Document:

Loan
Agreement (“Agreement”)

 

Australian
Future Energy Pty Ltd and Synthesis Energy Systems, Inc

 

Provision
of Short-Term Interim Funding

 

	#	 	Section	 	Detail

        

	1	 	Borrower	 	Australian
        Future Energy Pty Ltd (“AFE”)

        Level
        10

        10
        Market Street

        Brisbane
        Qld 4000

         

	2	 	Lender	 	Synthesis
        Energy Systems, Inc (“SES”)

        1
        Riverway

        Houston
        Texas 77056

        United
        States of America

         

	3	 	Background
    and Purpose	 	On
        10 October 2019, SES announced that it had signed a definitive Merger Agreement, whereby AFE, a private company incorporated
        in Brisbane, Australia in 2014, will merge with a wholly owned subsidiary of SES. As a result of the transaction, AFE
        will become a wholly owned subsidiary of SES. SES currently holds approximately 35% of the issued capital of AFE.

         

        In
        connection with the execution of the Merger Agreement, SES issued $US 2,000,000 of 11% senior secured debentures to certain
        accredited investors, along with warrants to purchase $4,000,000 of shares of SES’s common stock.

         

        SES
        shall receive the $2,000,000, less legal and escrow agent fees of approximately $36,000, pursuant to the Merger Debentures
        schedule, beginning seven business days after this announcement and concluding within two business days of stockholder
        approval of the merger.

         

        The
        merger debentures are intended to assist SES and AFE in financing the business through the closing of the merger.

         

        Both
        AFE and SES expect the merger to close in the first quarter of 2020.

         

	4	 	Purpose
    of Loan	 	To
        be used by AFE according to the budget attached in Appendix 1 – Budget and shall not deviate from the Budget by
        more than 25% on any line item and not exceed 10% in aggregate in any month without mutual written agreement of both AFE’s
        and SES’ CEO.

                                                                              

        

        

 

    	 

    	 

    

 

	 	 	 	 	

                                                                                          Commercially
        reasonable efforts shall be made by both AFE and SES to minimize expenses to close the proposed Merger transactions.

                                                                                           

                                                                                          In
        the event that the proposed Reverse Merger transaction does not successfully complete, SES and AFE will work co-operatively
        together to review those costs incurred individually by either of SES or AFE that may have been of benefit to the other
        party, and to reasonably discuss and agree a method for the sharing of payment of such costs. SES and AFE agree that this
        will be likely to predominantly relate to Australian legal costs of King Wood Mallesons.

         

	5	 	Loan
    Amount	 	$US
        350,000.

         

	6	 	Funding
    Date	 	Loan
        Amount to be provided as one lump sum payment in cleared funds to AFE’s normal cash operating account, with Westpac
        Banking Corporation, within 2 business days of signing this Agreement.

         

        Account
        details :

         

        Account
        Name : Australian Future Energy Pty Ltd

        Bank
        : Westpac Banking Corporation

        Customer
        ID Number : 8414 9681

        BSB
        Number : 034-001

        Account
        Number : 346 367

         

	7	 	Term	 	The
        Loan is effective upon signing this agreement and receipt of Loan Amount by AFE and shall be due in full on March 31,
        2020, or 3 months following the vote of the shareholders of SES in relation to the proposed Reverse Merger transaction,
        whichever is the later.

         

        For
        the avoidance of doubt, the Loan Amount plus Interest remains payable in full by AFE to Lender until such time as the
        Repayment Amount is paid in full to Lender.

         

	8	 	Security	 	In
        the event that the Reverse Merger transaction outlined in Section 3 above does not successfully complete, the Loan Amount
        will continue to accrue interest until the Loan Amount is repaid in full.

         

        AFE
        acknowledges and understands that should the Loan Amount not be rapid by the Sunset Date it will be in default of this
        agreement.

         

        The
        Parties shall undertake their commercially reasonable efforts to achieve a mutually agreeable settlement should AFE foresee
        that the Loan Amount cannot be repaid by the Sunset Date.

        

         

    	 

    	 

    

 

	 	 	 	 	The
        Lender’s right to collect shall be in accordance with prevailing law.

         

	9	 	Interest	 	Interest
        will be charged on the Loan Amount on a simple interest basis, at the rate of 11.0% per annum, payable in full on the
        Repayment Date, in conjunction with repayment of the Loan Amount.

         

        Should
        the Loan Amount not be paid in full by the Sunset Date the interest rate shall increase to the Default Interest rate of
        18%.

         

	10	 	Repayment
    Amount	 	Loan
        Amount plus Interest and Default Interest, if any.

         

	11	 	Repayment
    Date	 	The
        earlier of 5 days after completion of the Reverse Merger transaction as outlined in Section 3 above has completed on or
        around 31 March 2020.

         

        Upon
        successful completion of the Reverse Merger transaction the Loan Amount may be repaid in cash or converted to a shareholder
        loan from the SES parent company to AFE.

         

        In
        the event that the Reverse Merger transaction outlined in Section 3 above does not successfully complete, the Loan Amount
        will continue to accrue Interest and Default Interest until the Loan Amount is repaid in full.

         

        Final
        Sunset Date for repayment is the later of March 31, 2020 or 3 months following the vote of the shareholders of SES in
        relation to the proposed Reverse Merger transaction.

