Sky Quarry Inc S-1, filed Jul 18, 2025
Sky Quarry Inc. (SKYQ)
As filed with the Securities and Exchange Commission on July 18, 2025
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________
FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
SKY QUARRY INC.
(Exact name of registrant as specified in its charter)
Delaware |
| 4955 |
| 84-1803091 |
(State or other jurisdiction of incorporation or organization) |
| (Primary Standard Industrial Classification Code Number) |
| (I.R.S. Employer |
____________________________
Woods Cross, Utah 84087
(424) 394-1090
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
____________________________
David Sealock
Chief Executive Officer
700 W. 700 South, Suite 101
Woods Cross, Utah 84087
(424) 394-1090
(Name, address, including zip code, and telephone number, including area code, of agent for service)
____________________________
Copies to: | |
Louis A. Bevilacqua, Esq. Bevilacqua PLLC 1050 Connecticut Avenue, NW, Suite 500 Washington, DC 20036 (202) 869-0888 | Steven J. Davis, Esq. SD Law Group APC 10531 4S Commons Drive, B464 San Diego, CA 92127 (619) 788-2383 |
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨Accelerated filer ¨
Non-accelerated filer x Smaller reporting company x
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of Securities Act. ¨
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any state where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED July 18, 2025
Sky Quarry Inc.
Up to 13,834,230 Shares of Common Stock
____________________________
This prospectus relates to the sale of 13,834,230 shares of our common stock by Varie Asset Management, LLC, or the Selling Stockholder, which includes:
·120,000 shares of common stock issuable upon conversion of a 12% convertible promissory note in the principal amount of $150,000 issued to the Selling Stockholder on May 22, 2025, at an initial conversion price of $1.25 per share, which we refer to as the Convertible Note, and 60,000 shares of common stock issuable upon exercise of a warrant issued to the Selling Stockholder on May 22, 2025, at an initial exercise price of $1.25 per share, which we refer to as the Warrant; and
·up to 13,654,230 shares of common stock that we have issued, or may, in our sole discretion, elect to issue and sell to the Selling Stockholder pursuant to a purchase agreement that we entered into with the Selling Stockholder on July 9, 2025, which we refer to as the Purchase Agreement.
We are not selling any securities under this prospectus and will not receive any of the proceeds from the sale of shares of common stock by the Selling Stockholder. However, we may receive proceeds from the cash exercise of the Warrant and up to $8,125,000 in aggregate gross proceeds under the Purchase Agreement from sales of our common stock we may elect to make to the Selling Stockholder pursuant to the Purchase Agreement after the date of this prospectus.
Please see “The Convertible Note and Warrant” for a description of the terms of the Convertible Note and the Warrant, “The Purchase Agreement” for a description of the Purchase Agreement and “Selling Stockholder” for additional information regarding the Selling Stockholder.
The Selling Stockholder may sell or otherwise dispose of the shares of common stock described in this prospectus in a number of different ways and at varying prices. See “Plan of Distribution” for more information about how the Selling Stockholder may sell or otherwise dispose of the shares of common stock being registered pursuant to this prospectus. The Selling Stockholder is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended.
The Selling Stockholder will pay all brokerage fees and commissions and similar expenses. We will pay the expenses (except brokerage fees and commissions and similar expenses) incurred in registering the shares, including legal and accounting fees. See “Plan of Distribution.”
Our common stock is listed on The Nasdaq Capital Market under the symbol “SKYQ.” On July 16, 2025, the closing price of our common stock on The Nasdaq Capital Market was $0.6192.
We are an “emerging growth company,” as that term is used in the Jumpstart Our Business Startups Act of 2012, and as such, have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. See “Prospectus Summary—Implications of Being an Emerging Growth Company.”
Investing in our securities involves a high degree of risk. You should read “Risk Factors” beginning on page 7 of this prospectus and the reports we file with the Securities and Exchange Commission incorporated by reference in this prospectus to read about factors to consider before purchasing our securities.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 2025
TABLE OF CONTENTS
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We have not, and the Selling Stockholder has not, authorized anyone to provide you with information different from that contained or incorporated by reference in this prospectus or any accompanying prospectus supplement or free writing prospectus, and neither we nor the Selling Stockholder take any responsibility for any other information that others may give you. We and the Selling Stockholder are offering to sell these securities and seeking offers to buy these securities only in jurisdictions where offers and sales are permitted. This prospectus and any accompanying supplement to this prospectus do not constitute an offer to sell or the solicitation of an offer to buy any securities other than the registered securities to which they relate.
You should not assume that the information contained in this prospectus or any prospectus supplement or free writing prospectus is accurate as of any date other than the date on the front cover of those documents, or that the information contained in any document incorporated by reference is accurate as of any date other than the date of the document incorporated by reference, regardless of the time of delivery of this prospectus or any sale of a security. Our business, financial condition, results of operations and prospects may have changed since those dates.
This prospectus relates to the offering of our common stock. Before buying any of our common stock, you should carefully read this prospectus, any supplement to this prospectus, the information and documents incorporated herein by reference and the additional information under the heading “Where You Can Find More Information” and “Information Incorporated by Reference.” These documents contain important information that you should consider when making your investment decision.
We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus and the documents incorporated by reference into this prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks and trade names or products in this prospectus or in the documents incorporated by reference into this prospectus is not intended to, and does not imply a relationship with, or endorsement or sponsorship by us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus or in the documents incorporated by reference into this prospectus may appear without the ®, TM or SM symbols, but the omission of such references is not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable owner of these trademarks, service marks and trade names.
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This summary highlights selected information contained elsewhere in or incorporated by reference into this prospectus. This summary is not complete and does not contain all of the information that you should consider before deciding whether to invest in our securities. This summary is qualified in its entirety by the more detailed information included in or incorporated by reference into this prospectus. You should carefully read the entire prospectus and the other documents incorporated by reference into this prospectus, including the risks associated with an investment in our company discussed in the “Risk Factors” section of this prospectus, any applicable prospectus supplement, and documents referred to in “Information Incorporated by Reference” before making an investment decision. Some of the statements in this prospectus and the other documents incorporated by reference into this prospectus are forward-looking statements. See the section titled “Cautionary Note Regarding Forward-Looking Statements.”
Unless otherwise indicated by the context, reference in this prospectus to “we,” “us,” “our,” “our company” and similar references are to the combined business of Sky Quarry Inc., a Delaware corporation, and its consolidated subsidiaries.
OUR COMPANY
Overview
We are an oil production, refining, and development-stage environmental remediation company formed to deploy technologies to facilitate the recycling of waste asphalt shingles and remediation of oil-saturated sands and soils, providing sustainable refined crude products. We expect the recycling and production of oil from asphalt shingles to reduce the dependence on landfills for the disposal of waste and to also reduce dependence on foreign and domestic virgin crude oil extraction for industrial uses.
We have developed a process for separating oil from oily sands and other oil-bearing solids utilizing a proprietary solvent, which we refer to as our ECOSolv technology or the ECOSolv process. The solvent is used in a closed-loop distillation and evaporation circuit which results in over 99% of the solvent being recoverable for continuous reuse and requires no water. The solvent has demonstrated oil separation rates of over 95% in bench testing using samples of both mined crushed ore and ground asphalt shingles. Bench testing was conducted in house, and through unaffiliated third parties, which were completed on May 3, 2022 and August 30, 2022.
We intend to finish retrofitting our oil sands remediation facility located in PR Spring in eastern Utah in fiscal 2025 to recycle waste asphalt shingles using our ECOSolv technology, to produce and sell oil as well as asphalt paving aggregate mined from our bitumen deposit.
We expect to complete the build-out of our initial modular asphalt shingle recycling facility in fiscal 2025, which can be deployed in areas with high concentrations of waste asphalt shingles and near asphalt shingle manufacturing centers. Our design contemplates a modular, scalable, purpose-built facility capable of remediating waste asphalt shingles and separation into their base components of bitumen / asphalt cement, shingle granules, sand aggregate, limestone and fiberglass.
Implications of Being an Emerging Growth Company
We qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As a result, we will be permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:
·have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002;
·comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);
·submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and
·disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.
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In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of this offering, (ii) the last day of the first fiscal year in which our total annual gross revenues are $1.235 billion or more, (iii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iv) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
Corporate Information
Our principal executive offices are located at 707 W. 700 S. Suite 101, Woods Cross, UT 84087 and our telephone number is (424) 394-1090. We maintain a website at www.skyquarry.com. Information available on our website is not incorporated by reference in and is not deemed a part of this prospectus.
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THE CONVERTIBLE NOTE AND WARRANT
On May 22, 2025, we entered into a note purchase agreement with the Selling Stockholder, pursuant to which the Selling Stockholder purchased the Convertible Note and the Warrant for a purchase price of $150,000. The note purchase agreement contains customary representations and warrants and covenants.
The Convertible Note accrues interest at a rate of twelve percent (12%) per annum, paid semi-annually in cash commencing on December 31, 2025, with all unpaid principal and interest due and payable on May 22, 2027; provided that upon an event of default (as defined in the Convertible Note), the interest rate shall increase to fourteen percent (14%) per annum. We may prepay all or any portion of the Convertible Note at any time prior to maturity; provided that if the Convertible Note is paid within the first twelve months after issuance, we must pay a one percent (1%) prepayment penalty. The principal amount and outstanding accrued interest may be converted into shares of common stock at any time at an initial conversion price of $1.25 per share, which such exercise price is subject to standard adjustments in the event of any stock splits, stock combinations, stock reclassifications, dividends paid in common stock, sales of substantially all of our assets, mergers, consolidations or similar transactions, as well as an antidilution adjustment, which provides that if we sell securities convertible into shares of common stock for cash in a minimum amount of $250,000, and the conversion price of such securities is lower than the conversion price then in effect for the Convertible Note, the conversion price shall be reduced to such lower price, subject to a floor price of $0.50 per share. The Convertible Note contains customary events of default for a loan of this type.
The Warrant may be exercised for a period of twenty-four (24) months at an initial exercise price of $1.25, which such exercise price is subject to standard adjustments in the event of any stock splits, stock combinations, stock reclassifications, dividends paid in common stock, sales of substantially all of our assets, mergers, consolidations or similar transactions.
On July 9, 2025, we also entered into a registration rights agreement with the Selling Stockholder, or the Registration Rights Agreement, pursuant to which we agreed to register for resale under the Securities Act the shares of common stock that have been or may be issued to the Selling Stockholder under the Convertible Note, the Warrant and the Purchase Agreement. Pursuant to the Registration Rights Agreement, we agreed to file an initial registration statement on Form S-1 within ten (10) business days after the date of the Registration Rights Agreement and use our best efforts to have such registration statement declared effective by the SEC at the earliest possible date. The Registration Rights Agreement also contains customary covenants and indemnification provisions.
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THE PURCHASE AGREEMENT
On July 9, 2025, we entered into the Purchase Agreement with the Selling Stockholder, pursuant to which the Selling Stockholder has agreed to purchase from us up to an aggregate of $8,125,000 of our common stock (subject to certain limitations) from time to time over the term of the Purchase Agreement.
This prospectus covers the resale by the Selling Stockholder pursuant to the Purchase Agreement of 13,654,230 shares of our common stock, comprised of: (i) 366,260 shares that we issued to the Selling Stockholder, or the Initial Commitment Shares; (ii) up to 183,131 shares that we may issue to the Selling Stockholder from time to time in connection with each purchase of common stock by the Selling Stockholder, or the Additional Commitment Shares, in each case, as consideration for the Selling Stockholder’s commitment to purchase shares of common stock under the Purchase Agreement, and (iii) 13,104,839 shares that we have reserved for issuance and sale to the Selling Stockholder in the future under the Purchase Agreement.
We do not have the right to commence any sales of our common stock to the Selling Stockholder under the Purchase Agreement until all of the conditions set forth in the Purchase Agreement have been satisfied, including that the SEC has declared effective the registration statement of which this prospectus forms a part registering the shares issued and being issued and sold to the Selling Stockholder. Thereafter, we may, from time to time and at our sole discretion for a period of 24-months, on any business day that we select, direct the Selling Stockholder to purchase up to 40,000 shares of common stock, which amounts may be increased depending on the market price of our common stock at the time of sale.
We will control the timing and amount of any sales of our common stock to the Selling Stockholder. The purchase price of the shares that may be sold to the Selling Stockholder under the Purchase Agreement will be based on an agreed upon fixed discount to the market price of our common stock immediately preceding the time of sale as computed under the Purchase Agreement; provided, however, that we will not sell any shares of our common stock to the Selling Stockholder at a price of less than $0.62 per share. The purchase price per share will be equitably adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction occurring during the business days used to compute such price.
We may at any time in our sole discretion terminate the Purchase Agreement without fee, penalty or cost upon one (1) business day notice. There are no restrictions on future financings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement or the Registration Rights Agreement. The Selling Stockholder may not assign or transfer its rights and obligations under the Purchase Agreement.
The Purchase Agreement prohibits us from directing the Selling Stockholder to purchase any shares of common stock if those shares, when aggregated with all other shares of our common stock then beneficially owned by the Selling Stockholder and its affiliates, would result in the Selling Stockholder and its affiliates having beneficial ownership at any single point in time of more than 9.99% of the then total outstanding shares of our common stock, as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 thereunder, which limitation we refer to as the Beneficial Ownership Cap.
Issuances of our common stock in this offering will not affect the rights or privileges of our existing stockholders, except that the economic and voting interests of each of our existing stockholders will be diluted as a result of any such issuance. Although the number of shares of common stock that our existing stockholders own will not decrease, the shares owned by our existing stockholders will represent a smaller percentage of our total outstanding shares after any such issuance to the Selling Stockholder.
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THE OFFERING
Common stock offered by the Selling Stockholder pursuant to this prospectus: |
| 13,834,230 shares consisting of: ·120,000 shares of common stock issuable upon conversion of the Convertible Note; ·60,000 shares of common stock issuable upon exercise of the Warrant; ·366,260 Initial Commitment Shares issued to the Selling Stockholder upon the execution of the Purchase Agreement; ·up to 183,131 Additional Commitment Shares that may be issued to the Selling Stockholder; and ·up to 13,104,839 additional shares that we may sell and issue to the Selling Stockholder under the Purchase Agreement. |
Common stock outstanding:(1) |
| 22,480,036 shares of common stock. |
Use of proceeds: |
| We will not receive any proceeds from the sales of common stock included in this prospectus by the Selling Stockholder. We may receive proceeds from the cash exercise of the Warrant and up to $8,125,000 in aggregate gross proceeds under the Purchase Agreement from sales of common stock that we may elect to make to the Selling Stockholder pursuant to the Purchase Agreement, if any, from time to time in our sole discretion. We intend to use any net proceeds that we received under the Purchase Agreement for the repayment of certain debt and for working capital and other general corporate purposes. See “Use of Proceeds” for more information. |
Risk factors: |
| Investing in our securities involves a high degree of risk. You should read “Risk Factors” beginning on page 7 of this prospectus and the reports we file with the SEC incorporated by reference in this prospectus to read about factors to consider before purchasing our securities. |
Trading market and symbol: |
| Our common stock is listed on The Nasdaq Capital Market under the symbol “SKYQ.” |
(1)The number of shares of common stock outstanding is based on 22,480,036 shares outstanding as of July 16, 2025 and excludes:
·4,910,518 shares of common stock issuable upon the exercise of outstanding warrants at a weighted average exercise price of $2.00 per share (including shares issuable upon exercise of the Warrant);
·932,453 shares of common stock issuable upon the exercise of outstanding options at a weighted average exercise price of $3.80 per share;
·3,067,547 additional shares of common stock that are reserved for issuance under our 2020 Stock Plan;
·shares of common stock issuable upon the conversion of a secured promissory note in the principal amount of $1,200,000 issued to KF Business Ventures, LP, or KF Ventures, which is convertible into shares of common stock at a conversion price of $0.83 (subject to adjustment);
·shares of common stock issuable upon the conversion of a promissory note in the amount of $2,000,000 issued to Bengt Eriksson, which is convertible into shares of common stock at a conversion price of $4.80 (subject to adjustment);
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·shares of common stock issuable pursuant to our advisory agreement with KF Ventures, dated December 2, 2024, which provides that we shall issue KF Ventures 10,274 shares per month during the term of the agreement, which is for a period of six months but will be automatically extended for a period of six months for each month the secured promissory note referred to above remains unpaid; and
·120,000 shares of common stock issuable upon conversion of the Convertible Note.
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An investment in our securities involves a high degree of risk. Prior to making a decision about investing in our securities, you should consider the risks, uncertainties and assumptions discussed under “Part I-Item 1A-Risk Factors” of our most recent Annual Report on Form 10-K that are incorporated herein by reference, as may be amended, supplemented or superseded from time to time by other reports we file with the SEC in the future. The risks described in these documents are not the only ones we face, but those that we consider to be material. Additional risks not presently known to us or that we currently believe are immaterial may also significantly impair our business operations and financial condition. Please also refer to the section titled “Cautionary Note Regarding Forward-Looking Statements.” In addition to the risks that we have previously disclosed, our business is subject to the following risks.
Risks Related to this Offering
The sale or issuance of our common stock to the Selling Stockholder may cause dilution and the sale of the shares of common stock acquired by the Selling Stockholder, or the perception that such sales may occur, could cause the price of our common stock to decrease.
On July 9, 2025, we entered into the Purchase Agreement with the Selling Stockholder, pursuant to which (i) we issued 366,260 shares to the Selling Stockholder as the Initial Commitment Shares, (ii) we have reserved and may issue 183,131 additional shares to the Selling Stockholder as the Additional Commitment Shares, in each case, as consideration for the Selling Stockholder’s commitment to purchase shares of common stock under the Purchase Agreement, and (iii) the Selling Stockholder has committed to purchase up to $8,125,000 of our common stock.
The shares of our common stock that may be issued under the Purchase Agreement may be sold by us to the Selling Stockholder at our discretion from time to time over a 24-month period commencing after the satisfaction of certain conditions set forth in the Purchase Agreement, including that the SEC has declared effective the registration statement of which this prospectus forms a part. The purchase price for the shares that we may sell to the Selling Stockholder under the Purchase Agreement will fluctuate based on the price of our common stock. Depending on market liquidity at the time, sales of such shares may cause the trading price of our common stock to decrease.
We generally have the right to control the timing and amount of any future sales of our shares to the Selling Stockholder. Additional sales of our common stock, if any, to the Selling Stockholder will depend upon market conditions and other factors to be determined by us. We may ultimately decide to sell to the Selling Stockholder all, some or none of the additional shares of our common stock that may be available for us to sell pursuant to the Purchase Agreement. If and when we do sell additional shares to the Selling Stockholder, after the Selling Stockholder has acquired the shares, the Selling Stockholder may resell all, some or none of those shares at any time or from time to time in its discretion. Therefore, sales to the Selling Stockholder by us could result in substantial dilution to the interests of other holders of our common stock. Additionally, the sale of a substantial number of shares of our common stock to the Selling Stockholder, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.
Further, we are not restricted from issuing additional securities in the future, including our common stock, securities that are convertible into or exchangeable for, or that represent the right to receive, our common stock or substantially similar securities. To the extent that we raise additional funds through the sale of equity or convertible debt securities, the issuance of such securities will result in dilution to our stockholders.
We may require additional financing to sustain our operations, without which we may not be able to continue operations, and the terms of subsequent financings may adversely impact our stockholders.
We may direct the Selling Stockholder to purchase up to $8,125,000 worth of shares of our common stock under our agreement over a 24-month period in amounts up to 40,000 shares of our common stock, which may be increased depending on the market price of our common stock at the time of sale, and, in each case, subject to a maximum limit of $300,000 per purchase, on any single business day (such share amounts being subject to adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction as provided in the Purchase Agreement).
The extent we rely on the Selling Stockholder as a source of funding will depend on a number of factors, including the prevailing market price of our common stock and the extent to which we are able to secure financing from other sources. If obtaining sufficient financing from the Selling Stockholder were to prove unavailable or prohibitively dilutive, we may need to secure another source of funding in order to satisfy our financing needs. Even if we sell all $8,125,000 under the Purchase Agreement to the Selling Stockholder, we may still need additional capital to finance our future working capital needs, and
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we may have to raise funds through the issuance of equity or debt securities. Depending on the type and the terms of any financing we pursue, stockholders’ rights and the value of their investment in our common stock could be reduced. A financing could involve one or more types of securities including common stock, preferred stock, convertible debt or warrants to acquire common stock. These securities could be issued at or below the then prevailing market price for our common stock. In addition, if we issue secured debt securities, the holders of the debt would have a claim to our assets that would be prior to the rights of stockholders until the debt is paid. Interest on these debt securities would increase costs and negatively impact operating results. If the issuance of new securities results in diminished rights to holders of our common stock, the market price of our common stock could be negatively impacted.
Should the financing we require to sustain our financing needs be unavailable or prohibitively expensive when we require it, the consequences could be a material adverse effect on our business, operating results, financial condition and prospects.
Our management will have broad discretion over the use of the net proceeds from our sale of shares of common stock to the Selling Stockholder, you may not agree with how we use the proceeds and the proceeds may not be invested successfully.
Our management will have broad discretion as to the use of the net proceeds from our sale of shares of common stock to the Selling Stockholder, and we could use them for purposes other than those contemplated at the time of commencement of this offering. Accordingly, you will be relying on the judgment of our management with regard to the use of those net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used as you may deem to be appropriate. It is possible that, pending their use, we may invest those net proceeds in a manner that may not yield a favorable, or any, return for us. The manner in which our management uses such funds could have a material adverse effect on our business, financial condition, operating results and cash flows.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, any accompanying prospectus supplement and the information incorporated by reference in this prospectus and any accompanying prospectus supplement contain certain statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “potentially,” “likely,” and similar expressions and variations thereof are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Those statements appear in this prospectus, any accompanying prospectus supplement and the documents incorporated herein and therein by reference, particularly in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and include statements regarding the intent, belief or current expectations of our management that are subject to known and unknown risks, uncertainties and assumptions. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors.
Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, we do not plan to publicly update or revise any forward-looking statements contained herein after we distribute this prospectus, whether as a result of any new information, future events or otherwise.
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This prospectus relates to shares of our common stock that may be offered and sold from time to time by the Selling Stockholder. We will receive no proceeds from the sale of shares of common stock by the Selling Stockholder in this offering. However, we may receive up to $75,000 in gross proceeds upon the exercise of the Warrant and up to $8,125,000 in aggregate gross proceeds (subject to certain limitations) under the Purchase Agreement from any sales we make to the Selling Stockholder pursuant to the Purchase Agreement after the date of this prospectus. It is possible that no shares will be sold under the Purchase Agreement. See “Plan of Distribution” elsewhere in this prospectus for more information.
We intend to use the net proceeds that we receive for general corporate and working capital purposes; provided that any amounts exceeding $1,000,000 shall be subject to the following allocation: 25% of the excess amounts shall be utilized to pay down the existing debt obligations described below, with the remaining funds allocated to general corporate and working capital purposes.
We are party to several agreements related to the sale of future revenues with Libertas Funding, LLC, or Libertas. The agreements contain substantially the same terms and conditions and grant a continuing security interest in all of the assets of our subsidiary Foreland Refining Corporation, or Foreland, to the extent and in the amount of the purchased receivables.
On October 25, 2023, Foreland entered into an agreement of sale of future receivables with Libertas for the sale of $1,731,660 of future sales receipts for gross proceeds of $1,302,000. Under the agreement, Foreland will make weekly deliveries of receivables of not less than $37,482 until the amount sold is extinguished. As of June 30, 2025, a total of $134,049, exclusive of debt discounts, remained outstanding.
On January 11, 2024, Foreland entered into an agreement of sale of future receivables with Libertas for the sale of $1,268,582 of future sales receipts for gross proceeds of $2,056,916. Under the agreement, Foreland will make weekly deliveries of receivables of not less than $56,988 until the amount sold is extinguished. As of June 30, 2025, a total of $1,231,582, exclusive of debt discounts, remained outstanding.
On January 18, 2024, Foreland entered into an agreement of sale of future receivables with Libertas for the sale of $4,224,000 of future sales receipts for gross proceeds of $3,300,000. Under the agreement, Foreland will make weekly deliveries of receivables of not less than $91,429 until the amount sold is extinguished. As of June 30, 2025, a total of $2,434,241, exclusive of debt discounts, remained outstanding.
On February 19, 2024, Foreland entered into an agreement of sale of future receivables with Libertas for the sale of $1,386,000 of future sales receipts for gross proceeds of $1,018,500. Under the agreement, Foreland will make weekly deliveries of receivables of not less than $30,000 until the amount sold is extinguished. As of June 30, 2025, a total of $424,175, exclusive of debt discounts, remained outstanding.
On May 16, 2024, Foreland entered into an agreement of sale of future receivables with Libertas for the sale of $665,000 of future sales receipts for gross proceeds of $500,000. Under the agreement, Foreland will make weekly deliveries of receivables not less than $15,833 until the amount sold is extinguished. As of June 30, 2025, a total of $23,140, exclusive of debt discounts, remained outstanding.
Pending the uses described above, we may invest the net proceeds in short- and intermediate-term interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the United States government. Our management will retain broad discretion over the allocation of the net proceeds. See “Risk Factors—Risks Related to this Offering—Our management will have broad discretion over the use of the net proceeds from our sale of shares of common stock to the Selling Stockholder, you may not agree with how we use the proceeds and the proceeds may not be invested successfully.”
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Except with respect to our series B preferred stock, which entitled holders to an annual dividend in the amount of 8% of the original issue price of such series B preferred stock, we have never declared or paid cash dividends on our capital stock. All of the outstanding shares of series B preferred stock were converted into shares of our common stock in connection with our public offering on October 10, 2024. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any cash dividends in the near future. We may also enter into credit agreements or other borrowing arrangements in the future that will restrict our ability to declare or pay cash dividends. Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, contractual restrictions, general business conditions and other factors that our board of directors may deem relevant.
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THE CONVERTIBLE NOTE AND WARRANT
On May 22, 2025, we entered into a note purchase agreement with the Selling Stockholder, pursuant to which the Selling Stockholder purchased the Convertible Note and the Warrant for a purchase price of $150,000. The note purchase agreement contains customary representations and warrants and covenants.
The Convertible Note accrues interest at a rate of twelve percent (12%) per annum, paid semi-annually in cash commencing on December 31, 2025, with all unpaid principal and interest due and payable on May 22, 2027; provided that upon an event of default (as defined in the Convertible Note), the interest rate shall increase to fourteen percent (14%) per annum. We may prepay all or any portion of the Convertible Note at any time prior to maturity; provided that if the Convertible Note is paid within the first twelve months after issuance, we must pay a one percent (1%) prepayment penalty. The principal amount and outstanding accrued interest may be converted into shares of common stock at any time at an initial conversion price of $1.25 per share, which such exercise price is subject to standard adjustments in the event of any stock splits, stock combinations, stock reclassifications, dividends paid in common stock, sales of substantially all of our assets, mergers, consolidations or similar transactions, as well as an antidilution adjustment, which provides that if we sell securities convertible into shares of common stock for cash in a minimum amount of $250,000, and the conversion price of such securities is lower than the conversion price then in effect for the Convertible Note, the conversion price shall be reduced to such lower price, however such lower price shall not be less than $.50 per share. The Convertible Note contains customary events of default for a loan of this type.
The Warrant may be exercised for a period of twenty-four (24) months at an initial exercise price of $1.25, which such exercise price is subject to standard adjustments in the event of any stock splits, stock combinations, stock reclassifications, dividends paid in common stock, sales of substantially all of our assets, mergers, consolidations or similar transactions.
On July 9, 2025, we also entered into the Registration Rights Agreement with the Selling Stockholder, pursuant to which we agreed to register for resale under the Securities Act the shares of common stock that have been or may be issued to the Selling Stockholder under the Convertible Note, the Warrant and the Purchase Agreement. Pursuant to the Registration Rights Agreement, we agreed to file an initial registration statement on Form S-1 within ten (10) business days after the date of the Registration Rights Agreement and use our best efforts to have such registration statement declared effective by the SEC at the earliest possible date. The Registration Rights Agreement also contains customary covenants and indemnification provisions.
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General
On July 9, 2025, we entered into the Purchase Agreement with the Selling Stockholder, pursuant to which the Selling Stockholder has agreed to purchase from us up to an aggregate of $8,125,000 of our common stock (subject to certain limitations) from time to time over the term of the Purchase Agreement.
This prospectus covers the resale by the Selling Stockholder pursuant to the Purchase Agreement of 13,654,230 shares of our common stock, comprised of: (i) 366,260 Initial Commitment Shares that we issued to the Selling Stockholder; (ii) up to 183,131 Additional Commitment Shares that we may issue to the Selling Stockholder from time to time in connection with each purchase of common stock by the Selling Stockholder, in each case, as consideration for the Selling Stockholder’s commitment to purchase shares of common stock under the Purchase Agreement, and (iii) 13,104,839 shares that we have reserved for issuance and sale to the Selling Stockholder in the future under the Purchase Agreement.
We do not have the right to commence any sales of our common stock to the Selling Stockholder under the Purchase Agreement until all of the conditions set forth in the Purchase Agreement have been satisfied, including that the SEC has declared effective the registration statement of which this prospectus forms a part registering the shares issued and being issued and sold to the Selling Stockholder. Thereafter, we may, from time to time and at our sole discretion for a period of 24-months, on any business day that we select, direct the Selling Stockholder to purchase up to 40,000 shares of common stock, which amounts may be increased depending on the market price of our common stock at the time of sale.
We will control the timing and amount of any sales of our common stock to the Selling Stockholder. The purchase price of the shares that may be sold to the Selling Stockholder under the Purchase Agreement will be based on an agreed upon fixed discount to the market price of our common stock immediately preceding the time of sale as computed under the Purchase Agreement; provided, however, we will not sell any shares of our common stock to the Selling Stockholder at a price of less than $0.62 per share. The purchase price per share will be equitably adjusted for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction occurring during the business days used to compute such price.
We may at any time in our sole discretion terminate the Purchase Agreement without fee, penalty or cost upon one (1) business day notice. There are no restrictions on future financings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement or the Registration Rights Agreement. The Selling Stockholder may not assign or transfer its rights and obligations under the Purchase Agreement.
The Purchase Agreement prohibits us from directing the Selling Stockholder to purchase any shares of common stock if those shares, when aggregated with all other shares of our common stock then beneficially owned by the Selling Stockholder and its affiliates, would result in the Selling Stockholder and its affiliates having beneficial ownership at any single point in time of more than 9.99% of the then total outstanding shares of our common stock, as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 thereunder, which limitation we refer to as the Beneficial Ownership Cap.
Issuances of our common stock in this offering will not affect the rights or privileges of our existing stockholders, except that the economic and voting interests of each of our existing stockholders will be diluted as a result of any such issuance. Although the number of shares of common stock that our existing stockholders own will not decrease, the shares owned by our existing stockholders will represent a smaller percentage of our total outstanding shares after any such issuance to the Selling Stockholder.
Purchase of Shares Under the Purchase Agreement
Under the Purchase Agreement, on any business day that we select (and provided (A) the closing sale price of our common stock on the purchase date is not less than $0.64 (as adjusted pursuant to the Purchase Agreement) and (B) all shares of common stock subject to all prior regular purchases and all Additional Commitment Shares required to be issued to the Selling Stockholder have been properly delivered to the Selling Stockholder in accordance with the Purchase Agreement), we may direct the Selling Stockholder to purchase up to 40,000 shares of our common stock on such business day, provided, however, that (i) the purchase may be increased to up to 60,000 shares if the closing sale price of our common stock is not below $0.80 on the purchase date, (ii) the purchase may be increased to up to 80,000 shares if the closing sale price of our common stock is not below $1.00 on the purchase date, and (iii) the purchase may be increased to up to 100,000 shares if the closing sale price of the common stock is not below $2.00 on the purchase date (which such share amount limitation is referred to herein as the Purchase Share Limit). In each case, the Selling Stockholder’s maximum commitment in any single purchase may not exceed $300,000. The Regular Purchase Share Limit is subject to proportionate adjustment in the event of a reorganization, recapitalization, non-cash dividend, stock split or other similar transaction; provided, that if after giving effect to such full
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proportionate adjustment, the adjusted Regular Purchase Share Limit would preclude us from requiring the Selling Stockholder to purchase common stock at an aggregate purchase price equal to or greater than $100,000 in any single purchase, then the Regular Purchase Share Limit will not be fully adjusted, but rather the Regular Purchase Share Limit for such purchase shall be adjusted as specified in the Purchase Agreement, such that, after giving effect to such adjustment, the Regular Purchase Share Limit will be equal to (or as close as can be derived from such adjustment without exceeding) $100,000.
The purchase price per share for each such purchase will be equal to 97% of the lower of (i) the lowest sale price for our common stock on the purchase date of such shares and (ii) the arithmetic average of the three lowest closing sale prices for our common stock during the ten (10) consecutive business days ending on the business day immediately preceding the purchase date of such shares, subject to adjustment for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring during the business days used to compute the purchase price. Notwithstanding the foregoing, the purchase price shall not be less than $0.62 per share.
Other than as described above, there are no trading volume requirements or restrictions under the Purchase Agreement, and we will control the timing and amount of any sales of our common stock to the Selling Stockholder.
Suspension Events
Suspension events under the Purchase Agreement include the following:
·the effectiveness of the registration statement of which this prospectus forms a part lapses for any reason (including, without limitation, the issuance of a stop order), or such registration statement (or the prospectus forming a part thereof) are unavailable for the resale by the Selling Stockholder of our common stock offered hereby, and such lapse or unavailability continues for a period of ten (10) consecutive business days or for more than an aggregate of thirty (30) business days in any 365-day period;
·suspension by our principal market of our common stock from trading for a period of one (1) business day;
·the de-listing of our common stock from The Nasdaq Capital Market, our principal market, provided our common stock is not immediately thereafter trading on The Nasdaq Global Market, The Nasdaq Global Select Market, the New York Stock Exchange, the NYSE American, or the OTCQX or OTCQB operated by the OTC Markets Group Inc. (or any nationally recognized successors thereto);
·the failure of our transfer agent to issue to the Selling Stockholder shares of our common stock within two (2) business days after the applicable date on which the Selling Stockholder is entitled to receive such shares;
·any breach of the representations or warranties or covenants contained in the Purchase Agreement or the Registration Rights Agreement that has or could have a material adverse effect on us and, in the case of a breach of a covenant that is reasonably curable, that is not cured within five (5) business days;
·any voluntary or involuntary participation or threatened participation in insolvency or bankruptcy proceedings by or against us; or
·if at any time we are not eligible to transfer our common stock electronically.
The Selling Stockholder does not have the right to terminate the Purchase Agreement upon any of the suspension events set forth above. During a suspension event, all of which are outside of the Selling Stockholder’s control, we may not direct the Selling Stockholder to purchase any shares of our common stock under the Purchase Agreement.
Our Termination Rights
We have the unconditional right, at any time, for any reason and without any payment or liability to us, to give notice to the Selling Stockholder to terminate the Purchase Agreement. In the event of bankruptcy proceedings by or against us, the Purchase Agreement will automatically terminate without action of any party.
No Short-Selling or Hedging by the Selling Stockholder
The Selling Stockholder has agreed that neither it nor any of its affiliates shall engage in any direct or indirect short-selling or hedging of our common stock during any time prior to the termination of the Purchase Agreement.
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No Prohibitions on Future Financings
There are no restrictions on future financings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement or the Registration Rights Agreement.
Effect of Performance of the Purchase Agreement on Our Stockholders
All 13,654,230 shares registered in this offering that have been and may be issued or sold by us to the Selling Stockholder under the Purchase Agreement are expected to be freely tradable. It is anticipated that shares registered pursuant to the Purchase Agreement in this offering, excluding the Initial Commitment Shares, will be sold to the Selling Stockholder over a period of up to 24-months. The resale by the Selling Stockholder of a significant amount of shares registered in this offering, at any given time during the pendency of this offering, could cause the market price of our common stock to decline and to be volatile. Resales of our common stock to the Selling Stockholder, if any, will depend upon market conditions and other factors to be determined by us. We may ultimately decide to sell to the Selling Stockholder all, some or none of the shares of our common stock that may be available for us to sell pursuant to the Purchase Agreement. If and when we do sell shares to the Selling Stockholder, after the Selling Stockholder has acquired the shares, the Selling Stockholder may resell all, some or none of those shares at any time or from time to time in its discretion. Therefore, sales to the Selling Stockholder by us under the Purchase Agreement may result in substantial dilution to the interests of other holders of our common stock. In addition, if we sell a substantial number of shares to the Selling Stockholder under the Purchase Agreement, or if investors expect that we will do so, the actual sales of shares or the mere existence of our arrangement with the Selling Stockholder may make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect such sales. However, we have the right to control the timing and amount of any additional sales of our shares to the Selling Stockholder and the Purchase Agreement may be terminated by us at any time at our discretion without any cost to us.
Pursuant to the terms of the Purchase Agreement, we have the right, but not the obligation, to direct the Selling Stockholder to purchase up to $8,125,000 of our common stock. The number of shares ultimately offered for resale by the Selling Stockholder under this prospectus is dependent upon the number of shares we direct the Selling Stockholder to purchase under the Purchase Agreement.
