.06 or Section 12.04 of the Financing Agreement.

 

(b)      Representations and Warranties. After giving effect to this Fourth Amendment and the transactions contemplated hereby, the representations and warranties herein, in Article VI of the Financing Agreement and in each other Loan Document, certificate or other writing delivered to any Secured Party pursuant hereto or thereto on or prior to the Fourth Amendment Effective Date shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the Fourth Amendment Effective Date as though made on and as of such date, except to the extent that any such representation or warranty expressly relates solely to an earlier date (in which case such representation or warranty shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of such earlier date).

 

(c)      No Default; Event of Default. After giving effect to this Fourth Amendment and the transactions contemplated hereby, no Default or Event of Default shall have occurred and be continuing on the Fourth Amendment Effective Date or result from this Fourth Amendment becoming effective in accordance with its terms.

 

(d)      Delivery of Documents.  The Agents shall have received on or before the Fourth Amendment Effective Date the following, each in form and substance reasonably satisfactory to the Agents and, unless indicated otherwise, dated the Fourth Amendment Effective Date:

 

(i)     this Fourth Amendment, duly executed by the Loan Parties, each Agent and the Required Lenders;

 

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(ii)     an amendment to the Revolving Loan Agreement, in form and substance reasonably satisfactory to the Agents, and duly executed by the Loan Parties, the Revolving Loan Agent and the requisite Revolving Loan Lenders; and

 

(iii)     a certificate signed by the chief executive officer of each Loan Party, certifying as to the matters set forth in subsections (b) and (c) of this Section 5.

 

(e)      Material Adverse Effect. There shall not have occurred since the Effective Date (as defined in the Financing Agreement) any event or development that has had or could reasonably be expected to have any Material Adverse Effect.

 

6.      Continued Effectiveness of the Financing Agreement and other Loan Documents. Each Loan Party hereby (a) acknowledges and consents to this Fourth Amendment, (b) confirms and agrees that the Financing Agreement and each other Loan Document to which it is a party is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that on and after the Fourth Amendment Effective Date, all references in the Financing Agreement or any such other Loan Document to "the Financing Agreement", the "Agreement", "thereto", "thereof", "thereunder" or words of like import referring to the Financing Agreement shall mean the Financing Agreement as amended by this Fourth Amendment, and (c) confirms and agrees that, to the extent that the Financing Agreement or any such other Loan Document purports to assign or pledge to the Collateral Agent, for the benefit of the Agents and the Lenders, or to grant to the Collateral Agent, for the benefit of the Agents and the Lenders, a security interest in or Lien on any Collateral as security for the Obligations of the Loan Parties from time to time existing in respect of the Financing Agreement (as amended hereby) and the other Loan Documents, such pledge, assignment and/or grant of the security interest or Lien is hereby ratified and confirmed in all respects. This Fourth Amendment does not and shall not affect any of the obligations of the Loan Parties, other than as expressly provided herein, including, without limitation, the Loan Parties' obligations to repay the Term Loans in accordance with the terms of Financing Agreement or the obligations of the Loan Parties under the Financing Agreement (as amended hereby) or any other Loan Document to which they are a party, all of which obligations shall remain in full force and effect. Except as expressly provided herein, the execution, delivery and effectiveness of this Fourth Amendment shall not operate as a waiver of any right, power or remedy of any Agent or any Lender under the Financing Agreement or any other Loan Document nor constitute a waiver of any provision of the Financing Agreement or any other Loan Document.

 

7.      No Novation. Nothing herein contained shall be construed as a substitution or novation of the Obligations outstanding under the Financing Agreement or instruments securing the same, which shall remain in full force and effect, except as modified hereby.

 

8.      No Representations by Agents or Lenders. Each Loan Party hereby acknowledges that it has not relied on any representation, written or oral, express or implied, by any Agent or any Lender, other than those expressly contained herein, in entering into this Fourth Amendment.

