Document:

ex_197438.htm

Exhibit 10.1

 

CONSENT AND THIRD AMENDMENT TO CREDIT AGREEMENT

 

THIS CONSENT AND THIRD AMENDMENT TO CREDIT AGREEMENT, dated as of April 17, 2020 (this “Amendment”), is entered into by and among Rush Truck Centers of Alabama, Inc., Rush Truck Centers of Arizona, Inc., Rush Truck Centers of California, Inc., Rush Medium Duty Truck Centers of Colorado, Inc., Rush Truck Centers of Colorado, Inc., Rush Truck Centers of Florida, Inc., Rush Truck Centers of Georgia, Inc., Rush Truck Centers of New Mexico, Inc., Rush Truck Centers of Oklahoma, Inc., Rush Truck Centers of Tennessee, Inc., Rush Truck Centers of North Carolina, Inc., Rush Truck Centers of Idaho, Inc., Rush Truck Centers of Utah, Inc., Rush Truck Centers of Ohio, Inc., Rush Truck Centers of Kansas, Inc., Rush Truck Centers of Missouri, Inc., Rush Truck Centers of Virginia Inc., Rush Truck Centers of Indiana Inc., Rush Truck Centers of Illinois Inc., Rush Truck Centers of Nevada, Inc., Rush Truck Centers of Kentucky, Inc., RIG TOUGH, INC., LOS CUERNOS, INC., AIRUSH, INC., RUSH TRUCK LEASING, INC., RUSH ADMINISTRATIVE SERVICES, INC., RUSH MEDIUM-DUTY TRUCK CENTERS OF CALIFORNIA, INC., RUSH TRUCK CENTERS OF NEBRASKA, INC., RUSH TRUCK CENTERS OF PENNSYLVANIA, INC., RTC CENTRAL SAN ANTONIO, INC., each a Delaware corporation, Rush Truck Centers of Texas, L.P., a Texas limited partnership (collectively, the “Borrowers” and each individually, a “Borrower”), Rush Enterprises, Inc., a Texas corporation (“Holdings”), each Lender (as defined below) party hereto and BMO HARRIS BANK N.A., in its capacity as administrative agent under the Loan Documents (in such capacity, the “Administrative Agent”).

 

RECITALS

 

A.     The Borrowers, Holdings, each other Loan Party party thereto from time to time, the financial institutions party thereto from time to time as lenders (the “Lenders”) and the Administrative Agent are parties to that certain Credit Agreement, dated as of March 21, 2017 (as amended by that certain First Amendment to Credit Agreement, dated as of April 25, 2019, and that certain Second Amendment and Joinder to Credit Agreement, dated as of March 19, 2020, and as may be further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; capitalized terms used but not defined herein shall have the meanings indicated in the Credit Agreement, as amended hereby).

 

B.     The Borrowers have informed the Administrative Agent that they have previously applied, or intend to apply, for one or more SBA PPP Loans.

 

C.     In connection with the foregoing, the Borrowers have requested that the Lenders, and the Lenders signatory hereto have agreed to, (i) provide certain consents under the Credit Agreement and (ii) amend the Credit Agreement in certain respects, in each case, subject to the terms and conditions hereof.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and intending to be legally bound, the parties hereto agree as follows:

 

I. AMENDMENTS

 

1.     Amendments to Section 1.01. Section 1.01 (Defined Terms) of the Credit Agreement is amended by inserting the following new defined terms in appropriate alphabetical order:

 

"CARES Act" means the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, and applicable rules and regulations, as amended from time to time.

 

 

 

 

"CARES Payroll Costs" means "payroll costs" as defined in 15 U.S.C. 636(a)(36)(A)(viii) (as added to the Small Business Act by Section 1102 of the CARES Act).

 

“CARES Forgivable Uses” means uses of proceeds of an SBA PPP Loan that are eligible for forgiveness under Section 1106 of the CARES Act.

 

“CARES Forgiveness Application Deadline” means, as to any SBA PPP Loan, the last day to apply for forgiveness of such SBA PPP Loan pursuant to Section 1106 of the CARES Act and the applicable rules and regulations thereunder.

 

"Small Business Act" means the Small Business Act (15 U.S. Code Chapter 14A – Aid to Small Business).

 

“SBA” means the U.S. Small Business Administration.

 

"SBA PPP Loan" means a loan incurred by any Borrower under 15 U.S.C. 636(a)(36) (as added to the Small Business Act by Section 1102 of the CARES Act).

 

"SBA PPP Loan Date" means, as to any SBA PPP Loan, the date on which the applicable Borrower receives the proceeds of such SBA PPP Loan.

 

“Third Amendment Date” means April 17, 2020.