The following table sets forth the amount of gross proceeds we would receive from the Selling Stockholder from our sale of shares to the Selling Stockholder under the Purchase Agreement at varying purchase prices:
Assumed Average Purchase Price Per Share |
| Number of Registered Shares to be Issued if Full Purchase |
| Percentage of Outstanding Shares After Giving Effect to |
| Proceeds from the Sale of Shares to the Selling Stockholder Under the Purchase Agreement | |
$0.62 |
| 13,104,839 |
| 36.8% |
| $ | 8,125,000 |
$0.65 |
| 12,500,000 |
| 35.7% |
| $ | 8,125,000 |
$0.75 |
| 10,833,334 |
| 32.5% |
| $ | 8,125,000 |
$0.85 |
| 9,558,824 |
| 29.8% |
| $ | 8,125,000 |
$0.95 |
| 8,552,632 |
| 27.6% |
| $ | 8,125,000 |
$1.05 |
| 7,738,096 |
| 25.6% |
| $ | 8,125,000 |
$1.15 |
| 7,065,218 |
| 23.9% |
| $ | 8,125,000 |
(1)The denominator is based on 22,480,036 shares outstanding as of July 16, 2025 (which number includes the 366,260 Initial Commitment Shares), adjusted to include the number of shares set forth in the column titled “Number of Registered Shares to be Issued if Full Purchase,” which we would have sold to the Selling Stockholder, assuming the purchase price in the adjacent column. The numerator is based on the number of shares issuable under the Purchase Agreement, set forth in the column titled “Number of Registered Shares to be Issued if Full Purchase,” at the corresponding assumed purchase price set forth in the adjacent column. The table does not give effect to the Beneficial Ownership Cap.
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This prospectus relates to the possible resale by the Selling Stockholder of shares of our common stock that have been or may be issued to the Selling Stockholder upon conversion of the Convertible Note, exercise of the Warrant and pursuant to the Purchase Agreement. We are filing the registration statement of which this prospectus forms a part pursuant to the provisions of the Registration Rights Agreement.
The Selling Stockholder may, from time to time, offer and sell pursuant to this prospectus any or all of the shares that we may issue to it from time to time at our discretion under the Purchase Agreement. The Selling Stockholder may sell some, all or none of its shares. We do not know how long the Selling Stockholder will hold the shares before selling them, and we currently have no agreements, arrangements or understandings with the Selling Stockholder regarding the sale of any of the shares.
The following table presents information regarding the Selling Stockholder and the shares that it may offer and sell from time to time under this prospectus. The table is prepared based on information supplied to us by the Selling Stockholder and reflects its holdings as of July 16, 2025. Neither the Selling Stockholder nor any of its affiliates has held a position or office, or had any other material relationship, with us or any of our predecessors or affiliates. Beneficial ownership is determined in accordance with Section 13(d) of the Exchange Act and Rule 13d-3 thereunder. The percentage of shares beneficially owned prior to the offering is based on 22,480,036 shares of our common stock outstanding as of July 16, 2025.
Name of Beneficial Owner | Shares Beneficially Owned Prior to this Offering | Number of Shares Being Offered | Shares Beneficially Owned After this Offering(1) | ||
Shares | % | Shares | % | ||
Varie Asset Management, LLC (2) | 1,305,037 | 5.76% | 13,834,230 | 758,777 | 2.11% |
(1)Assumes the sale of all shares of common stock registered pursuant to this prospectus, although the Selling Stockholder is under no obligation known to us to sell any shares of common stock at this time.
(2)The number of shares beneficially owned prior to this offering consists of (i) 120,000 shares of common stock issuable upon conversion of the Convertible Note, (ii) 60,000 shares of common stock issuable upon exercise of the Warrant, (iii) 366,260 shares of common stock issued to the Selling Stockholder as the Initial Commitment Shares, and (vi) 758,777 shares of common stock owned by the Selling Stockholder. The number of shares being offered includes the foregoing shares issuable upon conversion of the Convertible Note and exercise of the Warrant, as well as 183,131 additional shares of common stock being registered hereunder, which shares may be issued to the Selling Stockholder as the Additional Commitment Shares, and the remainder of which are shares of common stock that we may issue and sell to the Selling Stockholder pursuant to the Purchase Agreement. Janey Baker is the Manager of the Selling Stockholder and may be deemed to beneficially own the securities held by it.
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The common stock offered by this prospectus is being offered by the Selling Stockholder. The common stock may be sold or distributed from time to time by the Selling Stockholder directly to one or more purchasers or through brokers, dealers, or underwriters who may act solely as agents at market prices prevailing at the time of sale, at prices related to the prevailing market prices, at negotiated prices, or at fixed prices, which may be changed. The sale of the common stock offered by this prospectus could be effected in one or more of the following methods:
·ordinary brokers’ transactions;
·transactions involving cross or block trades;
·through brokers, dealers, or underwriters who may act solely as agents;
·“at the market” into an existing market for the common stock;
·in other ways not involving market makers or established business markets, including direct sales to purchasers or sales effected through agents;
·in privately negotiated transactions; or
·any combination of the foregoing.
In order to comply with the securities laws of certain states, if applicable, the shares may be sold only through registered or licensed brokers or dealers. In addition, in certain states, the shares may not be sold unless they have been registered or qualified for sale in the state or an exemption from the state’s registration or qualification requirement is available and complied with.
The Selling Stockholder is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act.
The Selling Stockholder has informed us that it intends to use an unaffiliated broker-dealer to effectuate all sales, if any, of the common stock that it may purchase from us pursuant to the Purchase Agreement. Such sales will be made at prices and at terms then prevailing or at prices related to the then current market price. Each such unaffiliated broker-dealer will be an underwriter within the meaning of Section 2(a)(11) of the Securities Act. The Selling Stockholder has informed us that each such broker-dealer will receive commissions from it that will not exceed customary brokerage commissions.
Brokers, dealers, underwriters or agents participating in the distribution of the shares offered by this prospectus may receive compensation in the form of commissions, discounts, or concessions from the purchasers, for whom the broker-dealers may act as agent, of the common stock sold by the Selling Stockholder through this prospectus. The compensation paid to any such particular broker-dealer by any such purchasers of common stock sold by the Selling Stockholder may be less than or in excess of customary commissions. Neither we nor the Selling Stockholder can presently estimate the amount of compensation that any agent will receive from any purchasers of common stock sold by the Selling Stockholder.
We know of no existing arrangements between the Selling Stockholder or any other stockholder, broker, dealer, underwriter or agent relating to the sale or distribution of the shares offered by this prospectus.
We may from time to time file with the SEC one or more supplements to this prospectus or amendments to the registration statement of which this prospectus forms a part to amend, supplement or update information contained in this prospectus, including, if and when required under the Securities Act, to disclose certain information relating to a particular sale of shares offered by this prospectus by the Selling Stockholder, including the names of any brokers, dealers, underwriters or agents participating in the distribution of such shares by the Selling Stockholder, any compensation paid by the Selling Stockholder to any such brokers, dealers, underwriters or agents, and any other required information.
We will pay the expenses incident to the registration under the Securities Act of the offer and sale of the shares covered by this prospectus by the Selling Stockholder. We have agreed to indemnify the Selling Stockholder and certain other persons against certain liabilities in connection with the offering of shares of common stock offered hereby, including liabilities arising under the Securities Act or, if such indemnity is unavailable, to contribute amounts required to be paid in respect of such liabilities. The Selling Stockholder has agreed to indemnify us against liabilities under the Securities Act that may arise from certain written information furnished to us by the Selling Stockholder specifically for use in this prospectus or, if such indemnity is unavailable, to contribute amounts required to be paid in respect of such liabilities.
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The Selling Stockholder has represented to us that at no time prior to the date of the Purchase Agreement has it or its agents, representatives or affiliates engaged in or effected, in any manner whatsoever, directly or indirectly, any short sale (as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) of our common stock or any hedging transaction, which establishes a net short position with respect to our common stock. The Selling Stockholder agreed that during the term of the Purchase Agreement, it, its agents, representatives or affiliates will not enter into or effect, directly or indirectly, any of the foregoing transactions.
We have advised the Selling Stockholder that it is required to comply with Regulation M promulgated under the Exchange Act. With certain exceptions, Regulation M precludes the Selling Stockholder, any affiliated purchasers, and any broker-dealer or other person who participates in the distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete. Regulation M also prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution of that security. All of the foregoing may affect the marketability of the securities offered by this prospectus.
This offering will terminate on the earlier of: (i) the date that all shares offered by this prospectus have been sold by the Selling Stockholder, or (ii) twenty-four months from the date of this prospectus.
Our common stock is traded on The Nasdaq Capital Market under the symbol “SKYQ.”
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The description of our capital stock is incorporated by reference to Exhibit 4.1 to Amendment No. 2 to the Annual Report on Form 10-K/A for the fiscal year ended December 31, 2024 filed with the SEC on June 17, 2025.
The validity of the securities offered hereby will be passed upon for us by Bevilacqua PLLC, Washington, DC.
Our consolidated financial statements for the years ended December 31, 2024 and 2023 have been incorporated by reference in this prospectus in reliance upon the report of Tanner LLC, an independent registered public accounting firm, upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC’s website at www.sec.gov. Copies of certain information filed by us with the SEC are also available on our website at www.skyquarry.com. Information accessible on or through our website is not a part of this prospectus.
This prospectus is part of a registration statement that we filed with the SEC and does not contain all of the information in the registration statement. You should review the information and exhibits in the registration statement for further information on us and our consolidated subsidiaries and the securities that we are offering. Statements in this prospectus about these documents are summaries and each statement is qualified in all respects by reference to the document to which it refers. You should read the actual documents for a more complete description of the relevant matters.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference much of the information that we file with the SEC, which means that we can disclose important information to you by referring you to those publicly available documents. The information that we incorporate by reference in this prospectus is considered to be part of this prospectus. Because we are incorporating by reference future filings with the SEC, this prospectus is continually updated and those future filings may modify or supersede some of the information included or incorporated by reference in this prospectus. This means that you must look at all of the SEC filings that we incorporate by reference to determine if any of the statements in this prospectus or in any document previously incorporated by reference have been modified or superseded. This prospectus incorporates by reference the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act (in each case, other than those documents or the portions of those documents furnished pursuant to Items 2.02 or 7.01 of any Current Report on Form 8-K and, except as may be noted in any such Form 8-K, exhibits filed on such form that are related to such information), until the offering of the securities under the registration statement of which this prospectus forms a part is terminated or completed:
·our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 31, 2025, as amended by Amendment No. 1 filed with the SEC on April 21, 2025 and Amendment No. 2 filed with the SEC on June 17, 2025;
·our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025 filed with the SEC on May 15, 2025;
·our Current Reports on Form 8-K filed with the SEC on January 15, 2025, March 3, 2025, April 3, 2025, April 8, 2025, July 15, 2025 and July 17, 2025; and
·the description of our common stock contained in Exhibit 4.1 to Amendment No. 2 to the Annual Report on Form 10-K/A for the fiscal year ended December 31, 2024 filed with the SEC on June 17, 2025, including any amendment or report filed for the purpose of updating such description.
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Any statement made in a document incorporated by reference into this prospectus or any prospectus supplement will be deemed to be modified or superseded for purposes of this prospectus or such prospectus supplement to the extent that a statement contained in this prospectus or such prospectus supplement modifies or supersedes that statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus or such prospectus supplement.
We will provide to each person, including any beneficial owner, to whom this prospectus is delivered, at no cost, upon written or oral request, a copy of any or all of the documents that are incorporated by reference into this prospectus, other than exhibits to such documents unless such exhibits are specifically incorporated by reference into such documents. Requests should be directed to Sky Quarry Inc., Attn: Secretary, 707 W. 700 S. Suite 101, Woods Cross, UT 84087, or by calling us at (424) 394-1090.
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Up to 13,834,230 Shares of Common Stock
SKY QUARRY INC.
______________________
PROSPECTUS
______________________
, 2025
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than underwriting discounts and commissions, payable by us in connection with the sale of common stock being registered. All amounts, other than the SEC registration fee, are estimates. We will pay all these expenses.
|
| Amount | |
SEC registration fee |
| $ | 1,260.66 |
Accounting fees and expenses |
|
| 5,000.00 |
Legal fees and expenses |
|
| 50,000.00 |
Transfer agent fees and expenses |
|
| 2,500.00 |
Printing and related fees and expenses |
|
| 2,500.00 |
Miscellaneous fees and expenses |
|
| 2,000.34 |
Total |
| $ | 63,261.00 |
Item 14. Indemnification of Directors and Officers
Section 145 of the DGCL authorizes a corporation to indemnify its directors and officers against liabilities arising out of actions, suits and proceedings to which they are made or threatened to be made a party by reason of the fact of their prior or current service to the corporation as a director or officer, in accordance with the provisions of Section 145, which are sufficiently broad to permit indemnification under certain circumstances for liabilities arising under the Securities Act. The indemnity may cover expenses (including attorneys’ fees) judgments, fines and amounts paid in settlement actually and reasonably incurred by the director or officer in connection with any such action, suit or proceeding. Section 145 permits corporations to pay expenses (including attorneys’ fees) incurred by directors and officers in advance of the final disposition of such action, suit or proceeding. In addition, Section 145 provides that a corporation has the power to purchase and maintain insurance on behalf of its directors and officers against any liability asserted against them and incurred by them in their capacity as a director or officer, or arising out of their status as such, whether or not the corporation would have the power to indemnify the director or officer against such liability under Section 145.
Our restated certificate of incorporation provides that we shall indemnify, advance expenses, and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of our company or, while a director or officer of our company, is or was serving at the request of our company as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such person. Notwithstanding the foregoing, except for claims for indemnification (following the final disposition of such proceeding) or advancement of expenses not paid in full, we shall be required to indemnify a covered person in connection with such a proceeding (or part thereof) commenced by such covered person only if the commencement of such proceeding (or part thereof) by the covered person was authorized in the specific case by our board of directors.
We have also obtained insurance policies covering our directors and officers with respect to certain liabilities, including liabilities arising under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Item 15. Recent Sales of Unregistered Securities
During the past three years, we issued the following securities, which were not registered under the Securities Act.
On July 9, 2025, we entered into the Purchase Agreement with the Selling Stockholder, pursuant to which we have the right to sell to the Selling Stockholder up to $8,125,000 in shares of common stock, subject to certain limitations, from time to time over the 24-month period. We issued 366,260 Initial Commitment Shares to the Selling Stockholder as consideration for its commitment to purchase shares of common stock under the Purchase Agreement.
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On May 22, 2025, we entered into a note purchase agreement with the Selling Stockholder, pursuant to which the Selling Stockholder purchased the Convertible Note and the Warrant for a purchase price of $150,000.
On June 12, 2025, we issued 10,274 shares of common stock to KF Business Ventures for services rendered.
On June 1, 2025, we issued 150,000 shares of common stock to Leo B. Womack for director services rendered.
On June 1, 2025, we issued 150,000 shares of common stock to Todd Palin for director services rendered.
On June 1, 2025, we issued 150,000 shares of common stock to Matthew Flemming for director services rendered.
On June 1, 2025, we issued 83,334 shares of common stock to JRS Law for services rendered.
On May 22, 2025, we issued 100,000 shares of common stock to JRS Law for services rendered.
On May 12, 2025, we issued 10,274 shares of common stock to KF Business Ventures for services rendered.
On May 5, 2025, we issued 40,000 shares of common stock to Lucas Ventures for services rendered.
On April 30, 2025, we issued 25,000 shares of common stock to SDK Sentinel LLC for services rendered.
On April 29, 2025, we issued 25,000 shares of common stock to SDK Sentinel LLC for services rendered.
On April 29, 2025, we issued 38,089 shares of common stock to Skeleton Crrew Labs LLC for services rendered.
On April 29, 2025, we issued 40,300 shares of common stock to MZ Group for services rendered.
On April 29, 2025, we issued 16,692 shares of common stock to General Research GmbH for services rendered.
On April 12, 2025, we issued 10,274 shares of common stock to KF Business Ventures for services rendered.
On April 2, 2025, we issued 1,184,593 shares of common stock to Allegheny Manufacturing LLC for services rendered.
On March 16, 2025, we issued 500,000 shares of common stock to Michael Kahari for services rendered.
On March 16, 2025, we issued 108,334 shares of common stock to Bengt Eriksson as payment of $92,083.90 in interest due on an outstanding note payable.
On March 12, 2025, we issued 10,274 shares of common stock to KF Business Ventures for services rendered.
On February 28, 2025, we issued 83,334 shares of common stock to Todd Palin for director services rendered.
On February 12, 2025, we issued 10,274 shares of common stock to KF Business Ventures for services rendered.
On February 10, 2025, we issued 200,000 shares of common stock to Outside The Box for services rendered.
On February 7, 2025, we issued 25,000 shares of common stock to General Research GmbH for services rendered.
On January 12, 2025, we issued 10,274 shares of common stock to KF Business Ventures for services rendered.
On January 10, 2025, we issued 83,334 shares of common stock to Leo B. Womack for director services rendered.
On December 31, 2024, we issued 83,334 shares of common stock to Matthew Flemming for director services rendered.
On December 3, 2024, we issued 27,778 shares of common stock to Smart Sales for services rendered.
On December 2, 2024, we issued a secured promissory note in the principal amount of $1,200,000 to KF Ventures. The note is convertible into shares of our common stock at a conversion price of $0.83 per share at any time after the issuance date of the note. In connection with the issuance of the note, we also issued a five-year warrant for the purchase of 1,200,000 shares of common stock at an exercise price of $0.83 per share. We also entered into an advisory agreement with KF Ventures, pursuant to which it will provide general business advisory services to us for a period of six months at a rate of $21,000 per
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month to be paid one-half in cash and one-half in the form of shares of our common stock. In addition, 10,274 shares of our common stock were issued to KF Ventures pursuant to the terms of the business advisory agreement in December 2024.
On November 26, 2024, we issued 38,333 shares of common stock to MZ Group for services rendered.
On November 18, 2024, we issued 60,000 shares of common stock to Outside The Box for services rendered.
On November 18, 2024, we issued 10,511 shares of common stock to General Research GmbH for services rendered.
On October 10, 2024, we issued 232,461 shares of common stock in connection with the conversion of 369,211 shares of series B preferred stock.
On October 9, 2024, we issued 1,118,005 shares of common stock for gross proceeds of $6,708,030 under Regulation A of Section 3(6) of the Securities Act.
On October 8, 2024, we issued a three-year warrant for the purchase of 15,000 shares of common stock at an exercise price of $4.50 per share in connection with the issuance of a promissory note in the principal amount of $165,000 to a third party.
On August 27, 2024, we issued a five-year warrant for the purchase of 375,000 shares of common stock at an exercise price of $4.50 per share in connection with the issuance of future revenues agreements in the principal amount of $8,208,916 to Libertas.
On August 27, 2024, we issued a three-year warrant for the purchase of 100,000 shares of common stock at an exercise price of $4.50 per share in connection with the issuance of a business loan and security agreement in the principal amount of $900,000 to Lendspark.
On June 30, 2024, we issued 18,593 shares of common stock to Bengt Eriksson as payment of $89,260 in interest due on an outstanding note payable.
During the period from June 24, 2024 through August 15, 2024, we issued 1,063,690 shares of common stock for gross proceeds of $4,789,105 in connection with the exercise of warrants pursuant to Section 3(6) of the Securities Act.
On June 12, 2024, we issued a five-year warrant for the purchase of 50,000 shares of common stock at an exercise price of $4.50 per share in connection with the issuance of a promissory note in the principal amount of $122,500 to a third party.
On May 17, 2024, we issued a five-year warrant for the purchase of 375,000 shares of common stock at an exercise price of $4.50 per share in connection with the issuance of a sale of future revenues agreements in the principal amount of $8,208,916 to Libertas.
On May 17, 2024, we issued a three-year warrant for the purchase of 100,000 shares of common stock at an exercise price of $4.50 per share in connection with the issuance of business loan and security agreement in the principal amount of $1,500,000 to Lendspark.
On May 1, 2024, we issued 33,334 shares of common stock to Jody R. Samuels, Esq. for services rendered.
On March 23, 2024, we issued 3,802 shares of common stock to Bengt Eriksson as payment of $18,250 in interest due on an outstanding note payable.
On January 30, 2024, we issued 4,000 shares of common stock to Smart Sales for services rendered.
On April 10, 2023, we issued 33,334 shares of common stock to Jody R. Samuels, Esq. for services rendered.
On May 22, 2023, we issued 10,000 shares of common stock in connection with a warrant exercise by Keegan Wetzel for gross proceeds of $37,500.
On May 22, 2023, we issued 10,000 shares of common stock in connection with a warrant exercise by Ruth York for gross proceeds of $37,500.
During the period from December 16, 2021 through December 9, 2022, we issued 4,852,230 shares of common stock for gross proceeds of $18,195,838 under Regulation A of Section 3(6) of the Securities Act.
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Unless otherwise stated above, the issuance of these securities was made in reliance upon the exemption from the registration requirements of Section 5 of the Securities Act provided by Section 4(a)(2) of the Securities Act.
Item 16. Exhibits.
(a) Exhibits.
__________
†Executive compensation plan or arrangement
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sells are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the
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Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.
(iii) To include material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (1)(i), (1)(ii) and (1)(iii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 and Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) For determining liability of the undersigned Registrant under the Securities Act to any purchaser in the initial distribution of the securities, that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(a) Any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;
(b) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;
(c) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and
(d) Any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.
(5) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(6) That, insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
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Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Woods Cross, Utah, on July 18, 2025.
| SKY QUARRY INC.
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| By: | /s/ David Sealock |
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| David Sealock Chief Executive Officer |
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints each of David Sealock and Darryl Delwo as his or her true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and his name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and to file a new registration statement under Rule 461, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE | TITLE | DATE | |
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/s/ David Sealock |
| Chairman and Chief Executive Officer (principal executive officer) | July 18, 2025 |
David Sealock |
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/s/ Darryl Delwo |
| Chief Financial Officer (principal financial and accounting officer) | July 18, 2025 |
Darryl Delwo |
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/s/ Marcus Laun |
| Executive VP and Director | July 18, 2025 |
Marcus Laun |
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/s/ Matthew Flemming |
| Director | July 18, 2025 |
Matthew Flemming |
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/s/ Todd Palin |
| Director | July 18, 2025 |
Todd Palin |
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/s/ Leo B. Womack |
| Director | July 18, 2025 |
Leo B. Womack |
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RESTATED CERTIFICATE OF INCORPORATION
OF
SKY QUARRY INC.
(Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware)
Sky Quarry Inc., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “General Corporation Law”),
DOES HEREBY CERTIFY:
FIRST: That the name of this corporation is Sky Quarry Inc., and that this corporation was originally incorporated pursuant to the General Corporation Law on June 4, 2019 under the name Recoteq Inc.
SECOND: That the Board of Directors duly adopted resolutions proposing to amend and restate the Certificate of Incorporation of this corporation, declaring said amendment and restatement to be advisable and in the best interests of this corporation and its stockholders, and authorizing the appropriate officers of this corporation to solicit the consent of the stockholders therefor, which resolution setting forth the proposed amendment and restatement is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be amended and restated in its entirety as follows:
1.Name. The name of the corporation is: Sky Quarry Inc.
2.Registered Office. The address of its registered office in the State of Delaware is: Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The name of its registered agent at such address is: The Corporation Trust Company.
3.Nature of Business. The nature of the business or purposes to be conducted or promoted is:
(a)To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.
(b)To manufacture, purchase or otherwise acquire, invest in, own, mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and deal with goods, wares and merchandise and personal property of every class and description.
(c)To acquire, and pay for in cash, stock or bonds of this corporation or otherwise, the good will, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, firth, association or corporation.
(d)To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage or otherwise dispose of letters patent of the United States or any foreign country, patent rights,
licenses and privileges, inventions, improvements and processes, copyrights, trademarks and trade names, relating to or useful in connection with any business of this corporation.
(e)To acquire by purchase, subscription or otherwise, and to receive, hold own, guarantee, self, assign, exchange, transfer, mortgage, pledge or otherwise dispose of or deal in and with any of the shares of the capital stock, or any voting trust certificates in respect of the shares of capital stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts, and other securities, obligations, choses in action and evidences of indebtedness or interest issued or created by any corporations, joint stock companies, syndicates, associations, firms, trusts, or persons, public or private, or by the government of the United State of America, or by any foreign government, or by any state, territory, province, municipality or other political subdivision or by any governmental agency, and as owner thereof to possess and exercise all the rights, powers and privileges of ownership, including the right to execute consents and vote thereon, and to do any and all acts and things necessary or advisable for the preservation, protection, improvement and enhancement in value thereof.
(f)To borrow or raise money for any of the purposes of the corporation and, from time to time without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiable or non-negotiable instruments and evidences of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage upon or pledge, conveyance or assignment in trust of the whole or any part of the property of the corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or other obligations of the corporation for its corporate purposes.
(g)To purchase, receive, take by grant, gift, devise, bequest or otherwise, lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal in and with real or personal property, or any interest therein, wherever situated, and to sell, convey, lease, exchange, transfer or otherwise dispose of, or mortgage or pledge, all or any of the corporation’s property and assets, or any interest therein, wherever situated.
(h)In general, to possess and exercise all the powers and privileges granted by the General Corporation Law of Delaware or by any other law of Delaware or by this Certificate of Incorporation together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of the business or purposes set forth in this Certificate of Incorporation.
The business and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in nowise limited or restricted by reference to, or inference from, the terms of any other clause in this Certificate of Incorporation, but the business and purposes specified in each of the foregoing clauses of this article shall be regarded as independent business and purposes.
4.Authorized Common Stock. The total number of shares of common stock which the corporation shall have authority to issue is: fifty million shares (50,000,000), par value $0.0001 per share, amounting in the aggregate to Five Thousand Dollars ($5,000.00).
5.Authorized Preferred Stock. The total number of shares of preferred stock which the corporation shall have authority to issue is: Twenty Five Million (25,000,000), par value $0.001 per share, amounting in the aggregate to Twenty Five Thousand Dollars ($25,000.00).
6.Perpetual Term. The corporation is to have perpetual existence.
7.Authority of the Board. In furtherance and not in limitation of the powers conferred by statute, the board of directors is expressly authorized:
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(a)To make, alter or repeal the by-laws of the corporation.
(b)To authorize and cause to be executed mortgages and liens upon the real and personal property of the corporation.
(c)To set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created.
(d)To designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. The by-laws may provide that in the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors, or in the by-laws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the General Corporation Law of Delaware to be submitted to stockholders for approval or (ii) adopting, amending or repealing any bylaw of the corporation.
(e)When and as authorized by the stockholders in accordance with law, to sell, lease or exchange all or substantially all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of money or property including shares of stock in, and/or other securities of, any other corporation or corporations, as its board of directors shall deem expedient and for the best interests of the corporation.
8.Election of Directors. Elections of directors need not be by written ballot unless the by-laws of the corporation shall provide. Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation.
9.Settlements. Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this corporation under the provisions of Section 291 of the General Corporation Law of Delaware or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of Section 279 of the General Corporation Law of Delaware order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on
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all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation.
10.Reservation of Right to Amend. The corporation reserves the right to amend, alter, change or repeal any provision contained in this Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.
11.Liability. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (a) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the General Corporation Law of Delaware, or (d) for any transaction from which the director derived any improper personal benefit. No amendment to or repeal of this Article shall apply to or have any effect on the liability or alleged liability of any director of the corporation for or with respect to any acts or omissions of such director occurring prior to such amendment.
12.Indemnification.
(a)The corporation shall indemnify, advance expenses, and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (a “Covered Person”) who owns or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the corporation or, while a director or officer of the corporation, is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Covered Person. Notwithstanding the preceding sentence, except for claims for indemnification (following the final disposition of such Proceeding) or advancement of expenses not paid in full, the corporation shall be required to indemnify a covered Person in connection with a Proceeding (or part thereof) commenced by such Covered Person only if the commencement of such Proceeding (or part thereof) by the Covered Person was authorized in the specific case by the board of directors of the corporation. Any amendment to, or repeal or modification of, this paragraph twelve shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification.
(b)Tho corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of the law. The corporation may create a trust fund, grant a security interest, and/or use other means (including, without limitation, letters of credit, surety bonds, and/or other similar arrangements), as well as enter into contracts providing for indemnification to the fullest extent permitted by law and including as part thereof any or all of the foregoing, to ensure the payment of such sums as may become necessary to effect full indemnification.
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THIRD: The foregoing amendment and restatement was approved by the holders of the requisite number of shares of said corporation in accordance with Section 228 of the General Corporation Law.
FOURTH: That said Restated Certificate of Incorporation, which restates and integrates and further amends the provisions of this corporation’s Restated Certificate of Incorporation, has been duly adopted in accordance with Sections 242 and 245 of the General Corporation Law.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation has been executed by a duly authorized officer of this corporation on this 6th day of August, 2020.
| /s/ David Sealock |
| David Sealock, Chief Executive Officer |
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STATE OF DELAWARE CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
The corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware does hereby certify:
FIRST: That at a meeting of the Board of Directors of SKY QUARRY INC., resolutions were duly adopted setting forth a proposed amendment of the Certificate of Incorporation of SKY QUARRY INC., declaring said amendment to be advisable and calling a meeting of the stockholders of SKY QUARRY INC. for consideration thereof. The resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be amended by changing the Articles thereof numbered “4” so that, as amended, said Articles shall be and will read as follows:
4. The total number of shares of common stock which the corporation shall have authority to issue is: One Hundred Million shares (100,000,000) and the par value of each of the such shares is: one hundredth of one cent Dollars ($.0001) amounting in the aggregate to Ten Thousand Dollars ($10,000.00).
SECOND: That thereafter, pursuant to resolution of its Board of Directors, a written consent in lieu of meeting of the stockholders of said corporation was circulated in accordance with Section 228 of the General Corporation Law of the State of Delaware in which stockholders holding the necessary number of shares as required by statute to vote in favor of the amendment provided written consent to such action.
THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this certificate to be signed this 20th day of April, 2021.
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| By: | /s/ Harrison Kordestani |
| Title: | Authorized Officer |
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| SKY QUARRY INC. |
| Name: | Harrison Kordestani |
STATE OF DELAWARE CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
The corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware does hereby certify:
FIRST: That at a meeting of the Board of Directors of SKY QUARRY INC., resolutions were duly adopted setting forth a proposed amendment of the Restated Certificate of Incorporation of SKY QUARRY INC., declaring said amendment to be advisable and calling a meeting of the stockholders of SKY QUARRY INC. for consideration thereof. The resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be amended by changing the Article thereof numbered “5” so that, as amended, said Article shall be and will read as follows:
5. Authorized Preferred Stock; Blank-Check Preferred Stock. The total number of shares of preferred stock which the corporation shall have authority to issue is: Twenty Five Million (25,000,000), par value $0.001 per share, amounting in the aggregate to Twenty Five Thousand Dollars ($25,000.00). The board of directors is authorized to provide, out of the unissued shares of authorized preferred stock, one or more classes of preferred stock or one or more series of preferred stock within any class thereof, and to set the voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, option or other special rights, and qualifications, limitations or restrictions thereof, which may differ from those of any and all other issuances, of each class of preferred stock or series of preferred stock within any class thereof, in accordance with the General Corporation Law of Delaware.
SECOND: That thereafter, pursuant to resolution of its Board of Directors, a written consent in lieu of meeting of the stockholders of said corporation was circulated in accordance with Section 228 of the General Corporation Law of the State of Delaware in which stockholders holding the necessary number of shares as required by statute to vote in favor of the amendment provided written consent to such action.
THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this certificate to be signed this 21st day of June, 2021.
By: | /s/ Harrison Kordestani |
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Name: | Harrison Kordestani |
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Title:. | Corporate Secretary, SKY QUARRY INC |
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CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION
OF
SKY QUARRY INC.
Sky Quarry Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State of Delaware, hereby certifies as follows:
This Certificate of Amendment (the “Certificate of Amendment”) amends the provisions of the Corporation’s Certificate of Incorporation, as amended (the “Certificate of Incorporation”).
Article FOUR of the Certificate of Incorporation is hereby amended by deleting it in its entirety and substituting therefor:
“4. The Corporation shall be authorized to issue a total of one hundred million (100,000,000) shares of its capital stock, par value one one-hundredth of a cent ($0.0001) per share (the “Common Stock”).
Effective at 11:59 p.m., Eastern Time, on April 9, 2024 (the “Effective Time”), every three (3) shares of Common Stock of the Corporation issued and outstanding or held as treasury shares shall thereupon, without any action on the part of the holder thereof or the Corporation, be reclassified and combined into one (1) share (the “Split Ratio”) of validly issued, fully paid, and non-assessable share of Common Stock having a par value of $0.0001 per share, subject to the treatment of fractional share interests as described in the immediately following sentence (the “Reverse Stock Split”). Any fractional shares of Common Stock resulting from the Reverse Stock Split shall be rounded up to the next whole share. All warrants, options and other securities convertible, exchangeable or that can be exercised for Common Stock outstanding at the Effective Time and outstanding option agreements, be, and the same hereby are, adjusted as of the Effective Time as follows: the number of shares of Common Stock that each such option and warrant currently entities the holder to purchase will be divided by three (3) rounded up to the nearest whole share and the exercise price of each share of Common Stock subject to each such option and warrant will be multiplied by three (3).”
All other provisions of the Certificate of Incorporation remain unchanged.
This Certificate of Amendment to the Certificate of Incorporation was approved by written consent of the Board of Directors and a majority of the stockholders of the Corporation effective March 20, 2024, pursuant to the requirements of Sections 228 and 242 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to the Certificate of incorporation to be duly executed by its authorized officer as of the 9th day of April 2024.
SKYQUARRY INC. |
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By: | /s/ David Sealock |
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Name: | David Sealock |
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Title: | Chairman and CEO |
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SKY QUARRY INC.
SKY QUARRY INC., a Delaware corporation (the “Company”), hereby certifies that, for value received, Varie Asset Management LLC (the “Warrant Holder,” which term includes its successors and registered assigns) is entitled, subject to the terms set forth below, to purchase an aggregate of sixty thousand (60,000) shares of common stock, par value $0.0001 per share, of the Company (the “Common Stock”) at an exercise price of $1.25 per share (the “Exercise Price”) pursuant to the terms and conditions of this warrant (“Warrant”). The shares of Common Stock purchasable upon exercise of this Warrant, as adjusted from time to time pursuant to the provisions of this Warrant, are sometimes hereinafter referred to as the “Warrant Shares”.
WHEREAS, the Warrant Holder entered into a Note Purchase Agreement with the Company pursuant to which Warrant Holder loaned $150,000.00 to the Company pursuant to the terms of a 12% Convertible Promissory Note (“Note”) dated even date herewith and in connection with the Note the Company agreed to issue this Warrant to the Warrant Holder;
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Company and the Warrant Holder hereby agree as follows:
1.Vesting of Warrant. Upon issuance hereof, this Warrant shall vest immediately and all of the Warrant Shares which the Registered Holder is permitted to acquire pursuant to this Warrant shall be immediately exercisable.
2.Exercise of Warrant. This Warrant may be exercised in whole or in part, subject to the terms and conditions of Section 1, during the twenty-four month period commencing on May 22, 2025 and expiring at 5:00 p.m., Mountain Standard time, on May 22, 2027 (the “Exercise Term”), or if such day is a day on which banking institutions in the State of Utah are authorized by law to close, then on the next succeeding day which shall not be such a day, by presentation and surrender of this Warrant evidencing the Warrant to be exercised to the Company at its principal office or at the office of its stock transfer agent, if any, with the Exercise Form annexed hereto duly executed, and payment of the Exercise Price. If any Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation and presentment of the Exercise Form, execute and deliver a new Warrant or Warrants, as the case may be, evidencing the rights of the Warrant Holder thereof to purchase the balance of the shares purchasable thereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise together with the payment of the Exercise Price, the Warrant Holder shall be deemed to be the holder of record of the Warrant Shares, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Warrant Holder. Certificates for the Warrant Shares shall be delivered to the Warrant Holder within a reasonable time following the exercise of this Warrant in accordance with the foregoing.
3.Reservation and Listing of Shares. The Company hereby agrees that at all times while the Warrants are outstanding there shall be reserved for issuance and delivery upon exercise of this Warrant, such number of shares of its Common Stock as shall be required for issuance and delivery upon exercise of this Warrant.
4.Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. Any fraction of a share called for upon any exercise hereof shall be canceled. The Warrant Holder, by his acceptance hereof, expressly waives any right to receive any fractional share of stock or fractional Warrant upon exercise of this Warrant.
5.Exchange, Transfer, Assignment or Loss of Warrant. This Warrant is exchangeable, without expense, at the option of the Warrant Holder, upon presentation and surrender of this Warrant evidencing such Warrants to the Company at its office or at the office of its stock transfer agent, if any, for other Warrants of different denominations entitling the Warrant Holder thereof to purchase in the aggregate the same number of shares of Common Stock as are purchasable thereunder at the same respective Exercise Price. Subject to Section 9 hereof, upon surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with a duly executed assignment form and funds sufficient to pay the applicable transfer tax, if any, the Company shall, without charge, execute and deliver new Warrant(s) in the name of the assignee named in such instrument of assignment and the original Warrant shall promptly be canceled. This Warrant may be divided or combined with other Warrants which carry the same rights upon presentation of this Warrant at the office of the Company or at the office of its stock transfer agent, if any, together with a written notice signed by the Warrant Holder hereof specifying the names and denominations in which new Warrants are to be issued. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver new Warrants of like tenor and date.
6.Rights of the Warrant Holder. The Warrant Holder shall not, by virtue hereof, be entitled to any rights of a shareholder of the Company until exercise of any Warrants.
7.Adjustments of Purchase Price and Number of Shares.
(a)Subdivision and Combination. If the Company shall at any time subdivide or combine the outstanding shares of Common Stock by way of stock split, reverse stock split or the like, the Exercise Price shall forthwith be proportionately increased or decreased.
(b)Adjustment in Number of Shares. Upon each adjustment of the Exercise Price pursuant to the provisions of paragraph 7(a), the number of shares of Common Stock issuable upon the exercise of this Warrant shall be adjusted to the nearest full share of Common Stock by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.
(c)Reclassification, Consolidation, Merger, etc. In case of any reclassification or change of the outstanding shares of Common Stock (other than a change in par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in the case of any consolidation of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding shares of Common Stock, except a change as a result of a subdivision or combination of such shares or a change in par value, as aforesaid), or in the case of a sale or conveyance to another corporation of all or a substantial part of the property of the Company, the Warrant Holder shall thereafter have the right to purchase the kind and number of shares of stock and other securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance as if the Warrant Holder were the owner of the shares of Common Stock underlying this Warrant immediately prior to any such events at a price equal to the product of (x) the number of shares issuable upon exercise of this Warrant and (y) the Exercise Price in effect immediately prior to the record date for such reclassification, change, consolidation, merger, sale or conveyance as if such Warrant Holder had exercised this Warrant.