 

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9.      Release. Each Loan Party hereby acknowledges and agrees that: (a) neither it nor any of its Subsidiaries has any claim or cause of action against any Agent or any Lender (or any of the directors, officers, employees, agents, attorneys or consultants of any of the foregoing) and (b) the Agents and the Lenders have heretofore properly performed and satisfied in a timely manner all of their obligations to the Loan Parties, and all of their Subsidiaries and Affiliates. Notwithstanding the foregoing, the Agents and the Lenders wish (and the Loan Parties agree) to eliminate any possibility that any past conditions, acts, omissions, events or circumstances would impair or otherwise adversely affect any of their rights, interests, security and/or remedies. Accordingly, for and in consideration of the agreements contained in this Fourth Amendment and other good and valuable consideration, each Loan Party (for itself and its Subsidiaries and Affiliates and the successors, assigns, heirs and representatives of each of the foregoing) (collectively, the "Releasors") does hereby fully, finally, unconditionally and irrevocably release, waive and forever discharge the Agents and the Lenders, together with their respective Affiliates and Related Funds, and each of the directors, officers, employees, agents, attorneys and consultants of each of the foregoing (collectively, the "Released Parties"), from any and all debts, claims, allegations, obligations, damages, costs, attorneys' fees, suits, demands, liabilities, actions, proceedings and causes of action, in each case, whether known or unknown, contingent or fixed, direct or indirect, and of whatever nature or description, and whether in law or in equity, under contract, tort, statute or otherwise, which any Releasor has heretofore had or now or hereafter can, shall or may have against any Released Party by reason of any act, omission or thing whatsoever done or omitted to be done, in each case, on or prior to the Fourth Amendment Effective Date directly arising out of, connected with or related to this Fourth Amendment, the Financing Agreement or any other Loan Document, or any act, event or transaction related or attendant thereto, or the agreements of any Agent or any Lender contained therein, or the possession, use, operation or control of any of the assets of any Loan Party, or the making of any Loans or other advances, or the management of such Loans or other advances or the Collateral. Each Loan Party represents and warrants that it has no knowledge of any claim by any Releasor against any Released Party or of any facts or acts or omissions of any Released Party which on the date hereof would be the basis of a claim by any Releasor against any Released Party which would not be released hereby.

 

10.      Further Assurances. The Loan Parties shall execute any and all further documents, agreements and instruments, and take all further actions, as may be required under Applicable Law or as any Agent may reasonably request, in order to effect the purposes of this Fourth Amendment.

 

11.      Miscellaneous.

 

(a)      This Fourth Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Fourth Amendment by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Fourth Amendment.

 

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(b)      Section and paragraph headings herein are included for convenience of reference only and shall not constitute a part of this Fourth Amendment for any other purpose.

 

(c)      This Fourth Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

 

(d)      Each Loan Party hereby acknowledges and agrees that this Fourth Amendment constitutes a "Loan Document" under the Financing Agreement. Accordingly, it shall be an immediate Event of Default under the Financing Agreement if (i) any representation or warranty made by any Loan Party under or in connection with this Fourth Amendment shall have been incorrect in any material respect (or in any respect if such representation or warranty is qualified or modified as to materiality or "Material Adverse Effect" in the text thereof) when made or deemed made, or (ii) any Loan Party shall fail to perform or observe any term, covenant or agreement contained in this Fourth Amendment.

 

(e)      Any provision of this Fourth Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

 

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to be executed and delivered as of the date set forth on the first page hereof.

 

	 	
			BORROWERS:

			
	 	 
	 	
			MC ASSEMBLY, LLC, as a Borrower

			
	 	
			By:

				 
	 	 	
			Name:

			
	 	 	
			Title:

			
	 	 
	 	 
	 	
			MC ASSEMBLY INTERNATIONAL, LLC as a

			Borrower

			
	 	 	 
	 	
			By:

				 
	 	 	
			Name:

			
	 	 	
			Title:

			
	 	 	 
	 	MC TEST SERVICE, INC., as a Borrower
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:
	 	 	 
	 	
			SMTC MANUFACTURING CORPORATION OF

			CALIFORNIA, as a Borrower

			
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:
	 	 	 
	 	SMTC MEX HOLDINGS INC., as a Borrower
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

Amendment No. 4 to Financing Agreement

 

 

	 	
			GUARANTORS:

			
	 	 
	 	
			HTM HOLDINGS, INC.,

			as a Guarantor

			
	 	
			 

			
	 	
			By:

				 
	 	 	
			Name:

			
	 	 	
			Title:

			
	 	 
	 	 
	 	
			MC ASSEMBLY HOLDINGS, INC.,

			as a Guarantor

			
	 	 
	 	
			By:

				 
	 	 	
			Name:

			
	 	 	
			Title:

			
	 	 	 
	 	 	 
	 	
			SMTC CORPORATION,

			as a Guarantor

			
	 	
			 

			
	 	
			By:

				 
	 	 	
			Name:

			
	 	 	
			Title:

			
	 	 	 
	 	 	 
	 	
			MC ASSEMBLY MEXICO S. DE R.L. DE C.V.,

			as a Guarantor

			
	 	 	 