 

2.     Amendment to Article VII. Article VII (Affirmative Covenants) of the Credit Agreement is amended by inserting the following new Section 7.14 (SBA PPP Loans) immediately after Section 7.13 (Future Borrowers) appearing therein:

 

7.14     SBA PPP Loans.

 

(a)     Use of Proceeds; Conduct of Business. The Loan Parties shall (i) use all of the proceeds of each SBA PPP Loan exclusively for CARES Forgivable Uses in the manner required under the CARES Act to obtain forgiveness of the largest possible amount of such SBA PPP Loan, which as of the Third Amendment Date requires that the Loan Parties use not less than 75% of such SBA PPP Loan proceeds for CARES Payroll Costs and (ii) use commercially reasonable efforts to conduct their business in a manner that maximizes the amount of SBA PPP Loans that is forgiven.

 

(b)     Non-Sweeping Account. Notwithstanding anything contained in this Agreement, the Loan Parties shall maintain the proceeds of each SBA PPP Loan in an account that does not sweep funds and apply them to the Obligations.

 

(c)     Maintenance of Records; Forgiveness. The Loan Parties shall (i) maintain all records required to be submitted in connection with the forgiveness of each SBA PPP Loan, (ii) apply for forgiveness of each SBA PPP Loan in accordance with regulations implementing Section 1106 of the CARES Act as promptly as practicable after the last day of the eight week period immediately following the SBA PPP Loan Date applicable to such SBA PPP Loan, but in no event later than the CARES Forgiveness Application Deadline, and (iii) provide the Administrative Agent with a copy of its application for forgiveness and all supporting documentation required by the SBA or each SBA PPP Loan lender in connection with the forgiveness of each SBA PPP Loan.

 

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3.     Amendment to Section 9.01(b). Section 9.01(b) (Specific Covenants) of the Credit Agreement is amended by replacing the text “or 7.12 (Use of Proceeds)” in such Section with the text “, 7.12 (Use of Proceeds) or 7.14 (SBA PPP Loans)”.

 

4.     Amendment to Article XI. Article XI (Miscellaneous) of the Credit Agreement is amended by inserting the following new Section 11.21 (Acknowledgement Regarding Any Supported QFCs) immediately after Section 11.20 (Acknowledgement and Consent to Bail-In of EEA Financial Institutions) appearing therein:

 

11.21     Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Swap Contracts or any other agreement or instrument that is a QFC (such support, “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):

 

(a)     In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.

 

(b)     As used in this Section 11.21, the following terms have the following meanings:

 

“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

 

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“Covered Entity” means any of the following:

 

(i)       a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §252.82(b);

 

(ii)      a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §47.3(b); or

 

(iii)     a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. §382.2(b).

 

“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§252.81, 47.2 or 382.1, as applicable.

 

“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

 

II.     CONSENT AND AGREEMENT REGARDING SBA PPP LOANS

 

Notwithstanding anything to the contrary contained in the Credit Agreement, the parties hereto consent and agree, as applicable, as follows:

 

1.     SBA PPP Loan. Notwithstanding anything contained in the Credit Agreement, including any restrictions on the ability of the Loan Parties to incur Indebtedness, the Loan Parties may incur Indebtedness in the form of SBA PPP Loans.

 

2.     Mandatory Prepayment. Notwithstanding anything contained in the Credit Agreement, the incurrence by the Loan Parties of SBA PPP Loans shall not trigger a mandatory prepayment or constitute a prepayment event under the Credit Agreement.

 

3.     Treatment of SBA PPP Loans in Loan Covenants. Notwithstanding anything contained in the Credit Agreement, each SBA PPP Loan (other than interest thereon to the extent not eligible for forgiveness) shall be disregarded for purposes of calculating financial covenants in the Credit Agreement, except that if any portion of any SBA PPP Loan is not forgiven, for purposes of calculating financial covenants in the Credit Agreement, such unforgiven portion (together with all interest thereon) (a) will not be disregarded and (b) will be deemed to have been incurred (i) to the extent the Loan Parties apply for forgiveness of such portion of such SBA PPP Loan by the CARES Forgiveness Application Deadline, as of the date the Loan Parties receive notice from the lender of such SBA PPP Loan that repayment of such portion will not be forgiven and (ii) to the extent the Loan Parties do not apply for forgiveness of such portion of such SBA PPP Loan by the CARES Forgiveness Application Deadline, as of the CARES Forgiveness Application Deadline. The Loan Parties hereby agree that neither the incurrence of any SBA PPP Loan nor any forgiveness of any SBA PPP Loan shall result in any increase to Consolidated Adjusted EBITDAR or Consolidated Net Worth under the Credit Agreement.

 

III.     CONDITIONS TO EFFECTIVENESS 

 

Notwithstanding any other provision of this Amendment and without affecting in any manner the rights of Lenders hereunder, it is understood and agreed that this Amendment shall not become effective, and the Loan Parties shall not have any rights under this Amendment, until the Administrative Agent shall have received, in each case, in form and substance reasonably satisfactory to the Administrative Agent:

 

1.     payment of all fees and expenses of the Administrative Agent (including reasonable fees, charges and disbursements of counsel to the Administrative Agent);

 

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2.     duly executed signature pages to this Amendment from the Borrowers, Holdings, the Required Lenders and the Administrative Agent; and

 

3.     the Borrowers and Holdings shall have delivered to the Administrative Agent such other certificates, instruments, documents, agreements and opinions of counsel as may be required by the Administrative Agent or its counsel.