(d)Dividends and Other Distributions with Respect to Outstanding Securities. In the event that the Company shall at any time prior to the exercise of all Warrants declare a dividend (other than a dividend consisting solely of shares of Common Stock or a cash dividend or distribution payable out of current or retained earnings) or otherwise distribute to the holders of its Common Stock any monies, assets, property, rights, evidences of indebtedness, securities (other than shares of Common Stock), whether issued by the Company or by another person or entity, or any other thing of value, the Warrant Holder of the unexercised Warrants shall thereafter be entitled, in addition to the shares of Common Stock or other securities receivable upon the exercise thereof, to receive, upon the exercise of such Warrants, the same monies, property, assets, rights, evidences of indebtedness, securities or any other thing of value that they would have been entitled to receive at the time of such dividend or distribution. At the time of any such dividend or distribution, the Company shall make appropriate reserves to ensure the timely performance of the provisions of this Subsection 7(d).
(e)Warrant After Adjustment. Irrespective of any change pursuant to this Section 7 in the Exercise Price or in the number, kind or class of shares or other securities or other property obtainable upon exercise of this Warrant, this Warrant may continue to express as the Exercise Price and as the number of shares obtainable upon exercise, the same price and number of shares as are stated herein.
(f)Statement of Calculation. Whenever the Exercise Price shall be adjusted pursuant to the provisions of this Section 7, the Company shall forthwith file at its principal office, a statement signed by an executive officer of the Company specifying the adjusted Exercise Price determined as above provided in such section. Such statement shall show in reasonable detail the method of calculation of such adjustment and the facts requiring the adjustment and upon which the calculation is based. The Company shall forthwith cause a notice setting forth the adjusted Exercise Price to be sent by certified mail, return receipt requested, postage prepaid, to the Warrant Holder.
8.Definition of “Common Stock”. For the purpose of this Warrant, the term “Common Stock” shall mean, in addition to the class of stock designated as the Common Stock, $.0001 par value, of the Company on the date hereof, any class of stock resulting from successive changes or reclassifications of the Common Stock consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. If at any time, as a result of an adjustment made pursuant to one or more of the provisions of Section 7 hereof, the shares of stock or other securities or property obtainable upon exercise of this Warrant shall include securities of the Company other than shares of Common Stock or securities of another corporation, then thereafter the amount of such other securities so obtainable shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in Section 7 hereof and all other provisions of this Warrant with respect to Common Stock shall apply on like terms to any such other shares or other securities.
9.Restrictions on Offer and Sale. THE OFFER AND SALE OF THE SECURITIES REPRESENTED HEREBY AND THE WARRANT SHARES HAVE NOT BEEN REGISTERED WITH OR APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY SECURITIES COMMISSION OR REGULATORY AUTHORITY AND ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).
THE SALE, ASSIGNMENT, CONVEYANCE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS WARRANT AND THE WARRANT SHARES IS PROHIBITED EXCEPT (1) PURSUANT TO REGISTRATION UNDER THE ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT, AND ANY CERTIFICATE REPRESENTING WARRANT SHARES SHALL BEAR A LEGEND TO SUCH EFFECT.
10.Notices to Warrant Holders. Nothing contained in this Warrant shall be construed as conferring upon the Warrant Holder the right to vote or to consent or to receive notice as a shareholder in respect of any meetings of shareholders for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of this Warrant and its exercise, any of the following events shall occur:
(a)The Company shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or
(b)The Company shall offer to all the holders of its Common Stock any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any warrant, right or option to subscribe therefor; or
(c)A dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business shall be proposed; or
(d)There shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with another entity;
then, in anyone or more of said events, the Company shall give written notice of such event at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the shareholders entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, warrants or options, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of closing the transfer books, as the case may be. Failure to give such notice or any defect therein shall not affect the validity of any action taken in connection with the declaration or payment of any such dividend or distribution, or the issuance of any convertible or exchangeable securities or subscription rights, warrants or options, or any proposed dissolution, liquidation, winding up or sale.
11.Notices.
(a)All communications under this Warrant shall be in writing and shall be mailed by certified mail, postage prepaid, return receipt requested, or telecopied with confirmation of receipt or delivered by hand or by overnight delivery service:
| If to the Company at: | SKY QUARRY INC. |
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| Attn: President |
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| 707 West 700 S., Suite 101 Woods Cross, Utah 84087 |
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| If to the Warrant Holder at: |
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| Varie Asset Management [ redacted ] |
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(b)Any notice so addressed, when mailed by registered or certified mail shall be deemed to be given three days after so mailed, when telecopied shall be deemed to be given when transmitted, or when delivered by hand or overnight shall be deemed to be given when hand delivered or on the day following deposit with the overnight delivery service.
12.Successors. All the covenants and provisions of this Warrant by or for the benefit of the Warrant Holder shall inure to the benefit of his successors and assigns hereunder.
13.Termination. This Warrant (and the right to purchase Warrant Shares upon exercise hereof) will terminate at 5PM MST on May 22, 2027 [two years after the date of issuance hereof].
14.Governing Law. This Warrant shall be deemed to be made under the laws of the State of Delaware and for all purposes shall be construed in accordance with the laws of said State, excluding choice of law principles thereof.
15.Entire Agreement, Amendment, Waiver. This Warrant and all attachments hereto and all incorporation by references set forth herein, set forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. This Warrant may be amended, the Company may take any action herein prohibited or omit to take any action herein required to be performed by it, and any breach of any covenant, agreement, warranty or representation may be waived, only if the Company has obtained the written consent or waiver of the Warrant Holder. No course of dealing between or among any persons having any interest in this Warrant will be deemed effective to modify, amend or discharge any part of this Warrant or any rights or obligations of any person under or by reason of this Warrant.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of this 22nd day of May, 2025.
| SKY QUARRY INC. | |
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| By: | /s/ Marcus Laun |
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| Name: Marcus Laun |
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| Title: Executive Vice President |
WARRANT EXERCISE FORM
(To be executed upon exercise Warrant)
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THIS WARRANT TO PURCHASE COMMON STOCK
SKY QUARRY INC.
The undersigned holder hereby exercises the right to purchase _________ of the shares of Common Stock (“Warrant Shares”) of SKY QUARRY INC., a Delaware corporation (the “Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
1. Exercise and Payment of Exercise Price for Cash. The Holder hereby elects to exercise an aggregate of _____ Warrants at an exercise price of $ per share. In exchange therefore, the Holder shall pay the aggregate exercise price of $_______ to the Company in exchange for an aggregate of _________ Warrant Shares, in accordance with the terms of the Warrant.
2. At the time such Holder was offered the Warrant, it was, at the date hereof, and on each date on which it exercises any Warrants, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act of 1933, as amended, or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Buyer is not required to be registered as a broker-dealer under Section 15 of the Securities Exchange Act of 1934, as amended.
The undersigned requests that a certificate for the Warrant Shares being purchased be registered in the name of _________ and that such certificate be delivered to _________
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THIS WARRANT AND THE SECURITIES UNDERLYING THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.
Sky Quarry Inc.
COMMON STOCK PURCHASE WARRANT
THIS IS TO CERTIFY that, for value received, THE VANNEMAN FAMILY TRUST DATED JANUARY 7, 2008 (the “Holder”) is entitled, subject to the terms and conditions set forth in this Common Stock Purchase Warrant (“Warrant”), to purchase from Sky Quarry Inc., a Delaware corporation (the “Company”) up to fifteen thousand (15,000) fully paid and nonassessable shares of the Company’s Common Stock (the “Warrant Securities”) at the initial exercise price of four dollars and fifty cents ($4.50) per share, but subject to adjustment as provided in Section 3 below, (the “Exercise Price”).
This Warrant is being issued in connection with a Promissory Note in the principal amount of $150,000, entered into by and between the Company and Holder dated of even date herewith (the “Note”).
1.Exercisability.
(A)This Warrant may be exercised at any time or from time to time beginning on date hereof (the “Trigger Date”) and ending on the date which is three (3) years after the Trigger Date. The Holder may exercise this Warrant by presentation and surrender hereof to the Company of a notice of election to purchase duly executed and accompanied by payment by the Exercise Price, which must be paid in cash.
2.Manner of Exercise. In case of the purchase of less than all the Warrant Securities, the Company shall cancel this Warrant upon the surrender hereof and shall execute and deliver a new warrant of like tenor for the balance of the Warrant Securities. Upon the exercise of this Warrant, the issuance of certificates for securities, properties or rights underlying this Warrant shall be made forthwith (and in any event within five (5) business days thereafter) without charge to the Holder including, without limitation, any tax that may be payable in respect of the issuance thereof: provided, however, that the Company shall not be required to pay any tax in respect of income or capital gain of the Holder.
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If and to the extent this Warrant is exercised, in whole or in part, the Holder shall be entitled to receive a certificate or certificates representing the Warrant Securities so purchased, upon presentation and surrender to the Company of the form of election to purchase attached hereto duly executed, and accompanied by payment of the purchase price.
3.Adjustment in Number of Shares and Exercise Price.
(A)Adjustment for Reclassifications. In case at any time or from time to time after the issue date the holders of the Common Stock of the Company (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefore, other or additional stock or other securities or property (including cash) by way of stock split, spin- off, reclassification, combination of shares or similar corporate rearrangement (exclusive of any stock dividend of its or any subsidiary’s capital stock), then and in each such case the Holder of this Warrant, upon the exercise hereof as provided in Section 1, shall be entitled to receive the amount of stock and other securities and property which such Holder would hold on the date of such exercise if on the issue date he had been the holder of record of the number of shares of Common Stock of the Company called for on the face of this Warrant and had thereafter, during the period from the issue date, to and including the date of such exercise, retained such shares and/or all other or additional stock and other securities and property receivable by him as aforesaid during such period, giving effect to all adjustments called for during such period. In the event of any such adjustment, the Exercise Price shall be adjusted proportionally.
(B)Adjustment for Reorganization, Consolidation, Merger. In case of any reorganization of the Company (or any other corporation the stock or other securities of which are at the time receivable on the exercise of this Warrant) after the issue date, or in case, after such date, the Company (or any such other corporation) shall consolidate with or merge into another corporation or convey all or substantially all of its assets to another corporation, then and in each such case the Holder of this Warrant, upon the exercise hereof as provided in Section 1 at any time after the consummation of such reorganization, consolidation, merger or conveyance, shall be entitled to receive, in lieu of the stock or other securities or property to which such Holder would be entitled had the Holder exercised this Warrant immediately prior thereto, all subject to further adjustment as provided herein; in each such case, the terms of this Warrant shall be applicable to the shares of stock or other securities or property receivable upon the exercise of this Warrant after such consummation.
4.No Requirement to Exercise. Nothing contained in this Warrant shall be construed as requiring the Holder to exercise this Warrant prior to or in connection with the effectiveness of a registration statement.
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5.No Stockholder Rights. Unless and until this Warrant is exercised, this Warrant shall not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Company, or to any other rights whatsoever except the rights herein expressed, and, no dividends shall be payable or accrue in respect of this Warrant.
6.Exchange. This Warrant is exchangeable upon the surrender hereof by the Holder to the Company for new warrants of like tenor representing in the aggregate the right to purchase the number of Warrant Securities purchasable hereunder, each of such new warrants to represent the right to purchase such number of Warrant Securities as shall be designated by the Holder at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it and reimbursement to the company of all reasonable expenses incidental thereto, and upon surrender and cancellation hereof, if mutilated, the Company will make and deliver a new warrant of like tenor and amount, in lieu hereof.
7.Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of securities upon the exercise of this Warrant, nor shall it be required to issue scrip or pay cash in lieu of fractional interests. All fractional interests shall be eliminated by rounding any fraction up to the nearest whole number of securities, properties or rights receivable upon exercise of this Warrant.
8.Reservation of Securities. The Company shall at all times reserve and keep available out of its authorized shares of Common Stock or other securities, solely for the purpose of issuance upon the exercise of this Warrant, such number of shares of Common Stock or other securities, properties or rights as shall be issuable upon the exercise hereof. The Company covenants and agrees that, upon exercise of this Warrant and payment of the Principal Value, all shares of Common Stock and other securities issuable upon such exercise shall be duly and validly issued, fully paid, non-assessable and not subject to the preemptive rights of any stockholder.
9.Notices to Holder. If at any time prior to the expiration of this Warrant or its exercise, any of the following events shall occur:
(a)the Company shall take a record of the holders of any class of its securities for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or
(b)the Company shall offer to all the holders of a class of its securities any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option or warrant to subscribe therefor; or
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(c)a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business as an entirety shall be proposed
then, in any one or more said events, the Company shall give written notice of such event to the Holder at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholder entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of closing the transfer books, as the case may be.
10.Transferability. This Warrant may not be transferred or assigned by the Holder without prior written approval by the Company.
11.Informational Requirements. The Company will transmit to the Holder such information, documents and reports as are generally distributed to stockholders of the Company concurrently with the distribution thereof to such stockholders.
12.Notice. All notices provided for in this Warrant shall be in accordance with the notice provisions of the Debt Satisfaction Agreement.
13.Governing Law; Venue. This Warrant shall be governed by and construed under the laws of the State of Utah as applied to agreements among Utah residents, made and to be performed entirely within the State of Utah. The Parties agree that any action brought to enforce the terms of this Warrant will be brought in the appropriate federal or state court having jurisdiction in Salt Lake City, Utah, United States of America.
14.Successors. All the covenants and provisions of this Warrant shall be binding upon and inure to the benefit of the Company, the Holder and their respective legal representatives, successors and assigns.
15.Attorneys’ Fees. In the event any holder hereof shall refer this Warrant to an attorney to enforce the terms hereof, the Company agrees to pay all the costs and expenses incurred in attempting or effecting collection hereunder, including reasonable attorney's fees, whether or not suit is instituted.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on October 8, 2024.
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Sky Quarry Inc., |
| THE VANNEMAN FAMILY TRUST |
a Delaware corporation |
| DATED JANUARY 7, 2008 |
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/s/ David Sealock |
| /s/ Marcus Vanneman |
By: David Sealock |
| By: Marcus G. Vanneman |
Its: Chief Executive Officer |
| Its: Trustee |
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[FORM OF ELECTION TO PURCHASE]
Ladies and Gentlemen:
The undersigned hereby elects to exercise the warrant issued to it by Sky Quarry Inc. (the “Company”) pursuant to the Common Stock Purchase Warrant Agreement between the Company and THE VANNEMAN FAMILY TRUST DATED JANUARY 7, 2008, dated
October 8, 2024 (the “Warrant Agreement”) and to purchase thereunder ________ (____) shares of Common Stock of the Company (the “Shares”) at a purchase price of $4.50 per share or an aggregate purchase price of ________ Dollars ($_____) (the “Purchase Price”), subject to adjustment as set forth in the Warrant Agreement.
The certificate(s) or other instruments for such shares shall be issued in the name of the undersigned or as otherwise indicated below.
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SKY QUARRY INC.
SKY QUARRY INC., a Delaware corporation (the “Company”), hereby certifies that, for value received, Libertas Funding, LLC, a Connecticut limited liability company (the “Warrant Holder,” which term includes its successors and registered assigns), is entitled, subject to the terms set forth below, to purchase an aggregate of 375,000 shares of common stock, par value $0.0001 per share, of the Company (the “Common Stock”) at an exercise price of $4.50 per share (the “Exercise Price”) pursuant to the terms and conditions of this warrant (“Warrant”). The shares of Common Stock purchasable upon exercise of this Warrant, as adjusted from time to time pursuant to the provisions of this Warrant, are sometimes hereinafter referred to as the “Warrant Shares”.
WHEREAS, the Warrant Holder entered into several receivables purchase agreements (“Agreements”) with the Company, pursuant to which Warrant Holder advanced funds to the Company pursuant to the Agreements;
WHEREAS, the Warrant Holder agreed to a modification of certain payments to be made by the Company to Warrant Holder pursuant to the Agreements and in consideration therefore the Company agreed to issue this Warrant to the Warrant Holder;
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Company and the Warrant Holder hereby agree as follows:
1.Vesting of Warrant. Upon issuance hereof, this Warrant shall vest immediately and all of the Warrant Shares which the Registered Holder is permitted to acquire pursuant to this Warrant shall be immediately exercisable.
2.Exercise of Warrant. This Warrant may be exercised in whole or in part, subject to the terms and conditions of Section 1, during the thirty-six month period commencing on August 27, 2024 and expiring at 5:00 p.m., Mountain Standard time, on August 27, 2027 (the “Exercise Term”), or if such day is a day on which banking institutions in the State of Utah are authorized by law to close, then on the next succeeding day which shall not be such a day, by presentation and surrender of this Warrant evidencing the Warrant to be exercised to the Company at its principal office or at the office of its stock transfer agent, if any, with the Exercise Form annexed hereto duly executed, and payment of the Exercise Price. If any Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation and presentment of the Exercise Form, execute and deliver a new Warrant or Warrants, as the case may be, evidencing the rights of the Warrant Holder thereof to purchase the balance of the shares purchasable thereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise together with the payment of the Exercise Price, the Warrant Holder shall be deemed to be the holder of record of the Warrant Shares, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Warrant Holder. Certificates for the Warrant Shares shall be delivered to the Warrant Holder within a reasonable time (not to exceed ten (10) business days) following the exercise of this Warrant in accordance with the foregoing.
3.Reservation and Listing of Shares. The Company hereby agrees that at all times while the Warrants are outstanding there shall be reserved for issuance and delivery upon exercise of this Warrant, such number of shares of its Common Stock as shall be required for issuance and delivery upon exercise of this Warrant.
4.Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. Any fraction of a share called for upon any exercise hereof shall be canceled. The Warrant Holder, by his acceptance hereof, expressly waives any right to receive any fractional share of stock or fractional Warrant upon exercise of this Warrant.
5.Exchange, Transfer, Assignment or Loss of Warrant. This Warrant is exchangeable, without expense, at the option of the Warrant Holder, upon presentation and surrender of this Warrant evidencing such Warrants to the Company at its office or at the office of its stock transfer agent, if any, for other Warrants of different denominations entitling the Warrant Holder thereof to purchase in the aggregate the same number of shares of Common Stock as are purchasable thereunder at the same respective Exercise Price. Subject to Section 9 hereof, upon surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with
a duly executed assignment form and funds sufficient to pay the applicable transfer tax, if any, the Company shall, without charge, execute and deliver new Warrant(s) in the name of the assignee named in such instrument of assignment and the original Warrant shall promptly be canceled. This Warrant may be divided or combined with other Warrants which carry the same rights upon presentation of this Warrant at the office of the Company or at the office of its stock transfer agent, if any, together with a written notice signed by the Warrant Holder hereof specifying the names and denominations in which new Warrants are to be issued. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver new Warrants of like tenor and date.
6.Rights of the Warrant Holder. The Warrant Holder shall not, by virtue hereof, be entitled to any rights of a shareholder of the Company until exercise of any Warrants.
7.Adjustments of Purchase Price and Number of Shares.
(a)Subdivision and Combination. If the Company shall at any time subdivide or combine the outstanding shares of Common Stock by way of stock split, reverse stock split or the like, the Exercise Price shall forthwith be proportionately increased or decreased.
(b)Adjustment in Number of Shares. Upon each adjustment of the Exercise Price pursuant to the provisions of paragraph 7(a), the number of shares of Common Stock issuable upon the exercise of this Warrant shall be adjusted to the nearest full share of Common Stock by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.
(c)Reclassification, Consolidation, Merger, etc. In case of any reclassification or change of the outstanding shares of Common Stock (other than a change in par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in the case of any consolidation of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding shares of Common Stock, except a change as a result of a subdivision or combination of such shares or a change in par value, as aforesaid), or in the case of a sale or conveyance to another corporation of all or a substantial part of the property of the Company, the Warrant Holder shall thereafter have the right to purchase the kind and number of shares of stock and other securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance as if the Warrant Holder were the owner of the shares of Common Stock underlying this Warrant immediately prior to any such events at a price equal to the product of (x) the number of shares issuable upon exercise of this Warrant and (y) the Exercise Price in effect immediately prior to the record date for such reclassification, change, consolidation, merger, sale or conveyance as if such Warrant Holder had exercised this Warrant.
(d)Dividends and Other Distributions with Respect to Outstanding Securities. In the event that the Company shall at any time prior to the exercise of all Warrants declare a dividend (other than a dividend consisting solely of shares of Common Stock or a cash dividend or distribution payable out of current or retained earnings) or otherwise distribute to the holders of its Common Stock any monies, assets, property, rights, evidences of indebtedness, securities (other than shares of Common Stock), whether issued by the Company or by another person or entity, or any other thing of value, the Warrant Holder of the unexercised Warrants shall thereafter be entitled, in addition to the shares of Common Stock or other securities receivable upon the exercise thereof, to receive, upon the exercise of such Warrants, the same monies, property, assets, rights, evidences of indebtedness, securities or any other thing of value that they would have been entitled to receive at the time of such dividend or distribution. At the time of any such dividend or distribution, the Company shall make appropriate reserves to ensure the timely performance of the provisions of this Subsection 7(d).
(e)Warrant After Adjustment. Irrespective of any change pursuant to this Section 7 in the Exercise Price or in the number, kind or class of shares or other securities or other property obtainable upon exercise of this Warrant, this Warrant may continue to express as the Exercise Price and as the number of shares obtainable upon exercise, the same price and number of shares as are stated herein.
(f)Statement of Calculation. Whenever the Exercise Price shall be adjusted pursuant to the provisions of this Section 7, the Company shall forthwith file at its principal office, a statement signed by an executive officer of the Company specifying the adjusted Exercise Price determined as above provided in such section. Such statement shall show in reasonable detail the method of calculation of such adjustment and the facts requiring the adjustment and upon which the calculation is based. The Company shall forthwith cause a notice setting forth the adjusted Exercise Price to be sent by certified mail, return receipt requested, postage prepaid, to the Warrant Holder.
8.Definition of “Common Stock”. For the purpose of this Warrant, the term “Common Stock” shall mean, in addition to the class of stock designated as the Common Stock, $.0001 par value, of the Company on the date hereof, any class of stock resulting from successive changes or reclassifications of the Common Stock consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. If at any time, as a result of an adjustment made pursuant to one or more of the provisions of Section 7 hereof, the shares of stock or other securities or property obtainable upon exercise of this Warrant shall include securities of the Company other than shares of Common Stock or securities of another corporation, then thereafter the amount of such other securities so obtainable shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in Section 7 hereof and all other provisions of this Warrant with respect to Common Stock shall apply on like terms to any such other shares or other securities.
9.Restrictions on Offer and Sale. THE OFFER AND SALE OF THE SECURITIES REPRESENTED HEREBY AND THE WARRANT SHARES HAVE NOT BEEN REGISTERED WITH OR APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY SECURITIES COMMISSION OR REGULATORY AUTHORITY AND ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).
THE SALE, ASSIGNMENT, CONVEYANCE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS WARRANT AND THE WARRANT SHARES IS PROHIBITED EXCEPT (1) PURSUANT TO REGISTRATION UNDER THE ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT, AND ANY CERTIFICATE REPRESENTING WARRANT SHARES SHALL BEAR A LEGEND TO SUCH EFFECT.
10.Notices to Warrant Holders. Nothing contained in this Warrant shall be construed as conferring upon the Warrant Holder the right to vote or to consent or to receive notice as a shareholder in respect of any meetings of shareholders for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of this Warrant and its exercise, any of the following events shall occur:
(a)The Company shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or
(b)The Company shall offer to all the holders of its Common Stock any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any warrant, right or option to subscribe therefor; or
(c)A dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business shall be proposed; or
(d)There shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with another entity;
then, in anyone or more of said events, the Company shall give written notice of such event at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the shareholders entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, warrants or options, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be. Failure to give such notice or any defect therein shall not affect the validity of any action taken in connection with the declaration or payment of any such dividend or distribution, or the issuance of any convertible or exchangeable securities or subscription rights, warrants or options, or any proposed dissolution, liquidation, winding up or sale.
11.Notices.
(a)All communications under this Warrant shall be in writing and shall be mailed by certified mail, postage prepaid, return receipt requested, or telecopied with confirmation of receipt or delivered by hand or by overnight delivery service:
If to the Company at:SKY QUARRY INC. Attn: President
707 West 700 S., Suite 101 Woods Cross, Utah 84087
If to the Warrant Holder at:
Libertas Funding, LLC Attn: Randy Saluck, CEO
411 West Putnam Avenue, Suite 220
Greenwich, CT 06830
(b)Any notice so addressed, when mailed by registered or certified mail shall be deemed to be given three days after so mailed, when telecopied shall be deemed to be given when transmitted, or when delivered by hand or overnight shall be deemed to be given when hand delivered or on the day following deposit with the overnight delivery service.
12.Successors. All the covenants and provisions of this Warrant by or for the benefit of the Warrant Holder shall inure to the benefit of his successors and assigns hereunder.
13.Termination. This Warrant (and the right to purchase Warrant Shares upon exercise hereof) will terminate at 5PM MST on May 1, 2027 [three years after the date of issuance hereof].
14.Governing Law. This Warrant shall be deemed to be made under the laws of the State of Delaware and for all purposes shall be construed in accordance with the laws of said State, excluding choice of law principles thereof.
15.Entire Agreement, Amendment, Waiver. This Warrant and all attachments hereto and all incorporation by references set forth herein, set forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. This Warrant may be amended, the Company may take any action herein prohibited or omit to take any action herein required to be performed by it, and any breach of any covenant, agreement, warranty or representation may be waived, only if the Company has obtained the written consent or waiver of the Warrant Holder. No course of dealing between or among any persons having any interest in this Warrant will be deemed effective to modify, amend or discharge any part of this Warrant or any rights or obligations of any person under or by reason of this Warrant.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of this 27 day of August, 2024.
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| Name: David Sealock |
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WARRANT EXERCISE FORM
(To be executed upon exercise Warrant)
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT TO PURCHASE COMMON STOCK
SKY QUARRY INC.
The undersigned holder hereby exercises the right to purchase _________of the shares of Common Stock (“Warrant Shares”) of SKY QUARRY INC., a Delaware corporation (the “Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
1.Exercise and Payment of Exercise Price for Cash. The Holder hereby elects to exercise an aggregate of _________ Warrants at an exercise price of $____ per share. In exchange therefore, the Holder shall pay the aggregate exercise price of $_______ to the Company in exchange for an aggregate of _________Warrant Shares, in accordance with the terms of the Warrant.
2.At the time such Holder was offered the Warrant, it was, at the date hereof, and on each date on which it exercises any Warrants, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act of 1933, as amended, or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Buyer is not required to be registered as a broker-dealer under Section 15 of the Securities Exchange Act of 1934, as amended.
The undersigned requests that a certificate for the Warrant Shares being purchased be registered in the name of _________ and that such certificate be delivered to _________
________________________________________________________.
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SKY QUARRY INC.
SKY QUARRY INC., a Delaware corporation (the “Company”), hereby certifies that, for value received, Lendspark Corporation (the “Warrant Holder,” which term includes its successors and registered assigns) is entitled, subject to the terms set forth below, to purchase an aggregate of 250,000 shares of common stock, par value $0.0001 per share, of the Company (the “Common Stock”) at an exercise price of $4.50 per share (the “Exercise Price”) pursuant to the terms and conditions of this warrant (“Warrant”). The shares of Common Stock purchasable upon exercise of this Warrant, as adjusted from time to time pursuant to the provisions of this Warrant, are sometimes hereinafter referred to as the “Warrant Shares”.
WHEREAS, the Warrant Holder entered into several business loan and security agreement (“Agreement”)
with the Company, pursuant to which Warrant Holder advanced funds to the Company pursuant to the Agreement;
WHEREAS, the Warrant Holder agreed to a modification of certain payments to be made by the Company to Warrant Holder pursuant to the Agreement and in consideration therefore the Company agreed to issue this Warrant to the Warrant Holder;
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Company and the Warrant Holder hereby agree as follows:
1.Vesting of Warrant. Upon issuance hereof, this Warrant shall vest immediately and all of the Warrant Shares which the Registered Holder is permitted to acquire pursuant to this Warrant shall be immediately exercisable.
2.Exercise of Warrant. This Warrant may be exercised in whole or in part, subject to the terms and conditions of Section 1, during the thirty-six month period commencing on August 27, 2024 and expiring at 5:00 p.m., Mountain Standard time, on August 27, 2029 (the “Exercise Term”), or if such day is a day on which banking institutions in the State of Utah are authorized by law to close, then on the next succeeding day which shall not be such a day, by presentation and surrender of this Warrant evidencing the Warrant to be exercised to the Company at its principal office or at the office of its stock transfer agent, if any, with the Exercise Form annexed hereto duly executed, and payment of the Exercise Price. If any Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation and presentment of the Exercise Form, execute and deliver a new Warrant or Warrants, as the case may be, evidencing the rights of the Warrant Holder thereof to purchase the balance of the shares purchasable thereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise together with the payment of the Exercise Price, the Warrant Holder shall be deemed to be the holder of record of the Warrant Shares, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Warrant Holder. Certificates for the Warrant Shares shall be delivered to the Warrant Holder within a reasonable time following the exercise of this Warrant in accordance with the foregoing.
3.Reservation and Listing of Shares. The Company hereby agrees that at all times while the Warrants are outstanding there shall be reserved for issuance and delivery upon exercise of this Warrant, such number of shares of its Common Stock as shall be required for issuance and delivery upon exercise of this Warrant.
4.Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. Any fraction of a share called for upon any exercise hereof shall be canceled. The Warrant Holder, by his acceptance hereof, expressly waives any right to receive any fractional share of stock or fractional Warrant upon exercise of this Warrant.
5.Exchange, Transfer, Assignment or Loss of Warrant. This Warrant is exchangeable, without expense, at the option of the Warrant Holder, upon presentation and surrender of this Warrant evidencing such Warrants to the Company at its office or at the office of its stock transfer agent, if any, for other Warrants of different denominations entitling the Warrant Holder thereof to purchase in the aggregate the same number of shares of Common Stock as are purchasable thereunder at the same respective Exercise Price. Subject to Section 9 hereof, upon surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with a duly executed assignment form and funds sufficient to pay the applicable transfer tax, if any, the Company shall,
without charge, execute and deliver new Warrant(s) in the name of the assignee named in such instrument of assignment and the original Warrant shall promptly be canceled. This Warrant may be divided or combined with other Warrants which carry the same rights upon presentation of this Warrant at the office of the Company or at the office of its stock transfer agent, if any, together with a written notice signed by the Warrant Holder hereof specifying the names and denominations in which new Warrants are to be issued. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver new Warrants of like tenor and date.
6.Rights of the Warrant Holder. The Warrant Holder shall not, by virtue hereof, be entitled to any rights of a shareholder of the Company until exercise of any Warrants.
7.Adjustments of Purchase Price and Number of Shares.
(a)Subdivision and Combination. If the Company shall at any time subdivide or combine the outstanding shares of Common Stock by way of stock split, reverse stock split or the like, the Exercise Price shall forthwith be proportionately increased or decreased.
(b)Adjustment in Number of Shares. Upon each adjustment of the Exercise Price pursuant to the provisions of paragraph 7(a), the number of shares of Common Stock issuable upon the exercise of this Warrant shall be adjusted to the nearest full share of Common Stock by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.
(c)Reclassification, Consolidation, Merger, etc. In case of any reclassification or change of the outstanding shares of Common Stock (other than a change in par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in the case of any consolidation of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding shares of Common Stock, except a change as a result of a subdivision or combination of such shares or a change in par value, as aforesaid), or in the case of a sale or conveyance to another corporation of all or a substantial part of the property of the Company, the Warrant Holder shall thereafter have the right to purchase the kind and number of shares of stock and other securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance as if the Warrant Holder were the owner of the shares of Common Stock underlying this Warrant immediately prior to any such events at a price equal to the product of (x) the number of shares issuable upon exercise of this Warrant and (y) the Exercise Price in effect immediately prior to the record date for such reclassification, change, consolidation, merger, sale or conveyance as if such Warrant Holder had exercised this Warrant.
(d)Dividends and Other Distributions with Respect to Outstanding Securities. In the event that the Company shall at any time prior to the exercise of all Warrants declare a dividend (other than a dividend consisting solely of shares of Common Stock or a cash dividend or distribution payable out of current or retained earnings) or otherwise distribute to the holders of its Common Stock any monies, assets, property, rights, evidences of indebtedness, securities (other than shares of Common Stock), whether issued by the Company or by another person or entity, or any other thing of value, the Warrant Holder of the unexercised Warrants shall thereafter be entitled, in addition to the shares of Common Stock or other securities receivable upon the exercise thereof, to receive, upon the exercise of such Warrants, the same monies, property, assets, rights, evidences of indebtedness, securities or any other thing of value that they would have been entitled to receive at the time of such dividend or distribution. At the time of any such dividend or distribution, the Company shall make appropriate reserves to ensure the timely performance of the provisions of this Subsection 7(d).
(e)Warrant After Adjustment. Irrespective of any change pursuant to this Section 7 in the Exercise Price or in the number, kind or class of shares or other securities or other property obtainable upon exercise of this Warrant, this Warrant may continue to express as the Exercise Price and as the number of shares obtainable upon exercise, the same price and number of shares as are stated herein.
(f)Statement of Calculation. Whenever the Exercise Price shall be adjusted pursuant to the provisions of this Section 7, the Company shall forthwith file at its principal office, a statement signed by an executive officer of the Company specifying the adjusted Exercise Price determined as above provided in such section. Such statement shall show in reasonable detail the method of calculation of such adjustment and the facts requiring the adjustment and upon which the calculation is based. The Company shall forthwith cause a notice setting forth the adjusted Exercise Price to be sent by certified mail, return receipt requested, postage prepaid, to the Warrant Holder.
8.Definition of “Common Stock”. For the purpose of this Warrant, the term “Common Stock” shall mean, in addition to the class of stock designated as the Common Stock, $.0001 par value, of the Company on the date hereof, any class of stock resulting from successive changes or reclassifications of the Common Stock consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. If at any time, as a result of an adjustment made pursuant to one or more of the provisions of Section 7 hereof, the shares of stock or other securities or property obtainable upon exercise of this Warrant shall include securities of the Company other than shares of Common Stock or securities of another corporation, then thereafter the amount of such other securities so obtainable shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in Section 7 hereof and all other provisions of this Warrant with respect to Common Stock shall apply on like terms to any such other shares or other securities.
9.Restrictions on Offer and Sale. THE OFFER AND SALE OF THE SECURITIES REPRESENTED HEREBY AND THE WARRANT SHARES HAVE NOT BEEN REGISTERED WITH OR APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY SECURITIES COMMISSION OR REGULATORY AUTHORITY AND ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).
THE SALE, ASSIGNMENT, CONVEYANCE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS WARRANT AND THE WARRANT SHARES IS PROHIBITED EXCEPT (1) PURSUANT TO REGISTRATION UNDER THE ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT, AND ANY CERTIFICATE REPRESENTING WARRANT SHARES SHALL BEAR A LEGEND TO SUCH EFFECT.
10.Notices to Warrant Holders. Nothing contained in this Warrant shall be construed as conferring upon the Warrant Holder the right to vote or to consent or to receive notice as a shareholder in respect of any meetings of shareholders for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of this Warrant and its exercise, any of the following events shall occur:
(a)The Company shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or
(b)The Company shall offer to all the holders of its Common Stock any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any warrant, right or option to subscribe therefor; or
(c)A dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business shall be proposed; or
(d)There shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with another entity;
then, in anyone or more of said events, the Company shall give written notice of such event at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the shareholders entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, warrants or options, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be. Failure to give such notice or any defect therein shall not affect the validity of any action taken in connection with the declaration or payment of any such dividend or distribution, or the issuance of any convertible or exchangeable securities or subscription rights, warrants or options, or any proposed dissolution, liquidation, winding up or sale.
11.Notices.
(a)All communications under this Warrant shall be in writing and shall be mailed by certified mail, postage prepaid, return receipt requested, or telecopied with confirmation of receipt or delivered by hand or by overnight delivery service:
| If to the Company at: | SKY QUARRY INC. |
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(b)Any notice so addressed, when mailed by registered or certified mail shall be deemed to be given three days after so mailed, when telecopied shall be deemed to be given when transmitted, or when delivered by hand or overnight shall be deemed to be given when hand delivered or on the day following deposit with the overnight delivery service.
12.Successors. All the covenants and provisions of this Warrant by or for the benefit of the Warrant Holder shall inure to the benefit of his successors and assigns hereunder.
13.Termination. This Warrant (and the right to purchase Warrant Shares upon exercise hereof) will terminate at 5PM MST on September 12, 2029 [five years after the date of issuance hereof].
14.Governing Law. This Warrant shall be deemed to be made under the laws of the State of Delaware and for all purposes shall be construed in accordance with the laws of said State, excluding choice of law principles thereof.
15.Entire Agreement, Amendment, Waiver. This Warrant and all attachments hereto and all incorporation by references set forth herein, set forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. This Warrant may be amended, the Company may take any action herein prohibited or omit to take any action herein required to be performed by it, and any breach of any covenant, agreement, warranty or representation may be waived, only if the Company has obtained the written consent or waiver of the Warrant Holder. No course of dealing between or among any persons having any interest in this Warrant will be deemed effective to modify, amend or discharge any part of this Warrant or any rights or obligations of any person under or by reason of this Warrant.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of this 27 day of August 2024.
| SKY QUARRY INC. | |
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| By: | /s/ David Sealock |
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| Name: David Sealock |
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| Title: CEO |
WARRANT EXERCISE FORM
(To be executed upon exercise Warrant)
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT TO PURCHASE COMMON STOCK
SKY QUARRY INC.