	 	
			By:

				 
	 	 	
			Name:

			
	 	 	
			Title:

			
	 	 	 
	 	 	 
	 	
			RADIO COMPONENTES DE MEXICO, S.A. DE C.V.,

			as a Guarantor

			
	 	 	 
	 	
			By:

				 
	 	 	
			Name:

			
	 	 	
			Title:

			

 

Amendment No. 4 to Financing Agreement

 

 

	 	
			SMTC DE CHIHUAHUA, S.A. DE C.V.,

			as a Guarantor

			
	 	 	 
	 	
			By:

				 
	 	 	
			Name:

			
	 	 	
			Title:

			
	 	 	 

 

Amendment No. 4 to Financing Agreement

 

 

	 	
			AGENTS:

			
	 	 
	 	
			TCW ASSET MANAGEMENT COMPANY LLC,

			as Administrative Agent and as Collateral Agent

			
	 	 
	 	
			By:

				 
	 	 	
			Name:

			
	 	 	
			Title:

			
	 	 
	 	 
	 	
			LENDERS:

			

 

	 	
			TCW DL VII FINANCING LLC

			 

			By: TCW Asset Management Company LLC, its

			Investment Advisor,

			as a Lender

			
	 	 
	 	
			By:

				 
	 	 	
			Name:

			
	 	 	
			Title:

			
	 	 
	 	 

 

	 	
			WEST VIRGINIA DIRECT LENDING LLC

			 

			By: TCW Asset Management Company LLC,

			Its Investment Advisor,

			as a Lender

			
	 	 
	 	
			By:

				 
	 	 	
			Name:

			
	 	 	
			Title:

			
	 	 
	 	 

 

	 	
			TCW BRAZOS FUND LLC

			 

			By: TCW Asset Management Company LLC, its

			Investment Advisor,

			as a Lender

			
	 	 
	 	
			By:

				 
	 	 	
			Name:

			
	 	 	
			Title:

			
	 	 
	 	 

 

Amendment No. 4 to Financing Agreement

 

 

	 	
			TCW SKYLINE LENDING, L.P.

			 

			By: TCW Asset Management Company LLC, its

			Investment Advisor,

			as a Lender

			
	 	 
	 	
			By:

				 
	 	 	
			Name:

			
	 	 	
			Title:

			
	 	 	 

 

	 	
			NJ/TCW DIRECT LENDING LLC

			 

			By: TCW Asset Management Company LLC, its

			Investment Advisor,

			as a Lender

			
	 	 
	 	
			By:

				 
	 	 	
			Name:

			
	 	 	
			Title:

			
	 	 	 
	 	 	 

 

	 	
			BTC HOLDINGS FUND I, LLC

			 

			By: Blue Torch Credit Opportunities Fund I LP, its

			sole member

			By: Blue Torch Credit Opportunities GP LLC, its

			general partner

			
	 	 
	 	
			By:

				 
	 	 	
			Name:

			
	 	 	
			Title:

			
	 	 	 
	 	 	 
	 	
			BTC HOLDINGS SC FUND LLC

			 

			By: Blue Torch Credit Opportunities SC Master

			Fund LP, its sole member

			By: Blue Torch Credit Opportunities SC GP LLC,

			its general partner

			
	 	 
	 	
			By:

				 
	 	 	
			Name:

			
	 	 	
			Title:

			

 

Amendment No. 4 to Financing Agreement

 

 

	 	
			SWISS CAPITAL BTC PRIVATE DEBT

			OFFSHORE SP

			 

			By: Blue Torch Capital LP, acting solely in its

			capacity as Investment Advisor to the Manager of

			Swiss Capital BTC Private Debt Offshore Fund SP,

			a segregated portfolio of Swiss Capital Private Debt

			(Offshore) Funds SPC

			
	 	 
	 	
			By:

				 
	 	 	
			Name:

			
	 	 	
			Title:

			
	 	 	 
	 	 	 
	 	
			SC BTC PRIVATE DEBT FUND L.P.

			 

			By: Blue Torch Capital LP, acting solely in its

			capacity as Investment Advisor to the Manager of

			SC BTC Private Debt Fund L.P.

			
	 	 
	 	
			By:

				 
	 	 	
			Name:

			
	 	 	
			Title:

			
	 	 	 

 

Amendment No. 4 to Financing AgreementExhibit 10.1

 

ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement
(this “Agreement”), dated as of September 27, 2019, is entered into by and between GBT TECHNOLOGIES INC.,
a Nevada corporation (“Seller”), whose principal address is 2500 Broadway, Suite F-125, Santa Monica, CA 90404, and Surge
Holdings, Inc., a Nevada corporation (“Buyer”), whose principal address is 3124 Brother Blvd, Suite 104,
Bartlett, TN 38133.