 

IV.      REPRESENTATIONS

 

Each Loan Party hereby represents and warrants to the Lenders and the Administrative Agent that:

 

1.     Each Group Member (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) is duly qualified to do business as a foreign entity and in good standing under the laws of each jurisdiction where such qualification is necessary, except where the failure to be so qualified or in good standing would not, in the aggregate, have a Material Adverse Effect, (c) has all requisite corporate or limited partnership power, as applicable, and authority and the legal right to own, pledge, mortgage and operate its property, to lease or sublease any property it operates under lease or sublease and to conduct its business as now or currently proposed to be conducted, (d) is in compliance in all material respects with its Constituent Documents, (e) is in compliance with all applicable Requirements of Law, except where the failure to be in compliance would not have a Material Adverse Effect, and (f) has all necessary Permits from or by, has made all necessary filings with, and has given all necessary notices to, each Governmental Authority having jurisdiction, to the extent required for such ownership, lease, sublease, operation, occupation or conduct of business, except where the failure to obtain such Permits, make such filings or give such notices would not, in the aggregate, have a Material Adverse Effect. The Borrowers are engaged in the business of selling Inventory at retail.

 

2.     The execution, delivery and performance by such Loan Party of this Amendment (a) are within such Loan Party’s corporate or similar powers and, at the time of execution thereof, have been duly authorized by all necessary corporate and similar action (including, if applicable, consent of holders of its Securities), (b) do not (i) contravene such Loan Party’s Constituent Documents, (ii) violate any applicable Requirement of Law, (iii) conflict with, contravene, constitute a default or breach under, or result in or permit the termination or acceleration of, any material Contractual Obligation of such Loan Party or any of its respective Subsidiaries (including other Loan Documents) other than those that would not, in the aggregate, have a Material Adverse Effect, or (iv) result in the imposition of any Lien (other than a Lien securing the Obligations) upon any property of such Loan Party or any of its Subsidiaries, and (c) do not require any Permit of, or filing with, any Governmental Authority or any consent of, or notice to, any Person.

 

3.     This Amendment has been duly executed and delivered to the other parties hereto by such Loan Party, is the legal, valid and binding obligation of such Loan Party and is enforceable against such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.

 

4.     Such Loan Party (other than Holdings) is a wholly owned subsidiary of Holdings and has full corporate authority to bind itself to the terms and conditions of this Amendment, the Credit Agreement and the other Loan Documents.

 

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5.     Each of the representations and warranties contained in the Credit Agreement, this Amendment, and the other Loan Documents applicable to it is true and correct in all material respects on and as of the date hereof as if made on and as of such date.

 

6.     Both before and after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing as of the date hereof.

 

V.      MISCELLANEOUS

 

1.     Loan Documents; Continued Effectiveness. As amended hereby, all terms of the Credit Agreement and the other Loan Documents, including without limitation the grant of security interest contained in the Security Agreement, shall be and remain in full force and effect and shall constitute the legal, valid, binding and enforceable obligations of the Loan Parties party thereto. To the extent any terms and conditions in any of the other Loan Documents shall contradict or be in conflict with any terms or conditions of the Credit Agreement, after giving effect to this Amendment, such terms and conditions are hereby deemed modified and amended accordingly to reflect the terms and conditions of the Credit Agreement as modified and amended hereby. Upon the effectiveness of this Amendment such terms and conditions are hereby deemed modified and amended accordingly to reflect the terms and conditions of the Credit Agreement as modified and amended hereby.

 

2.     Reaffirmation of Guaranty. Each Guarantor consents to the execution and delivery by all Borrowers of this Amendment and the consummation of the transactions described herein and ratifies and confirms the terms of its guarantee of all Obligations with respect to the indebtedness now or hereafter outstanding under the Credit Agreement as amended hereby. Each Guarantor acknowledges that, notwithstanding anything to the contrary contained herein or in any other document evidencing any indebtedness of any Borrower to the Lenders or any other obligation of any Borrower, or any actions now or hereafter taken by the Lenders with respect to any obligation of any Borrower, the guarantee by each Guarantor of all of the Obligations (i) is and shall continue to be a primary obligation of such Guarantor, (ii) is and shall continue to be an absolute, unconditional, continuing and irrevocable guaranty of payment, and (iii) is and shall continue to be in full force and effect in accordance with its terms. Nothing contained herein to the contrary shall release, discharge, modify, change or affect the original liability of any Guarantor with respect to the Obligations as amended hereby.