The undersigned holder hereby exercises the right to purchase __________ of the shares of Common Stock (“Warrant Shares”) of SKY QUARRY INC., a Delaware corporation (the “Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
1.Exercise and Payment of Exercise Price for Cash. The Holder hereby elects to exercise an aggregate of __________ Warrants at an exercise price of $_ per share. In exchange therefore, the Holder shall pay the aggregate exercise price of $_______to the Company in exchange for an aggregate of __________Warrant Shares, in accordance with the terms of the Warrant.
2.At the time such Holder was offered the Warrant, it was, at the date hereof, and on each date on which it exercises any Warrants, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act of 1933, as amended, or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Buyer is not required to be registered as a broker-dealer under Section 15 of the Securities Exchange Act of 1934, as amended.
The undersigned requests that a certificate for the Warrant Shares being purchased be registered in the name of __________ and that such certificate be delivered to __________
________________________________________________________.
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FORM OF WARRANT
SKY QUARRY INC.
SKY QUARRY INC., a Delaware corporation (the “Company”), hereby certifies that, for value received, Dual Dreams LLC (the “Warrant Holder,” which term includes its successors and registered assigns) is entitled, subject to the terms set forth below, to purchase an aggregate of 50,000 shares of common stock, par value $0.0001 per share, of the Company (the “Common Stock”) at an exercise price of $4.50 per share (the “Exercise Price”) pursuant to the terms and conditions of this warrant (“Warrant”). The shares of Common Stock purchasable upon exercise of this Warrant, as adjusted from time to time pursuant to the provisions of this Warrant, are sometimes hereinafter referred to as the “Warrant Shares”.
WHEREAS; on June 13, 2024, the Warrant Holder entered into a promissory note in the principal amount of
$122,500 (“Principal Amount”) with 2020 Resources LLC (“2020 Resources”), a wholly-owned subsidiary of the Company, and in connection with the Note the Company agreed to issue this Warrant to the Warrant Holder.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Company and the Warrant Holder hereby agree as follows:
1.Vesting of Warrant. Upon issuance hereof, this Warrant shall vest immediately and all of the Warrant Shares which the Registered Holder is permitted to acquire pursuant to this Warrant shall be immediately exercisable.
2.Exercise of Warrant. This Warrant may be exercised in whole or in part, subject to the terms and conditions of Section 1, during the sixty month period commencing on June 13, 2024 and expiring at 5:00 p.m., Mountain Standard time, on June 13, 2029 (the “Exercise Term”), or if such day is a day on which banking institutions in the State of Utah are authorized by law to close, then on the next succeeding day which shall not be such a day, by presentation and surrender of this Warrant evidencing the Warrant to be exercised to the Company at its principal office or at the office of its stock transfer agent, if any, with the Exercise Form annexed hereto duly executed, and payment of the Exercise Price. If any Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation and presentment of the Exercise Form, execute and deliver a new Warrant or Warrants, as the case may be, evidencing the rights of the Warrant Holder thereof to purchase the balance of the shares purchasable thereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise together with the payment of the Exercise Price, the Warrant Holder shall be deemed to be the holder of record of the Warrant Shares, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Warrant Holder. Certificates for the Warrant Shares shall be delivered to the Warrant Holder within a reasonable time following the exercise of this Warrant in accordance with the foregoing.
3.Reservation and Listing of Shares. The Company hereby agrees that at all times while the Warrants are outstanding there shall be reserved for issuance and delivery upon exercise of this Warrant, such number of shares of its Common Stock as shall be required for issuance and delivery upon exercise of this Warrant.
4.Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. Any fraction of a share called for upon any exercise hereof shall be canceled. The Warrant Holder, by his acceptance hereof, expressly waives any right to receive any fractional share of stock or fractional Warrant upon exercise of this Warrant.
5.Exchange, Transfer, Assignment or Loss of Warrant. This Warrant is exchangeable, without expense, at the option of the Warrant Holder, upon presentation and surrender of this Warrant evidencing such Warrants to the Company at its office or at the office of its stock transfer agent, if any, for other Warrants of different denominations entitling the Warrant Holder thereof to purchase in the aggregate the same number of shares of Common Stock as are purchasable thereunder at the same respective Exercise Price. Subject to Section 9 hereof, upon surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with a duly executed assignment form and funds sufficient to pay the applicable transfer tax, if any, the Company shall, without charge, execute and deliver new Warrant(s) in the name of the assignee named in such instrument of
assignment and the original Warrant shall promptly be canceled. This Warrant may be divided or combined with other Warrants which carry the same rights upon presentation of this Warrant at the office of the Company or at the office of its stock transfer agent, if any, together with a written notice signed by the Warrant Holder hereof specifying the names and denominations in which new Warrants are to be issued. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver new Warrants of like tenor and date.
6.Rights of the Warrant Holder. The Warrant Holder shall not, by virtue hereof, be entitled to any rights of a shareholder of the Company until exercise of any Warrants.
7.Adjustments of Purchase Price and Number of Shares.
(a)Subdivision and Combination. If the Company shall at any time subdivide or combine the outstanding shares of Common Stock by way of stock split, reverse stock split or the like, the Exercise Price shall forthwith be proportionately increased or decreased.
(b)Adjustment in Number of Shares. Upon each adjustment of the Exercise Price pursuant to the provisions of paragraph 7(a), the number of shares of Common Stock issuable upon the exercise of this Warrant shall be adjusted to the nearest full share of Common Stock by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.
(c)Reclassification, Consolidation, Merger, etc. In case of any reclassification or change of the outstanding shares of Common Stock (other than a change in par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in the case of any consolidation of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding shares of Common Stock, except a change as a result of a subdivision or combination of such shares or a change in par value, as aforesaid), or in the case of a sale or conveyance to another corporation of all or a substantial part of the property of the Company, the Warrant Holder shall thereafter have the right to purchase the kind and number of shares of stock and other securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance as if the Warrant Holder were the owner of the shares of Common Stock underlying this Warrant immediately prior to any such events at a price equal to the product of (x) the number of shares issuable upon exercise of this Warrant and (y) the Exercise Price in effect immediately prior to the record date for such reclassification, change, consolidation, merger, sale or conveyance as if such Warrant Holder had exercised this Warrant.
(d)Dividends and Other Distributions with Respect to Outstanding Securities. In the event that the Company shall at any time prior to the exercise of all Warrants declare a dividend (other than a dividend consisting solely of shares of Common Stock or a cash dividend or distribution payable out of current or retained earnings) or otherwise distribute to the holders of its Common Stock any monies, assets, property, rights, evidences of indebtedness, securities (other than shares of Common Stock), whether issued by the Company or by another person or entity, or any other thing of value, the Warrant Holder of the unexercised Warrants shall thereafter be entitled, in addition to the shares of Common Stock or other securities receivable upon the exercise thereof, to receive, upon the exercise of such Warrants, the same monies, property, assets, rights, evidences of indebtedness, securities or any other thing of value that they would have been entitled to receive at the time of such dividend or distribution. At the time of any such dividend or distribution, the Company shall make appropriate reserves to ensure the timely performance of the provisions of this Subsection 7(d).
(e)Warrant After Adjustment. Irrespective of any change pursuant to this Section 7 in the Exercise Price or in the number, kind or class of shares or other securities or other property obtainable upon exercise of this Warrant, this Warrant may continue to express as the Exercise Price and as the number of shares obtainable upon exercise, the same price and number of shares as are stated herein.
(f)Statement of Calculation. Whenever the Exercise Price shall be adjusted pursuant to the provisions of this Section 7, the Company shall forthwith file at its principal office, a statement signed by an executive officer of the Company specifying the adjusted Exercise Price determined as above provided in such section. Such statement shall show in reasonable detail the method of calculation of such adjustment and the facts requiring the adjustment and upon which the calculation is based. The Company shall forthwith cause a notice setting forth the adjusted Exercise Price to be sent by certified mail, return receipt requested, postage prepaid, to the Warrant Holder.
8.Definition of “Common Stock”. For the purpose of this Warrant, the term “Common Stock” shall mean, in addition to the class of stock designated as the Common Stock, $.0001 par value, of the Company on the date hereof, any class of stock resulting from successive changes or reclassifications of the Common Stock consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. If at any time, as a result of an adjustment made pursuant to one or more of the provisions of Section 7 hereof, the shares of stock or other securities or property obtainable upon exercise of this Warrant shall include securities of the Company other than shares of Common Stock or securities of another corporation, then thereafter the amount of such other securities so obtainable shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in Section 7 hereof and all other provisions of this Warrant with respect to Common Stock shall apply on like terms to any such other shares or other securities.
9.Restrictions on Offer and Sale. THE OFFER AND SALE OF THE SECURITIES REPRESENTED HEREBY AND THE WARRANT SHARES HAVE NOT BEEN REGISTERED WITH OR APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY SECURITIES COMMISSION OR REGULATORY AUTHORITY AND ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).
THE SALE, ASSIGNMENT, CONVEYANCE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS WARRANT AND THE WARRANT SHARES IS PROHIBITED EXCEPT (1) PURSUANT TO REGISTRATION UNDER THE ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT, AND ANY CERTIFICATE REPRESENTING WARRANT SHARES SHALL BEAR A LEGEND TO SUCH EFFECT.
10.Notices to Warrant Holders. Nothing contained in this Warrant shall be construed as conferring upon the Warrant Holder the right to vote or to consent or to receive notice as a shareholder in respect of any meetings of shareholders for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of this Warrant and its exercise, any of the following events shall occur:
(a)The Company shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or
(b)The Company shall offer to all the holders of its Common Stock any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any warrant, right or option to subscribe therefor; or
(c)A dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business shall be proposed; or
(d)There shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with another entity;
then, in anyone or more of said events, the Company shall give written notice of such event at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the shareholders entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, warrants or options, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of closing the transfer books, as the case may be. Failure to give such notice or any defect therein shall not affect the validity of any action taken in connection with the declaration or payment of any such
dividend or distribution, or the issuance of any convertible or exchangeable securities or subscription rights, warrants or options, or any proposed dissolution, liquidation, winding up or sale.
11.Notices.
(a)All communications under this Warrant shall be in writing and shall be mailed by certified mail, postage prepaid, return receipt requested, or telecopied with confirmation of receipt or delivered by hand or by overnight delivery service:
| If to the Company at: | SKY QUARRY INC. Attn: President |
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| 707 West 700 S., Suite 101 Woods Cross, Utah 84087 |
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| If to the Warrant Holder at: |
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| Dual Dreams LLC |
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(b)Any notice so addressed, when mailed by registered or certified mail shall be deemed to be given three days after so mailed, when telecopied shall be deemed to be given when transmitted, or when delivered by hand or overnight shall be deemed to be given when hand delivered or on the day following deposit with the overnight delivery service.
12.Successors. All the covenants and provisions of this Warrant by or for the benefit of the Warrant Holder shall inure to the benefit of his successors and assigns hereunder.
13.Termination. This Warrant (and the right to purchase Warrant Shares upon exercise hereof) will terminate at 5PM MST on June 13, 2029 [five years after the date of issuance hereof].
14.Governing Law. This Warrant shall be deemed to be made under the laws of the State of Delaware and for all purposes shall be construed in accordance with the laws of said State, excluding choice of law principles thereof.
15.Entire Agreement, Amendment, Waiver. This Warrant and all attachments hereto and all incorporation by references set forth herein, set forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. This Warrant may be amended, the Company may take any action herein prohibited or omit to take any action herein required to be performed by it, and any breach of any covenant, agreement, warranty or representation may be waived, only if the Company has obtained the written consent or waiver of the Warrant Holder. No course of dealing between or among any persons having any interest in this Warrant will be deemed effective to modify, amend or discharge any part of this Warrant or any rights or obligations of any person under or by reason of this Warrant.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of this 13th day of June, 2024.
| SKY QUARRY INC. | |
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| By: | /s/ David Sealock |
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| Name: David Sealock |
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| Title: CEO |
WARRANT EXERCISE FORM
(To be executed upon exercise Warrant)
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THIS WARRANT TO PURCHASE COMMON STOCK
SKY QUARRY INC.
The undersigned holder hereby exercises the right to purchase _________of the shares of Common Stock (“Warrant Shares”) of SKY QUARRY INC., a Delaware corporation (the “Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
1.Exercise and Payment of Exercise Price for Cash. The Holder hereby elects to exercise an aggregate of _________ Warrants at an exercise price of $ ___ per share. In exchange therefore, the Holder shall pay the aggregate exercise price of $_______to the Company in exchange for an aggregate of _________Warrant Shares, in accordance with the terms of the Warrant.
2.At the time such Holder was offered the Warrant, it was, at the date hereof, and on each date on which it exercises any Warrants, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act of 1933, as amended, or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Buyer is not required to be registered as a broker-dealer under Section 15 of the Securities Exchange Act of 1934, as amended.
The undersigned requests that a certificate for the Warrant Shares being purchased be registered in the name of _________ and that such certificate be delivered to _________
________________________________________________________.
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SKY QUARRY INC.
SKY QUARRY INC., a Delaware corporation (the “Company”), hereby certifies that, for value received, Clearview Funding, LLC, a Connecticut limited liability company (the “Warrant Holder,” which term includes its successors and registered assigns), is entitled, subject to the terms set forth below, to purchase an aggregate of 100,000 shares of common stock, par value $0.0001 per share, of the Company (the “Common Stock”) at an exercise price of $4.50 per share (the “Exercise Price”) pursuant to the terms and conditions of this warrant (“Warrant”). The shares of Common Stock purchasable upon exercise of this Warrant, as adjusted from time to time pursuant to the provisions of this Warrant, are sometimes hereinafter referred to as the “Warrant Shares”.
WHEREAS, the Warrant Holder entered into several receivables purchase agreements (“Agreements”) with the Company, pursuant to which Warrant Holder advanced funds to the Company pursuant to the Agreements;
WHEREAS, the Warrant Holder agreed to a modification of certain payments to be made by the Company to Warrant Holder pursuant to the Agreements and in consideration therefore the Company agreed to issue this Warrant to the Warrant Holder;
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Company and the Warrant Holder hereby agree as follows:
1.Vesting of Warrant. Upon issuance hereof, this Warrant shall vest immediately and all of the Warrant Shares which the Registered Holder is permitted to acquire pursuant to this Warrant shall be immediately exercisable.
2.Exercise of Warrant. This Warrant may be exercised in whole or in part, subject to the terms and conditions of Section 1, during the sixty month period commencing on June 3, 2024 and expiring at 5:00 p.m., Mountain Standard time, on June 3, 2029 (the “Exercise Term”), or if such day is a day on which banking institutions in the State of Utah are authorized by law to close, then on the next succeeding day which shall not be such a day, by presentation and surrender of this Warrant evidencing the Warrant to be exercised to the Company at its principal office or at the office of its stock transfer agent, if any, with the Exercise Form annexed hereto duly executed, and payment of the Exercise Price. If any Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation and presentment of the Exercise Form, execute and deliver a new Warrant or Warrants, as the case may be, evidencing the rights of the Warrant Holder thereof to purchase the balance of the shares purchasable thereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise together with the payment of the Exercise Price, the Warrant Holder shall be deemed to be the holder of record of the Warrant Shares, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Warrant Holder. Certificates for the Warrant Shares shall be delivered to the Warrant Holder within a reasonable time (not to exceed ten (10) business days) following the exercise of this Warrant in accordance with the foregoing.
3.Reservation and Listing of Shares. The Company hereby agrees that at all times while the Warrants are outstanding there shall be reserved for issuance and delivery upon exercise of this Warrant, such number of shares of its Common Stock as shall be required for issuance and delivery upon exercise of this Warrant.
4.Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. Any fraction of a share called for upon any exercise hereof shall be canceled. The Warrant Holder, by his acceptance hereof, expressly waives any right to receive any fractional share of stock or fractional Warrant upon exercise of this Warrant.
5.Exchange, Transfer, Assignment or Loss of Warrant. This Warrant is exchangeable, without expense, at the option of the Warrant Holder, upon presentation and surrender of this Warrant evidencing such Warrants to the Company at its office or at the office of its stock transfer agent, if any, for other Warrants of different denominations entitling the Warrant Holder thereof to purchase in the aggregate the same number of shares of Common Stock as are purchasable thereunder at the same respective Exercise Price. Subject to Section 9 hereof, upon surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with
a duly executed assignment form and funds sufficient to pay the applicable transfer tax, if any, the Company shall, without charge, execute and deliver new Warrant(s) in the name of the assignee named in such instrument of assignment and the original Warrant shall promptly be canceled. This Warrant may be divided or combined with other Warrants which carry the same rights upon presentation of this Warrant at the office of the Company or at the office of its stock transfer agent, if any, together with a written notice signed by the Warrant Holder hereof specifying the names and denominations in which new Warrants are to be issued. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver new Warrants of like tenor and date.
6.Rights of the Warrant Holder. The Warrant Holder shall not, by virtue hereof, be entitled to any rights of a shareholder of the Company until exercise of any Warrants.
7.Adjustments of Purchase Price and Number of Shares.
(a)Subdivision and Combination. If the Company shall at any time subdivide or combine the outstanding shares of Common Stock by way of stock split, reverse stock split or the like, the Exercise Price shall forthwith be proportionately increased or decreased.
(b)Adjustment in Number of Shares. Upon each adjustment of the Exercise Price pursuant to the provisions of paragraph 7(a), the number of shares of Common Stock issuable upon the exercise of this Warrant shall be adjusted to the nearest full share of Common Stock by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.
(c)Reclassification, Consolidation, Merger, etc. In case of any reclassification or change of the outstanding shares of Common Stock (other than a change in par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in the case of any consolidation of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding shares of Common Stock, except a change as a result of a subdivision or combination of such shares or a change in par value, as aforesaid), or in the case of a sale or conveyance to another corporation of all or a substantial part of the property of the Company, the Warrant Holder shall thereafter have the right to purchase the kind and number of shares of stock and other securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance as if the Warrant Holder were the owner of the shares of Common Stock underlying this Warrant immediately prior to any such events at a price equal to the product of (x) the number of shares issuable upon exercise of this Warrant and (y) the Exercise Price in effect immediately prior to the record date for such reclassification, change, consolidation, merger, sale or conveyance as if such Warrant Holder had exercised this Warrant.
(d)Dividends and Other Distributions with Respect to Outstanding Securities. In the event that the Company shall at any time prior to the exercise of all Warrants declare a dividend (other than a dividend consisting solely of shares of Common Stock or a cash dividend or distribution payable out of current or retained earnings) or otherwise distribute to the holders of its Common Stock any monies, assets, property, rights, evidences of indebtedness, securities (other than shares of Common Stock), whether issued by the Company or by another person or entity, or any other thing of value, the Warrant Holder of the unexercised Warrants shall thereafter be entitled, in addition to the shares of Common Stock or other securities receivable upon the exercise thereof, to receive, upon the exercise of such Warrants, the same monies, property, assets, rights, evidences of indebtedness, securities or any other thing of value that they would have been entitled to receive at the time of such dividend or distribution. At the time of any such dividend or distribution, the Company shall make appropriate reserves to ensure the timely performance of the provisions of this Subsection 7(d).
(e)Warrant After Adjustment. Irrespective of any change pursuant to this Section 7 in the Exercise Price or in the number, kind or class of shares or other securities or other property obtainable upon exercise of this Warrant, this Warrant may continue to express as the Exercise Price and as the number of shares obtainable upon exercise, the same price and number of shares as are stated herein.
(f)Statement of Calculation. Whenever the Exercise Price shall be adjusted pursuant to the provisions of this Section 7, the Company shall forthwith file at its principal office, a statement signed by an executive officer of the Company specifying the adjusted Exercise Price determined as above provided in such section. Such statement shall show in reasonable detail the method of calculation of such adjustment and the facts requiring the adjustment and upon which the calculation is based. The Company shall forthwith cause a notice setting forth the adjusted Exercise Price to be sent by certified mail, return receipt requested, postage prepaid, to the Warrant Holder.
8.Definition of “Common Stock”. For the purpose of this Warrant, the term “Common Stock” shall mean, in addition to the class of stock designated as the Common Stock, $.0001 par value, of the Company on the date hereof, any class of stock resulting from successive changes or reclassifications of the Common Stock consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. If at any time, as a result of an adjustment made pursuant to one or more of the provisions of Section 7 hereof, the shares of stock or other securities or property obtainable upon exercise of this Warrant shall include securities of the Company other than shares of Common Stock or securities of another corporation, then thereafter the amount of such other securities so obtainable shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in Section 7 hereof and all other provisions of this Warrant with respect to Common Stock shall apply on like terms to any such other shares or other securities.
9.Restrictions on Offer and Sale. THE OFFER AND SALE OF THE SECURITIES REPRESENTED HEREBY AND THE WARRANT SHARES HAVE NOT BEEN REGISTERED WITH OR APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY SECURITIES COMMISSION OR REGULATORY AUTHORITY AND ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).
THE SALE, ASSIGNMENT, CONVEYANCE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS WARRANT AND THE WARRANT SHARES IS PROHIBITED EXCEPT (1) PURSUANT TO REGISTRATION UNDER THE ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT, AND ANY CERTIFICATE REPRESENTING WARRANT SHARES SHALL BEAR A LEGEND TO SUCH EFFECT.
10.Notices to Warrant Holders. Nothing contained in this Warrant shall be construed as conferring upon the Warrant Holder the right to vote or to consent or to receive notice as a shareholder in respect of any meetings of shareholders for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of this Warrant and its exercise, any of the following events shall occur:
(a)The Company shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or
(b)The Company shall offer to all the holders of its Common Stock any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any warrant, right or option to subscribe therefor; or
(c)A dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business shall be proposed; or
(d)There shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with another entity;
then, in anyone or more of said events, the Company shall give written notice of such event at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the shareholders entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, warrants or options, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be. Failure to give such notice or any defect therein shall not affect the validity of any action taken in connection with the declaration or payment of any such dividend or distribution, or the issuance of any convertible or exchangeable securities or subscription rights, warrants or options, or any proposed dissolution, liquidation, winding up or sale.
11.Notices.
(a)All communications under this Warrant shall be in writing and shall be mailed by certified mail, postage prepaid, return receipt requested, or telecopied with confirmation of receipt or delivered by hand or by overnight delivery service:
If to the Company at:SKY QUARRY INC. Attn: President
707 West 700 S., Suite 101 Woods Cross, Utah 84087
If to the Warrant Holder at:
Clearview Funding, LLC Attn: Rui Figueiredo, CEO
(b)Any notice so addressed, when mailed by registered or certified mail shall be deemed to be given three days after so mailed, when telecopied shall be deemed to be given when transmitted, or when delivered by hand or overnight shall be deemed to be given when hand delivered or on the day following deposit with the overnight delivery service.
12.Successors. All the covenants and provisions of this Warrant by or for the benefit of the Warrant Holder shall inure to the benefit of his successors and assigns hereunder.
13.Termination. This Warrant (and the right to purchase Warrant Shares upon exercise hereof) will terminate at 5PM MST on June 3, 2029 [three years after the date of issuance hereof].
14.Governing Law. This Warrant shall be deemed to be made under the laws of the State of Delaware and for all purposes shall be construed in accordance with the laws of said State, excluding choice of law principles thereof.
15.Entire Agreement, Amendment, Waiver. This Warrant and all attachments hereto and all incorporation by references set forth herein, set forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. This Warrant may be amended, the Company may take any action herein prohibited or omit to take any action herein required to be performed by it, and any breach of any covenant, agreement, warranty or representation may be waived, only if the Company has obtained the written consent or waiver of the Warrant Holder. No course of dealing between or among any persons having any interest in this Warrant will be deemed effective to modify, amend or discharge any part of this Warrant or any rights or obligations of any person under or by reason of this Warrant.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of this 3 day of June, 2024.
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| By: | /s/ David Sealock |
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| Name: David Sealock |
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| Title: CEO |
WARRANT EXERCISE FORM
(To be executed upon exercise Warrant)
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT TO PURCHASE COMMON STOCK
SKY QUARRY INC.
The undersigned holder hereby exercises the right to purchase _________of the shares of Common Stock (“Warrant Shares”) of SKY QUARRY INC., a Delaware corporation (the “Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
1.Exercise and Payment of Exercise Price for Cash. The Holder hereby elects to exercise an aggregate of _________Warrants at an exercise price of $___ per share. In exchange therefore, the Holder shall pay the aggregate exercise price of $ to the Company in exchange for an aggregate of _________Warrant Shares, in accordance with the terms of the Warrant.
2.At the time such Holder was offered the Warrant, it was, at the date hereof, and on each date on which it exercises any Warrants, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act of 1933, as amended, or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Buyer is not required to be registered as a broker-dealer under Section 15 of the Securities Exchange Act of 1934, as amended.
The undersigned requests that a certificate for the Warrant Shares being purchased be registered in the name of __________ and that such certificate be delivered to __________
________________________________________________________.
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SKY QUARRY INC.
SKY QUARRY INC., a Delaware corporation (the “Company”), hereby certifies that, for value received, Libertas Funding, LLC, a Connecticut limited liability company (the “Warrant Holder,” which term includes its successors and registered assigns), is entitled, subject to the terms set forth below, to purchase an aggregate of 375,000 shares of common stock, par value $0.0001 per share, of the Company (the “Common Stock”) at an exercise price of $4.50 per share (the “Exercise Price”) pursuant to the terms and conditions of this warrant (“Warrant”). The shares of Common Stock purchasable upon exercise of this Warrant, as adjusted from time to time pursuant to the provisions of this Warrant, are sometimes hereinafter referred to as the “Warrant Shares”.
WHEREAS, the Warrant Holder entered into several receivables purchase agreements (“Agreements”) with the Company, pursuant to which Warrant Holder advanced funds to the Company pursuant to the Agreements;
WHEREAS, the Warrant Holder agreed to a modification of certain payments to be made by the Company to Warrant Holder pursuant to the Agreements and in consideration therefore the Company agreed to issue this Warrant to the Warrant Holder;
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Company and the Warrant Holder hereby agree as follows:
1.Vesting of Warrant. Upon issuance hereof, this Warrant shall vest immediately and all of the Warrant Shares which the Registered Holder is permitted to acquire pursuant to this Warrant shall be immediately exercisable.
2.Exercise of Warrant. This Warrant may be exercised in whole or in part, subject to the terms and conditions of Section 1, during the sixty month period commencing on May 17, 2024 and expiring at 5:00 p.m., Mountain Standard time, on May 17, 2029 (the “Exercise Term”), or if such day is a day on which banking institutions in the State of Utah are authorized by law to close, then on the next succeeding day which shall not be such a day, by presentation and surrender of this Warrant evidencing the Warrant to be exercised to the Company at its principal office or at the office of its stock transfer agent, if any, with the Exercise Form annexed hereto duly executed, and payment of the Exercise Price. If any Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation and presentment of the Exercise Form, execute and deliver a new Warrant or Warrants, as the case may be, evidencing the rights of the Warrant Holder thereof to purchase the balance of the shares purchasable thereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise together with the payment of the Exercise Price, the Warrant Holder shall be deemed to be the holder of record of the Warrant Shares, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Warrant Holder. Certificates for the Warrant Shares shall be delivered to the Warrant Holder within a reasonable time (not to exceed ten (10) business days) following the exercise of this Warrant in accordance with the foregoing.
3.Reservation and Listing of Shares. The Company hereby agrees that at all times while the Warrants are outstanding there shall be reserved for issuance and delivery upon exercise of this Warrant, such number of shares of its Common Stock as shall be required for issuance and delivery upon exercise of this Warrant.
4.Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. Any fraction of a share called for upon any exercise hereof shall be canceled. The Warrant Holder, by his acceptance hereof, expressly waives any right to receive any fractional share of stock or fractional Warrant upon exercise of this Warrant.
5.Exchange, Transfer, Assignment or Loss of Warrant. This Warrant is exchangeable, without expense, at the option of the Warrant Holder, upon presentation and surrender of this Warrant evidencing such Warrants to the Company at its office or at the office of its stock transfer agent, if any, for other Warrants of different denominations entitling the Warrant Holder thereof to purchase in the aggregate the same number of shares of Common Stock as are purchasable thereunder at the same respective Exercise Price. Subject to Section 9 hereof, upon surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with
a duly executed assignment form and funds sufficient to pay the applicable transfer tax, if any, the Company shall, without charge, execute and deliver new Warrant(s) in the name of the assignee named in such instrument of assignment and the original Warrant shall promptly be canceled. This Warrant may be divided or combined with other Warrants which carry the same rights upon presentation of this Warrant at the office of the Company or at the office of its stock transfer agent, if any, together with a written notice signed by the Warrant Holder hereof specifying the names and denominations in which new Warrants are to be issued. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver new Warrants of like tenor and date.
6.Rights of the Warrant Holder. The Warrant Holder shall not, by virtue hereof, be entitled to any rights of a shareholder of the Company until exercise of any Warrants.
7.Adjustments of Purchase Price and Number of Shares.
(a)Subdivision and Combination. If the Company shall at any time subdivide or combine the outstanding shares of Common Stock by way of stock split, reverse stock split or the like, the Exercise Price shall forthwith be proportionately increased or decreased.
(b)Adjustment in Number of Shares. Upon each adjustment of the Exercise Price pursuant to the provisions of paragraph 7(a), the number of shares of Common Stock issuable upon the exercise of this Warrant shall be adjusted to the nearest full share of Common Stock by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.
(c)Reclassification, Consolidation, Merger, etc. In case of any reclassification or change of the outstanding shares of Common Stock (other than a change in par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in the case of any consolidation of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding shares of Common Stock, except a change as a result of a subdivision or combination of such shares or a change in par value, as aforesaid), or in the case of a sale or conveyance to another corporation of all or a substantial part of the property of the Company, the Warrant Holder shall thereafter have the right to purchase the kind and number of shares of stock and other securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance as if the Warrant Holder were the owner of the shares of Common Stock underlying this Warrant immediately prior to any such events at a price equal to the product of (x) the number of shares issuable upon exercise of this Warrant and (y) the Exercise Price in effect immediately prior to the record date for such reclassification, change, consolidation, merger, sale or conveyance as if such Warrant Holder had exercised this Warrant.
(d)Dividends and Other Distributions with Respect to Outstanding Securities. In the event that the Company shall at any time prior to the exercise of all Warrants declare a dividend (other than a dividend consisting solely of shares of Common Stock or a cash dividend or distribution payable out of current or retained earnings) or otherwise distribute to the holders of its Common Stock any monies, assets, property, rights, evidences of indebtedness, securities (other than shares of Common Stock), whether issued by the Company or by another person or entity, or any other thing of value, the Warrant Holder of the unexercised Warrants shall thereafter be entitled, in addition to the shares of Common Stock or other securities receivable upon the exercise thereof, to receive, upon the exercise of such Warrants, the same monies, property, assets, rights, evidences of indebtedness, securities or any other thing of value that they would have been entitled to receive at the time of such dividend or distribution. At the time of any such dividend or distribution, the Company shall make appropriate reserves to ensure the timely performance of the provisions of this Subsection 7(d).
(e)Warrant After Adjustment. Irrespective of any change pursuant to this Section 7 in the Exercise Price or in the number, kind or class of shares or other securities or other property obtainable upon exercise of this Warrant, this Warrant may continue to express as the Exercise Price and as the number of shares obtainable upon exercise, the same price and number of shares as are stated herein.
(f)Statement of Calculation. Whenever the Exercise Price shall be adjusted pursuant to the provisions of this Section 7, the Company shall forthwith file at its principal office, a statement signed by an executive officer of the Company specifying the adjusted Exercise Price determined as above provided in such section. Such statement shall show in reasonable detail the method of calculation of such adjustment and the facts requiring the adjustment and upon which the calculation is based. The Company shall forthwith cause a notice setting forth the adjusted Exercise Price to be sent by certified mail, return receipt requested, postage prepaid, to the Warrant Holder.
8.Definition of “Common Stock”. For the purpose of this Warrant, the term “Common Stock” shall mean, in addition to the class of stock designated as the Common Stock, $.0001 par value, of the Company on the date hereof, any class of stock resulting from successive changes or reclassifications of the Common Stock consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. If at any time, as a result of an adjustment made pursuant to one or more of the provisions of Section 7 hereof, the shares of stock or other securities or property obtainable upon exercise of this Warrant shall include securities of the Company other than shares of Common Stock or securities of another corporation, then thereafter the amount of such other securities so obtainable shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in Section 7 hereof and all other provisions of this Warrant with respect to Common Stock shall apply on like terms to any such other shares or other securities.
9.Restrictions on Offer and Sale. THE OFFER AND SALE OF THE SECURITIES REPRESENTED HEREBY AND THE WARRANT SHARES HAVE NOT BEEN REGISTERED WITH OR APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY SECURITIES COMMISSION OR REGULATORY AUTHORITY AND ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).
THE SALE, ASSIGNMENT, CONVEYANCE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS WARRANT AND THE WARRANT SHARES IS PROHIBITED EXCEPT (1) PURSUANT TO REGISTRATION UNDER THE ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT, AND ANY CERTIFICATE REPRESENTING WARRANT SHARES SHALL BEAR A LEGEND TO SUCH EFFECT.
10.Notices to Warrant Holders. Nothing contained in this Warrant shall be construed as conferring upon the Warrant Holder the right to vote or to consent or to receive notice as a shareholder in respect of any meetings of shareholders for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of this Warrant and its exercise, any of the following events shall occur:
(a)The Company shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or
(b)The Company shall offer to all the holders of its Common Stock any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any warrant, right or option to subscribe therefor; or
(c)A dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business shall be proposed; or
(d)There shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with another entity;
then, in anyone or more of said events, the Company shall give written notice of such event at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the shareholders entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, warrants or options, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be. Failure to give such notice or any defect therein shall not affect the validity of any action taken in connection with the declaration or payment of any such dividend or distribution, or the issuance of any convertible or exchangeable securities or subscription rights, warrants or options, or any proposed dissolution, liquidation, winding up or sale.
11.Notices.
(a)All communications under this Warrant shall be in writing and shall be mailed by certified mail, postage prepaid, return receipt requested, or telecopied with confirmation of receipt or delivered by hand or by overnight delivery service:
If to the Company at:SKY QUARRY INC. Attn: President
707 West 700 S., Suite 101 Woods Cross, Utah 84087
If to the Warrant Holder at:
Libertas Funding, LLC Attn: Randy Saluck, CEO
411 West Putnam Avenue, Suite 220
Greenwich, CT 06830
(b)Any notice so addressed, when mailed by registered or certified mail shall be deemed to be given three days after so mailed, when telecopied shall be deemed to be given when transmitted, or when delivered by hand or overnight shall be deemed to be given when hand delivered or on the day following deposit with the overnight delivery service.
12.Successors. All the covenants and provisions of this Warrant by or for the benefit of the Warrant Holder shall inure to the benefit of his successors and assigns hereunder.
13.Termination. This Warrant (and the right to purchase Warrant Shares upon exercise hereof) will terminate at 5PM MST on May 1, 2027 [three years after the date of issuance hereof].
14.Governing Law. This Warrant shall be deemed to be made under the laws of the State of Delaware and for all purposes shall be construed in accordance with the laws of said State, excluding choice of law principles thereof.
15.Entire Agreement, Amendment, Waiver. This Warrant and all attachments hereto and all incorporation by references set forth herein, set forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. This Warrant may be amended, the Company may take any action herein prohibited or omit to take any action herein required to be performed by it, and any breach of any covenant, agreement, warranty or representation may be waived, only if the Company has obtained the written consent or waiver of the Warrant Holder. No course of dealing between or among any persons having any interest in this Warrant will be deemed effective to modify, amend or discharge any part of this Warrant or any rights or obligations of any person under or by reason of this Warrant.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of this 17 day of May, 2024.
| SKY QUARRY INC. | |
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| By: | /s/ David Sealock |
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| Name: David Sealock |
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| Title: CEO |
WARRANT EXERCISE FORM
(To be executed upon exercise Warrant)
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT TO PURCHASE COMMON STOCK
SKY QUARRY INC.
The undersigned holder hereby exercises the right to purchase __________ of the shares of Common Stock (“Warrant Shares”) of SKY QUARRY INC., a Delaware corporation (the “Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
1. Exercise and Payment of Exercise Price for Cash. The Holder hereby elects to exercise an aggregate of __________ Warrants at an exercise price of $___ per share. In exchange therefore, the Holder shall pay the aggregate exercise price of $__________ to the Company in exchange for an aggregate of ________ Warrant Shares, in accordance with the terms of the Warrant.
2.At the time such Holder was offered the Warrant, it was, at the date hereof, and on each date on which it exercises any Warrants, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act of 1933, as amended, or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Buyer is not required to be registered as a broker-dealer under Section 15 of the Securities Exchange Act of 1934, as amended.
The undersigned requests that a certificate for the Warrant Shares being purchased be registered in the name of __________ and that such certificate be delivered to __________
________________________________________________________.
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SKY QUARRY INC.
SKY QUARRY INC., a Delaware corporation (the “Company”), hereby certifies that, for value received, Lendspark Corporation (the “Warrant Holder,” which term includes its successors and registered assigns) is entitled, subject to the terms set forth below, to purchase an aggregate of 100,000 shares of common stock, par value $0.0001 per share, of the Company (the “Common Stock”) at an exercise price of $4.50 per share (the “Exercise Price”) pursuant to the terms and conditions of this warrant (“Warrant”). The shares of Common Stock purchasable upon exercise of this Warrant, as adjusted from time to time pursuant to the provisions of this Warrant, are sometimes hereinafter referred to as the “Warrant Shares”.
WHEREAS, the Warrant Holder entered into several business loan and security agreement (“Agreement”)
with the Company, pursuant to which Warrant Holder advanced funds to the Company pursuant to the Agreement;
WHEREAS, the Warrant Holder agreed to a modification of certain payments to be made by the Company to Warrant Holder pursuant to the Agreement and in consideration therefore the Company agreed to issue this Warrant to the Warrant Holder;
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Company and the Warrant Holder hereby agree as follows:
1.Vesting of Warrant. Upon issuance hereof, this Warrant shall vest immediately and all of the Warrant Shares which the Registered Holder is permitted to acquire pursuant to this Warrant shall be immediately exercisable.