 

RECITALS

 

WHEREAS, Seller
wishes to sell and assign to Buyer, and Buyer wishes to purchase and assume from Seller, substantially all the assets (including
or even in specific intellectual properties that “form” a software), and certain specified liabilities, of its ECS
Prepaid business, Electronic Check Services business, and the Central State Legal Services business (collectively the “Business”),
subject to the terms and conditions set forth herein. The purchase and sale of the assets and all related transactions are referred
to herein as the “Transaction”.

 

NOW, THEREFORE,
in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.             Purchase
and Sale of Assets. Subject to the terms and conditions of this Agreement, Seller agrees to sell, transfer, assign and deliver
to Buyer, and Buyer agrees to purchase, acquire and take assignment and delivery of the properties and assets (the “Assets”),
as more particularly described on Exhibit “A”, attached hereto and incorporated herein by this reference:

 

(a)           Inventory.
All of the inventory of the Seller used or consumed by Seller in the operation of the Business, wherever located, including all
finished goods, work in process, raw materials, spare parts and all other materials and supplies to be used or consumed by Seller
in the production of finished goods in the operation of the Business, (collectively, the “Inventory”).

 

(b)          Contracts.
All of the rights, titles, interests and benefits accruing to Seller under those rental, sales, supply, purchase order, service,
sign, maintenance, equipment, any and all telephone and other contracts or leases relating to the Business, all of Seller’s
rights accruing under any so-called Non-Compete Agreements in favor of Seller in relation to the Business, and any other contracts
or leases relating to the operation of the Business (“Contracts”);

 

(c)           Licenses
and Permits. Any and all transferable consents, authorizations, variances or waivers, licenses, permits, registrations, certificates,
approvals and similar rights from any governmental or quasi-governmental agency, department, board, commission, bureau or other
entity or instrumentality with respect to the Business (collectively, the “Licenses”) held by or granted to Seller;

 

(d)           Intangible
Assets. All of Seller’s goodwill associated with the Business, including the telephone number, domain name and web page,
if any, customer lists, employee lists, supplier lists, and prospect lists associated with the Business, all trademarks, service
marks and their associated goodwill, trade secrets and confidential information, to the extent transferable (collectively the “Intangible
Assets”).

 

(e)           All
Intellectual Properties which include codes and keys that compile a software which allow “processing” prepaid platform
of ACH funds from merchant bank account to providers of the purchased service (“IP”) .

 

2.             Purchase
Price; Payment; Assumed Liabilities; Allocations.

 

(a)           Purchase
Price; Payment and Other Consideration. The purchase price for the Assets shall be FIVE MILLION DOLLARS ($5,000,000.00) (the
“Purchase Price”). Payment of the Purchase Price shall be made as follows:

 

    	 	1	 

     

    

 

At Closing, Buyer shall
transfer THREE MILLION THREE HOUNDRED THIRTY-THREE THOUSAND THREE HUNDRED THIRTY THREE (3,333,333) shares of Buyer’s common
stock and execute a convertible promissory note in favor of the Seller in the amount of FOUR MILLION and 00/100 DOLLARs
($4,000,000.00) (the “Note”), convertible into Buyer’s shares of common stock, $0.001 par value per
share (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in the Note;

  

(b)          Assumption
of Liabilities. At Closing, in addition to payment of the Purchase Price, Buyer shall assume and agree to pay, discharge, and perform
the following, and only the following and no other, obligations and liabilities of Seller (the “Assumed Liabilities”):

 

Seller’s liabilities
incurred after the “Effective Date” (hereafter defined) by Buyer pursuant to the Contracts, but only to the extent
such obligations and liabilities accrue and arise after the Effective Date and are not caused by or related to any action or inaction
by Sellers, or any other party occurring prior to the Effective Date.

 

Except for the specific
Assumed Liabilities as defined above, Buyer shall not assume, pay or otherwise be liable for any other obligations, liabilities
or debts of Seller of any nature whatsoever.