 

3.     Effect of Agreement. Except as set forth expressly herein, all terms of the Credit Agreement, as amended hereby, and the other Loan Documents shall be and remain in full force and effect and shall constitute the legal, valid, binding and enforceable obligations of the Loan Parties to the Lenders and Administrative Agent. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Lenders or the Administrative Agent under the Credit Agreement, nor constitute a waiver of any provision of the Credit Agreement. This Amendment shall constitute a Loan Document for all purposes of the Credit Agreement.

 

4.     Release. The Borrowers and the other Loan Parties hereby voluntarily and knowingly forever release, discharge, waive and relinquish any and all claims, demands, causes of action of every kind and nature whatsoever, whether in law, in equity or before an administrative agency, whether known or unknown, direct or indirect, fixed or contingent, whether heretofore asserted or not, and whether arising based on a tort or breach of contractual or other duty, arising under or in connection with this Amendment, any other Loan Document or the transactions contemplated thereby based on the acts or omissions of the Administrative Agent, the Lenders and their past and present officers, directors, managers, employees, partners, agents, shareholders, members, trustees, predecessors, successors, and assigns (the “Released Parties”) existing on or before the date hereof, that Borrowers or the Loan Parties ever had, have or may have against the Released Parties.

 

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5.     No Novation. This Amendment is not intended by the parties to be, and shall not be construed to be, a novation of the Credit Agreement or any other Loan Documents or an accord and satisfaction in regard thereto.

 

6.     Costs and Expenses. Borrowers agree to pay on demand all costs and expenses of Administrative Agent in connection with the preparation, execution and delivery of this Amendment, including, without limitation, the reasonable fees and out-of-pocket expenses of outside counsel for Administrative Agent with respect thereto.

 

7.     Entire Understanding. This Amendment sets forth the entire understanding of the parties with respect to the matters set forth herein, and shall supersede any prior negotiations or agreements, whether written or oral, with respect thereto.

 

8.     Counterparts. This Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, each of which shall be deemed an original and all of which, taken together, shall be deemed to constitute one and the same instrument. Delivery of an executed counterpart of this Amendment by facsimile transmission, electronic transmission or containing an e-signature shall be as effective as delivery of a manually executed counterpart.

 

9.     Binding Nature. This Amendment shall be binding upon and inure to the benefit of the parties hereto, their respective successors, successors-in-titles, and assigns.

 

10.    Governing Law. This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York and all applicable federal laws of the United States of America.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, this Amendment has been duly executed as of the date first written above.

 

	 	
			BORROWERS:

			 

			RUSH TRUCK CENTERS OF ALABAMA, INC.

			RUSH TRUCK CENTERS OF ARIZONA, INC.

			RUSH TRUCK CENTERS OF CALIFORNIA, INC.

			RUSH MEDIUM DUTY TRUCK CENTERS OF COLORADO, INC.

			RUSH TRUCK CENTERS OF COLORADO, INC.

			RUSH TRUCK CENTERS OF FLORIDA, INC.

			RUSH TRUCK CENTERS OF GEORGIA, INC.

			RUSH TRUCK CENTERS OF NEW MEXICO, INC.

			RUSH TRUCK CENTERS OF OKLAHOMA, INC.

			RUSH TRUCK CENTERS OF TENNESSEE, INC.

			RUSH TRUCK CENTERS OF NORTH CAROLINA, INC.

			RUSH TRUCK CENTERS OF IDAHO, INC. 

			RUSH TRUCK CENTERS OF UTAH, INC. 

			RUSH TRUCK CENTERS OF OHIO, INC.

			RUSH TRUCK CENTERS OF KANSAS, INC.

			RUSH TRUCK CENTERS OF MISSOURI, INC.

			RUSH TRUCK CENTERS OF VIRGINIA INC.

			RUSH TRUCK CENTERS OF INDIANA INC.

			RUSH TRUCK CENTERS OF ILLINOIS INC. 

			RUSH TRUCK CENTERS OF NEVADA, INC.

			RUSH TRUCK CENTERS OF KENTUCKY, INC.

			RIG TOUGH, INC.

			LOS CUERNOS, INC.

			AIRUSH, INC.

			RUSH TRUCK LEASING, INC.

			RUSH ADMINISTRATIVE SERVICES, INC.

			RUSH MEDIUM-DUTY TRUCK CENTERS OF CALIFORNIA, INC.

			RUSH TRUCK CENTERS OF NEBRASKA, INC.

			RUSH TRUCK CENTERS OF PENNSYLVANIA, INC.

			RTC CENTRAL SAN ANTONIO, INC. 

			
	 	 
	 	
			By: /s/ Derrek Weaver

			Name:    Derrek Weaver

			Title:      Vice President

			               of each of the foregoing entities

			

 

[Signature Page to Consent and Third Amendment to Credit Agreement]

 

 

	 	
			RUSH TRUCK CENTERS OF TEXAS, L.P.