2.Exercise of Warrant. This Warrant may be exercised in whole or in part, subject to the terms and conditions of Section 1, during the thirty-six month period commencing on May 17, 2024 and expiring at 5:00 p.m., Mountain Standard time, on May 17, 2027 (the “Exercise Term”), or if such day is a day on which banking institutions in the State of Utah are authorized by law to close, then on the next succeeding day which shall not be such a day, by presentation and surrender of this Warrant evidencing the Warrant to be exercised to the Company at its principal office or at the office of its stock transfer agent, if any, with the Exercise Form annexed hereto duly executed, and payment of the Exercise Price. If any Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation and presentment of the Exercise Form, execute and deliver a new Warrant or Warrants, as the case may be, evidencing the rights of the Warrant Holder thereof to purchase the balance of the shares purchasable thereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise together with the payment of the Exercise Price, the Warrant Holder shall be deemed to be the holder of record of the Warrant Shares, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Warrant Holder. Certificates for the Warrant Shares shall be delivered to the Warrant Holder within a reasonable time following the exercise of this Warrant in accordance with the foregoing.
3.Reservation and Listing of Shares. The Company hereby agrees that at all times while the Warrants are outstanding there shall be reserved for issuance and delivery upon exercise of this Warrant, such number of shares of its Common Stock as shall be required for issuance and delivery upon exercise of this Warrant.
4.Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. Any fraction of a share called for upon any exercise hereof shall be canceled. The Warrant Holder, by his acceptance hereof, expressly waives any right to receive any fractional share of stock or fractional Warrant upon exercise of this Warrant.
5.Exchange, Transfer, Assignment or Loss of Warrant. This Warrant is exchangeable, without expense, at the option of the Warrant Holder, upon presentation and surrender of this Warrant evidencing such Warrants to the Company at its office or at the office of its stock transfer agent, if any, for other Warrants of different denominations entitling the Warrant Holder thereof to purchase in the aggregate the same number of shares of Common Stock as are purchasable thereunder at the same respective Exercise Price. Subject to Section 9 hereof, upon surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with a duly executed assignment form and funds sufficient to pay the applicable transfer tax, if any, the Company shall,
without charge, execute and deliver new Warrant(s) in the name of the assignee named in such instrument of assignment and the original Warrant shall promptly be canceled. This Warrant may be divided or combined with other Warrants which carry the same rights upon presentation of this Warrant at the office of the Company or at the office of its stock transfer agent, if any, together with a written notice signed by the Warrant Holder hereof specifying the names and denominations in which new Warrants are to be issued. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver new Warrants of like tenor and date.
6.Rights of the Warrant Holder. The Warrant Holder shall not, by virtue hereof, be entitled to any rights of a shareholder of the Company until exercise of any Warrants.
7.Adjustments of Purchase Price and Number of Shares.
(a)Subdivision and Combination. If the Company shall at any time subdivide or combine the outstanding shares of Common Stock by way of stock split, reverse stock split or the like, the Exercise Price shall forthwith be proportionately increased or decreased.
(b)Adjustment in Number of Shares. Upon each adjustment of the Exercise Price pursuant to the provisions of paragraph 7(a), the number of shares of Common Stock issuable upon the exercise of this Warrant shall be adjusted to the nearest full share of Common Stock by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.
(c)Reclassification, Consolidation, Merger, etc. In case of any reclassification or change of the outstanding shares of Common Stock (other than a change in par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in the case of any consolidation of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding shares of Common Stock, except a change as a result of a subdivision or combination of such shares or a change in par value, as aforesaid), or in the case of a sale or conveyance to another corporation of all or a substantial part of the property of the Company, the Warrant Holder shall thereafter have the right to purchase the kind and number of shares of stock and other securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance as if the Warrant Holder were the owner of the shares of Common Stock underlying this Warrant immediately prior to any such events at a price equal to the product of (x) the number of shares issuable upon exercise of this Warrant and (y) the Exercise Price in effect immediately prior to the record date for such reclassification, change, consolidation, merger, sale or conveyance as if such Warrant Holder had exercised this Warrant.
(d)Dividends and Other Distributions with Respect to Outstanding Securities. In the event that the Company shall at any time prior to the exercise of all Warrants declare a dividend (other than a dividend consisting solely of shares of Common Stock or a cash dividend or distribution payable out of current or retained earnings) or otherwise distribute to the holders of its Common Stock any monies, assets, property, rights, evidences of indebtedness, securities (other than shares of Common Stock), whether issued by the Company or by another person or entity, or any other thing of value, the Warrant Holder of the unexercised Warrants shall thereafter be entitled, in addition to the shares of Common Stock or other securities receivable upon the exercise thereof, to receive, upon the exercise of such Warrants, the same monies, property, assets, rights, evidences of indebtedness, securities or any other thing of value that they would have been entitled to receive at the time of such dividend or distribution. At the time of any such dividend or distribution, the Company shall make appropriate reserves to ensure the timely performance of the provisions of this Subsection 7(d).
(e)Warrant After Adjustment. Irrespective of any change pursuant to this Section 7 in the Exercise Price or in the number, kind or class of shares or other securities or other property obtainable upon exercise of this Warrant, this Warrant may continue to express as the Exercise Price and as the number of shares obtainable upon exercise, the same price and number of shares as are stated herein.
(f)Statement of Calculation. Whenever the Exercise Price shall be adjusted pursuant to the provisions of this Section 7, the Company shall forthwith file at its principal office, a statement signed by an executive officer of the Company specifying the adjusted Exercise Price determined as above provided in such section. Such statement shall show in reasonable detail the method of calculation of such adjustment and the facts requiring the adjustment and upon which the calculation is based. The Company shall forthwith cause a notice setting forth the adjusted Exercise Price to be sent by certified mail, return receipt requested, postage prepaid, to the Warrant Holder.
8.Definition of “Common Stock”. For the purpose of this Warrant, the term “Common Stock” shall mean, in addition to the class of stock designated as the Common Stock, $.0001 par value, of the Company on the date hereof, any class of stock resulting from successive changes or reclassifications of the Common Stock consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. If at any time, as a result of an adjustment made pursuant to one or more of the provisions of Section 7 hereof, the shares of stock or other securities or property obtainable upon exercise of this Warrant shall include securities of the Company other than shares of Common Stock or securities of another corporation, then thereafter the amount of such other securities so obtainable shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in Section 7 hereof and all other provisions of this Warrant with respect to Common Stock shall apply on like terms to any such other shares or other securities.
9.Restrictions on Offer and Sale. THE OFFER AND SALE OF THE SECURITIES REPRESENTED HEREBY AND THE WARRANT SHARES HAVE NOT BEEN REGISTERED WITH OR APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY SECURITIES COMMISSION OR REGULATORY AUTHORITY AND ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).
THE SALE, ASSIGNMENT, CONVEYANCE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS WARRANT AND THE WARRANT SHARES IS PROHIBITED EXCEPT (1) PURSUANT TO REGISTRATION UNDER THE ACT OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT, AND ANY CERTIFICATE REPRESENTING WARRANT SHARES SHALL BEAR A LEGEND TO SUCH EFFECT.
10.Notices to Warrant Holders. Nothing contained in this Warrant shall be construed as conferring upon the Warrant Holder the right to vote or to consent or to receive notice as a shareholder in respect of any meetings of shareholders for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of this Warrant and its exercise, any of the following events shall occur:
(a)The Company shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or
(b)The Company shall offer to all the holders of its Common Stock any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any warrant, right or option to subscribe therefor; or
(c)A dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business shall be proposed; or
(d)There shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with another entity;
then, in anyone or more of said events, the Company shall give written notice of such event at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the shareholders entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, warrants or options, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be. Failure to give such notice or any defect therein shall not affect the validity of any action taken in connection with the declaration or payment of any such dividend or distribution, or the issuance of any convertible or exchangeable securities or subscription rights, warrants or options, or any proposed dissolution, liquidation, winding up or sale.
11.Notices.
(a)All communications under this Warrant shall be in writing and shall be mailed by certified mail, postage prepaid, return receipt requested, or telecopied with confirmation of receipt or delivered by hand or by overnight delivery service:
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(b)Any notice so addressed, when mailed by registered or certified mail shall be deemed to be given three days after so mailed, when telecopied shall be deemed to be given when transmitted, or when delivered by hand or overnight shall be deemed to be given when hand delivered or on the day following deposit with the overnight delivery service.
12.Successors. All the covenants and provisions of this Warrant by or for the benefit of the Warrant Holder shall inure to the benefit of his successors and assigns hereunder.
13.Termination. This Warrant (and the right to purchase Warrant Shares upon exercise hereof) will terminate at 5PM MST on May 2, 2027 [three years after the date of issuance hereof].
14.Governing Law. This Warrant shall be deemed to be made under the laws of the State of Delaware and for all purposes shall be construed in accordance with the laws of said State, excluding choice of law principles thereof.
15.Entire Agreement, Amendment, Waiver. This Warrant and all attachments hereto and all incorporation by references set forth herein, set forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. This Warrant may be amended, the Company may take any action herein prohibited or omit to take any action herein required to be performed by it, and any breach of any covenant, agreement, warranty or representation may be waived, only if the Company has obtained the written consent or waiver of the Warrant Holder. No course of dealing between or among any persons having any interest in this Warrant will be deemed effective to modify, amend or discharge any part of this Warrant or any rights or obligations of any person under or by reason of this Warrant.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of this 17 day of May, 2024.
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| By: | /s/ David Sealock |
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WARRANT EXERCISE FORM
(To be executed upon exercise Warrant)
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT TO PURCHASE COMMON STOCK
SKY QUARRY INC.
The undersigned holder hereby exercises the right to purchase __________of the shares of Common Stock (“Warrant Shares”) of SKY QUARRY INC., a Delaware corporation (the “Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.
1.Exercise and Payment of Exercise Price for Cash. The Holder hereby elects to exercise an aggregate of __________Warrants at an exercise price of $___ per share. In exchange therefore, the Holder shall pay the aggregate exercise price of $ to the Company in exchange for an aggregate of __________Warrant Shares, in accordance with the terms of the Warrant.
2.At the time such Holder was offered the Warrant, it was, at the date hereof, and on each date on which it exercises any Warrants, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act of 1933, as amended, or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Buyer is not required to be registered as a broker-dealer under Section 15 of the Securities Exchange Act of 1934, as amended.
The undersigned requests that a certificate for the Warrant Shares being purchased be registered in the name of __________ and that such certificate be delivered to __________
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THE REGISTERED HOLDER OF THIS PURCHASE WARRANT AGREES BY ITS ACCEPTANCE HEREOF, THAT SUCH HOLDER WILL NOT FOR A PERIOD OF ONE HUNDRED EIGHTY (180) DAYS FOLLOWING OCTOBER 9, 2024, WHICH IS THE CLOSING DATE OF THE OFFERING TO WHICH THIS WARRANT RELATES: (A) SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE WARRANT TO ANYONE OTHER THAN OFFICERS OR PARTNERS OF DIGITAL OFFERING, LLC, OR AN UNDERWRITER, PLACEMENT AGENT, OR A SELECTED DEALER PARTICIPATING IN THE OFFERING FOR WHICH THIS PURCHASE WARRANT WAS ISSUED TO THE PLACEMENT AGENT AS CONSIDERATION (THE “OFFERING”), OR (II) A BONA FIDE OFFICER, PARTNER OR REGISTERED REPRESENTATIVE OF ANY SUCH UNDERWRITER, PLACEMENT AGENT OR SELECTED DEALER, EACH OF WHOM SHALL HAVE AGREED TO THE RESTRICTIONS CONTAINED HEREIN, IN ACCORDANCE WITH FINRA CONDUCT RULE 5110(E)(1), OR (B) CAUSE THIS PURCHASE WARRANT OR THE SECURITIES ISSUABLE HEREUNDER TO BE THE SUBJECT OF ANY HEDGING, SHORT SALE, DERIVATIVE, PUT OR CALL TRANSACTION THAT WOULD RESULT IN THE EFFECTIVE ECONOMIC DISPOSITION OF THIS PURCHASE WARRANT OR THE SECURITIES HEREUNDER, EXCEPT AS PROVIDED FOR IN FINRA RULE 5110(E)(2).
THIS PURCHASE WARRANT IS NOT EXERCISABLE PRIOR TO OCTOBER 9, 2024 (THE DATE OF ISSUANCE), AND IT WILL BE VOID AFTER 5:00 P.M., EASTERN TIME, AUGUST 8, 2029 (THE DATE THAT IS FIVE YEARS FROM COMMENCEMENT OF SALES OF SHARES OF COMMON STOCK IN THE OFFERING).
COMMON STOCK PURCHASE WARRANT
For the Purchase of 25,714 Shares of Common Stock of
Sky Quarry Inc.
1.Purchase Warrant. THIS CERTIFIES THAT, in consideration of funds duly paid by or on behalf of Digital Offering, LLC (the “Holder” or “Digital Offering”), as registered owner of this Purchase Warrant, to Sky Quarry Inc., a Delaware corporation (the “Company”), Holder is entitled, at any time or from time to time beginning October 9, 2024 (the “Effective Date”), and at or before 5:00 p.m., Eastern time, August 8, 2029 (the “Expiration Date”), but not thereafter, to subscribe for, purchase and receive, in whole or in part, up to 25,714 shares (the “Shares”) of common stock of the Company, $0.0001 par value per share (the “Common Stock”), subject to adjustment as provided in Section 6 hereof. If the Expiration Date is a day on which banking institutions are authorized by law to close, then this Purchase Warrant may be exercised on the next succeeding day which is not such a day in accordance with the terms herein. During the period ending on the Expiration Date, the Company agrees not to take any action that would terminate this Purchase Warrant. This Purchase Warrant is initially exercisable at $7.50 per Share; provided, however, that upon the occurrence of any of the events specified in Section 6 hereof, the rights granted by this Purchase Warrant, including the exercise price per Share and the number of Shares to be received upon such exercise, shall be adjusted as therein specified. The term “Exercise Price” shall mean the initial exercise price or the adjusted exercise price, depending on the context.
2.Exercise.
2.1Exercise Form. In order to exercise this Purchase Warrant, the exercise form attached hereto must be duly executed and completed and delivered to the Company, together with this Purchase Warrant and payment of the Exercise Price for the Shares being purchased payable in cash by wire transfer of immediately available funds to an account designated by the Company or by certified check or official bank check. If the subscription rights represented hereby shall not be exercised at or before 5:00 p.m., Eastern time, on the Expiration Date, this Purchase Warrant shall become and be void without further force or effect, and all rights represented hereby shall cease and expire. Each exercise hereof shall be irrevocable.
2.2Cashless Exercise. In lieu of exercising this Purchase Warrant by payment of cash or check payable to the order of the Company pursuant to Section 2.1 above, Holder may elect to receive the number of Shares equal to the value of this Purchase Warrant (or the portion thereof being exercised), by surrender of this
Purchase Warrant to the Company, together with the exercise form attached hereto, in which event the Company will issue to Holder Shares in accordance with the following formula:
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Y | = | The number of Shares for which the Purchase Warrant is being exercised; |
A | = | The fair market value of one Share; and |
B | = | The Exercise Price. |
For purposes of this Section 2.2, the fair market value means, for any date, the price determined by the first of the following clauses that applies: (a) if the shares of Common Stock are then listed or quoted on a national securities exchange, the OTCQB or the OTCQX, the value shall be deemed to be (i) the closing price of the Common Stock on the trading day immediately preceding the date of the applicable exercise notice if such exercise notice is (1) both executed and delivered pursuant to Section 2.1 hereof on a day that is not a trading day or (2) both executed and delivered pursuant to Section 2.1 hereof on a trading day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(68) of Regulation NMS promulgated under the federal securities laws) on such trading day, or (ii) the closing price of the Common Stock on the date of the applicable exercise notice if the date of such exercise notice is a trading day and such exercise notice is both executed and delivered pursuant to Section
2.1 hereof after the close of “regular trading hours” on such trading day, (b) if the shares of Common Stock are not then listed or quoted for trading on a national securities exchange, the OTCQB or OTCQX and if prices for the shares of Common Stock are then reported on the “Pink Tier” of OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices) (the “OTC Markets Group”), the value shall be deemed to be the highest intra-day or closing price on any trading day on the Pink Tier on which the shares of Common Stock are then quoted as reported by OTC Markets Group (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)) during the five trading days preceding the exercise, or (c) in all other cases, the fair market value of a share of shares of Common Stock as determined by an independent appraiser selected in good faith by Holder and reasonably acceptable to the Company.
2.3Legend. Each certificate for the securities purchased under this Purchase Warrant shall bear a legend as follows unless such securities have been registered under the Securities Act of 1933, as amended (the “Act”):
“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Act”), or applicable state law. Neither the securities nor any interest therein may be offered for sale, sold or otherwise transferred except pursuant to an effective registration or offering statement under the Act, or pursuant to an exemption from registration under the Act and applicable state law which, in the opinion of counsel to the Company, is available.”
2.4Resale of Shares. Holder and the Company acknowledge that as of the date hereof the Staff of the Division of Corporation Finance of the SEC has published Compliance & Disclosure Interpretation 528.04 in the Securities Act Rules section thereof, stating that the holder of securities issued in connection with a public offering may not rely upon Rule 144 promulgated under the Act to establish an exemption from registration requirements under Section 4(a)(1) under the Act, but may nonetheless apply Rule 144 constructively for the resale of such shares in the following manner: (a) provided that six months has elapsed since the last sale under the registration or offering statement, an underwriter or finder may resell the securities in accordance with the provisions of Rule 144(c), (e), and (f), except for the notice requirement; (b) a purchaser of the shares from an underwriter receives restricted securities unless the sale is made with an appropriate, current prospectus, or unless the sale is made pursuant to the conditions contained in (a) above; (c) a purchaser of the shares from an underwriter who receives restricted securities may include the underwriter’s holding period, provided that the underwriter or finder is not an affiliate of the issuer; and (d) if an underwriter transfers the shares to its employees, the employees may tack the firm’s holding period for purposes of Rule 144(d), but they must aggregate sales of the distributed shares with those of other employees, as well as those of the underwriter or finder, for a six-month period from the date of the transfer to the employees. Holder and the Company also acknowledge that the Staff of the Division of Corporation Finance of the SEC has advised in various no-action letters that the holding period associated with securities issued without registration to a service provider commences upon the completion of the services, which the Company agrees and acknowledges shall be the final closing of the Offering, and that Rule 144(d)(3)(ii)
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provides that securities acquired from the issuer solely in exchange for other securities of the same issuer shall be deemed to have been acquired at the same time as the securities surrendered for conversion (which the Company agrees is the date of the initial issuance of this Purchase Warrant). In the event that following a reasonably-timed written request by Holder to transfer the Shares in accordance with Compliance & Disclosure Interpretation
528.04 counsel for the Company in good faith concludes that Compliance & Disclosure Interpretation 528.04 no longer may be relied upon as a result of changes in applicable laws, regulations, or interpretations of the SEC Division of Corporation Finance, or as a result of judicial interpretations not known by the Company or its counsel on the date hereof, then the Company shall promptly, and in any event within five (5) business days following the request, provide written notice to Holder of such determination. As a condition to giving such notice, the parties shall negotiate in good faith a single demand registration right pursuant to an agreement in customary form reasonably acceptable to the parties; provided that notwithstanding anything to the contrary, the obligations of the Company pursuant to this Section 2 shall terminate on the fifth anniversary of the Effective Date. In the absence of such conclusion by counsel for the Company, the Company shall, upon such a request of Holder given no earlier than six months after the closing of the Offering, instruct its transfer agent to permit the transfer of such shares in accordance with Compliance & Disclosure Interpretation 528.04, provided that Holder has provided such documentation as shall be reasonably be requested by the Company to establish compliance with the conditions of Compliance & Disclosure Interpretation 528.04. Notwithstanding anything to the contrary, pursuant to FINRA Rule 5110(g)(8)(B)-(C), Holder shall not be entitled to more than one demand registration right hereunder and the duration of the registration rights hereunder shall not exceed five years from the date of commencement of sales in the Offering.
3.Transfer.
3.1General Restrictions. The registered Holder of this Purchase Warrant agrees by his, her or its acceptance hereof, that such Holder will not for a period of one hundred eighty (180) days following the Effective Date: (a) sell, transfer, assign, pledge or hypothecate this Purchase Warrant to anyone other than: (i) Digital Offering or an underwriter, placement agent, or a selected dealer participating in the Offering, or (ii) a bona fide officer, partner or registered representative of Digital Offering or of any such underwriter, placement agent or selected dealer, in each case in accordance with FINRA Corporate Financing Rule 5110(e)(1), or (b) cause this Purchase Warrant or the securities issuable hereunder to be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of this Purchase Warrant or the securities hereunder, except as provided for in FINRA Rule 5110(e)(2). After 180 days after the Effective Date, transfers to others may be made subject to compliance with or exemptions from applicable securities laws. In order to make any permitted assignment, Holder must deliver to the Company the assignment form attached hereto duly executed and completed, together with the Purchase Warrant and payment of all transfer taxes, if any, payable in connection therewith. The Company shall within five (5) Business Days transfer this Purchase Warrant on the books of the Company and shall execute and deliver a new Purchase Warrant or Purchase Warrants of like tenor to the appropriate assignee(s) expressly evidencing the right to purchase the aggregate number of Shares purchasable hereunder or such portion of such number as shall be contemplated by any such assignment.
3.2Restrictions Imposed by the Act. The securities evidenced by this Purchase Warrant shall not be transferred unless and until: (i) if required by applicable law, the Company has received the opinion of counsel for the Company that the securities may be transferred pursuant to an exemption from registration under the Act and applicable state securities laws, or (ii) a offering statement or a post-qualification amendment to the offering Statement relating to the offer and sale of such securities has been filed by the Company and declared qualified by the U.S. Securities and Exchange Commission (the ”Commission”) and compliance with applicable state securities law has been established.
4.Piggyback Offering Rights.
4.1Grant of Right. In the event that there is not an qualified offering statement covering the Purchase Warrant or the underlying Shares, whenever the Company proposes to register or qualify any of its shares of Common Stock under the Act after the date hereof (other than (i) a registration effected solely to implement an employee benefit plan or a transaction to which Rule 145 of the Act is applicable, or (ii) a registration or offering statement on Form S-4, S-8 or any successor form thereto or another form not available for registering the Shares issuable upon exercise of this Purchase Warrant) for sale to the public, , whether for its own account or for the account of one or more shareholders of the Company (a “Piggyback Offering”), the Company shall give prompt written notice (in any event no later than ten (10) Business Days prior to the filing of such registration or offering statement ) to Holder of the Company’s intention to effect such a registration or qualification and, subject to the remaining provisions of this Section 4.1, shall include in such registration or qualification such number of Shares
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underlying this Purchase Warrant (the “Registrable Securities”) that Holder and any other holder of this duly transferred Purchase Warrant pursuant to Section 3 or other holders of interests in or represented by this Purchase Warrant as otherwise permitted by this Purchase Warrant (collectively, the “Holders”) have (within ten (10) Business Days of the respective Holder’s receipt of such notice) requested in writing (including such number) to be included within such registration or qualification. If a Piggyback Offering is an underwritten offering and the managing underwriter advises the Company that it has determined in good faith that marketing factors require a limit on the number of shares of Common Stock to be included in such registration (or qualification), including all Shares issuable upon exercise of this Purchase Warrant (if Holder has elected to include such shares in such Piggyback Offering) and all other shares of Common Stock proposed to be included in such underwritten offering, the Company shall include in such registration (or qualification) (i) first, the number of shares of Common Stock that the Company proposes to issue and sell pursuant to such underwritten offering and (ii) second, the number of shares of Common Stock, if any, requested to be included therein by selling shareholders (including Holder) allocated pro rata among all such persons on the basis of the number of shares of Common Stock then owned by each such person. If any Piggyback Offering is initiated as a primary underwritten offering on behalf of the Company, the Company shall select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such offering. Notwithstanding anything to the contrary, the obligations of the Company pursuant to this Section 4.1 shall terminate on the earlier of (i) the seventh anniversary of the commencement of sales of the Offering and (ii) the date that Rule 144 would allow Holder to sell its Registrable Securities (assuming a cashless exercise of this Purchase Warrant) during any ninety (90) day period, and shall not be applicable so long as the Company’s Offering Statement on Form 1-A covering the Registrable Securities remains qualified at such time. The duration of the Piggyback Offering right shall not exceed seven years from the commencement of sales of the Offering in compliance with FINRA rule 5110(g)(8)(D).
4.2Indemnification. The Company shall indemnify the Holder(s) of the Registrable Securities to be sold pursuant to any registration or offering statement hereunder and each person, if any, who controls such Holders within the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), against all loss, claim, damage, expense or liability (including all reasonable attorneys’ fees and other out-of-pocket expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which any of them may become subject under the Act, the Exchange Act or otherwise, arising from such registration or offering statement but only to the same extent and with the same effect as the provisions pursuant to which the Company has agreed to indemnify Digital Offering contained in the Selling Agency Agreement between Digital Offering and the Company, dated as of August 22, 2024. Holder(s) of the Registrable Securities to be sold pursuant to such registration or offering statement, and their successors and assigns, shall severally, and not jointly, indemnify the Company, against all loss, claim, damage, expense or liability (including all reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which they may become subject under the Act, the Exchange Act or otherwise, arising from information furnished by or on behalf of such Holders, or their successors or assigns, in writing, for specific inclusion in such registration or offering statement to the same extent and with the same effect as the provisions contained in the Selling Agency Agreement pursuant to which Digital Offering has agreed to indemnify the Company.
4.3Exercise of Purchase Warrants. Nothing contained in this Purchase Warrant shall be construed as requiring the Holder(s) to exercise their Purchase Warrants prior to or after the initial filing of any registration (or offering) statement or the effectiveness or qualification thereof.
4.4Documents Delivered to Holders. The Company shall deliver promptly to each Holder participating in the offering requesting the correspondence and memoranda described below, copies of all correspondence between the Commission and the Company, its counsel or auditors and all memoranda relating to discussions with the Commission or its staff with respect to the registration or offering statement and permit each Holder and underwriter to do such investigation, upon reasonable advance notice, with respect to information contained in or omitted from the registration or offering statement as it deems reasonably necessary to comply with applicable securities laws or rules of FINRA. Such investigation shall include access to books, records and properties and opportunities to discuss the business of the Company with its officers and independent auditors, all to such reasonable extent and at such reasonable times, during normal business hours, as any such Holder shall reasonably request.
4.5Underwriting Agreement. The Holders shall be parties to any Underwriting Agreement relating to a Piggyback Offering. Such Holders shall not be required to make any representations or warranties to or agreements with the Company or the underwriters except as they may relate to such Holders, their Shares and the amount and nature of their ownership thereof and their intended methods of distribution.
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4.6Documents to be Delivered by Holder(s). Each of the Holder(s) participating in any of the foregoing offerings shall furnish to the Company a completed and executed questionnaire provided by the Company requesting information customarily sought of selling security holders.
4.7Damages. Should the Company fail to comply with such provisions, the Holder(s) shall, in addition to any other legal or other relief available to the Holder(s), be entitled to obtain specific performance or other equitable (including injunctive) relief against the threatened breach of such provisions or the continuation of any such breach, without the necessity of proving actual damages and without the necessity of posting bond or other security.
5.New Purchase Warrants to be Issued.
5.1Partial Exercise or Transfer. Subject to the restrictions in Section 3 hereof, this Purchase Warrant may be exercised or assigned in whole or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Purchase Warrant for cancellation, together with the duly executed exercise or assignment form and funds sufficient to pay any Exercise Price and/or transfer tax if exercised pursuant to Section 2.1 hereto, the Company shall cause to be delivered to the Holder without charge a new Purchase Warrant of like tenor to this Purchase Warrant in the name of the Holder evidencing the right of the Holder to purchase the number of Shares purchasable hereunder as to which this Purchase Warrant has not been exercised or assigned.
5.2Lost Certificate. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Purchase Warrant and of reasonably satisfactory indemnification or the posting of a bond, determined in the sole discretion of the Company, the Company shall execute and deliver a new Purchase Warrant of like tenor and date. Any such new Purchase Warrant executed and delivered as a result of such loss, theft, mutilation or destruction shall constitute a substitute contractual obligation on the part of the Company.
6.Adjustments.
6.1Adjustments to Exercise Price and Number of Securities. The Exercise Price and the number of Shares underlying the Purchase Warrant shall be subject to adjustment from time to time as hereinafter set forth:
6.1.1Share Dividends; Split Ups. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding Shares is increased by a dividend payable in Shares or by a split up of Shares or other similar event, then, on the effective day thereof, the number of Shares purchasable hereunder shall be increased in proportion to such increase in outstanding Shares, and the Exercise Price shall be proportionately decreased.
6.1.2Aggregation of Shares. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding Shares is decreased by a consolidation, combination or reclassification of Shares or other similar event, then, on the effective date thereof, the number of Shares purchasable hereunder shall be decreased in proportion to such decrease in outstanding Shares, and the Exercise Price shall be proportionately increased.
6.1.3Replacement of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding Shares other than a change covered by Section 6.1.1 or 6.1.2 hereof or that solely affects the par value of such Shares, or in the case of any share reconstruction or amalgamation or consolidation or merger of the Company with or into another corporation (other than a consolidation or share reconstruction or amalgamation or merger in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding Shares), or in the case of any sale or conveyance to another corporation or entity of the property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the Holder of this Purchase Warrant shall have the right thereafter (until the expiration of the right of exercise of this Purchase Warrant) to receive upon the exercise hereof, for the same aggregate Exercise Price payable hereunder immediately prior to such event, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, share reconstruction or amalgamation, or consolidation, or upon a dissolution following any such sale or transfer, by a Holder of the number of Shares of the Company obtainable upon exercise of this Purchase Warrant immediately prior to such event; and if any reclassification also results in a change in Shares covered by Section 6.1.1 or 6.1.2, then such adjustment shall be made pursuant to Sections 6.1.1 and 6.1.2 and this Section 6.1.3. The provisions of
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this Section 6.1.3 shall similarly apply to successive reclassifications, reorganizations, share reconstructions or amalgamations, or consolidations, sales or other transfers.
6.1.4Changes in Form of Purchase Warrant. This form of Purchase Warrant need not be changed because of any change pursuant to this Section 6.1, and Purchase Warrants issued after such change may state the same Exercise Price and the same number of Shares as are stated in the Purchase Warrants initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance of new Purchase Warrants reflecting a required or permissive change shall not be deemed to waive any rights to an adjustment occurring after the Issue Date or the computation thereof.
6.2Substitute Purchase Warrant. In case of any consolidation of the Company with, or share reconstruction or amalgamation or merger of the Company with or into, another corporation (other than a consolidation or share reconstruction or amalgamation or merger which does not result in any reclassification or change of the outstanding Shares), the corporation formed by such consolidation or share reconstruction or amalgamation shall execute and deliver to the Holder a supplemental Purchase Warrant providing that the holder of each Purchase Warrant then outstanding or to be outstanding shall have the right thereafter (until the stated expiration of such Purchase Warrant) to receive, upon exercise of such Purchase Warrant, the kind and amount of shares and other securities and property receivable upon such consolidation or share reconstruction or amalgamation, by a holder of the number of Shares of the Company for which such Purchase Warrant might have been exercised immediately prior to such consolidation, share reconstruction or amalgamation or merger, sale or transfer. Such supplemental Purchase Warrant shall provide for adjustments which shall be identical to the adjustments provided for in this Section 6. The above provision of this Section shall similarly apply to successive consolidations or share reconstructions or amalgamations or mergers.
6.3Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of Shares upon the exercise of the Purchase Warrant, nor shall it be required to issue scrip or pay cash in lieu of any fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up or down, as the case may be, to the nearest whole number of Shares or other securities, properties or rights.
7.Reservation. The Company covenants and agrees that, upon exercise of the Purchase Warrants and payment of the Exercise Price therefor, in accordance with the terms hereby, all Shares and other securities issuable upon such exercise shall be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any shareholder. In the event that the Company determines that it does not have a sufficient number of authorized shares of Common Stock available for issuance upon the exercise of this Purchase Warrant, the Company shall take all actions necessary to increase the number of authorized shares of Common Stock so that the Purchase Warrant can be exercised in full.
8.Certain Notice Requirements.
8.1Holder’s Right to Receive Notice. Nothing herein shall be construed as conferring upon the Holders the right to vote or consent or to receive notice as a shareholder for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of the Purchase Warrants and their exercise, any of the events described in Section 8.2 shall occur, then, in one or more of said events, the Company shall deliver to each Holder a copy of each notice relating to such events given to the other shareholders of the Company at the same time and in the same manner that such notice is given to the shareholders.
8.2Events Requiring Notice. The Company shall be required to give the notice described in this Section 8 upon one or more of the following events: (i) if the Company shall take a record of the holders of its Shares for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company, or (ii) the Company shall offer to all the holders of its Shares any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option, right or warrant to subscribe therefor.
8.3Notice of Change in Exercise Price. The Company shall, promptly after an event requiring a change in the Exercise Price pursuant to Section 6 hereof, send notice to the Holders of such event and change (“Price Notice”). The Price Notice shall describe the event causing the change and the method of calculating same.
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8.4Transmittal of Notices. All notices, requests, consents and other communications under this Purchase Warrant shall be in writing and shall be deemed to have been duly made when hand delivered, or mailed by express mail or private courier service: (i) if to the registered Holder of the Purchase Warrant, to the address of such Holder as shown on the books of the Company, or (ii) if to the Company, to following address or to such other address as the Company may designate by notice to the Holders:
If to the Holder:
1461 Glenneyre Street, Suite D Laguna Beach, CA 92651 Attn.: Gordon McBean
Email:
with a copy (which shall not constitute notice) to:
Bevilacqua PLLC
1050 Connecticut Avenue NW, Suite 500
Washington, DC 20036 Attention: Louis Bevilacqua, Esq. Fax No: (202) 869-0889
If to the Company:
Sky Quarry Inc.
2707 W. 700 S. Suite 101
Woods Cross, UT 84087 Attn.: Chief Executive Officer
Email: mailto:dsealock@skyquarry.com
with a copy (which shall not constitute notice) to:
Clyde Snow & Sessions, P.C. 201 South Main Street, Suite 2200 Salt Lake City, UT 84111
Attn: Brian A. Lebrecht, Esq Email:
9.Miscellaneous.
9.1Amendments. The Company and Digital Offering may from time to time supplement or amend this Purchase Warrant without the approval of any of the Holders in order to cure any ambiguity, to correct or supplement any provision contained herein that may be defective or inconsistent with any other provisions herein, or to make any other provisions in regard to matters or questions arising hereunder that the Company and Digital Offering may deem necessary or desirable and that the Company and Digital Offering deem shall not adversely affect the interest of the Holders. All other modifications or amendments shall require the written consent of and be signed by (i) the Company and (ii) the Holder(s) of Purchase Warrants then-exercisable for at least a majority of the Shares then-exercisable pursuant to all then-outstanding Purchase Warrants.
9.2Headings. The headings contained herein are for the sole purpose of convenience of reference and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Purchase Warrant.
9.3. Entire Agreement. This Purchase Warrant (together with the other agreements and documents being delivered pursuant to or in connection with this Purchase Warrant) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.
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9.4Binding Effect. This Purchase Warrant shall inure solely to the benefit of and shall be binding upon, Holder and the Company and their permitted assignees, respective successors, legal representative and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Purchase Warrant or any provisions herein contained.
9.5Governing Law; Submission to Jurisdiction; Trial by Jury. This Purchase Warrant shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflict of laws principles thereof. The Company hereby agrees that any action, proceeding or claim against it arising out of, or relating in any way to this Purchase Warrant shall be brought and enforced in the courts located in New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 8 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. The Company and the Holder agree that the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys’ fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor. The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its shareholders and affiliates) and the Holder hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
9.6Waiver, etc. The failure of the Company or the Holder to at any time enforce any of the provisions of this Purchase Warrant shall not be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Purchase Warrant or any provision hereof or the right of the Company or any Holder to thereafter enforce each and every provision of this Purchase Warrant. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Purchase Warrant shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment.
9.7Exchange Agreement. As a condition of the Holder’s receipt and acceptance of this Purchase Warrant, Holder agrees that, at any time prior to the complete exercise of this Purchase Warrant by Holder, if the Company and Digital Offering enter into an agreement (“Exchange Agreement”) pursuant to which they agree that all outstanding Purchase Warrants will be exchanged for securities or cash or a combination of both, then Holder shall agree to such exchange and become a party to the Exchange Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused this Purchase Warrant to be signed by its duly authorized officer as of the 9th day of October, 2024.
Sky Quarry Inc.
By: /s/ David Sealock
Name: David Sealock
Title: Chief Executive Officer
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[Form to be used to exercise Purchase Warrant] Date: , 20
The undersigned hereby elects irrevocably to exercise the Purchase Warrant for shares of Common Stock, $0.0001 par value per share (the “Shares”), of Sky Quarry Inc., a Delaware corporation (the “Company”), and hereby makes payment of $ (at the rate of $7.50 per Share) in payment of the Exercise Price pursuant thereto. Please issue the Shares as to which this Purchase Warrant is exercised in accordance with the instructions given below and, if applicable, a new Purchase Warrant representing the number of Shares for which this Purchase Warrant has not been exercised.
or
The undersigned hereby elects irrevocably to convert its right to purchase Shares of the Company under the Purchase Warrant for Shares, as determined in accordance with the following formula:
X | = | Y(A-B) |
|
| A |
Where, |
|
|
X | = | The number of Shares to be issued to Holder; |
Y | = | The number of Shares for which the Purchase Warrant is being exercised; |
A | = | The fair market value of one Share which is equal to $ ; and |
B | = | The Exercise Price which is equal to $6.25 per share |
The undersigned agrees and acknowledges that the calculation set forth above is subject to confirmation by the Company and any disagreement with respect to the calculation shall be resolved by the Company in its sole discretion.
Please issue the Shares as to which this Purchase Warrant is exercised in accordance with the instructions given below and, if applicable, a new Purchase Warrant representing the number of Shares for which this Purchase Warrant has not been converted.