 

(c)           Retained
Liabilities. The “Retained Liabilities” as set forth in this section (d) shall remain the sole responsibility of and
shall be retained, paid, performed and discharged solely by Seller. “Retained Liabilities” shall mean every obligation
and liability of Seller other than the Assumed Liabilities, including, without limitation:

 

A.       any
obligation or liability of any nature whatsoever arising out of or relating to products sold or distributed by Seller to the extent
manufactured, sold, or distributed sold prior to the Effective Date;

 

B.       any
obligation or liability of any nature whatsoever under any Contract that arises after the Effective Date but that arises out of
or relates to any breach that occurred prior to the Effective Date;

 

C.       any
obligation or liability of any nature whatsoever for taxes, fees, or assessments of any nature, whether deferred or not, (A) arising
as a result of Seller’s operation of its Business or ownership of the Assets prior to the Effective Date, or (B) that will
arise as a result of the sale of the Assets pursuant to this Agreement;

 

D.       any
obligation or liability of any nature whatsoever under any employee benefit plans of Seller or relating to payroll, vacation, sick
leave, workers’ compensation, unemployment benefits, pension benefits, employee stock option or profit-sharing plans, health
care plans or benefits or any other employee plans or benefits of any kind for Seller’s employees or former employees or
both;

 

E.       any
obligation or liability of any nature whatsoever under any employment, severance, retention or termination agreement with any employee
of Seller;

 

F.       any
obligation or liability of any nature whatsoever arising out of or relating to any employee grievance whether or not the affected
employees are hired by Buyer;

 

G.       any
obligation or liability of any nature whatsoever arising out of any litigation, action, arbitration, audit, hearing, investigation,
or suit pending as of the Effective Date;

 

H.       any
obligation or liability of any nature whatsoever arising out of any litigation, action, arbitration, audit, hearing, investigation,
or suit involving Seller’s operation of the Business or ownership of the Assets commenced after the Effective Date and arising
out of or relating to any occurrence or event happening prior to the Effective Date;

 

I.       any
obligation or liability of any nature whatsoever arising out of or resulting from Seller’s compliance or noncompliance with
any legal requirement or order of any governmental body;

 

J.       any
obligation or liability of any nature whatsoever of Seller under this Agreement or any other document executed in connection herewith
and

 

    	 	2	 

     

    

 

 

K.       any
obligation or liability of any nature whatsoever of Seller based upon Seller’s acts or omissions occurring after the Effective
Date.

 

(d)  Closing Date. The
consummation of the transaction contemplated under this Agreement (herein referred to as the “Closing”) shall occur
on or before September 27, 2019 (the “Closing Date”); provided, however, that the Parties may mutually agree to extend
the Closing Date. Notwithstanding anything to the contrary contained herein, the Closing shall be effective as of 11:59 PM on the
Closing Date (the “Effective Date”).

 

(e)       Preparation
of Closing Documents. Counsel for Buyer shall prepare the documents to be executed and delivered at the Closing (the “Closing
Documents”), including the Bill of Sale (as hereinafter defined), and other Assignments (as hereinafter defined), all of
which must be satisfactory to Seller and its legal counsel.

 

3.            Delivery
of Documents.

 

(a)       Seller’s
Deliveries. At Closing, upon payment of the Purchase Price by Buyer, Seller shall deliver to Buyer the following:

 

A.       such
good and sufficient instruments of sale, conveyance, transfer and assignment as shall be required or as may be appropriate to effectively
vest in Buyer good title to the Assets, free and clear of all liens, security interests and encumbrances of whatever nature, properly
executed and acknowledged, including a limited warranty bill of sale (the “Bill of Sale”), and assignment and assumption
instruments (the “Assignments”);

 

B.       copies
of the resolutions by the board of directors of Seller approving the Transaction, together with a certificate of good standing
from Buyer’s jurisdiction of organization;

 

C.       physical
possession of all Assets including all records, keys and items of entry to the Business and the Assets;

 

D.       all
required or necessary consents, waivers and approvals with respect to the Contracts, and assignment thereof, in such form as is
satisfactory to Buyer and its counsel;

 

E.       such
other instruments and documents as may be reasonably required by Buyer or its counsel as to the performance of all covenants and
satisfaction of all conditions required of Seller, or as to any other matter required or necessitated by this Agreement, including
evidence reasonably satisfactory to Buyer that the person(s) executing the Closing Documents for Seller has full right, power and
authority to do so; and

 

(b)          Buyer’s
Deliveries. At Closing, Buyer shall deliver to Seller, as applicable:

 

A.       
the fully executed promissory note in favor of the Seller;

  

B.       copies
of the resolutions by of the board of directors of Buyer approving the Transaction, together with a certificate of good standing
from Buyer’s jurisdiction of organization;

 

C.       such
other instruments and documents as may be reasonably required by Seller or their counsel as to the performance of all covenants
and satisfaction of all conditions required of Buyer, or as to any other matter required or necessitated by this Agreement, including
evidence reasonably satisfactory to Seller that the person(s) executing the Closing Documents for Buyer has full right, power and
authority to do so;

 

4.            Warranties
and Representations.

 

(a)          Warranties
and Representations to Buyer. As an inducement to Buyer entering into this Agreement, Seller hereby covenants, represents and warrants
to Buyer as follows:

 

A.       Good
Standing. Seller is a duly organized and validly existing corporation and is in good standing under the laws of the State of Nevada.