			 

			By: Rushtex, Inc., a Delaware corporation

			 

			 

			By: /s/ Derrek Weaver

			Name: Derrek Weaver

			Title: Vice President

			

 

[Signature Page to Consent and Third Amendment to Credit Agreement]

 

 

	 	
			HOLDINGS:

			 

			RUSH ENTERPRISES, INC.,

			as Borrower Agent and a Guarantor

			 

			 

			By: /s/ Derrek Weaver

			Name: Derrek Weaver

			Title: Executive Vice President

			

 

[Signature Page to Consent and Third Amendment to Credit Agreement]

 

 

	 	
			ADMINISTRATIVE AGENT AND LENDERS:

			 

			BMO HARRIS BANK N.A.,

			as Administrative Agent and a Lender

			 

			 

			By: /s/ Sara E. Fyffe

			Name: Sara E. Fyffe

			Title: Vice President

			

 

[Signature Page to Consent and Third Amendment to Credit Agreement]

 

 

	 	
			BANK OF AMERICA, N.A.,

			as a Lender

			 

			 

			By: /s/ Jose Alfred Lopez

			Name: Jose Alfred Lopez

			Title: Vice President – Wholesale Credit

			

 

[Signature Page to Consent and Third Amendment to Credit Agreement]

 

 

	 	
			MASSMUTUAL ASSET FINANCE LLC,

			as a Lender

			 

			 

			By: /s/ Don Butler

			Name: Don Butler

			Title: SVP

			

 

[Signature Page to Consent and Third Amendment to Credit Agreement]

 

 

	 	
			NYCB SPECIALTY FINANCE COMPANY, LLC, A

			WHOLLY OWNED SUBSIDIARY OF NEW YORK

			COMMUNITY BANK,

			as a Lender

			 

			 

			By: /s/ Mark C. Mazmanian

			Name: Mark C. Mazmanian

			Title: First Senior Vice President

			

 

[Signature Page to Consent and Third Amendment to Credit Agreement]

 

 

	 	
			FROST BANK,

			as a Lender

			 

			 

			By: /s/ Lane Allen

			Name: Lane Allen

			Title: Senior Vice President

			

 

[Signature Page to Consent and Third Amendment to Credit Agreement]Document

MIND TECHNOLOGY, INC.
DESCRIPTION OF CAPITAL STOCK
The following is a summary of certain provisions of Delaware law and the material terms of our capital stock as contained in our Amended and Restated Certificate of Incorporation (our “charter”), our Certificate of Designations of Series A Cumulative Preferred Stock (our “Certificate of Designations”) and our Amended and Restated Bylaws (our “bylaws”). The following descriptions do not purport to be complete statements of the relevant provisions of our charter, our Certificate of Designations, our bylaws or the Delaware General Corporation Law (the “DGCL”). You should refer to our charter, Certificate of Designations and bylaws, which are incorporated by reference, along with the applicable provisions of the DGCL.
Authorized Capital Stock
MIND Technology, Inc, a Delaware corporation (“we”, or the “Company”) has authorized capital stock consisting of 40,000,000 shares of common stock, par value $0.01 per share, and 2,000,000 shares of preferred stock, par value $1.00 per share.
Common Stock
Shares Outstanding. As of August 5, 2020, we had 12,182,233 issued and outstanding shares of common stock.
Dividends. We have not paid any cash dividends on our common stock since our inception, and our board of directors does not contemplate the payment of cash dividends on our common stock in the foreseeable future. It is the present policy of our board of directors to retain earnings, if any, for use in developing and expanding our business. In the future, our payment of dividends on our common stock will also depend on the amount of funds available, our financial condition, capital requirements and such other factors as our board of directors may consider.
Voting Rights. The holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote at a meeting of our stockholders. In matters other than the election of directors, stockholder approval requires the affirmative vote of a majority of the voting power of our common stock present in person or represented by proxy at the meeting and entitled to vote on the matter, voting as a single class, unless the matter is one upon which, by express provision of law, our charter or our bylaws, a different vote is required. Subject to the rights of the holders of any series of preferred stock to elect directors under specified circumstances, election of directors is determined by a plurality of the votes cast.
In addition to any other vote that may be required by law, applicable stock exchange rule or the terms of any series of our preferred stock, amendments to our charter must be approved by the board of directors and thereafter by holders of a majority in voting power of our stock entitled to vote thereon, and a majority in voting power of each class entitled to a separate class vote. A separate class vote is provided for amendments to the charter changing the number of authorized shares of a class of stock (unless the certificate of incorporation provides otherwise), changing the par value of a class of stock, or adversely affecting the rights, powers and preferences of the class of stock.
Our bylaws may be amended by (i) stockholder action with the affirmative vote of the holders of at least a majority of the voting power of all the shares entitled to vote thereon or (ii) by the majority of the board of directors.
Series A Preferred Stock
Shares Outstanding. As of August 5, 2020, we had 994,046 issued and outstanding shares of our 9.00% Series A Cumulative Preferred Stock, which we refer to as the “Series A Preferred Stock”. Our Series A Preferred Stock represents all of the Company’s outstanding preferred stock.
Dividends. Holders of Series A Preferred Stock will be entitled to 9.00% per annum of the $25.00 per share liquidation preference (equivalent to $2.25 per annum per share), accruing from the date of initial issuance. 