Signature
Signature Guaranteed
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name: |
(Print in Block Letters) |
Address: |
NOTICE: The signature to this form must correspond with the name as written upon the face of the Purchase Warrant without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange.
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[Form to be used to assign Purchase Warrant]
ASSIGNMENT
(To be executed by the registered Holder to effect a transfer of the within Purchase Warrant):
FOR VALUE RECEIVED, does hereby sell, assign and transfer unto the right to purchase shares of Common Stock, $0.0001 par value per share, of Sky Quarry Inc., a Delaware corporation (the “Company”), evidenced by the Purchase Warrant and does hereby authorize the Company to transfer such right on the books of the Company.
Dated: , 20
Signature
Signature Guaranteed
NOTICE: The signature to this form must correspond with the name as written upon the face of the within Purchase Warrant without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange.
SHDOCS:220048055.2
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July 18, 2025
Sky Quarry Inc.
707 W. 700 South, Suite 101
Woods Cross, Utah 84087
Re:Registration Statement on Form S-1
Ladies and Gentlemen:
We have acted as counsel to Sky Quarry Inc., a Delaware corporation (the “Company”), in connection with the preparation and filing of the Company’s registration statement on Form S-1 (the “Registration Statement”), filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the “Act”), and the rules and regulations thereunder, relating to the registration of 13,834,230 shares of common stock of the Company to be sold by the selling stockholder named in the Registration Statement (the “Selling Stockholder”), comprised of (i) 120,000 shares of common stock (the “Note Shares”) issuable upon conversion of a 12% convertible promissory note in the principal amount of $150,000 issued to the Selling Stockholder on May 22, 2025 (the “Note”); (ii) 60,000 shares of common stock (the “Warrant Shares”) issuable upon exercise of a warrant issued to the Selling Stockholder on May 22, 2025 (the “Warrant”) and (iii) up to 13,654,230 shares of common stock that have or may be issued to the Selling Stockholder pursuant to a purchase agreement, dated July 9, 2025, between the Company and the Selling Stockholder (the “Purchase Agreement”), which includes (a) 366,260 shares (the “Initial Commitment Shares”) that were issued to the Selling Stockholder upon execution of the Purchase Agreement, (b) up to 183,131 shares (the “Additional Commitment Shares”) that may be issued to the Selling Stockholder from time to time as consideration for the Selling Stockholder’s purchase of shares of common stock under the Purchase Agreement and (c) up to 13,104,839 shares (the “Purchase Shares,” and together with the Note Shares, the Warrant Shares, the Initial Commitment Shares and the Additional Commitment Shares, the “Shares”) that may be issued and sold to the Selling Stockholder in the future under the Purchase Agreement. This opinion is being furnished in connection with the requirements of Item 601(b)(5) of Regulation S-K under the Act, and no opinion is expressed herein as to any matter pertaining to the contents of the Registration Statement or related prospectus, other than as expressly stated herein with respect to the issue of the Shares.
In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of such records of the Company and such agreements, certificates of public officials, certificates of officers or other representatives of the Company and others, and such other documents, certificates, and records as we have deemed necessary or appropriate as a basis for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity to original documents of all documents submitted to us as copies. We have relied upon the accuracy and completeness of the information, factual matters, representations, and warranties contained in such documents. We have also assumed that the persons identified as officers of the Company are actually serving in such capacity and that the Registration Statement will be declared effective. In our examination of documents, we have assumed that the parties thereto, other than the Company, had the power, corporate or other, to enter into and perform all obligations thereunder and had the due authorization by all requisite action, corporate or other, the execution and delivery by all parties of the documents, and the validity and binding effect thereof on such parties.
Based upon and subject to the foregoing, we are of the opinion that (i) the Note Shares, if and when issued upon conversion of the Note in accordance with its terms, will be legally and validly issued, fully paid and nonassessable; (ii) the Warrant Shares, if and when issued upon exercise of the Warrant in accordance with its terms, will be legally and validly issued, fully paid and nonassessable; (iii) the Initial Commitment Shares were legally and validly issued and are fully paid and nonassessable; and (iv) the Additional Commitment Shares and the Purchase Shares, if and
PG. 2 July 18, 2025
|
|
when issued in accordance the terms of the Purchase Agreement, will be legally and validly issued, fully paid and nonassessable.
The opinions expressed herein are limited to the matters specifically set forth herein and no other opinion shall be inferred beyond the matters expressly stated. We disclaim any undertaking to advise you of any subsequent changes in the facts stated or assumed herein or any changes in applicable law that may come to our attention subsequent to the date the Registration Statement is declared effective.
The opinions we express herein are limited to matters involving the General Corporation Law of the State of Delaware as currently in effect. We express no opinion regarding the effect of the laws of any other jurisdiction or state, including any federal securities laws related to the issuance and sale of the Shares.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and we consent to the reference of our name under the caption “Legal Matters” in the prospectus forming a part of the Registration Statement. In giving the foregoing consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Bevilacqua PLLC
NOTE PURCHASE AGREEMENT
This Note Purchase Agreement (this “Agreement”), dated as of May 22, 2025 is made by and between Sky Quarry Inc., a Delaware corporation (the “Company”), and the investors signatory hereto (the “Purchaser(s)”).
RE CI T A L S :
A.The Company is offering up to $5,000,000 principal amount of 12% Convertible Promissory Notes (“Notes”) to accredited investors (the “Offering”), and the Purchasers have agreed to purchase that amount of Notes specified herein and set forth on the signature page hereto, on the terms and conditions set forth herein;
B.Each Note purchased by a Purchaser is due twenty (24) months after the date of such Note’s issuance;
C.The Company and the Purchaser are executing and delivering this Agreement in reliance upon the exemption from securities registration for offers and sales to accredited investors afforded, inter alia, under Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities Act”), and/or Section 4(2) of the Securities Act.
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
1.Definitions.
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
"Business Day" means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Common Stock” means the Company’s common stock, par value $0.0001 per share.
“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Initial Closing” means the initial closing of the purchase and sale of a Note pursuant to Section
2(a).
“Initial Closing Date” means the day on which the Initial Closing takes place.
“Intellectual Property Rights” shall mean, collectively: (a) all patents and applications therefor (including all continuations, divisionals, continuations-in-part, reissue applications/requests and patents, reexamination applications/requests and reexamined patents, abandoned applications that could be revived or reinstated, lapsed or expired patents that could be reinstated or revived, amended patents, and term-
extended patents), registered trademarks and service marks and applications therefor, domain name registrations and copyright registrations and applications therefor (collectively, “Registered IP”); (b) unregistered trademarks and service marks, trade names, domain names, trade dress, product configurations or other marks, names, logos and slogans embodying business or product goodwill or indications of origin, all translations, adaptations, derivations and combinations thereof, and all goodwill associated with the businesses in which the foregoing are used; (c) inventions (whether patentable or unpatentable and whether or not reduced to practice), discoveries, improvements, ideas, know-how, formulae, methodology, processes, and technology; (d) unregistered copyrights, designs, mask works or other expressions and works of authorship, all moral rights and visual artists’ rights in relation to the foregoing and to registered copyrights and applications therefor, and databases and database rights; (e) proprietary, confidential and other non-public information, and the right in any jurisdiction to limit the use or disclosure thereof (including technical information relating to development, design, manufacture, scheduling, installation, assembly or testing, trade secrets, secret processes and procedures, know-how, business and financial information, and all confidential information of any nature); (f) all computer software and programs (excluding off-the-shelf commercially available systems and computer programs included in purchased or leased equipment); and (g) any other similar property, whether or not embodied in tangible form (including but not limited to technical drawings and specifications, shop drawings, manuals, forms, working notes and memos, market studies, consultants’ reports, technical and laboratory data, notebooks, samples and engineering prototypes).
“Lien” shall have the meaning ascribed to such term in Section 5(d).
“Material Adverse Effect” means any event or circumstance occurring after the date of this Agreement that could have or could reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document.
“Note” means the 12% Convertible Promissory Notes of the Company issued to the Purchaser(s) under this Agreement, in the form attached hereto as Exhibit A.
“Note Shares” means the shares of Common Stock issuable upon conversion of the Note.
“Permitted Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien created by operation of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in the ordinary course of business with respect to a liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings, and (iv) any Liens existing as of the date hereof.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Registration Rights” means the Purchasers right to have the Note Shares and the Warrant Shares registered for resale on Form S-1 within 15 days of the Company selling a minimum of $1,000,000 principal amount of Notes in this Offering.
“Securities” means the Notes, the Note Shares, the Warrants and the Warrant Shares.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsequent Closing” means the closing of the purchase and sale of a Note after the Initial Closing pursuant to Section 2(a).
“Subsequent Closing Date” means the date on which a Subsequent Closing occurs pursuant to Section 2(a).
“Subsidiary” or “Subsidiaries” means, as of the relevant date, any subsidiary of the Company whether now existing or hereafter acquired or created.
“Transaction Documents” means this Agreement, the Notes, the Warrants and all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated herein.
“Warrants” mean the warrants issuable to the Purchasers, whereby the Company will issue a number of warrants to the Purchasers equal to fifty percent (50%) of the number of shares that the Notes are initially convertible into on the date of issuance of the Notes, exercisable into shares of Common Stock at a price equal to $1.25 per share, in the form attached hereto as Exhibit B.
“Warrant Shares” means shares of Common Stock acquired by the Purchaser upon exercise of a Warrant.
2.Initial Closing and Subsequent Closings.
(a)On the Initial Closing Date and on each Subsequent Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchaser(s) agree to purchase, the principal amount of Notes and to receive the Warrants, as set forth on the respective Purchaser’s signature pages hereto. At the Initial Closing and each Subsequent Closing, Purchaser(s) shall deliver the Purchase Price to the Company and the Company shall deliver to the Purchaser(s) the Notes and the Warrants, and the Company and Purchaser(s) shall deliver the other items set forth in Section 3 deliverable at the Initial Closing. Upon satisfaction of the covenants and conditions set forth in Sections 4(a) and (b), the Initial Closing, and each Subsequent Closing, shall occur at the offices of the Company or such other location as the parties shall mutually agree.
3.Deliveries.
(a)On or prior to the Initial Closing Date and, with respect to any Subsequent Closing Date, the Company shall deliver or cause to be delivered to the Purchaser(s) the following:
(i)this Agreement duly executed by the Company;
(ii)a Note payable to the Purchaser(s) in the face value amount set forth on the Purchaser(s) signature page hereto dated as of the Initial Closing Date or the Subsequent Closing Date, as applicable; and
(iii)the Warrant issuable to the Purchaser.
(b)On or prior to the Initial Closing Date and with respect to any Subsequent Closing Date, the Purchaser(s) shall deliver or cause to be delivered to the Company the following:
(i)this Agreement duly executed by the Purchaser(s);
(ii)the Purchaser(s) completed Confidential Purchaser Questionnaire; and
(iii)the principal amount of the Notes subscribed for by Purchaser(s) and set forth on the Purchaser(s) signature page hereto by check or wire transfer to the Company.
4.Closing Conditions.
(a)The obligations of the Company hereunder in connection with the Initial Closing and the Subsequent Closing are subject to the following conditions being met:
(i)the accuracy in all material respects on the Initial Closing Date and, with respect any Subsequent Closing, on such Subsequent Closing Date, of the representations and warranties of the Purchaser contained herein;
(ii)all obligations, covenants and agreements of the Purchaser required to be performed at or prior to the Initial Closing Date and, with respect to any Subsequent Closing, on such Subsequent Closing Date, shall have been performed as of such date; and
(iii)the delivery by the Purchaser of the items set forth in Sections 3(b) of this Agreement in connection with the Initial Closing and each Subsequent Closing, as applicable.
(b)The obligations of the Purchaser hereunder in connection with the Initial Closing and the Subsequent Closing are subject to the following conditions being met:
(i)the accuracy in all material respects on the Initial Closing Date and, with respect any Subsequent Closing, on such the Subsequent Closing Date of the representations and warranties of the Company contained herein;
(ii)all obligations, covenants and agreements of the Company and its officers and directors required to be performed at or prior to the Initial Closing Date and, with respect to any Subsequent Closing, on such Subsequent Closing Date shall have been performed as of such date;
(iii)the delivery by the Company of the items set forth in Sections 3(a) of this Agreement in connection with the Initial Closing and each Subsequent Closing, as applicable; and
(iv)there shall have been no Material Adverse Effect with respect to the Company since the date hereof.
5.Representations and Warranties of the Company. The Company hereby makes to the Purchaser(s) the following representations and warranties:
(a)Subsidiaries. Each of 2020 Resources LLC (“2020 Resources”), a Delaware limited liability company, 2020 Resources (Canada) Ltd. (“2020 Canada”), a corporation incorporated in Alberta, Canada, and Foreland Refining Corporation, a Texas corporation, are wholly-owned subsidiaries of the Company (each, a “Subsidiary” and collectively, the “Subsidiaries”). The Company owns, directly or indirectly, all of the equity interests of each Subsidiary free and clear of any Liens.
(b)Organization and Qualification. The Company and each Subsidiary are duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of their incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any of its Subsidiaries are in violation or default of any of the provisions of its respective articles of organization, company agreements, operating agreements, certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and its Subsidiaries are duly qualified to conduct business and are in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in a Material Adverse Effect, and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
(c)Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, its board of directors or its stockholders in connection therewith. This Agreement has been duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(d)No Conflicts. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company’s certificate or articles of incorporation, bylaws or other organizational or charter documents; or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction (a “Lien”) (except as contemplated herein) upon any of the properties or assets of the Company in connection with, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement, credit facility, debt or other material instrument (evidencing Company debt or otherwise) or other material understanding to which such Company is a party or by which any property or asset of the Company is bound or affected; or (iii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected, except, in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
(e)Issuance of the Notes, Warrants and Warrant Shares. The Notes are duly authorized and, upon the execution of this Agreement by each Purchaser, will be duly and validly issued free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Note. The Warrants and the Warrant Shares, when issued in accordance with the terms of this Agreement and upon exercise of the Warrants, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company shall reserve from its duly authorized capital stock a number of shares of Common Stock for issuance of the Warrant Shares.
(f)Capitalization. The Company has 100,000,000 shares of common stock and 25,000,000 shares of preferred stock authorized for issuance, of which 21,409,620 shares of common stock are issued and outstanding, zero shares of Series A Preferred Stock are issued and outstanding, and zero shares of Series B Convertible Preferred Stock are issued and outstanding, as of May 15, 2025. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. As of May 15, 2025, there were an aggregate of 5,299,112 warrants to acquire shares of the Company’s Common Stock outstanding plus up to 1,666,667 shares of Common Stock that may be issued pursuant to Company’s stock option plan. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no stockholder agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.
(g)Financial Statements. The financial statements of the Company included in its public filings (“SEC Filings”) with the Securities and Exchange Commission (“SEC” or “Commission”) have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.
(h)Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the Company’s most recent financial statements dated March 31, 2025 as filed with the SEC on Form 10-Q: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans or compensation agreements.
(i)Legal proceedings. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Securities Act.
(j)Employee Matters. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. No executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(k)Intellectual Property Rights. The Company and the Subsidiaries have, or have rights to use, the Intellectual Property Rights and similar rights necessary or material for use in connection with their respective businesses and which the failure to so have could have a Material Adverse Effect, and neither the Company nor its Subsidiaries have granted, or agreed to grant, to any Person any options, rights, licenses, restrictions, interests of any kind, or encumbrances relating to the Intellectual Property Rights. Neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(l)Affiliate Transactions. None of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.
(m)Brokerage Fees. There are no brokerage fees or commissions payable by the Company to any broker, financial advisor, placement agent, or investment banker with respect to the transactions contemplated by the Transaction Documents. The Purchaser shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.
(n)Taxes. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been asserted or threatened against the Company or any Subsidiary.
(o)Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.
(p)Private Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 6, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated hereby.
(q)No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 6, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of the Securities Act which would require the registration of any such securities under the Securities Act.
(r)Indebtedness. The financial statements included in the Company’s SEC Filings set forth as of the date thereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments and, there has been no material change thereto. For the purposes of this Agreement, “Indebtedness” means (x) any
liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of
$50,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.
(s)Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or governmental body or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the environment, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.
(t)No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.
(u)Environmental Matters. There are, to the Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company, no past or present violations of Environmental Laws (as defined below), releases of any material into the environment, actions, activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal, state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of the foregoing, nor is any action pending or, to the Company’s knowledge, threatened in connection with any of the foregoing. The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.
6.Representations and Warranties of the Purchaser. Each Purchaser, severally, and not jointly, hereby represents and warrants as of the date hereof to the Company as follows:
(a)Authority. The execution, delivery and performance by such Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate or
similar action on the part of such Purchaser. This Agreement has been duly executed by such Purchaser and, when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(b)Own Account. Such Purchaser (i) understands that the Note, Warrant and Warrant Shares are each a “restricted security” and have not been registered under the Securities Act or any applicable state securities law, (ii) is acquiring the Note, Warrant and Warrant Shares as principal for its own account and not with a view to or for distributing or reselling such Note, Warrant or Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, (iii) has no present intention of distributing any of such securities in violation of the Securities Act or any applicable state securities law and (iv) has no arrangement or understanding with any other persons regarding the distribution of such Note, Warrant and Warrant Shares (this representation and warranty not limiting such Purchaser’s right to sell the Warrant Shares pursuant to a registration statement or otherwise in compliance with applicable federal and state securities laws) in violation of the Securities Act or any applicable state securities law. Such Purchaser is acquiring the Note, Warrant and Warrant Shares in the ordinary course of its business.
(c)Purchaser Status. At the time such Purchaser was offered the Note, Warrant and Warrant Shares, it was, and as of the date hereof it is an “accredited investor” as defined in Rule 501 under the Securities Act.
(d)Experience of Purchaser(s). Purchaser is an accredited investor and as such has the knowledge and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Note, Note Shares, Warrant and Warrant Shares, and has so evaluated the merits and risks of such investment. Purchaser is able to bear the economic risk of an investment in the Note, Note Shares, Warrant and Warrant Shares, and, at the present time, is able to afford a complete loss of such investment.
(e)Confidential Purchaser Questionnaire. All of Purchaser’s information included in the Purchaser’s Confidential Purchaser Questionnaire executed by Purchaser in connection herewith is true, accurate and complete in all material respects.
(f)No General Solicitation. Purchaser is not purchasing the Note, Note Shares, Warrant and Warrant Shares as a result of any advertisement, article, notice or other communication regarding such securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.
(g)Disclosure. The Purchaser has been presented with an opportunity to ask management of the Company any questions about the Company’s business, operations or financial condition that it desires.
7.Registration of the Shares. The Company shall file a registration statement on Form S-1 for the resale of the Note Shares and the Warrant Shares within fifteen (15) days of the Company closing on the sale of a minimum of $1,000,000 in principal amount of the Notes being offered in this Offering.
8.Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have executed a written agreement with the Company regarding the confidentiality and use of such information. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.
9.Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Business Day,
(b) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Business Day or later than 5:30 p.m. (New York City time) on any Business Day, (c) the second Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.
10.Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Purchaser.
11.Execution and Counterparts. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.
12.Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the state of Delaware. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the state of Delaware for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed by the other party
for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
13.Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
14.Headings. The headings in this Agreement are for convenience only, do not constitute a part of the Agreement and shall not be deemed to limit or affect any of the provisions hereof.
15.Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise this Agreement and the transaction documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the transaction documents or any amendments hereto.
16.Entire Agreement. This Transaction Documents, including all schedules hereto, constitutes the entire agreement between the Purchaser(s) and the Company with respect to the Securities, and there are no other agreements, warranties, representations, conditions or covenants, written or oral, express or implied, in respect of, or which affect, the transaction herein contemplated.
[SIGNATURE PAGES FOLLOW]
[PURCHASER SIGNATURE PAGES TO AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Note Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
Principal Amount of Note to be Purchased: $ 150,000 Number of Warrants to be Issued to Purchaser: 60,000
[SIGNATURE PAGES CONTINUE]
[COMPANY SIGNATURE PAGE TO AGREEMENT]
THE COMPANY:
SKY QUARRY INC., a Delaware corporation
By: /s/ Marcus Laun Name: Marcus Laun
Title: Executive Vice President
Address: 707 W. 700 S, Suite 101 Woods Cross, UT 84087
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
Principal Amount: $150,000.00Issue Date: May 22, 2025 12% Convertible Promissory Note
FOR VALUE RECEIVED, SKY QUARRY INC., a Delaware corporation (hereinafter called “Borrower” or “Company”), hereby promises to pay to the order of Varie Asset Management LLC (the “Holder”), address at 22647 Ventura Blvd, Suite 925, Woodland Hills, CA 91364, the sum of One Hundred Fifty Thousand Dollars ($150,000.00) (“Principal Amount”), with interest accruing thereon, payable on May 22, 2027 (the “Maturity Date”), if not sooner paid, converted or modified as permitted herein. This 12% Convertible Promissory Note (the “Note”) is being issued in connection with the Note Purchase Agreement entered into by and between Borrower and Holder dated May 22, 2025 (“Note Purchase Agreement”). Terms not otherwise defined herein shall have the meanings assigned to them in the Note Purchase Agreement.
The following terms shall apply to this Note:
ARTICLE I
GENERAL PROVISIONS
1.1Interest Rate and Interest Payment Date. Except as otherwise provided herein, interest payable on this Note shall accrue at a rate of twelve percent (12.0%) per annum from the Issue Date through the Maturity Date. Interest shall be paid on a semi-annual basis commencing on December 31, 2025. Payment of interest shall be made to the Holder in the form of cash.
1.2Maturity Date. The Maturity Date shall be May 22, 2027 (24 months from date of the issuance of the Note).
1.3Payment Grace Period. The Borrower shall have a ten (10) day grace period to pay any monetary amounts due under this Note. After the Maturity Date and during the pendency of an Event of Default, (as defined in Article IV), the interest rate shall be increased to fourteen percent (14%) per annum.
1.4Miscellaneous. Interest on this Note shall be calculated on the basis of a 365-day year and the actual number of days elapsed. Principal and interest on this Note and other payments in connection with this Note shall be payable at the Holder’s offices as designated above in lawful money of the United States of America in immediately available funds without set-off, deduction or counterclaim. Upon assignment of the interest of Holder in this Note, Borrower shall instead make its payment pursuant to the assignee’s instructions upon receipt of written notice thereof.
ARTICLE II CONVERSION RIGHTS
The Holder shall have the right to convert the principal and any interest due under this Note into Shares of the Borrower’s Common Stock, $0.0001 par value per share (“Common Stock”) as set forth below.
2.1.Conversion into the Borrower’s Common Stock.
(a)The Holder shall have the right at any time commencing on the date hereof until this Note is fully paid, to convert any outstanding and unpaid principal portion of this Note, and accrued interest, at the election of the Holder (the date of giving of such notice of conversion being a “Conversion Date”) into fully paid and non-assessable shares of Common Stock. Upon delivery to the Borrower of a completed Notice of Conversion, a form of which is annexed hereto as Schedule A, Borrower shall issue and deliver to the Holder within five (5) business days after the Conversion Date (such fifth day being the “Delivery Date”) that number of shares of Common Stock for the portion of the Note converted in accordance with the foregoing. The Holder will not be required to surrender the Note to the Borrower until the Note has been fully converted or satisfied. The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing that portion of the principal of the Note and interest, if any, to be converted, by the Conversion Price.
(b)Subject to adjustment as provided in Article 2.1(c) hereof, the conversion price (“Conversion Price”) per share shall be a price equal to $1.25 per share of the Company’s Common Stock.
(c)The Conversion Price and number and kind of shares or other securities to be issued upon conversion determined pursuant to Article 2.1(a), shall be subject to adjustment from time to time upon the happening of certain events while this conversion right remains outstanding, as follows:
A.Merger, Sale of Assets, etc. If (A) the Borrower effects any merger or consolidation of the Borrower with or into another entity, (B) the Borrower effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Borrower or another entity) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, (D) the Borrower consummates a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more persons or entities whereby such other persons or entities acquire more than the 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by such other persons or entities making or party to, or associated or affiliated with the other persons or entities making or party to, such stock purchase agreement or other business combination), (E) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate Common Stock of the Borrower), or (F) the Borrower effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than a reverse merger) (in any such case, a “Fundamental Transaction”), this Note, as to the unpaid principal portion thereof and accrued interest thereon, if any, shall thereafter be deemed to evidence the right to convert into such number and kind of shares or other securities and property as would have been issuable or distributable on account of such Fundamental Transaction, upon or with respect to the securities subject to the conversion right immediately prior to such Fundamental Transaction. The foregoing provision shall similarly apply to successive Fundamental Transactions of a similar nature by any such successor or purchaser. Without limiting the generality of the
foregoing, the anti-dilution provisions of this Article shall apply to such securities of such successor or purchaser after any such Fundamental Transaction.
B.Reclassification, etc. If the Borrower at any time shall, by reclassification or otherwise, change the Common Stock into the same or a different number of securities of any class or classes that may be issued or outstanding, this Note, as to the unpaid principal portion thereof and accrued interest thereon, shall thereafter be deemed to evidence the right to purchase an adjusted number of such securities and kind of securities as would have been issuable as the result of such change with respect to the Common Stock immediately prior to such reclassification or other change.
C.Stock Splits, Combinations and Dividends. If the shares of Common Stock are subdivided or combined into a greater or smaller number of shares of Common Stock, or if a dividend is paid on the Common Stock in shares of Common Stock, the Conversion Price shall be proportionately reduced in case of subdivision of shares or stock dividend or proportionately increased in the case of combination of shares, in each such case by the ratio which the total number of shares of Common Stock outstanding immediately after such event bears to the total number of shares of Common Stock outstanding immediately prior to such event.
D.Sale of Convertible Securities. In the event that the Company sells securities that are convertible into shares of the Company’s Common Stock for cash and the conversion price of such securities is less than the Conversion Price then in effect, the Conversion Price shall be reduced to equal such lower conversion price. This provision shall only be applicable to a sale of securities by the Company in the minimum amount of $250,000.
(d)Whenever the Conversion Price is adjusted pursuant to Article 2.1(c) above, the Borrower shall promptly but not later than the fifth (5th) business day after the effectiveness of the adjustment, provide notice to the Holder setting forth the Conversion Price after such adjustment and setting forth a statement of the facts requiring such adjustment. Failure to provide the foregoing notice is an Event of Default under this Note.
2.2Method of Conversion. This Note may be converted by the Holder in whole or in part as described in Article 2.1(a) hereof. Upon partial conversion of this Note, a new Note containing the same date and provisions of this Note shall, at the request of the Holder, be issued by the Borrower to the Holder for the principal balance of this Note and interest which shall not have been converted or paid.
2.3 Beneficial Ownership Limitation. Notwithstanding anything to the contrary contained in this Note, the Company shall not issue or sell, and the Holder shall not purchase or acquire, any shares of Common Stock under this Note which, when aggregated with all other shares of Common Stock then beneficially owned by the Holder and its affiliates (as calculated pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder), would result in the beneficial ownership by the Holder of more than 9.99% of the then issued and outstanding shares of Common Stock (the “Beneficial Ownership Limitation”). Upon the written or oral request of the Holder, the Company shall promptly (but not later than 24 hours) confirm orally or in writing to the Holder the number of shares of Common Stock then outstanding. The Holder and the Company shall each cooperate in good faith in the determinations required hereby and the application hereof. The Holder’s written certification to the Company of the applicability of the Beneficial Ownership Limitation, and the resulting effect thereof hereunder at any time, shall be conclusive with respect to the applicability thereof and such result absent manifest error.
ARTICLE III REDEMPTION
This Note may be prepaid, in whole or in part, by the Borrower, at any time after the issuance hereof, without the consent of the Holder except as otherwise described in this Note. If the Note is prepaid prior to the date that is twelve months from the date of this Note, the Borrower shall pay a one percent (1%) prepayment penalty to Holder. Any pre-payment penalty shall only be applied to the then outstanding principal amount being prepaid. Borrower shall provide Holder at least thirty (30) days prior written notice of its intent to prepay the Note, during which time Holder may elect to convert all or a portion of the outstanding principal and accrued interest of the Note. Holder shall notify Borrower in writing of its election to convert the Note at least five (5) days prior to the prepayment date, pursuant to which it shall indicate the amount of principal and/or accrued interest it intends to convert into shares of the Borrower’s common stock at the Conversion Price then in effect. If Holder does not timely notify Borrower of its election to convert the Note in accordance herewith, Holder shall not be entitled to convert the Note at such time, however, if the Note is not repaid in full Holder shall continue to have the right to convert the Note in connection with any future repayment notices provided to Holder.
ARTICLE IV EVENT OF DEFAULT
The occurrence of any of the following events of default (“Event of Default”) shall, at the option of the Holder hereof, make all sums of principal and interest then remaining unpaid hereon and all other amounts payable hereunder immediately due and payable, upon demand, without presentment or grace period, all of which hereby are expressly waived, except as set forth below:
4.1Failure to Pay Principal or Interest. The Borrower fails to pay any installment of principal, interest or other sum due under this Note when due in full, subject to a ten (10) day grace period.
4.2Breach of Covenant. The Borrower or any Subsidiary breaches any material covenant or other term or condition of the Note Purchase Agreement or this Note in any material respect and such breach, if subject to cure, continues for a period of ten (10) business days after written notice to the Borrower from the Holder.
4.3Breach of Representations and Warranties. Any material representation or warranty of the Borrower made herein, in the Note Purchase Agreement, or in any agreement, statement or certificate given in writing pursuant hereto or in connection therewith shall be false or misleading in any material respect as of the date made and the Closing Date and such inaccuracy, if subject to cure, continues for a period of ten
(10) business days after written notice to the Borrower from the Holder.
4.4Liquidation. Any dissolution, liquidation or winding up of Borrower or a Subsidiary’s substantial portion of their business.
4.5Cessation of Operations. Any cessation of operations by Borrower or a Subsidiary.
4.6Maintenance of Assets. The failure by Borrower or any Subsidiary to maintain any material intellectual property rights, personal, real property, equipment, leases or other assets which are necessary to conduct its business (whether now or in the future) and such breach is not cured with ten (10) business days after written notice to the Borrower from the Holder.
4.7Receiver or Trustee. The Borrower or any Subsidiary shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business; or such a receiver or trustee shall otherwise be appointed.
4.8Judgments. Any money judgment, writ or similar final process shall be entered or made in a non-appealable adjudication against Borrower or any Subsidiary or any of its property or other assets for more than $250,000, unless stayed vacated or satisfied within ten days.
4.9Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law, or the issuance of any notice in relation to such event, for the relief of debtors shall be instituted by or against the Borrower or any Subsidiary.
4.10Notification Failure. A failure by Borrower to notify Holder of any material event of which Borrower is obligated to notify Holder pursuant to the terms of this Note or any other Transaction Document.
4.11Failure to Deliver Shares/DWAC Shares. A failure by Borrower or Borrower’s transfer agent for any reason or for no reason to electronically transfer any shares of Common Stock issuable upon conversion of this Note as DWAC Shares on or before the Delivery Date. “DWAC Shares” means shares of Common Stock that are (i) issued in electronic form, (ii) freely tradable and transferable and without restriction on resale and (iii) timely credited by the Company to the Investor’s or its designee’s specified Deposit/Withdrawal at Custodian (DWAC) account with DTC under its Fast Automated Securities Transfer (FAST) Program, or any similar program hereafter adopted by DTC performing substantially the same function.
4.12Cross-Default. A breach or default by the Borrower of any covenant or other term or condition contained in any other material agreement, including, without limitation, any loan agreement(s) or promissory note(s), entered into by the Borrower, after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note.
Upon the occurrence and during the continuation of any Event of Default specified in this Article IV, (i) the Note shall become immediately due and payable (subject to any applicable cure periods); and (ii) if the Borrower fails to pay all principal and interest due and payable within five (5) business days of the date which such amount is due and payable, then the Holder shall have the right at any time, so long as the Borrower remains in default, to require the Borrower upon written notice, to immediately issue the number of shares of Common Stock of the Borrower equal to the amount of outstanding principal and interest then due and owing divided by the 90% of the Conversion Price then in effect.
ARTICLE V MISCELLANEOUS
5.1Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.
5.2Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i)
personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the first business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: (i) if to the Borrower to: Sky Quarry Inc., 707 W. 700 S, Suite 101, Woods Cross, UT 84087, Attn: President, facsimile: (801) 606-2722, and (ii) if to the Holder, to the name, address and facsimile number set forth in the Note Purchase Agreement.
5.3Amendment Provision. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.
5.4Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns.
5.5Cost of Collection. If default is made in the payment of this Note, Borrower shall pay the Holder hereof reasonable costs of collection, including reasonable attorneys’ fees.
5.6Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Delaware without regard to conflicts of laws principles that would result in the application of the substantive laws of another jurisdiction. Any action brought by either party against the other concerning the transactions contemplated by this Agreement must be brought only in the civil or state courts of the state of Delaware or in the federal courts located in the state of Delaware. Both parties and the individual signing this Agreement on behalf of the Borrower agree to submit to the jurisdiction of such courts. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or unenforceability of any other provision of this Note. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Borrower in any other jurisdiction to collect on the Borrower’s obligations to Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other decision in favor of the Holder.
5.7Maximum Payments. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum rate permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum rate permitted by applicable law, any payments in excess of such maximum rate shall be credited against amounts owed by the Borrower to the Holder and thus refunded to the Borrower.
5.8Non-Business Days. Whenever any payment or any action to be made shall be due on a Saturday, Sunday or a public holiday under the laws of the State of Delaware, such payment may be due or action shall be required on the next succeeding business day and, for such payment, such next succeeding day shall be included in the calculation of the amount of accrued interest payable on such date.
IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by an authorized officer as of the 22nd day of May, 2025.
SKY QUARRY INC.
By: /s/ Marcus Laun Name: Marcus Laun
Title: Executive Vice President
SCHEDULE A - NOTICE OF CONVERSION
(To be executed by the Registered Holder in order to convert the Note)
The undersigned hereby elects to convert $_____ of the principal and $________ of the interest due on the Note issued by Sky Quarry Inc. (“Borrower”) on May 22, 2025 into Shares of Common Stock of Borrower according to the conditions set forth in such Note, as of the date written below.
Date of Conversion:
Conversion Price:
Shares To Be Delivered:
Signature:
Print Name:
Address:
This Credit and Security Agreement (the “Agreement”) is made and entered into as of the 21 day of September, 2020, by Sky Quarry Inc., a Delaware corporation with its principal place of business located at 1800 Vine Street #200, Los Angeles, CA 90028, 2020 Resources LLC, a Delaware limited liability company with its principal place of business located at 67750 South Seep Ridge Rd, Bonanza, UT 84008, and 2020 Resources (Canada) Ltd., a named Alberta corporation with its principal place of business located at 67750 South Seep Ridge Rd, Bonanza, UT 84008 (collectively, “Co- Borrowers”), in favor of Loeb Term Solutions LLC, an Illinois limited liability company with an address at 8609 W. Bryn Mawr, Suite 208, Chicago, IL 60609 (“Lender”).
Co-Borrowers, and any person or entity that executes a guaranty of the Obligations in favor of Lender (each a “Guarantor”), agrees to all of the terms and conditions contained in the Note and this Agreement and in any attachments thereto, and in any other documents incorporated herein by reference.
In consideration of and as an inducement to Lender making certain loans to Co-Borrowers as evidenced by that certain Promissory Note of even date herewith in the principal amount of up to One Million and 00/100 Dollars ($1,000,000.00) (the “Note”), and to secure the payment and performance of the Note and of any and all obligations and liabilities of Co-Borrowers to Lender, whether arising in connection with loans, advances, purchases, acquisitions, or other extensions of credit made to or on behalf of Co-Borrowers or any other person for whom Co- Borrowers serves as surety or guarantor, and whether direct or indirect, absolute or contingent, or now or hereafter existing, or due or to become due (collectively the “Obligations”), the parties hereto agree as follows:
1.Loan Advances and Repayment. This Agreement sets forth the terms and conditions for a loan or loans to be made by Lender to Co-Borrowers. Provided there is no event of Default, Co-Borrowers may request that Lender make a loan or loans to Co-Borrowers (each an “Advance” or collectively the “Advances”) provided that the principal amount of the Obligations do not exceed the lesser of (a) seventy percent (70%) of the liquidation value of the Eligible Equipment (defined below) as determined by Lender in its sole reasonable discretion, or (b) the declining dollar amount for the applicable month set forth on attached Exhibit A (collectively the “Borrowing Base”). Co-Borrowers may make one request per month for an Advance, and the request must be made not less than ten (10) days prior to the end of the month for an Advance to be made on the first day of the following month. In addition to payments of interest and the Unpaid Borrowing Base Fee set forth in the Note, on the first day of each month Borrower shall pay Lender the dollar amount that outstanding principal amount of the Note exceeds the Borrowing Base. Eligible Equipment” means equipment that (a) is owned by the Co-Borrowers free of any title defect or any lien or interest of any person except the lien in favor of the Lender; (b) is located at locations set forth in this Agreement; (c) in the Lender’s opinion, is not obsolete, unsalable, damaged or unfit for further use; (d) is appraised by an appraiser satisfactory to the Lender, and all such appraisals shall be in form and substance satisfactory to the Lender;
(e) complies with any representation or warranty contained in this Agreement; and (f) is otherwise acceptable to the Lender in its sole reasonable discretion.
2.Grant of Security Interest. To secure the payment and performance of the Obligations, Co-Borrowers hereby grant to Lender a security interest in all of Co-Borrower’s rights, titles and interests in and to the Collateral (defined below).
a.All capitalized terms not defined herein shall have the meaning given to such terms in the Uniform Commercial Code (“UCC”) as in effect on the date hereof in the state of Michigan, except as required by mandatory provisions of law.
b.Co-Borrowers previously authorized and hereby authorizes Lender to file one or more financing statements, and amendments thereto, relating to all or any part of the Collateral in the Co- Borrower’s state of organization and in any other states or locations selected by Lender. Lender may describe the Collateral as “all assets” of Co-Borrowers or words of similar effect in such financing statements.