 

    	 	3	 

     

    

 

 

B.       Authority.
Seller has all requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and
the execution, delivery and performance of this Agreement by Seller does not and will not violate any provisions of Seller’s
governing corporate instruments, or any order, judgment or award of any court or administrative agency or any contract to which
Seller is a party or require the consent of any third party, or violate any law or governmental or regulatory rule or regulation.

 

C.       Authorization
and Execution. This Agreement has been duly authorized by all necessary action on the part of Seller, has been duly executed and
delivered by Seller, constitutes the valid and binding agreement of Seller and is enforceable in accordance with its terms. The
person executing this Agreement on behalf of Seller has the authority to do so.

 

D.       Ownership
and Condition of Assets, Status of Contracts. (A) Seller possesses all licenses and required governmental or official approvals,
permits or authorizations necessary for the operation of the Business; and (B) with respect to the Contracts, each is in full force
and effect, there have been no material defaults or breaches of same, no assignment of rights in or relating to same have been
made, and to the best of Seller’s knowledge no event has occurred which would cause a material breach or default under same.

 

E.       Sufficiency
of Assets. The Assets (a) constitute all of the material assets necessary to operate the Business in substantially the manner presently
operated by Seller and (b) include all of the material operating assets of the Business.

 

F.       Warranty
of Title. Seller is the lawful owner of the Assets, and has the full right, power, and authority to sell, transfer and convey the
Assets to Buyer and that the Assets are not subject to any liens, claims, security interests, encumbrances, taxes, or assessments,
however described or denominated.

 

G.       Actions
or Proceedings. There is no action, suit or proceeding pending against Seller or known to Seller to be threatened against or affecting
the Business in any court, before any arbitrator or before or by any governmental authority. Seller has not been cited, fined,
held liable or in violation of, or otherwise received notification of any asserted past or present failure or alleged failure to
comply with any federal, state or local laws, and is not aware of any action or occurrence which would give rise to a violation
with regard to the Business.

 

H.       Payment
of Taxes. Seller has paid in full all applicable sales, occupancy, ad valorem, employment and other applicable taxes relating to
the ownership and operation of all Business or otherwise relating to the Assets, except for accrued taxes not yet due.

 

I.       Brokers;
Finders. Buyer shall not be obligated to pay any broker or finder in connection with the Transaction.

 

J.       No
Material Adverse Change. Since the date of the most recent Quarterly Report on Form 10-Q filed by the Seller, there has not been
any material adverse change in the business, operations, prospects, assets, results of operations or condition (financial or other)
of Seller, and no event has occurred or circumstance exists that may result in such a material adverse change.

 

K.       Independent
Evaluation.  Seller conducted its own independent evaluation, made its own analysis and consulted with advisors (including
legal, accounting, and tax advisors) as it has deemed necessary, prudent or advisable in order for Seller to make its own determination
and decision to enter into the transactions contemplated by this Agreement and to execute and deliver this Agreement.

 

(b)           Buyer’s
Warranties and Representations. Buyer covenants, warrants and represents as follows:

 

A.       Good
Standing. Buyer is a duly organized and validly existing corporation and is in good standing under the laws of the State of Nevada.

 

    	 	4	 

     

    

 

 

B.       Authority.
Buyer has all requisite power and authority to execute and deliver this Agreement and to perform the obligations of Buyer hereunder.
The execution, delivery and performance of this Agreement by Buyer does not and will not violate any provisions of Buyer’s
governing corporate instruments, or any order, judgment or award of any court or administrative agency or any contract to which
Buyer is a party or, except as otherwise acknowledged herein, require the consent of any third party, or to Buyer’s knowledge,
violate any law or governmental or regulatory rule or regulation.

 

C.       Authorization
and Execution. This Agreement has been duly authorized by all necessary action on the part of Buyer, has been duly executed and
delivered by Buyer, constitutes the valid and binding agreement of Buyer and is enforceable in accordance with its terms. The person
executing this Agreement on behalf of Buyer has the authority to do so.