        

         

	12	 	Notices	 	AFE
        :

        Mr
        Kerry Parker

        Chief
        Executive Officer

        Australian
        Future Energy Pty Ltd

        Level
        10

        10
        Market Street

        Brisbane
        Qld 4000

        Email
        : k.parker@ausfutureenergy.com.au

         

        Lender
        Name :

        Mr
        Robert Rigdon

        President
        and Chief Executive Officer

        Synthesis
        Energy Systems

        1
        Riverway

        Houston
        Texas 77056

        United
        States of America

        Email
        : robert.rigdon@synthesisenergy.com

         

	13	 	Governing
    Law	 	This
        agreement will be governed by the laws of Queensland, Australia as may apply from time to time.

         

	14	 	Binding
    agreement	 	AFE
        and SES agree that this agreement is legally binding.

        

 

    	 

    	 

    

 

Executed
as An Agreement :

Australian
Future Energy Pty Ltd

ABN
56 168 160 067

Level
10

10
Market Street

Brisbane
Qld 4000

 

	/s/
    Edek Choros	 	/s/
    Kerry Parker
	Edek
    Choros	 	Kerry
    Parker
	Director	 	Company
    Secretary
	Date
    October 25, 2019	 	Date
    October 25, 2019

 

Synthesis
Energy Systems, Inc

1
Riverway

Houston
Texas 77056

United
States of America

 

	/s/
    Robert W. Rigdon	 
	Robert
    W. Rigdon	 
	President
    and Chief Executive Officer	 
	Synthesis
    Energy Systems, Inc	 
	Date
    October 24, 2019Exhibit

EXECUTION

AMENDMENT NO. 2
TO SECOND AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT
Amendment No. 2 dated as of October 28, 2019 (this “Amendment”), between STERLING NATIONAL BANK (the “Buyer”) and M/I FINANCIAL, LLC (the “Seller”).
RECITALS
The Buyer and the Seller are parties to that certain Second Amended and Restated Master Repurchase Agreement, dated as of October 30, 2017 (as amended by that certain Amendment No. 1 to Second Amended and Restated Master Repurchase Agreement, dated as of October 29, 2018, by and between the Buyer and the Seller and this Amendment, the “Existing Repurchase Agreement”; and as further amended by this Amendment, the “Repurchase Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Existing Repurchase Agreement.
The Buyer and the Seller have agreed, subject to the terms and conditions of this Amendment, that the Existing Repurchase Agreement be amended to reflect certain agreed upon revisions to the terms of the Existing Repurchase Agreement.
Accordingly, the Buyer and the Seller hereby agree, in consideration of the mutual promises and mutual obligations set forth herein, that the Existing Repurchase Agreement is hereby amended as follows:
SECTION 1.Maximum Purchase Price. Section 2 of Schedule 2 to the Existing Repurchase Agreement is hereby amended by deleting the definition of “Maximum Purchase Price” in its entirety and replacing it with the following:
“Maximum Purchase Price” shall mean $65,000,000.

SECTION 2.Termination Date.  Section 4 of Schedule 2 to the Existing Repurchase Agreement is hereby amended by deleting such section in its entirety and replacing it with the following: 
Termination Date.  The Termination Date shall mean October 26, 2020, or such other date declared by either Seller or Buyer as contemplated below, or such date as determined by Buyer pursuant to its rights and remedies under the Agreement.

SECTION 3.Price Differential; Pricing Rate; Post-Default Rate. Section 6 of Schedule 2 to the Existing Repurchase Agreement is hereby amended by deleting the definition of “Pricing Spread” in its entirety and replacing it with the following:

The “Pricing Spread” shall equal:

(a)    with respect to Transactions the subject of which are Mortgage Loans which are Conforming Mortgage Loans, Agency High Balance Mortgage Loans and Exception Mortgage Loans, 1.75%; or 
(b)    with respect to Transactions the subject of which are Mortgage Loans which are Jumbo Mortgage Loans and Aged Mortgage Loans, 2.00%. 
SECTION 4.Conditions Precedent.  This Amendment shall become effective as of the date hereof (the “Amendment Effective Date”), subject to the satisfaction of the following conditions precedent:
4.1    Delivered Documents.  On the Amendment Effective Date, the Buyer shall have received the following documents, each of which shall be satisfactory to the Buyer in form and substance:
(a)this Amendment, executed and delivered by the duly authorized officers of the Buyer and the Seller; 
(b)the Commitment Fee in an amount equal to $162,500, incurred in connection with the extension of the Termination Date; and
(c)such other documents as the Buyer or counsel to the Buyer may reasonably request.

SECTION 5.Representations and Warranties. Seller hereby represents and warrants to the Buyer that it is in compliance with all the terms and provisions set forth in the Existing Repurchase Agreement on its part to be observed or performed, and that no Default or Event of Default has occurred and is continuing, and hereby confirms and reaffirms the representations and warranties contained in Section 11 of the Existing Repurchase Agreement. 

SECTION 6.Limited Effect.  Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with its terms.  

SECTION 7.Counterparts.  This Amendment may be executed in any number of counterparts each of which shall constitute one and the same instrument, and each party hereto may execute this Amendment by signing any such counterpart. Delivery of an executed counterpart of a signature page of this Amendment in Portable Document Format (PDF) or by facsimile shall be effective as delivery of a manually executed original counterpart of this Amendment.

SECTION 8.Severability. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement.

SECTION 9.GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the parties have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the day and year first above written.

	
		
	 
	STERLING NATIONAL BANK, as Buyer 
By:  /s/ Eddie Othman           
      Name: Eddie Othman
      Title: Senior Vice President

	
		
	 
	M/I FINANCIAL, LLC, as Seller 
By:  /s/ Derek J. Klutch           
      Name: Derek J. Klutch
      Title: President & CEO

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