Dividends will be payable to holders of our Series A Preferred Stock quarterly on or about the last day of January, April, July and October of each year. The record date for dividend payment will be the 15th day of January, April, July and October of each year.
 
Voting Rights. Holders of our Series A Preferred Stock generally have no voting rights. However, if we do not pay dividends on the Series A Preferred Stock for six or more quarterly dividend periods (whether or not consecutive), the holders of the Series A Preferred Stock (voting separately as a class with the holders of all other classes or series of our preferred stock that we may issue upon which like voting rights have been conferred and are exercisable and which are entitled to vote as a class with the Series A Preferred Stock) will be entitled to vote for the election of two additional directors to serve on our board of directors until we pay, or declare and set aside funds for the payment of, all dividends that we owe on the Series A Preferred Stock, subject to certain limitations.
In addition, the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series A Preferred Stock is required at any time for us to authorize or issue any class or series of our capital stock ranking senior to the Series A Preferred Stock with respect to the payment of dividends or the distribution of assets on liquidation, dissolution or winding up, to amend any provision of our charter so as to materially and adversely affect any rights of the Series A Preferred Stock or to take certain other actions. If any such amendments to our charter would be material and adverse to holders of the Series A Preferred Stock and any other series of parity preferred stock upon which similar voting rights have been conferred and are exercisable, a vote of at least two-thirds of the outstanding shares of Series A Preferred Stock and the shares of the other applicable series materially and adversely affected, voting together as a class, would be required.
Maturity. The Series A Preferred Stock has no stated maturity and will not be subject to any sinking fund or mandatory redemption. Shares of the Series A Preferred Stock will remain outstanding indefinitely unless we decide to redeem or otherwise repurchase them or they are converted into our common stock in connection with a Change of Control as described below. We are not required to set aside funds to redeem the Series A Preferred Stock.
Optional Redemption. The Series A Preferred Stock is not redeemable by us prior to June 8, 2021 except upon the occurrence of a Change of Control pursuant to the special optional redemption described below. On and after June 8, 2021, we may, at our option, redeem the Series A Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price equal to $25.00 per share, plus any accumulated and unpaid dividends to, but not including, the redemption date.
Upon the occurrence of a Change of Control (as defined below), we may, at our option, redeem the Series A Preferred Stock, in whole or in part, within 120 days after the first date on which such Change of Control occurred, for cash at a redemption price of $25.00 per share, plus any accumulated and unpaid dividends to, but not including, the redemption date.
A “Change of Control” is deemed to occur when, after the original issuance of the Series A Preferred Stock, the following have occurred and are continuing:
•the acquisition by any person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the Exchange Act, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchases, mergers or other acquisition transactions of our stock entitling that person to exercise more than 50% of the total voting power of all our stock entitled to vote generally in the election of our directors (except that such person will be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); and
•following the closing of any transaction referred to in the bullet point above, neither we nor the acquiring or surviving entity has a class of common securities (or American Depositary Receipts representing such securities) listed on the New York Stock Exchange (“NYSE”), the NYSE MKT LLC (“NYSE MKT”) or the NASDAQ Stock Market LLC (“NASDAQ”), or listed or quoted on an exchange or quotation system that is a successor to the NYSE, the NYSE MKT or the NASDAQ.

Conversion Rights. Upon the occurrence of a Change of Control, each holder of Series A Preferred Stock will have the right (unless, prior to the Change of Control Conversion Date (as defined below), we have provided notice of our election to redeem the Series A Preferred Stock) to convert some or all of the Series A Preferred Stock held by such holder (the “Change of Control Conversion Right”) on the Change of Control Conversion Date into a number of shares of our common stock per share of Series A Preferred Stock to be converted equal to the lesser of:
•the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference plus the amount of any accrued and unpaid dividends to, but not including, the Change of Control Conversion Date (unless the Change of Control Conversion Date is after a record date for a Series A Preferred Stock dividend payment and prior to the corresponding Series A Preferred Stock dividend payment date, in which case no additional amount for such accrued and unpaid dividend will be included in this sum) by (ii) the Common Stock Price (as defined below); and
•25 shares of common stock per preferred share (i.e., the “Share Cap”), subject to certain adjustments;
 