4.Definition of Collateral. The Collateral is all of the Co-Borrower’s now owned or existing or hereafter acquired or arising: Accounts, Goods, Inventory, Equipment (including without limitation the equipment
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described on Exhibit B attached hereto), Chattel Paper, Instruments, Investment Property, specifically identified Commercial Tort Claims, Documents, Deposit Accounts, Letter of Credit Rights, General Intangibles, Contract Rights, customer lists, furniture and fixtures, books and records and supporting obligations for any of the foregoing, and all Proceeds of the foregoing (the “Collateral”). The Collateral also includes all monies on deposit with Lender.
5.Representations and Covenants Relating to the Collateral.
a.Ownership. Co-Borrowers are the owners of the Collateral and shall at all times maintain valid title to the Collateral.
b.Lien Priority. The security interest granted hereby shall at all times be a valid and perfected first priority security interest enforceable against Co-Borrowers and all third parties, securing the Obligations. Co-Borrowers shall not permit any financing statement or other instruments similar in effect covering all or any part of the Collateral to be filed or recorded without the prior written consent of Lender. Without limiting the foregoing, Co-Borrowers shall not enter into any merchant cash advance loans or any other agreements or loans wherein Co-Borrowers sells or assigns its accounts or future cash.
c.Care of Collateral. Co-Borrowers, at their own expense, will maintain, keep and preserve the Collateral in the ordinary course of business in good repair, working order and condition (reasonable wear and tear excepted) and from time to time make or cause to be made all needed and appropriate repairs, renewals, replacements, additions, betterments and improvements thereto and will not waste or destroy the Collateral or any part thereof and will not be negligent in the care and use of any Collateral and will not use any Collateral in violation of applicable law.
d.Disposition of Collateral. Co-Borrowers shall not sell, lease, transfer, assign (by operation of law or otherwise) or otherwise dispose of all or any part of the Collateral, except for Inventory in the ordinary course of business.
e.Principal place of business and Trade Names. Co-Borrowers represent, warrant and covenant that:
(i) Co-Borrower’s principal place of business and the books and records relating to the Collateral are located at Co-Borrower’s principal place of business specified above; (ii) Co-Borrowers has not, within the last five (5) years, transacted business under any trade names other than those specified herein or otherwise provided to Lender in writing; and (iii) Co-Borrowers will not move its principal place of business or its books and records, or transact business under any new trade names, without giving Lender thirty (30) days prior written notice thereof or without having taken all action required by Lender including but not limited to those in Section 5.f. below with respect to any affected Collateral.
f.Location of Collateral. Co-Borrowers shall not permit the equipment or other tangible Collateral to be located at any location except at the locations specified in a written Landlord Agreement executed by the landlord and Lender unless:
(i)Co-Borrowers give Lender thirty (30) days prior written notice thereof;
(ii)Prior to the move, Co-Borrowers obtain from the landlord(s) of the premises of the future location(s) an executed lease and provide a copy to Lender;
(iii)Prior to the move, Co-Borrowers obtain from the landlord(s) of the premises of the future location(s) a Landlord Agreement, in form satisfactory to Lender, executed by the landlord and Lender;
(iv)Prior to the move, the machinery mover hired by Co-Borrowers names Lender as additional insured, loss payee and lender loss payee on its insurance policy and provides a copy to Lender;
(v)Co-Borrowers have all of the previously installed equipment re-installed;
(vi)Co-Borrowers allow Lender to inspect the equipment at Co-Borrower’s expense to confirm that all previously installed equipment as shown on Exhibit B is re-installed and operating. The reinspection fee will be pulled via ACH; and
(vii)Within ten (10) days of the completion of the move, Co-Borrowers notify Lender of any surplus equipment left from the move and develops with Lender a plan to sell the surplus.
6.Collection of Accounts. After an event of Default Lender shall have the right to notify the Account debtors of the assignment of the related Accounts to Lender and to direct such Account debtors to make payment of all amounts due or to become due to Co-Borrowers thereunder directly to Lender, and upon such
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notification and at the expense of Co-Borrowers Lender may enforce collection of any such Accounts, and adjust, settle or compromise the amount or payment thereof. After the notice from Lender to the account debtors, (i) all amounts and proceeds (in whatever form) received by Co-Borrowers in respect of the Accounts shall be received in trust for the benefit of Lender, shall be segregated from other funds of Co- Borrowers and shall be forthwith paid over to Lender in the same form as so received (with any necessary endorsement), and applied against the Obligations in such order as Lender shall elect in its sole discretion, and (ii) Co-Borrowers shall not adjust, settle or compromise the amount or payment of any Receivable, or release wholly or partly any account debtor, or allow any credit or discount thereon without the prior written consent of Lender. Co-Borrowers hereby appoints any officer or agent of Lender as Co-Borrower’s true and lawful attorney-in-fact after an event of Default with power to endorse the name of the Co-Borrowers upon any notices, checks, drafts, money orders or other instruments of payment or Collateral which may come into possession of Lender; to sign and endorse the name of Co-Borrowers upon any invoices, freight or express bills, bills of lading, stored or warehouse receipts, drafts against account debtors, assignments, verifications and notices in connection with accounts; and after the occurrence of an event of Default, to give written notice to such office and officials of the United States Postal Service to effect the change or changes of address so that all mail addressed to Co-Borrowers may be delivered directly to Lender (Lender will return all mail not related to the obligors or the Collateral). This power of attorney shall be irrevocable for the term of this Agreement and all transactions hereunder.
7.Further Assurances. Co-Borrowers agree that it shall from time to time, and at its expense, promptly execute and deliver all instruments, documents and assignments, and shall take all further actions that Lender may request in order to perfect, protect and continue any security interest granted or purported to be granted hereby or to enable Lender to exercise and enforce its rights and remedies hereunder with respect to any Collateral, and shall promptly give to the Lender evidence satisfactory to Lender of such action. Without limiting the generality of the foregoing, Co-Borrowers shall:
a.Take such steps as Lender may request for Lender (i) to obtain an acknowledgment of any bailee having possession of any of the Collateral that the bailee holds such Collateral for Lender, or (ii) to obtain “control” of any investment property, deposit accounts, letter-of-credit rights, electronic chattel paper or other Collateral;
b.Mark conspicuously each document, Chattel Paper and Instrument, and at the request of Lender, each of its records pertaining to the Collateral, with a legend in form and substance satisfactory to Lender indicating that such document, Chattel Paper, Instrument or other Collateral is subject to the security interest granted hereby;
c.Upon the request of the Lender, deliver and pledge Lender any original Note, Instrument, Chattel Paper, Instrument or other document evidencing any Collateral and any certificate or instrument evidencing any Security, duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in forms and substance satisfactory to Lender;
d.Deliver certificates of title and execute all documentation in order to reflect Lender’s security interest on titled motor vehicles and vessels;
e.Furnish to Lender from time to time statements and schedules identifying and describing the Collateral and such other reports and information concerning the Collateral as Lender may request in its sole discretion; and
f.Not store, keep or maintain any Collateral at any location other than locations where there is a landlord waiver and/or a mortgagee waiver in favor of Lender, and in forms acceptable to Lender.
Lender is establishing a reserve in the amount of $10,000 (the “Open Item Reserve”) from the funding of the Note to ensure that the open closing items are satisfied. The Open Item Reserve will only be released once the Co-Borrowers provides the following to Lender, in form and content acceptable to Lender:
1.Certificate of Liability Insurance for 2020 Resources LLC, and 2020 Resources (Canada) Ltd. showing Lender as additional insured, loss payee and lender’s loss payee, per section 9 below within fifteen (15) days of funding
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Lender is requiring that a reserve in the amount of $15,000 (the “Occupancy Reserve”) be established from the funding of the Note to secure payment of rent and mortgage payments, as applicable, on any of its rented or owned locations. In the event that the Co-Borrowers fails to timely pay rent or mortgage payments on any of its rented or owned locations, the Lender is authorized to use funds in the Occupancy Reserve to make such payments or may use such funds to satisfy any other amounts Co-Borrowers owes Lender.
Notwithstanding the establishment of any reserve, the Co-Borrowers will pay interest on the full amount of the Note commencing on the date of the initial funding of the Note. Co-Borrowers will not earn interest on any funds held in reserve and the existence of the reserve shall not relieve Co-Borrowers of its Obligation to make payments under this Agreement and the Note. Lender will not use the funds in reserve for any other Co-Borrowers or client.
9.Insurance. Co-Borrowers at all times should have the Collateral insured in the Co-Borrower’s name and in the name of the Lender against loss or damage by fire, theft, burglary, pilferage, loss in transit and such other hazards with amounts, under policies and by insurers acceptable to Lender. Each policy shall include a provision for Lender to receive copies directly from the insurance agent of all written notices to policy holder including, but not limited to any invoices, statements of account, certificates of insurance, cancellation, or substantial modification. Policies shall show Lender as additional insured, loss payee and lender’s loss payee in a manner acceptable to Lender. Co-Borrowers shall execute and deliver to Lender simultaneously herewith and at any other time hereafter such assignments of policies of insurance as Lender shall reasonably require. All premiums shall be paid by Co-Borrowers and the policies shall be delivered to Co-Borrowers and Certificate of Insurance shall be delivered to Lender. If Co-Borrowers fail to do so, Lender may (but shall not be required) procure such insurance at the Co-Borrower’s expense. CO-BORROWERS ALSO GRANT PERMISSION FOR LENDER TO SPEAK DIRECTLY WITH INSURANCE AGENT AS REQUIRED TO CONFIRM PROPER INSURANCE IS IN PLACE AND IT IS CURRENT.
10.Inspection; Books, Records and Financial Statements and Reports.
a.Co-Borrowers shall at all times keep accurate and complete records of the Collateral, and, at Co- Borrower’s expense, at any time and without hindrance or delay, permit Lender to inspect the Collateral, and inspect and make extracts from and copies of its books and all records, including preventative maintenance records relating to the Collateral.
b.Co-Borrowers shall at all times keep, and if requested provide Lender with copies of or allow Lender to inspect, monthly financial records prepared in accordance with generally accepted accounting principles and which are true and accurate in all material respects, including an income statement, balance sheet, statement of cash flows on a consolidated basis, accounts payable aging, accounts receivable aging, inventory report and payroll report.
c.Lender shall be permitted to discuss with Co-Borrower’s owners, directors, officers, managers and auditors Co-Borrower’s business, procedures, assets, liabilities, financial positions, results of operations and business prospects.
d.Co-Borrowers shall keep its records concerning the Collateral and other business records at its principal place of business or at such other location as shall have been notified to Lender upon not less than thirty (30) days written notice. The cost of all such inspections shall be borne by the Co- Borrowers.
e.The Lender shall have the right to have the Equipment appraised or inspected on an annual basis. At every annual appraisal or inspection, the loan balance needs to be at 70% FLV or lower and must be paid down to stay in formula. If the Loan does not close within forty-five (45) days of the initial inspection, Lender may perform a reinspection of the Collateral at the Co-Borrower’s expense. After the occurrence of a Default, there shall be no limit on the number of appraisals and inspections, and Co-Borrowers shall reimburse Lender for costs related to such appraisals or inspections. Prior to the occurrence of a Default, Lender will give Co-Borrowers seventy-two (72) hours prior notice and the inspection will only be during normal business hours. Co-Borrowers authorize Lender to debit the amount of the Appraisal Expense (as defined below) from Co-Borrower’s bank account via ACH transfer as more fully set forth in the ACH Authorization Agreement. In addition, at all times Lender shall have the right to verify all Accounts, whether in its name or using a fictitious name.
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11.Taxes. Co-Borrowers shall promptly pay when due all property, payroll and any other taxes, assessments and governmental charges or levies imposed upon the Collateral, except to the extent the validity thereof is being contested in good faith by Co-Borrowers and with reserves for payment of such charges or levies in any amount satisfactory to Lender. Lender reserves the right to require Co-Borrowers to use an independent payroll service if Co-Borrowers are delinquent in paying their payroll taxes on time.
12.Lender’s Duties and Powers. If Co-Borrowers fail to perform any covenant or agreement contained herein, Lender may (but shall not be obligated to) perform, or cause performance of, such covenant or agreement at the Co-Borrower’s expense. The powers conferred on Lender hereunder are to protect Lender’s interest in the Collateral and shall not impose any duty upon Lender to exercise any such powers.
13.Loans, Dividends, or other Distributions to Equity Owners, and Payments on Junior Notes. Co- Borrowers covenant and agree that until all Obligations to Lender are paid in full, it will not declare or pay any dividend or make any other distribution or loan of any kind to its shareholders, members or other equity owners, other than:
a.Normal salary paid to an equity owner that is also an employee of Co-Borrowers; and
b.With respect to any year in which Co-Borrowers are not taxed by the Internal Revenue Services as a “C” corporation, and provided that Co-Borrowers are not in Default at that time of such payment, Co-Borrowers may make a distribution of profits to its equity owners in an amount not to exceed the sum necessary to enable its equity owners to pay their personal state and federal taxes directly attributable to the profits earned by Co-Borrowers for the applicable year.
Co-Borrowers covenant and agree that prior to a Default they may make regularly scheduled payments of principal and interest, without acceleration of any kind, under the $300,000.00 Promissory Note dated September 16, 2020 in favor of ACMO USOS LLC, and under the $450,000.00 Promissory Note dated September 16, 2020 in favor of JPMorgan Chase Bank, N.A (collectively the “Junior Notes”). After and during the continuance of any Default, Co-Borrowers shall not make any payments on the Junior Notes.
a.Co-Borrowers shall upon demand pay to Lender the amount of any and all expenses, including without limitation, the reasonable fees and disbursements of Lender’s counsel and of any experts and agents, which Lender may incur in connection with the preparation, administration and enforcement of this Agreement, or the sale, collection from, or other realization upon any of the Collateral.
b.At closing of the Loan, Co-Borrowers will pay Lender a loan fee in the amount of $30,000, which will be fully earned as of such date and not refundable in any event.
c.Co-Borrowers shall pay to Lender a late charge of five percent (5%) of each and every payment not received by Lender on its due date. The minimum late charge shall, at Lender’s discretion, be
$500.00. Such late charges shall be to cover the additional costs in connection with handling of a late payment. The imposition of a late charge shall not affect the rights of Lender to declare an event of Default or impose a default interest rate as a result of a late payment.
d.The Co-Borrowers shall pay to Lender a Frequent Late Fee (the “Frequent Late Fee”) in the amount of one percent (1%) of original principal amount of the Note, as may have been increased from time to time, to be paid on the earlier of the Maturity Date of the Note or the earlier repayment (including prepayment or acceleration) of the Note. This Frequent Late Fee will be waived upon payment in full of all Obligations under the Note at the Maturity Date, provided that Co-Borrowers have not been late in making payment under the Note on more than two (2) occasions. This Frequent Late Fee shall be in addition to any prepayment fees.
e.Co-Borrowers shall pay the monthly Unused Borrowing Base Fee set forth in the Note.
f.Co-Borrowers shall pay Lender $6,000.00 per appraisal or inspection (the “Appraisal Expense”).
g.The Note has a four (4) year term (the “Term”). In the event of repayment in full of the indebtedness under the Note or any repayment of twenty percent (20%) or more of the outstanding indebtedness under this Note during any thirty (30) day period prior to the expiration of the Term, Co-Borrowers shall pay to Lender, as an early prepayment fee as liquidated damages and not as a penalty, an amount equal to (the “Prepayment Fee”): Three percent (3%) of the Borrowing Base as
Page 5 of 13
of the payoff date during the first year of the Note (beginning with the date of this Note); three percent (3%) of the Borrowing Base as of the payoff date during the second year of the Note; two percent (2%) of the Borrowing Base as of the payoff date during the third year of the Note; and one percent (1%) of the Borrowing Base as of the payoff date during the final year of this Note. In the event that payment of the Note shall be accelerated for any reason whatsoever by the Lender, the full Prepayment Fee in effect as of the date of such acceleration shall be added to the outstanding balance of the Note in determining the debt for the purposes of any judgment under the Note, or the amount of Obligations secured by the Collateral.
15.Default. Each of the following shall constitute an event of default under this Agreement (a “Default”):
a.Co-Borrowers fail to pay any amounts under the Note or any other Obligations when due;
b.Co-Borrowers fail to observe or perform any of the terms, covenants or conditions contained in this Agreement, the Note or any other contract, instrument or agreement with Lender, including but not limited to the representations and warranties concerning the Collateral set forth in paragraph 5 above;
c.Any representation or warranty made by Co-Borrowers herein is false in any material respect as of the time when made or given;
d.Co-Borrowers or any Guarantor shall make an assignment for the benefit of creditors, file a petition in bankruptcy, petition or apply for the appointment of a custodian, receiver or any trustee for Co-Borrowers, Guarantor or the Collateral, or shall commence any proceedings under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statue of any jurisdiction, whether now or hereafter in effect, or if there shall have been filed any such petition or application, or any such proceeding shall have been commenced against Co- Borrowers or Guarantor, in which an order for relief is entered and is not dismissed within sixty
(60) days;
e.Any suit is filed against Co-Borrowers or Guarantor and not disclosed to lender within thirty (30) days;
f.Any judgment is entered against Co-Borrowers or Guarantor in excess of $25,000;
g.Co-Borrowers fail to provide Lender the Certificate of Liability Insurance for 2020 Resources LLC, and 2020 Resources (Canada) Ltd. showing Lender as additional insured, loss payee and lender’s loss payee, per section 9 within fifteen (15) days of funding
h.Any of the Collateral is taken or sought to be taken by levy, execution or other process of law;
i.Co-Borrowers or Guarantor liquidates, dissolves, or merges into or consolidates with or into any other entity;
j.If Co-Borrowers open a new bank account and fails to provide an Automatic ACH Debit Agreement covering such account within five (5) Business Days of opening such account;
k.Any financial statement or report provided to Lender is false in any material respect as of the time when made or given; or
l.Any circumstance or event of any nature which in Security Party’s sole reasonable discretion may materially and adversely affect the condition, operation, business or assets of Co-Borrowers or any Guarantor, or materially impairs the ability of Co-Borrowers or any Guarantor to fulfill their Obligations to Lender.
16.Remedies. Upon and event of Default, Lender shall have the following remedies which may be exercised cumulatively:
a.To declare all amounts owing under the Note and all other Obligations immediately due and payable;
b.To exercise any and all rights and remedies provided under this Agreement, the UCC, in law or at equity, including the right to obtain an injunction against Co-Borrowers or a decree of specific performance;
c.To immediately apply to any court of competent jurisdiction for, and obtain appointment of, a receiver for the Collateral, the Co-Borrowers or the Co-Borrower’s business. Co-Borrowers consent to any such appointment and agrees not to contest any such motion or appointment;
d.Without prior demand or notice, set-off against and apply any accounts, items and monies in the possession of Lender or payable by Lender to Co-Borrowers to the Obligations;
Page 6 of 13
e.With or without judicial process or the aid or assistance of others, enter upon any premises in which Collateral may be located and, without resistance or interference by Co-Borrowers, take physical possession of any items of Collateral and maintain such possession on Co-Borrower’s premises or move the same or any part thereof to such other places as Lender shall choose without being liable to Co-Borrowers on account of any losses, damage or depreciation that may occur, and may dispose of all or any part of the Collateral on any premises of Co-Borrowers, require Co-Borrowers to assemble and make available to Lender or to remove all or any part of the Collateral from any premises in which any part may be located for the purpose of effecting sale or other disposition thereof; and
f.Sell any item of the Collateral for cash or other value in any number of lots at a public or private sale without demand or notice (excepting only that Lender shall give Co-Borrowers ten (10) days prior written notice of the time and place of any public sale, or the time after which a private sale may be made, which notice Co-Borrowers agree is reasonable). At any public sale Lender may bid for and purchase the whole or any part of the property and rights sold and upon compliance with the terms of such sale may hold or dispose of such property and rights without further accountability to Co-Borrowers. Co-Borrowers will execute and deliver, or cause to be executed and delivered, such instruments, documents, registration statements, assignments, waivers, certificates and affidavits, and will supply or cause to be supplied such further information and take such further action as Lender shall require in connection with such sales. Co-Borrowers shall be responsible for all costs of sale or other disposition of the Collateral. The proceeds of all sales and collections hereunder shall be applied against the Obligations in such order as Lender shall elect in its sole discretion.
Failure to exercise any and all rights or remedies Lender may have in the event of any event of Default shall not constitute a waiver of the right to exercise such rights or remedies in the event of any subsequent event of Default, whether of the same or different nature. No waiver of any right or remedy by Lender shall be effective unless made in writing and signed by Lender, nor shall any waiver on one occasion apply to any future occasion.
17.Waivers. Co-Borrowers and each Guarantor each hereby waive (a) any requirement for Lender to marshall the Collateral or to resort to the Collateral in any particular order, (b) the right to extend or excuse performance of any of Co-Borrower’s or Guarantor’s Obligations based on force majeure, and (c) to the extent permitted by applicable law, the benefits and advantages of any valuation, stay, appraisement, extension or redemption laws now or hereafter existing which, but for this provision, might be applicable.
18.Discharge and Payoff. In recognition of the Lender’s right to have its attorneys’ fees and other expenses incurred in connection with this Agreement secured by the Collateral, notwithstanding payment in full of all Obligations by Co-Borrowers, Lender shall not be required to file terminations or satisfactions of any of Lender’s liens on the Collateral unless and until Co-Borrowers and all Guarantors shall have provided general releases in favor of Lender, in form satisfactory to Lender. Co-Borrowers understand that this provision constitutes a waiver of its rights under Section 9-513 of the Uniform Commercial Code.
19.No Waiver; Cumulative Remedies. No failure on the part of Lender to exercise, and no delay on the part of Lender in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy by Lender preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies that may be available to Lender, whether at law, in equity or otherwise. No course of dealing between Co-Borrowers and Lender shall operate as a waiver of any rights of Lender under this Agreement or in respect of the Collateral or the Obligations.
20.Indemnity. Co-Borrowers assume liability for and does hereby agree to indemnify, protect, save and keep harmless Lender and its agents, from and against any and all liabilities, claims, losses, obligations, damages, penalties, actions, and suites of whatsoever kind and nature imposed on, incurred by or asserted against Lender or its agents, in any way relating to or growing out of this Agreement, the Note or the Collateral (including without limitation, enforcement of this Agreement and the Note or disposition of the Collateral), except claims, losses or liabilities resulting solely from Lender’s gross negligence or willful misconduct.
Page 7 of 13
21.Right of First Refusal. In consideration of the Lender providing the Loan to the Co-Borrowers, Co- Borrowers hereby agree that it will, within five (5) days of receipt, provide a copy of any proposal letter, term sheet, letter of intent or commitment letter from any Lender offering to Co-Borrowers a refinance of the Loan. Lender shall have the right of first refusal to match the offer(s) of such other Lender(s), and if Lender advises Co-Borrowers that it intends to meet the financial terms set forth in such offer(s), Co- Borrowers will be obligated to enter into an amendment to this Agreement and the Note extending the terms of this Agreement and the Note for at least the term proposed in such other offer(s), and amending the financial terms set forth in this Agreement and the Note. Notwithstanding the foregoing, Co-Borrowers recognize that this Agreement and the Note can only be terminated as provided herein and therein. Failure of Lender to meet the terms set forth in such letter of interest or commitment letter does not relieve the Co- Borrowers from its Obligations hereunder.
22.Use of Co-Borrower’s Name, etc. Co-Borrowers hereby authorizes Lender to use the Co-Borrower’s name and tradenames together with variants of such names and related logotypes and the amount of the transaction in advertising that promotes Lender and the business transaction between any Co-Borrowers and Lender. Neither Lender nor any of its subsidiaries, affiliates, officers, employees and advertising agents shall have any liability to Co-Borrowers arising out of or related to the reasonable exercise of the rights hereby granted to Lender.
23.Miscellaneous. The invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of any other term or provision hereof. Neither this Agreement nor any term hereof may be amended orally, nor may any provision hereof waived orally but only by an instrument in writing signed by Lender and, in the case of an amendment, by Co-Borrowers and any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. This Agreement shall be governed by and construed in accordance with the law of the State of Michigan, except as required by mandatory provisions of law and except to the extent that the validity or perfection of the security interest hereunder in respect of any particular Collateral are governed by the law of a jurisdiction other than the State of Michigan. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Each party acknowledges that is has reviewed this Agreement, and the parties hereby agree that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.
24.Assignments. This Agreement shall bind the parties hereto and their respective successors and assigns. This Agreement and the Note may be assigned by Lender to a third party, and the Co-Borrowers consent to such assignment and agrees that this Agreement and the Note will be in favor of the assignee(s) upon assignment, without any defenses, counterclaims or setoffs of any kind whatsoever. All of the terms of this Agreement and the Note shall inure to the benefit of Lender and its successors and assigns and shall be binding upon each and every one of the Obligors and their respective heirs, executors, administrators, personal representatives, successors and assigns, jointly and severally. Lender may grant participations in all or any portion of, and may assign all or any part of Lender’s rights under, this Agreement and the Note. Lender may disclose to any such participant or assignee any and all information held by or known to Lender at any time with respect to any Obligor.
25.Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed to have been given three (3) business days after deposit in the mail, designated as certified mail, return receipt requested, postage-prepaid, one (1) business day after being entrusted to a reputable commercial overnight delivery service, addressed to the party to whom such notice is directed at its address as forth above, or upon sending if sent via electronic mail. Any party hereto may change the address to which notices shall be directed under this Paragraph by giving three (3) business days written notice of such change to the other parties.
Page 8 of 13
If to Lender, then to:
Lender: | Loeb Term Solutions LLC |
Attention: | James L. Newman |
Address: | 8609 W. Bryn Mawr, Suite 208 |
| Chicago, IL 60631 |
Phone: | 773-548-4131 |
Email: | jimn@loebtermsolutions.com |
Carbon copy: | Kenda Davis |
Email address: | kendad@loebtermsolutions.com |
If to Co-Borrowers, then to:
Co-Borrower: | Sky Quarry Inc. |
Attention: | David Owen Sealock |
Address: | 1800 Vine Street #200 |
| Los Angeles, CA 90028 |
Phone: | 403-561-9882 |
Email: | davids@skyquarry.com |
Co-Borrower: | 2020 Resources LLC |
Attention: | David Owen Sealock |
Address: | 67750 South Seep Ridge Rd |
| Bonanza, UT 84008 |
Phone: | 403-561-9882 |
Email: | davids@skyquarry.com |
Co-Borrower: | 2020 Resources (Canada) Ltd. |
Attention: | David Owen Sealock |
Address: | 67750 South Seep Ridge Rd |
| Bonanza, UT 84008 |
Phone: | 403-561-9882 |
Email: | davids@skyquarry.com |
26.WAIVER OF JURY TRIAL. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THEY OR ANY OTHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF EITHER OR ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT.
27.JURISDICTION. THE PARTIES AGREE THAT ANY ACTION TO ENFORCE CO-BORROWERS’S OR GUARANTOR’S OBLIGATIONS TO LENDER OR ANY ACTION RELATING TO OR ARISING OUT OF THE LOAN OR THIS AGREEMENT SHALL BE PROSECUTED EITHER IN THE CIRCUIT COURT OF OAKLAND COUNTY MICHIGAN OR THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN (UNLESS LENDER’S, IN ITS SOLE DISCRETION, ELECTS SOME OTHER JURISDICTION), AND CO-BORROWERS AND GUARANTOR SUBMIT TO THE JURISDICTION OF ANY SUCH COURT SELECTED BY LENDER. CO-BORROWERS AND GUARANTOR WAIVE ANY AND ALL RIGHTS TO CONTEST THE JURISDICTION AND VENUE OF ANY ACTION BROUGHT IN THIS MATTER AND CO-BORROWERS AND GUARANTOR MAY BRING ANY ACTION AGAINST LENDER ONLY IN THE CIRCUIT COURT FOR THE COUNTY OF OAKLAND OR THE FEDERAL COURT OR THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN.
Page 9 of 13
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written
above.
CO-BORROWERS: Sky Quarry Inc.
Signature: |
|
Print Name: | David Owen Sealock |
Title: | CEO |
Email: | davids@skyquarry.com |
Phone Number | 403-561-9882 |
CO-BORROWERS: 2020 Resources LLC
Signature: |
|
Print Name: | David Owen Sealock |
Title: | CEO |
Email: | davids@skyquarry.com |
Phone Number | 403-561-9882 |
CO-BORROWERS: 2020 Resources (Canada) Ltd.
Signature: |
|
Print Name: | David Owen Sealock |
Title: | CEO |
Email: | davids@skyquarry.com |
Phone Number | 403-561-9882 |
GUARANTOR: David Owen Sealock
Signature: |
|
Print Name: | David Owen Sealock |
Title: | CEO |
Email: | davids@skyquarry.com |
Phone Number | 403-561-9882 |
GUARANTOR: Marcus Goetz Laun
Signature: |
|
Print Name: | Marcus Goetz Laun |
Title: | Executive Vice President |
Email: | marcuslaun@gmail.com |
Phone Number | 917-514-2110 |
Page 10 of 13
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above.
Page 11 of 13
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above.