 

D.       Brokers;
Finders. Seller has no obligation to pay any broker or finder in connection with the Transaction.

 

(c)           Effect
of Representations and Warranties. The foregoing representations of the parties hereto set forth in this Section are true, and
the foregoing warranties and covenants are in full force and effect and binding on same, as of the date hereof, and shall be in
full force and effect and deemed to have been automatically reaffirmed and restated by the parties hereto in their entirety as
of the date and time of Closing.

 

5.             Further
Acts. In addition to the acts and deeds stated herein and contemplated to be performed, executed and delivered by the respective
parties hereto, each of the parties hereto agrees to perform, execute and deliver or cause to be performed, executed and delivered
at Closing and after Closing any and all such further acts, deeds and assurances as may be reasonably necessary to consummate the
Transaction.

 

6.            Confidentiality;
Publicity. Except as may be required by law or regulation, no party hereto or their respective affiliates, employees, agents or
representatives shall disclose to any third party the subject matter or terms of this Agreement without the prior written consent
of the other parties; provided however, that any party may discuss the same with its legal counsel and other engaged professionals.
No press release or other public announcement related to this Agreement or the transaction contemplated hereby will be issued by
any party without the prior written approval of the Seller and Buyer. Buyer and Seller understand that within four (4) business
days of the Closing, Buyer is obligated by regulation to file a Current Report on Form 8-K with the Securities and Exchange Commission
e along with copies of all agreements with Seller and their respective exhibits.

 

7.             Survival.
All representations, warranties, covenants and agreements set forth in this Agreement shall survive the Closing of the Transaction
indefinitely.

 

8.             Notices.
All notices permitted or required to be given hereunder shall be in writing and sent by registered or certified mail, return receipt
requested, postage prepaid, by overnight courier (such as Federal Express) or hand delivered, addressed as follows:

 

To Seller:       GBT Technologies
Inc.

2500 Broadway, Suite F-125

Santa Monica, CA 90404

Attention: Douglas Davis

 

With Copy to:

 

To Buyer:      Surge
Holdings, Inc.

3124 Brother Blvd, Suite 104

Bartlett, TN 38133

Attention: Kevin Brian Cox

 

With Copy to: Lucosky Brookman LLP

          101
Wood Avenue South, 5th Floor

          Woodbridge,
NJ 08830

           Attention: Joseph Lucosky, Esq.

 

 

    	 	5	 

     

    

 

Any party may designate a different address
from time to time by notice given in accordance with the provisions of this paragraph. Any such notice shall be deemed given on
the date of delivery.

 

9.             
Miscellaneous. This Agreement shall be construed and interpreted under the laws of the State of Nevada. Seller and Buyer hereby
irrevocably submit in any suit, action or proceeding arising out of or related to this Agreement or to the Transaction contemplated
hereby or thereby to the exclusive jurisdiction and venue of any state or federal court having jurisdiction over Clark County,
Nevada and waive any and all objections to jurisdiction and venue that they may have under the laws of the State of Nevada or the
United States and any claim or objection that any such court is an inconvenient forum. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Agreement
or other affected document, and the application of such provisions to other persons or circumstances shall not be affected thereby
and shall be enforced to the greatest extent permitted by law. This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors, legal representatives, successors and permitted assigns, whether voluntary
by act of the parties or involuntary by operation of law, as the case may be. This Agreement is solely for the benefit of the parties
hereto and their respective successors and permitted assigns. There shall be no third party beneficiaries hereof, intended or otherwise.
Neither Party may assign this Agreement without the written consent of the other party, provided, however, Buyer may assign this
Agreement to a wholly owned subsidiary. In the event of such assignment by Buyer it shall remain obligated and liable under the
terms and conditions of this Agreement. The titles of sections and subsections herein have been inserted as a matter of convenience
of reference only and shall not control or affect the meaning or construction of any of the terms or provisions herein. All references
herein to the singular shall include the plural, and vice versa. Should any provision of this Agreement require interpretation
in any judicial, administrative or other proceeding or circumstance, it is agreed that the court, administrative body, or other
entity interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed
against one party by reason of the rule of construction that a document is to be construed more strictly against the party who
by itself or through its agents prepared the same, it being agreed that the agents of both parties hereto have fully participated
in the preparation of this Agreement. Except as otherwise expressly provided herein, all rights, powers, and privileges conferred
hereunder upon the parties hereto shall be cumulative and in addition to those other rights, powers, and remedies hereunder and
those available at law or in equity. All such rights, powers, and remedies may be exercised separately or at once, and no exercise
of any right, power, or remedy shall be construed to be an election of remedies or shall preclude the future exercise of any or
all other rights, powers, and remedies granted hereunder or available at law or in equity, except as expressly provided herein.
Buyer shall have no right of assignment of this agreement without the express written permission of Seller. Neither the failure
of either party to exercise any power given such party hereunder or to insist upon strict compliance by the other party with its
obligations hereunder, nor any custom or practice of the parties at variance with the terms hereof shall constitute a waiver of
either party’s right to demand exact compliance with the terms hereof. No amendment to this Agreement shall be binding on
any of the parties hereto unless such amendment is in writing and is executed by the party against whom enforcement of such amendment
is sought. Time is of the essence with respect to each and every covenant, agreement, and obligation of the parties hereto. This
Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall constitute
one agreement, and the signatures of any party to any counterpart shall be deemed to be a signature to, and may be appended to,
any other counterpart. This Agreement constitutes the entire agreement of the parties with respect to the subject matter contained
herein and supersedes and/or revokes any prior agreements not included within this Agreement, including prior drafts of documents,
prior proposals, counterproposals and correspondence, whether written or oral. As used in this Agreement, the term “including”
will always be deemed to mean “including, without limitation”.