subject, in each case, to provisions for the receipt of alternative consideration.
The Share Cap is subject to pro rata adjustments for any share splits (including those effected pursuant to a distribution of our common stock), subdivisions or combinations with respect to our common stock.
Upon such a conversion, the holders will be limited to a maximum number of shares of our common stock equal to the Share Cap multiplied by the number of shares of Series A Preferred Stock converted. If the Common Stock Price is less than $1.00, subject to adjustment, the holders will receive a maximum of 25.00 shares of our common stock per share of Series A Preferred Stock, which may result in the holders receiving shares of common stock with a value that is less than the liquidation preference of the Series A Preferred Stock.
If, prior to the Change of Control Conversion Date, we have provided a redemption notice, whether pursuant to our special optional redemption right in connection with a Change of Control or our optional redemption right, holders of Series A Preferred Stock will not have any right to convert the Series A Preferred Stock in connection with the Change of Control Conversion Right, and any shares of Series A Preferred Stock selected for redemption that have been tendered for conversion will be redeemed on the related date of redemption instead of converted on the Change of Control Conversion Date.
The “Change of Control Conversion Date” is the date the Series A Preferred Stock is to be converted, which will be a business day that is no fewer than 20 days nor more than 35 days after the date on which we provide the required notice of the occurrence of a Change of Control to the holders of Series A Preferred Stock.
The “Common Stock Price” will be (i) if the consideration to be received in the Change of Control by the holders of our common stock is solely cash, the amount of cash consideration per share of our common stock or (ii) if the consideration to be received in the Change of Control by holders of our common stock is other than solely cash (x) the average of the closing sale prices per share of our common stock (or, if no closing sale price is reported, the average of the closing bid and ask prices or, if more than one in either case, the average of the average closing bid and the average closing ask prices) for the ten consecutive trading days immediately preceding, but not including, the effective date of the Change of Control as reported on the principal U.S. securities exchange on which our common stock is then traded, or (y) the average of the last quoted bid prices for our common stock in the over-the-counter market as reported by Pink Sheets LLC or a similar organization for the ten consecutive trading days immediately preceding, but not including, the effective date of the Change of Control, if our common stock is not then listed for trading on a U.S. securities exchange.
Additional Series of Preferred Stock
Our board of directors may, without the approval of holders of our common stock, designate additional shares of the Series A Preferred Stock and authorize the issuance of such shares or designate additional series of authorized preferred stock and the rights, preferences, limitations and privileges of such additional series ranking junior to or on 

parity with the Series A Preferred Stock. These rights, preferences, limitations and privileges may include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of this series, any or all of which may be greater than the rights of our common stock. It is not possible to state the actual effect of the issuance of any shares of our preferred stock upon the rights of holders of our common stock until our board of directors determines the specific rights of the holders of our preferred stock. However, the effects of the issuance of any shares of our preferred stock upon the rights of holders of our common stock might include, among other things:
•restricting dividends on our common stock;
•diluting the voting power of our common stock;
•impairing the liquidation rights of our common stock; and
•delaying or preventing a change in control without further action by our stockholders

Stock Options and Warrants

As of August 5, 2020, we had no outstanding warrants to purchase shares of our common stock or Series A Preferred Stock. We may issue warrants for the purchase of debt securities, preferred stock or common stock. Warrants may be issued independently or together with other securities and may be attached to or separate from any such offered securities. 

As of August 5, 2020, we had 2,670,334 outstanding options to purchase our common stock, issued under our Amended and Restated Stock Awards Plan. We may in the future issue additional stock options to certain officers and directors and to third-party consultants pursuant to the Amended and Restated Stock Awards Plan or other equity incentive plan adopted by our board of directors.
Certain Provisions of Delaware Law, Our Charter and Our Bylaws
Provisions of our charter, bylaws and the DGCL may tend to delay, defer or prevent a potential unsolicited offer or takeover attempt that is not approved by our board of directors but that our stockholders might consider to be in their best interest, including an attempt that might result in stockholders receiving a premium over the market price for their shares. Because our board of directors is authorized to issue preferred stock with preferences and rights as it determines, it may afford the holders of any series of preferred stock preferences, rights or voting powers superior to those of the holders of common stock. These provisions:
•encourage potential acquirers to deal directly with our board of directors;
•give our board of directors the time and leverage to evaluate the fairness of the proposal to all stockholders;
•enhance continuity and stability in the composition of our board of directors and in the policies formulated by our board of directors; and
•discourage certain tactics that may be used in proxy fights.
No Cumulative Voting. Our bylaws provide that holders of shares of our common stock are not entitled to cumulate their votes in the election of directors.
Requirements for Advance Notification of Stockholder Nomination and Proposals. Our bylaws establish advance notice procedures with respect to stockholder proposals and nomination of candidates for election as directors other than nominations made by or at the direction of our board of directors or a committee of our board of directors. Our bylaws prescribe specific information that the stockholder’s notice must contain, including, among other things: (i) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest of such stockholder in such business; (ii) the name and address of such stockholder, as they appear on our books; (iii) the number of shares, number and type of derivative instruments or other interests in the Company that are beneficially owned by such stockholder; (iv) any material interest of the stockholder in such business; (v) a representation that the stockholder is a holder of record of 

stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to bring such nomination or other business before the meeting; and (vi) a representation as to whether or not such stockholder will deliver a proxy statement or form of proxy to holders of at least the percentage of the voting power of the Company’s outstanding stock required to approve or adopt the proposal or, in the case of a nomination or nominations, at least the percentage of the voting power of the Company’s outstanding stock reasonably believed by the stockholder to be sufficient to elect such nominee or nominees. 
Generally, under our bylaws, to be timely notice must be received by the Company not earlier than the close of business on the 120th day and not later than the close of business on the 90th day prior to the first anniversary of the preceding year’s annual meeting. Notwithstanding the specific provisions of our bylaws, stockholders may request inclusion of proposals in our proxy statement pursuant to Rule 14(a)-8 under the Exchange Act or inclusion of nominees in our proxy statement pursuant to other SEC proxy rules.
Removal of Directors. Our charter provides that, subject to the rights of holders of any series of our preferred stock with respect to the election of directors, our stockholders may remove a director, with or without cause, by the affirmative vote of a majority of the voting power of the outstanding shares of stock of the Company entitled to vote generally for the election of directors.
Limitation of Liability and Indemnification Matters 
Our charter limits the liability of our directors for monetary damages for breach of their fiduciary duty as directors, except for liability that cannot be eliminated under the DGCL. Delaware law provides that directors of a company will not be personally liable for monetary damages for breach of their fiduciary duty as directors, except for liabilities:
•for any breach of their duty of loyalty to us or our stockholders;
•for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
•for unlawful payment of dividend or unlawful stock repurchase or redemption, as provided under Section 174 of the DGCL; or
•for any transaction from which the director derived an improper personal benefit.
Any amendment, repeal or modification of these provisions will be prospective only and would not affect any limitation on liability of a director for acts or omissions that occurred prior to any such amendment, repeal or modification. 
Our charter and bylaws also provide that we will indemnify our directors and officers to the fullest extent permitted by Delaware law. Our bylaws also permit us to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of that person’s actions as our officer, director, employee or agent, regardless of whether Delaware law would permit indemnification. We believe that the limitation of liability provision in our charter and bylaws will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers. 

Anti-Takeover Effects of Provisions of our Charter, our Bylaws and Delaware Law 
Some provisions of Delaware law, our charter and our bylaws described below contain provisions that could make the following transactions more difficult: acquisitions of us by means of a tender offer, a proxy contest or otherwise, or removal of our incumbent officers and directors. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interest or in our best interests, including transactions that might result in a premium over the market price for our shares. 
These provisions, summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with us. We believe that the benefits of increased protection and our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging these proposals because, among other things, negotiation of these proposals could result in an improvement of their terms. 
Delaware Law 
We are subject to Section 203 of the DGCL, an anti-takeover law. In general, Section 203 prohibits a publicly-held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years following the date the person became an interested stockholder, unless the “business combination” or the transaction in which the person became an interested stockholder is approved by our board of directors in a prescribed manner. Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own, 15% or more of a corporation’s voting stock. The existence of this provision may have an anti-takeover effect with respect to transactions not approved in advance by the board of directors, including discouraging attempts that might result in a premium over the market price for the shares of common stock held by stockholders. Under Section 203, a business combination between a corporation and an interested stockholder is prohibited unless it satisfies one of the following conditions:
•the transaction is approved by the board of directors before the date the interested stockholder attained that status;
•upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, shares owned by persons who are directors and also officers, and employee stock plans, in some instances; or
•on or after such time, the business combination is approved by the board of directors and authorized at a meeting of stockholders by at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.
Charter and Bylaws 
Provisions of our charter and bylaws may delay or discourage transactions involving an actual or potential change in control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price of our common stock. 
Among other things, our charter and bylaws:
•permit our board of directors to issue up to 2,000,000 shares of preferred stock, with any rights, preferences and privileges as they may designate;

•provide that the authorized number of directors may be changed only by resolution of the board of directors;
•provide that all vacancies, including newly created directorships, may, except as otherwise required by law and subject to the rights of holders of the our preferred stock, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum;
•provide that our bylaws may only be amended by the affirmative vote of the holders of a majority of the voting power of our then-outstanding shares of stock entitled to vote thereon, voting as a single class, or by resolution adopted by a majority of the directors;  
•provide that, subject to the rights of the holders of preferred stock, special meetings of the stockholders may only be called by a majority of the board of directors or upon the written request of the holders of 10% of the voting power of our outstanding stock;
•eliminate the personal liability of our directors for monetary damages resulting from breaches of their fiduciary duty to the extent permitted by the DGCL and indemnify our directors and officers to the fullest extent permitted by law;
•provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner, and also specify requirements as to the form and content of a stockholder’s notice; and 
•do not provide for cumulative voting rights, therefore allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose. 
Transfer Agent and Registrar
The transfer agent and registrar for our common stock and our Series A Preferred Stock is American Stock Transfer & Trust Company, LLC.
NASDAQ Listing
Our common stock is listed on the NASDAQ under the ticker symbol “MIND.” Our Series A Preferred Stock is listed on the NASDAQ under the ticker symbol “MINDP.”

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