 

[SIGNATURES BEGIN ON NEXT PAGE]

 

 

 

    	 	6	 

     

    

 

 

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first written above

 

	 	BUYER:
	 	 
	 	Surge Holdings, Inc., a Nevada corporation
	 	 
	 	By: /s/ Kevin Brian Cox
	 	Name: Kevin Brian Cox
	 	Title: Chief Executive Officer
	 	 
	 	SELLER:
	 	 
	 	GBT TECHNOLOGIES INC., a Nevada corporation
	 	 
	 	By: /s/ Mansour Khatib 09-30-2019
	 	Name:   Mansour Khatib
	 	Title: Board of Directors Member

 

 

    	 	7	 

     

    

 

EXHIBIT A

 

GBT TECHNOLOGIES INC.

 

ASSETS RELATED TO THE ECS PREPAID BUSINESS

 

	OFFICE COMPUTER EQUIPMENT – SERVERS	POS TERMINALS
	 	 
	Cisco 1900 series switch	158 Verifone POS terminals (570 – 3750) in field
	 	 
	Cisco ASA Firewall	13 Verifone POS terminals (570 – 3750) in inventory
	 	 
	Cisco ASA Firewall	PROCESSING SOFTWARE PROGRAM
	 	 
	Cisco ASA Firewall – Redundant Pair	Platform managing software program
	 	 
	Cisco Managed Switch	 
	 	 
	Cisco Managed Switch – Redundant Pair	 
	 	 
	ECS-LB1 – Loadbalancer	 
	 	 
	ECS-LB2 – Loadbalancer	 
	 	 
	ECS test	 
	 	 
	ECS – Utility Server	 
	 	 
	ECS – Backup – Data/Backup Storage	 
	 	 
	ECS – Main – Domain Server	 
	 	 
	ECS – wwwl – APT Server	 
	 	 
	ECS – www2 – Web Server	 
	 	 
	ECS – www3 – Web Server	 
	 	 
	ECS – www4 – API Server	 
	 	 
	ECS – www5 – Web Server	 
	 	 
	ECS – www6 – Web Server	 
	 	 
	ECS - sp5 – Primary DB – ECS Prepaid	 
	 	 
	ECS – spl - Backup DB – ECS Prepaid	 
	 	 
	ECS – sp4 – Backup DB – ECS Prepaid	 

 

 

    	 	8	 

     

    

 

ASSETS RELATED TO THE ELECTRONIC CHECK
SERVICES BUSINESS

 

	OFFICE COMPUTER EQUIPMENT – SERVERS	POS CHECK SCANNERS – MICR READERS
	 	 
	Debian – master – Primary DB	50 RDM Scanners
	 	 
	Debian2 – Backup DB	11 RDM Scanners in inventory
	 	 
	ECS – db3 – Backup DB	12 Magteck Micr Readers
	 	 
	IP Server1 – Process Checks	PROCESSING SOFTWARE PROGRAM
	 	 
	IP Server2 – Process Checks	ACH software processing program

 

 

 

ASSETS RELATED TO THE CENTRAL STATE
LEGAL SERVICES BUSINESS

 

COLLECTION SOFTWARE PROGRAM

 

Computerized Legal Collection Software Program

 

 

    	 	9

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