Page 12 of 13
LENDER:
Loeb Term Solutions LLC
Signature: |
|
Print Name: | James L. Newman |
Title: | Manager |
Email: | jimn@loebtermsolutions.com |
Phone Number: | 773-496-5720 |
Page 13 of 13
97263 - EXHIBIT A - Amort Schedule v4
Page 1 of 3
97263 - EXHIBIT A - Amort Schedule v4
REF # |
DATE (Interest Payment) |
DATE (Depreciatio n Date) |
Event |
TOTAL GROSS $ AVAILABLE |
023 | 07/01/22 | 07/31/22 | End of month #22 | $560,000 |
024 | 08/01/22 | 08/31/22 | End of month #23 | $540,000 |
025 | 09/01/22 | 09/30/22 | End of month #24 | $520,000 |
026 | 10/01/22 | 10/31/22 | End of month #25 | $500,000 |
027 | 11/01/22 | 11/30/22 | End of month #26 | $480,000 |
028 | 12/01/22 | 12/31/22 | End of month #27 | $460,000 |
029 | 01/01/23 | 01/31/23 | End of month #28 | $440,000 |
030 | 02/01/23 | 02/28/23 | End of month #29 | $420,000 |
031 | 03/01/23 | 03/31/23 | End of month #30 | $400,000 |
032 | 04/01/23 | 04/30/23 | End of month #31 | $380,000 |
033 | 05/01/23 | 05/31/23 | End of month #32 | $360,000 |
034 | 06/01/23 | 06/30/23 | End of month #33 | $340,000 |
035 | 07/01/23 | 07/31/23 | End of month #34 | $320,000 |
036 | 08/01/23 | 08/31/23 | End of month #35 | $300,000 |
037 | 09/01/23 | 09/30/23 | End of month #36 | $280,000 |
038 | 10/01/23 | 10/31/23 | End of month #37 | $260,000 |
039 | 11/01/23 | 11/30/23 | End of month #38 | $240,000 |
040 | 12/01/23 | 12/31/23 | End of month #39 | $220,000 |
041 | 01/01/24 | 01/31/24 | End of month #40 | $200,000 |
042 | 02/01/24 | 02/29/24 | End of month #41 | $180,000 |
043 | 03/01/24 | 03/31/24 | End of month #42 | $160,000 |
044 | 04/01/24 | 04/30/24 | End of month #43 | $140,000 |
Page 2 of 3
97263 - EXHIBIT A - Amort Schedule v4
REF # |
DATE (Interest Payment) |
DATE (Depreciatio n Date) |
Event |
TOTAL GROSS $ AVAILABLE |
045 | 05/01/24 | 05/31/24 | End of month #44 | $120,000 |
046 | 06/01/24 | 06/30/24 | End of month #45 | $100,000 |
047 | 07/01/24 | 07/31/24 | End of month #46 | $80,000 |
048 | 08/01/24 | 08/31/24 | End of month #47 | $60,000 |
049 | 09/01/24 |
| End of month #48 | $40,000 |
Page 3 of 3
97263 - Sky Quarry - v2 - EXHIBIT B
Equipment list
Page 1 of 10
97263 - Sky Quarry - v2 - EXHIBIT B
LTS # |
OEM |
Model |
Serial# |
Year Built |
Qty |
Machine Description |
LTS - '011 |
|
|
|
|
1 | BALL MILL, NO PLATE, PRINCIPAL INDICATES 1970'S VINTAGE, BALL MILL/MIXER, APPROX. 12' WIDE X 40' LONG, MOUNTED ON HEAVY DUTY CONCRETE CRADLES, TRUNNION DRIVE SYSTEM, TOSHIBA 800 HP/4160 HIGH VOLTAGE MOTOR, 3/4" TROMMEL SIZING SCREEN ON END, GREASE SPRAY SYSTEM FOR BALL GEAR, PRINCIPAL INDICATES NEW MOTOR, DRIVE, LUBRICATION SYSTEM, INCLUDES ALL RELATED EQUIPMENT, COMPONENTS, INCLUDING 3- LEVEL CUSTOM FRAME/STRUCTURE WITH STAIRS, RAILS, HIGH DEGREE DIFFICULTY OF REMOVAL |
LTS - '012 |
SMITHCO |
F6-60-1 |
15V095 |
|
1 |
RADIATOR COOLING SYSTEM, SMITHCO, PLATE SHOWS MDL. F6-60-1, S/N 15B095, TAG SHOWS 100-HE-157 MIXER LUBE HEAT EXCHANGER MOUNTED ON GALVANIZED ANGLE IRON FRAME, INCLUDES BOTTOM MOUNTED STAINLESS STEEL FILTER, ELECTRICS, *W/BALL MILL |
LTS - '013 |
|
|
|
|
1 | PUMP SKID, NO PLATE, INCLUDES #100-PU-194 FILTER PUMP WITH 15 HP MOTOR, #100PU-193 PINNACLE PUMP WITH APPROX. 5 HP MOTOR, #100-PU-192 HIGH PRESSURE PUMP WITH 30 HP MOTOR, #100-PU-191 LOW PRESSURE PUMP WITH 15 HP MOTOR, MULTI-POWER PRODUCTS TANK WITH S/N SN001-7675-40471-01, MFG. 7/15, PS FILTER POD MDL. 8302F2150C-0, S/N RD- 15076, MFG. 2015, RELATED PRESSURE GAUGES, VALVES, HOSE, PIPING, ELECTRICS, *W/BALL MILL |
LTS - '014 |
|
|
|
|
1 |
TRANSFER OUTFEED CONVEYOR, CUSTOM, APPROX. 24" X 40' IDLER TROUGH ROLL, MOTOR, DRIVE, *W/BALL MILL |
Equipment list
Page 2 of 10
97263 - Sky Quarry - v2 - EXHIBIT B
LTS # |
OEM |
Model |
Serial# |
Year Built |
Qty |
Machine Description |
LTS - '015 |
|
|
|
|
LOT |
SEPARATION SYSTEM, INCLUDES ALL RELATED COMPONENTS AS SHOWN BELOW, VALUED AS COMPLETE SETUP, ALL WITHIN SHEET METAL CONTAINMENT BIN, VALUED AS COMPLETE GROUPING AND/OR LOT, HIGH DEGREE DIFFICULTY OF REMOVAL |
LTS - '016 |
|
|
|
|
1 |
PRIMARY ATMOSPHERIC VESSEL, NO PLATE, APPROX. 20' DIA. X 40' HIGH, INSULATED, CONE BOTTOM, MOUNTED IN HEAVY DUTY I-BEAM FRAME/STRUCTURE, INCLUDES (5) ASSORTED TRIAD AIR ACTUATED FLOW CONTROL VALVES, RELATED INSULATED PIPING, VALVES, ELECTRICS, *W/SEPARATION SYSTEM |
LTS - '017 |
HAYWARD |
XCS4HA |
|
|
1 |
PUMP, HAYWARD MDL. XCS4HA, CENTRIFUGAL PUMP WITH APPROX. 50 HP MOTOR, RELATED PIPING, VALVES, *W/SEPARATION SYSTEM |
LTS - '018 |
|
|
|
|
1 |
PRIMARY ATMOSPHERIC VESSEL, APPROX. 15' DIA. X 25' HIGH, INSULATED, CONE BOTTOM, MOUNTED IN HEAVY DUTY I-BEAM FRAME/STRUCTURE, ALSO INCLUDES (3) TRIAD AIR ACTUATED FLOW CONTROL VALVES, INSULATED AND NON INSULATED PIPING, ELECTRICS, ALL MOUNTED IN HEAVY DUTY I-BEAM FRAME/STRUCTURE, *W/SEPARATION SYSTEM |
LTS - '019 |
VEGA |
MINITRA CK 31 |
|
2015 |
2 |
NUCLEAR DENSITY METERS, VEGA MINITRACK 31, MFG. 2015, LOCATED AT BOTTOM OF VESSELS, EACH INCLUDES CIDRA SONAR TRAC HD SERIES UNDER FLOW DENSITY METER DISPLAY CONTROL, WITH RELATED ELECTRICS, DIGITAL INDICATORS, *W/SEPARATION SYSTEM |
LTS - '020 |
HAYWARD GORDON |
XSC10C |
|
|
1 |
PUMP, #200 BULK SEPARATOR FEED PUMP, HAYWARD GORDON MDL. XCS10C, 2,570. AGPM, 125 HP MOTOR, RELATED PIPING, VALVES, ELECTRICS, *W/SEPARATION SYSTEM |
LTS - '021 |
|
|
|
|
1 |
PUMP, NO PLATE, 20 HP CENTRIFUGAL PUMP WITH (2) TRIAD AIR ACTUATED FLOW CONTROL VALVES, *W/SEPARATION SYSTEM |
LTS - '022 |
AFC/ADVANCED FLUID CONTAINMENT |
|
|
|
1 |
BULK STORAGE TANK, PLATE SHOWS AFC/ADVANCED FLUID CONTAINMENT, MFG. 2015, 15' 6" HIGH, APPROX. 12' DIA., 250 BARREL CAPACITY, CONE BOTTOM, INSULATED, MOUNTED ON HEAVY DUTY I-BEAM SKID, RELATED PIPING, SIDE MOUNTED LADDER, *W/SEPARATION SYSTEM |
LTS - '023 |
|
|
|
|
LOT |
ANCILLARY EQUIPMENT, INCLUDES (2) APPROX. 30 GALLON EXPANSION TANKS, (2) SETTLING TANKS, ASSORTED FILTER PODS, RELATED PIPING, VALVES, ELECTRICS, INCLUDES THOSE ASSETS NOT OTHERWISE LISTED, INCLUDES 3-LEVEL HEAVY DUTY FRAME/STRUCTURE WITH I- BEAM WELDED CONSTRUCTION, SPOT LIGHTS, ELECTRICS, *W/SEPARATION SYSTEM |
LTS - '024 |
|
|
|
|
LOT |
CENTRIFUGE SEPARATION SYSTEM, INCLUDES ALL EQUIPMENT AND COMPONENTS INSIDE CORRUGATED CONTAINMENT AREA, *VALUED INDIVIDUALLY |
Equipment list
Page 3 of 10
97263 - Sky Quarry - v2 - EXHIBIT B
LTS # |
OEM |
Model |
Serial# |
Year Built |
Qty |
Machine Description |
LTS - '025 |
PARKSON |
|
|
|
1 | CLARIFIER INCLINE BULK SEPARATOR SYSTEM, PARKSON, PLATE NOT ACCESSIBLE, APPROX. 20' HIGH, CONE BOTTOM, MOUNTED IN HEAVY DUTY TUBULAR STEEL FRAME/STRUCTURE, RELATED INSULATED PIPING, VALVES, ALSO INCLUDES SONAR TRAC HD SERIES NUCLEAR DENSITY METER WITH DISPLAY MONITOR, ELECTRICS, ALSO INCLUDES CENTRIFUGAL PUMP WITH APPROX. 15 HP MOTOR, ALL RELATED EQUIPMENT, COMPONENTS |
LTS - '026 |
AFC/ADVANCED FLUID CONTAINMENT |
|
|
2015 |
1 | FEED TANK, TAG SHOWS #200-TK-245 DISC STACK CENTRIFUGE FEED TANK, MFG. BY AFC/ADVANCED FLUID CONTAINMENT, MFG. 2015, APPROX. 12' DIA. X 15' 6" HIGH, CONE BOTTOM, INSULATED, 250 BARREL CAPACITY, MFG. 2015, S/N PTF2.5-0SN2-154494, RELATED INSULATED PIPING, VALVES, ELECTRICS, ALSO INCLUDES CENTRIFUGAL PUMP WITH APPROX. 25 HP MOTOR, RELATED EQUIPMENT, COMPONENTS |
LTS - '027 |
AFC/ADVANCED FLUID CONTAINMENT |
|
|
2015 |
1 | STORAGE TANK, TAG SHOWS #200-TK-243 OIL/WATER SEPARATOR STAND PIPE TANK, MFG. BY AFC/ADVANCED FLUID CONTAINMENT, 8' DIA. X 17' HIGH, 280 BARREL CAPACITY, MFG. 2015, S/N RTF1.5-0SN2-154462, CARBON STEEL WELDED, HEAVY DUTY PIPING, VALVES, ELECTRICS, MOUNTED ON HEAVY DUTY I-BEAM SKID, ALSO INCLUDES SULZER CENTRIFUGAL PUMP WITH APPROX. 50 HP MOTOR |
LTS - '028 |
AFC/ADVANCED FLUID CONTAINMENT |
|
|
2015 |
1 |
FEED TANK, TAG SHOWS #300-TK-301 DISTILLATION FEED TANK, MFG. BY AFC/ADVANCED FLUID CONTAINMENT, 12' DIA. X 15' 6" HIGH, 250 BARREL CAPACITY, MFG. 2015, S/N RTF2.5-0SH3- 154460, INSULATED CONE BOTTOM, RELATED PIPING, VALVES, ELECTRICS, ALSO INCLUDES CENTRIFUGAL PUMP WITH 50 HP MOTOR |
LTS - '029 |
ALFA LAVAL |
OSSX520 |
4127590/200 H/SK-15 |
2015 |
LOT | DISC STACK CENTRIFUGE, ALFA LAVAL MDL. OSSX520, S/N 4127590/200H/SK-15, POSSIBLE 2015 VINTAGE, 200 HP MAIN DRIVE MOTOR, (134) STACKED DISCS, STAINLESS STEEL PIPING, VALVES, FLANGES, FITTINGS, GAUGES, FILTER SYSTEM, I-BEAM WELDED FRAME/STRUCTURE WITHIN SHEET METAL BUILDING, SPRAYED INSULATED TANK, RELATED PIPING, VALVES, ELECTRICS, ALSO INCLUDES CENTRIFUGAL PUMP WITH APPROX. 25 HP MOTOR, RELATED EQUIPMENT, COMPONENTS |
LTS - '030 |
|
|
|
|
LOT |
ANCILLARY EQUIPMENT, ASSORTED EQUIPMENT AND COMPONENTS NOT OTHERWISE LISTED THROUGHOUT SHEET METAL CONTAINMENT AREA FOR CENTRIFUGE SEPARATION SYSTEM, INCLUDES THOSE NOT OTHERWISE LISTED WITH TANKS, PUMPS, CENTRIFUGE, CLARIFIER, INCLINE BULK SEPARATOR, ESTIMATE ONLY |
LTS - '031 |
|
|
|
|
1 |
CAUSTIC TANK, NO PLATE, HORIZONTAL, APPROX. 5,000 GALLON, APPROX. 8' DIA. X 20' LONG, CARBON STEEL, DOUBLE WALLED, MOUNTED ON TUBULAR STEEL FRAME, RELATED PIPING, FLANGES, ALSO INCLUDES (2) PUMPS WITH PIPING, VALVES, GAUGES, ALL MOUNTED IN SHEET METAL PORTABLE BUILDING, VALUED AS COMPLETE SETUP |
LTS - '032 |
ALFA LAVAL |
LYNX 800 |
5025883 |
2015 |
1 | DEWATERING CENTRIFUGE, TAG #200-CF-272, ALFA LAVAL MDL. LYNX 800, S/N 5025883, MFG. 20105, 1.2 KG/DM3 MAXIMUM SOLIDS DENSITY, 2,900 MAXIMUM BOWL SPEED, 0° CENTIGRADE- 100° CENTIGRADE MINIMUM-MAXIMUM FEED TEMPERATURE, MFG. IN DENMARK, APPROX. 30" X 12' LONG, 75 HP TOP MOTOR WITH DRIVE, 300 HP BALDOR-RELIANCE BOTTOM MOTOR WITH DRIVE, ALL RELATED EQUIPMENT, COMPONENTS, LOCATED ON THIRD LEVEL FRAME/STRUCTURE, HIGH DEGREE DIFFICULTY OF REMOVAL, [B] |
LTS - '033 |
|
|
|
|
1 |
PUMP, NOT ABLE TO CLOSELY INSPECT, APPROX. 15 HP MOTOR, DEWATERING FEED PUMP |
LTS - '034 |
DERRICK |
HYPERP OOL 4PVE |
17618-00-005 |
|
1 |
SHAKER SCREEN, DERRICK, HYPERPOOL 4PVE, SINGLE DECK, APPROX. 42" X 80", MOTOR, DRIVE, BOTTOM HOPPER, CONTROLS, ELECTRICS, RELATED EQUIPMENT, COMPONENTS, LOCATED ON SECOND LEVEL, REFERRED AS SHALE SHAKER, S/N 17618-00-005 |
LTS - '035 |
DERRICK |
HYPERP OOL 4PVE |
|
|
1 |
SHAKER SCREEN, DERRICK, HYPERPOOL 4PVE, SINGLE DECK, APPROX. 42" X 80", MOTOR, DRIVE, BOTTOM HOPPER, CONTROLS, ELECTRICS, RELATED EQUIPMENT, COMPONENTS, LOCATED ON SECOND LEVEL, REFERRED AS SHALE SHAKER, S/N NOT READABLE |
LTS - '036 |
DERRICK |
HYPERP OOL 4PVE |
|
|
1 |
SHAKER SCREEN, DERRICK, HYPERPOOL 4PVE, SINGLE DECK, APPROX. 42" X 80", MOTOR, DRIVE, BOTTOM HOPPER, CONTROLS, ELECTRICS, RELATED EQUIPMENT, COMPONENTS, LOCATED ON SECOND LEVEL, REFERRED AS SHALE SHAKER, S/N NOT READABLE |
LTS - '037 |
|
|
|
|
1 | MIXING TANK, NO PLATE, APPROX. 5,000 GALLON, APPROX. 10' DIA. X 12' HIGH, TOP MOUNTED HAYWARD GORDON MDL. STX-12 MIXER/AGITATOR, S/N 302838, APPROX. 5 HP MOTOR, ALSO INCLUDES CENTRIFUGAL PUMP WITH APPROX. 50 HP MOTOR, APPROX. 12" X 20' TOP MOUNTED FEED CONVEYOR WITH MOTOR, DRIVE, RELATED EQUIPMENT, COMPONENTS, OLDER APPEARANCE, [C-] |
LTS - '038 |
ANDRITZ SEPARATION |
|
|
2015 |
LOT | PADDLE DRYER SYSTEM, ANDRITZ SEPARATION, #GPD14W190, MACHINE #14W-269, MFG. 2015 IN HOLLAND, MOUNTED ON HEAVY DUTY STEEL CRADLE SYSTEM, (2) HOT OIL FIRED PADDLES, APPROX. 10' X 35' LONG, INSULATED EXTERIOR, NEWER SANTASALO MOTOR/DRIVE, TYPE P30- 111N-360-010/VHL, S/N W20282, BALDOR/RELIANCE 215 HP MOTOR, ELECTRICS, ALL RELATED PIPING, VALVES, ALSO INCLUDES CIDRA SONARTRAC NUCLEAR DENSITY METER WITH DISPLAY MONITOR, ELECTRICS, ALL RELATED EQUIPMENT, COMPONENTS, INCLUDING CUSTOM HEAVY DUTY FRAME/STRUCTURE WITH I-BEAM WELDED CONSTRUCTION, ALSO INCLUDES PRESSURE VESSEL PADDLE DRYER CONDENSER, TAG #200-CD-286, HIGH DEGREE DIFFICULTY OF REMOVAL |
Equipment list
Page 4 of 10
97263 - Sky Quarry - v2 - EXHIBIT B
LTS # |
OEM |
Model |
Serial# |
Year Built |
Qty |
Machine Description |
LTS - '039 |
|
|
|
|
1 | AUGER SCREW CONVEYORS, PLATE NOT ACCESSIBLE, HEAVY DUTY, APPROX. 32" X 20', APPROX. 50 HP MOTOR, DRIVE, (3) TOP MOUNTED FEED HOPPERS, ALSO INCLUDES TANK WITH CENTRIFUGAL PUMP AND APPROX. 15 HP MOTOR, EXPANSION TANK, RELATED PIPING, VALVES, EQUIPMENT, LOCATED UNDER PADDLE DRYER, ALSO INCLUDES APPROX. 16" X 8' AUGER SCREW CONVEYOR WITH APPROX. 5 HP MOTOR, LOCATED UNDER PADDLE DRYER |
LTS - '040 |
|
|
|
|
1 |
TRANSFER CONVEYOR, APPEARS CUSTOM, APPROX. 24" X 60' IDLER TROUGH ROLL, INCLINE, ANGLE IRON FRAME, MOTOR, DRIVE, LOCATED UNDER PADDLE DRYER FRAME/STRUCTURE, [C-] |
LTS - '041 |
MASABA |
|
2015248 |
|
1 |
RADIAL STACK CONVEYOR, MASABA, S/N 2015248, APPROX. 32" X 100' IDLER TROUGH ROLL, INCLINE, APPROX. 15 HP MOTOR, DRIVE, ELECTRICS, WALKWAY WITH RAILS, SPOTLIGHTS WITH ELECTRICS, (2) AXLES WITH (4) WHEELS, 3 HP MOTOR, DRIVE, NEW APPEARANCE, [B+] |
LTS - '042 |
FULTON |
|
|
|
1 | HOT OIL HEATER, FULTON, NO PLATE, APPROX. 12' DIA. X 50' LONG, MOUNTED IN HEAVY DUTY STEEL CRADLES ON HEAVY DUTY SKID, POWER SUPPLY/CONTROL, BURNER SYSTEM WITH (2) MAXON BURNER UNITS, OUTER INSULATION, (2) DEAN BOOSTER PUMPS WITH 125 HP MOTORS, RELATED INSULATED PIPING, VALVES, ELECTRICS, EXPANSION TANK, ALL RELATED EQUIPMENT, COMPONENTS, VALUED AS COMPLETE SETUP |
LTS - '043 |
|
|
|
|
1 |
MIXING TANK, REFERRED TO A PROCESS SUMP, APPROX. 30' DIA., INGROUND CONSTRUCTED, WITH PUMP, RELATED PIPING, HIGH DEGREE DIFFICULTY OF REMOVAL, *NO VALUE |
LTS - '044 |
|
|
|
|
LOT |
AIR/NITROGEN PACKAGE, INCLUDES THOSE ASSETS AS SHOWN BELOW, VALUED AS COMPLETE GROUPING AND/OR LOT, LOCATED IN PORTABLE BUILDING |
LTS - '045 |
ATLAS COPCO |
GA55 PLUS |
API621674 |
2015 |
1 |
AIR COMPRESSOR, ATLAS COPCO MDL. GA55 PLUS, PLATE SHOWS TYPE GA55P, S/N API621674, MFG. 2015, 157 PSI, 298.7 CFM, 75 HP, ENCLOSED, RELATED PIPING, ELECTRICS, DIGITAL INDICATOR, [B], LOCATED IN PORTABLE BUILDING, *W/AIR/NITROGEN PACKAGE |
LTS - '046 |
ATLAS COPCO |
NGM5 |
API202163 |
2015 |
1 |
NITROGEN GENERATOR, ATLAS COPCO MDL. NGM5, S/N API202163, MFG. 2015, RELATED PIPING, ELECTRICS, DIGITAL READOUT, [B], LOCATED IN PORTABLE BUILDING, *W/AIR/NITROGEN PACKAGE |
LTS - '047 |
ATLAS COPCO |
CD110 PLUS |
UTF125L71 |
2015 |
1 |
AIR DRYER, ATLAS COPCO MDL. CD110 PLUS, S/N UTF125L71, 165 PSIG DESIGN PRESSURE, 150 PSIG MAXIMUM WORKING PRESSURE, MFG. 2015, TWIN TANKS, SKID MOUNTED, (3) INLINE FILTERS, RELATED PIPING, VALVES, CONTROL POWER SUPPLY WITH ELECTRICS, [B], LOCATED IN PORTABLE BUILDING, *W/AIR/NITROGEN PACKAGE |
LTS - '048 |
|
|
|
2015 |
2 |
AIR RECEIVING TANKS, MFG. 2015, 150 PSI, APPROX. 500 GALLON EACH WITH RELATED PIPING, VALVES, *W/AIR/NITROGEN PACKAGE |
LTS - '049 |
|
|
|
|
1 |
PORTABLE BUILDING, APPROX. 12' X 24' X 10' HIGH, WITH FLOORING, DOUBLE DOORS ON EACH SIDE, LIGHTING, ELECTRICS, *W/AIR/NITROGEN PACKAGE |
LTS - '050 |
|
|
|
|
LOT | WATER TREATMENT SYSTEM, WATER SOFTENING SYSTEM, LOCATED IN PORTABLE BUILDING, INCLUDES (2) FIBERGLASS WATER SOFTENING TANKS, (1) PLASTIC BRINE TANK, FEED-PAC MDL. G156-15 SIMPLEX PUMP SKID, SHOP ORDER #15-487-B, INCLUDES VERTICAL PUMP WITH 15 HP MOTOR, RELATED PIPING, ELECTRICS, APPROX. 300 GALLON PLASTIC TANK, APPROX. 500 GALLON CARBON STEEL TANK, ALL RELATED PIPING, VALVES, METERS, VALUED AS COMPLETE PACKAGE, MOUNTED IN APPROX. 10' X 20' X 10' PORTABLE BUILDING |
LTS - '051 |
VICTORY ENERGY FRONTIER SERIES |
NB-183 |
12927 |
2015 |
1 | HEAT RECOVERY STEAM GENERATOR, VICTORY ENERGY FRONTIER SERIES MDL. NB-183, S/N 12927, MFG. 2015, 150 MAWP, 17,722 POUNDS PER HOURS MAXIMUM STEAMING CAPACITY, 7,308 SF BOILER HEATING SURFACE, CARBON STEEL HORIZONTAL TANK MOUNTED IN STEEL CRADLES ON CONCRETE FOOTERS, RELATED INSULATED AND NON INSULATED PIPING, VALVES, GAUGES, (2) EXHAUST STACKS, ALL RELATED EQUIPMENT, COMPONENTS, ALSO INCLUDES PLATFORM WITH STAIRS AND RAILS |
LTS - '052 |
CENTAUR |
GS1-CH- 1D |
HG85083 |
|
1 | TURBINE GENERATOR, SOLAR TURBINES, CENTAUR GAS TURBINE GENERATOR SET MDL. GS1- CH-1D, S/N HG85083, ASSEMBLY #2-40601, PRINCIPAL INDICATES 2.3 MEGA WATTS CAPACITY BUT DERATED BY ELEVATION TO 1.5 MEGA WATTS CAPACITY, INCLUDES ALL RELATED EQUIPMENT, COMPONENTS INCLUDING BURNER SYSTEM, EXHAUST STACK, PRINCIPAL INDICATED UPGRADED PLC CONTROLS WITH ELECTRICS, ALSO INCLUDES SOLAR MODS PACKAGE, [B] |
Equipment list
Page 5 of 10
97263 - Sky Quarry - v2 - EXHIBIT B
LTS # |
OEM |
Model |
Serial# |
Year Built |
Qty |
Machine Description |
LTS - '053 |
CENTAUR |
GS1-CH- ID |
HG85093 |
|
1 |
TURBINE GENERATOR, SOLAR TURBINES CENTAUR GAS TURBINE GENERATOR SET MDL. GS1- CH-ID, S/N HG85093, ASSEMBLY #2-40601, PRINCIPAL INDICATES 2.3 MEGA WATTS CAPACITY, DERATED BY ELEVATION TO 1.5 MEGA WATTS CAPACITY, INCLUDES ALL RELATED EQUIPMENT, COMPONENTS, INCLUDING GAS FIRED BURNER SYSTEM, EXHAUST STACK, ETC., ORIGINAL CONTROLS AND ELECTRICS, ALSO INCLUDES SOLAR MODS PACKAGE, [B] |
Equipment list
Page 6 of 10
97263 - Sky Quarry - v2 - EXHIBIT B
LTS # |
OEM |
Model |
Serial# |
Year Built |
Qty |
Machine Description |
LTS - '054 |
|
|
|
|
LOT |
DISTILLATION SYSTEM, INCLUDES ALL RELATED EQUIPMENT AND COMPONENTS ON HEAVY DUTY PLATFORM SKID WITH STEEL GRATE, FLOORING, INCLUDES THOSE ASSETS AS SHOWN BELOW, VALUED AS COMPLETE GROUPING AND/OR LOT |
LTS - '055 |
|
|
|
|
1 |
GLYCOL STORAGE TANK, TAG #400-TK-458, NO PLATE, APPROX. 7,500 GALLON, CARBON STEEL SEAM WELDED, VERTICAL, APPROX. 10' DIA. X 16' HIGH, WITH VALVES, PIPING, FLANGES, MOUNTED ON SKID, *W/DISTILLATION SYSTEM |
LTS - '056 |
|
|
N723H519 |
2015 |
1 |
GLYCOL PUMP, TAG #400-PU-456, GOULDS SIZE 4X6-13, S/N N723H519, MFG. 2015, RELATED PIPING, VALVES, GAUGES, FLANGES, ALSO INCLUDES GLYCOL FILTER WITH GAUGES, ALL RELATED EQUIPMENT, COMPONENTS, *W/DISTILLATION SYSTEM |
LTS - '057 |
|
|
|
|
1 |
HEAT EXCHANGER, TAG #300-HE-305 FLASH PRE HEATER, APPROX. 28" X 16', INSULATED HORIZONTAL TANK, RELATED INSULATED PIPING, VALVES, FLANGES, FISHER AIR ACTUATED RELEASE FLOW CONTROL VALVE, RELATED EQUIPMENT, COMPONENTS, *W/DISTILLATION SYSTEM |
LTS - '058 |
LOBE PRO |
API- CM50.T (SQ_SDF FF4) |
101561 |
|
1 | FLASH CONCENTRATE PUMP, NO TAG#, LOBE PRO MDL. API-CM50.T (SQ_SDFFF4), S/N 101561, 7.5 HP MOTOR, RELATED INSULATED PIPING, VALVES, FLANGES, ALSO INCLUDES HEAVY DUTY I- BEAM WELDED STAND MOUNTED INSULATED TANK, VERTICAL, APPROX. 6' DIA. X 20' HIGH, RELATED PIPING, VALVES, ELECTRICS, MICRO MOTION ELECTRIC VALVE CONTROLS, FISHER AIR ACTUATED VALVE FLOW CONTROL, RELATED EQUIPMENT, COMPONENTS, *W/DISTILLATION SYSTEM |
LTS - '059 |
GOULDS |
|
N723H670 |
2015 |
1 | TAI/SOLVENT PUMP, TAG #300-PU-360, GOULDS SIZE 2X3-10, S/N N723H670, MFG. 2015, 3 HP MOTOR, INSULATED PIPING, VALVES, FLANGES, FISHER CONTROLS AIR ACTUATED FLOW CONTROL RELIEF VALVE, APPROX. 1,000 GALLON, HORIZONTAL CARBON STEEL SEAM WELDED CONDENSATE DRUM TANK MOUNTED IN CARBON STEEL CRADLES, RELATED PIPING, VALVES, GAUGES, TOP MOUNTED GLYCOL CONDENSER/HEAT EXCHANGER, RIBBON HALF MOON SHAPED, RELATED PIPING, VALVES, FLANGES, *W/DISTILLATION SYSTEM |
LTS - '060 |
WINTEK CORPORATION | B2200- C280- WSS- 500/2- 1FR |
150220 |
2015 |
LOT | VACUUM SYSTEM, PLATE SHOWS WINTEK CORPORATION IN FLANDERS, NJ, TAG #300-PU-330, MDL. B2200-C280-WSS-500/2-1FR, S/N 150220, MFG. 2015, 2,200 ACFM AT 48 TORR, 50 HP BOOSTER AND LIQUID RING PUMP, BUCKEYE FABRICATING INSULATED TANK, TOP MOUNTED VACUUM PUMP WITH APPROX. 100 HP MOTOR, ALL RELATED PIPING, VALVES, FLANGES, FITTINGS, EQUIPMENT, COMPONENTS, INCLUDING AMETEK 5100 PLC WITH ELECTRICS, *W/DISTILLATION SYSTEM |
LTS - '061 |
GOULDS |
|
N723H671 |
2015 |
1 |
BITUMEN PUMP, TAG #300-PU-351, GOULDS SIZE 1.5X3-10, S/N N723H671, MFG. 2015, RELATED PIPING, VALVES, FLANGES, ALSO INCLUDES APPROX. 5' X 10' INSULATED HORIZONTAL BITUMEN DRUM/TANK, HEAVY DUTY FLANGE, ALL RELATED EQUIPMENT, COMPONENTS, *W/DISTILLATION SYSTEM |
LTS - '062 |
|
|
|
|
LOT | WIPED FILM EVAPORATOR, NO PLATE, APPROX. 5' X 40' VERTICAL PRESSURE VESSEL COLUMN, INSULATED EXTERIOR, TOP MOUNTED MIXER WITH MOTOR, DRIVE, INTERNAL SPIN ROTOR WITH (5) BLADES, OUTER INSULATED WITH HOT OIL HEATING, ALL RELATED PIPING, VALVES, EQUIPMENT, COMPONENTS, MOUNTED IN HEAVY DUTY I-BEAM FRAME/STRUCTURE, *W/DISTILLATION SYSTEM |
LTS - '063 |
GOULDS |
|
|
|
1 |
HOT OIL PUMP, TAG #300-PU-340, GOULDS CENTRIFUGAL PUMP WITH 40 HP MOTOR, RELATED PIPING, VALVES, FLANGES, ALSO INCLUDES BEARING LUBE SYSTEM, TAG #300-LU-308, *W/DISTILLATION SYSTEM |
LTS - '064 |
|
|
|
|
2 |
POP TANKS, TAG #300-TK-319 & 300-TK-318, EACH APPROX. 2,000 GALLON, CARBON STEEL, VERTICAL, APPROX. 10' DIA. X 8' HIGH, SKID MOUNTED, RELATED PIPING, VALVES, FLANGES, *W/DISTILLATION SYSTEM |
LTS - '065 |
|
|
|
|
1 |
COOLING TOWER, NO PLATE, INCLUDES (3) BOTTOM MOUNTED, APPROX. 12' DIA. EXHAUST UNITS WITH FANS, EACH WITH 30 HP MOTOR, GALVANIZED FRAME/STRUCTURE, CONTROLS, ELECTRICS, HEAVY DUTY, HIGH DEGREE DIFFICULTY OF REMOVAL, PLATE SHOWS CHART, PLATE NOT READABLE, *W/DISTILLATION SYSTEM |
LTS - '066 |
|
|
|
|
LOT |
ANCILLARY EQUIPMENT, ASSORTED COMPONENTS NOT OTHERWISE LISTED, *W/DISTILLATION SYSTEM |
Equipment list
Page 7 of 10
97263 - Sky Quarry - v2 - EXHIBIT B
LTS # |
OEM |
Model |
Serial# |
Year Built |
Qty |
Machine Description |
LTS - '067 |
CATERPILLAR |
SR-4B |
2DN011524 |
|
1 |
GENERATOR SET, CATERPILLAR MDL. SR-4B, S/N 2DN011524, TAG# 600-GE-640, MOUNTED IN PORTABLE BUILDING, CAT MDL. 3508B DIESEL ENGINE, 910 KW/1137 KVA, ROOF MOUNTED MUFFLER SYSTEM, ALSO INCLUDES HEAVY DUTY TRANSFER SWITCH MOUNTED ON CUSTOM I- BEAM WELDED PLATFORM STRUCTURE, APPROX. 1000 GALLON DOUBLE WALLED DIESEL FUEL TANK |
LTS - '068 |
|
|
|
|
LOT |
ELECTRICAL SYSTEM, INCLUDING BUT NOT LIMITED TO: TOSHIBA AND GE MOTOR CONTROL CENTERS, RELATED SWITCHGEAR, VARIABLE FREQUENCY DRIVES, BREAKER BOXES, TRANSFORMERS, ELECTRICAL WIRING, CONDUIT, ALL RELATED ELECTRICS THROUGHOUT, MOST LOCATED IN HEAVY DUTY PORTABLE BUILDING, TOSHIBA MDL. 2300MBI MEDIUM VOLTAGE ADJUSTABLE SPEED MOTOR DRIVE, GE EVOLUTION SERIES E9000 MOTOR CONTROL UNITS, (4) HEAVY DUTY TRANSFORMERS LOCATED OUTSIDE, NO PLATE, ESTIMATE ONLY |
LTS - '069 |
|
|
|
|
LOT |
MIXING SYSTEM, REFERRED TO AS FLOCCULANT DOSING, MFG. BY PROCESS ENGINEERS AND EQUIPMENT, INCLUDES (2) APPROX. 400 GALLON POLY TANKS, EACH WITH TOP MOUNTED MIXER/AGITATOR, DRY STORAGE HOPPER, FLOC SCREW, LIGHT DUTY CENTRIFUGAL PUMPS, AIR ACTUATED FLOW CONTROL VALVES, RELATED PIPING, VALVES, ELECTRICS, LOCATED IN PORTABLE BUILDING APPROX. 6' X 16' X 7' HIGH, WITH LIGHTING, ELECTRICS, VALUED AS COMPLETE SETUP, INCLUDES WALL MOUNTED POWER SUPPLY/CONTROL WITH ELECTRICS |
LTS - '070 |
|
|
|
|
LOT |
SAFETY SHOWER TANK AND PUMP, INCLUDES GLM INSULATED TANK, 9.5' DIA. X 8' HIGH, S/N A- 96380-S8, MFG. 1996, HEATED EXTERIOR, ALSO INCLUDES VERTICAL PUMP WITH 5 HP MOTOR, RELATED INSULATED PIPING, VALVES, FLANGES, TOP MOUNTED MIXER/AGITATOR W/ELECTRICS |
LTS - '071 |
|
|
|
|
LOT |
WATER TREATMENT SYSTEM, INCLUDES CLARIFIER, PUMPS, TANK, PIPING, VALVES, ELECTRICS, ALL RELATED EQUIPMENT, COMPONENTS, VALUED AS COMPLETE GROUPING AND/OR LOT |
LTS - '072 |
|
|
|
|
1 | CLARIFIER, NO PLATE, INLINE PLATE SEPARATOR, PAINTED BLUE, CONE BOTTOM, PNEUMATIC BOTTOM MOUNTED SIDE GATE OPENING VALVE, RELATED INSULATED PIPING, VALVES, ELECTRICS, ALSO INCLUDES TRIAD AIR ACTUATED FLOW CONTROL VALVE, ALL RELATED EQUIPMENT, COMPONENTS, MOUNTED IN HEAVY DUTY TUBULAR STEEL FRAME ON HEAVY DUTY I-BEAM SKID, *W/WATER TREATMENT SYSTEM |
LTS - '073 |
HAYWARD GORDON |
XR20/2 PUMP |
|
|
1 |
CENTRIFUGAL PUMP, TAG #200-PU-263 CLARIFIER UNDERFLOW PUMP, HAYWARD GORDON MDL. XR20/2 PUMP, 15 HP MOTOR, RELATED PIPING, VALVES, *W/WATER TREATMENT SYSTEM |
LTS - '074 |
|
|
|
|
1 |
TANK, TAG #200-TK-261 CLARIFIER OVERFLOW STAND PIPE TANK, VERTICAL CARBON STEEL, APPROX. 10' DIA. X 20' HIGH, MOUNTED ON HEAVY DUTY I-BEAM PLATFORM, *W/WATER TREATMENT SYSTEM |
LTS - '075 |
|
|
|
|
1 |
CENTRIFUGAL PUMP, TAG #200-PU-262 CLARIFIER OVERFLOW PUMP, SULZER PUMP, NO PLATE, 100 HP MOTOR, RELATED PIPING, VALVES, *W/WATER TREATMENT SYSTEM |
LTS - '076 |
SULZER |
|
|
|
2 |
CENTRIFUGAL PUMPS, SULZER, NO PLATE, TAG #400-PU-402A & 400-PU402B PROCESS WATER PUMPS, EACH WITH 200 HP MOTOR, RELATED PIPING, VALVES, *W/WATER TREATMENT SYSTEM |
LTS - '077 |
|
|
|
|
LOT |
ANCILLARY EQUIPMENT, ASSORTED COMPONENTS NOT OTHERWISE LISTED INCLUDING FILTER PODS, VALVES, ETC., *W/WATER TREATMENT SYSTEM |
Equipment list
Page 8 of 10
97263 - Sky Quarry - v2 - EXHIBIT B
LTS # |
OEM |
Model |
Serial# |
Year Built |
Qty |
Machine Description |
LTS - '078 |
AFC/ADVANCED FLUID CONTAINMENT |
|
RTF10-OSN4- 154454 |
2015 |
1 |
HEATED STORAGE TANK, AFC/ADVANCED FLUID CONTAINMENT, 1,000 BARREL CAPACITY, 15' 6" DIA. X 30' HIGH, MFG. 2015, HOT OIL HEATED, STAINLESS STEEL BOTTOM MOUNTED BAYONET HEATER, APPROX. 8' LONG, RELATED PIPING, VALVES, FLANGES, INCLUDES (1) FISHER AIR ACTUATED FLOW CONTROL VALVE, S/N RTF10-OSN4-154454 |
LTS - '079 |
AFC/ADVANCED FLUID CONTAINMENT |
|
RTF10-OSN4- 154458 |
2015 |
1 |
HEATED STORAGE TANK, AFC/ADVANCED FLUID CONTAINMENT, 1,000 BARREL CAPACITY, 15' 6" DIA. X 30' HIGH, MFG. 2015, HOT OIL HEATED, STAINLESS STEEL BOTTOM MOUNTED BAYONET HEATER, APPROX. 8' LONG, RELATED PIPING, VALVES, FLANGES, INCLUDES (1) FISHER AIR ACTUATED FLOW CONTROL VALVE, S/N RTF10-OSN4-154458 |
LTS - '080 |
AFC/ADVANCED FLUID CONTAINMENT |
|
TF10-OSN4- 154452 |
2015 |
2 |
HEATED STORAGE TANKS, AFC/ADVANCED FLUID CONTAINMENT, EACH 1,000 BARREL CAPACITY, 15' 6" DIA. X 30' HIGH, MFG. 2015, HOT OIL HEATED, STAINLESS STEEL BOTTOM MOUNTED BAYONET HEATER, APPROX. 8' LONG, RELATED PIPING, VALVES, FLANGES, INCLUDES (1) FISHER AIR ACTUATED FLOW CONTROL VALVE, S/N RTF10-OSN4-154452 AND ONE NOT AVAILABLE |
LTS - '081 |
|
|
|
|
LOT |
LOAD OUT SYSTEM, INCLUDES (4) ASSORTED STORAGE TANKS, PUMPS, CUSTODY TRANSFER STATION, RELATED PIPING, VALVES, FLANGES, CONTROLS, ELECTRICS, ALL MOUNTED IN CONCRETE CONTAINMENT, VALUED AS COMPLETE SYSTEM |
LTS - '082 |
AFC/ADVANCED FLUID CONTAINMENT |
|
|
|
1 | STORAGE TANK, AFC/ADVANCED FLUID CONTAINMENT, 600 BARREL CAPACITY, 13' 6" DIA. X 24' HIGH, MFG. 2015, S/N RTF6-OSNF-154448, CARBON STEEL, VERTICAL, RELATED PIPING, VALVES, FLANGES, FITTINGS, ALSO INCLUDES LIGHT DUTY CENTRIFUGAL PUMP WITH 7.5 HP MOTOR, *W/LOAD OUT SYSTEM |
LTS - '083 |
AFC/ADVANCED FLUID CONTAINMENT |
|
154449 |
|
1 |
STORAGE TANK, AFC/ADVANCED FLUID CONTAINMENT, 1,000 BARREL CAPACITY, 15' 6" DIA. X 30' HIGH, MFG. 2015, INSULATED, RELATED PIPING, VALVES, FLANGES, S/N ENDS IN 154449, *W/LOAD OUT SYSTEM |
LTS - '084 |
AFC/ADVANCED FLUID CONTAINMENT |
|
154450 |
|
1 |
STORAGE TANK, AFC/ADVANCED FLUID CONTAINMENT, 1,000 BARREL CAPACITY, 15' 6" DIA. X 30' HIGH, MFG. 2015, INSULATED, RELATED PIPING, VALVES, FLANGES, S/N ENDS IN 154450, *W/LOAD OUT SYSTEM |
LTS - '085 |
AFC/ADVANCED FLUID CONTAINMENT |
|
154451 |
|
1 |
STORAGE TANK, AFC/ADVANCED FLUID CONTAINMENT, 1,000 BARREL CAPACITY, 15' 6" DIA. X 30' HIGH, MFG. 2015, INSULATED, RELATED PIPING, VALVES, FLANGES, S/N ENDS IN 154451, *W/LOAD OUT SYSTEM |
LTS - '086 |
|
|
|
|
LOT |
PUMPS, INCLUDES DIAPHRAGM, GAS, VARIOUS THROUGHOUT, *W/LOAD OUT SYSTEM |
LTS - '087 |
S&S TECHNICAL |
|
SST2015-024 |
|
LOT |
CUSTODY TRANSFER STATION, PLATE SHOWS S&S TECHNICAL IN ALPHARETTA, GA, S/N SST2015-024, 285 PSI, 400 GM, ALL RELATED PIPING, VALVES, GAUGES, FLANGES, FITTINGS, ELECTRICS, *W/LOAD OUT SYSTEM |
LTS - '088 |
|
|
|
|
LOT |
ANCILLARY EQUIPMENT, ASSORTED COMPONENTS NOT OTHERWISE LISTED, ESTIMATE ONLY, *W/LOAD OUT SYSTEM |
LTS - '089 |
|
|
|
|
LOT | NATURAL GAS KNOCKOUT SYSTEM, INCLUDES TAG #400-KO-445 FUEL GAS KNOCKOUT DRUM WITH FUEL GAS INLET, RELATED PIPING, VALVES, FITTINGS, ALSO INCLUDES APPROX. 1,500 GALLON CONDENSATE TANK, TAG #400-TK-446, SIGMA THERMAL CONTROL PANEL WITH ELECTRICS, ALL RELATED EQUIPMENT, COMPONENTS, LOCATED IN CORNER OF YARD, VALUED AS COMPLETE SYSTEM |
LTS - '090 |
AFC/ADVANCED FLUID CONTAINMENT |
|
RTF6-OSN4- 154459 |
2015 |
1 | WATER STORAGE TANK, AFC/ADVANCED FLUID CONTAINMENT, 600 BARREL CAPACITY, 13' 6" DIA. X 24' HIGH, MFG. 2015, S/NRTF6-OSN4-154459, CARBON STEEL, SIDE MOUNTED LADDER, PRINCIPAL INDICATES INSIDE COMPARTMENT FOR 5,000 GALLON SECONDARY FIRE WATER STORAGE, ALSO INCLUDES VERTICAL PUMP WITH APPROX. 3 HP MOTOR, RELATED INSULATED PIPING, VALVES, FLANGES, [B] |
LTS - '091 |
GENIE |
Z60-34 |
760-374 |
|
1 |
AERIAL BOOM LIFT, GENIE MDL. Z60-34, S/N 760-374, 7,547 HOURS, ROUGH TERRAIN TIRES, SINGLE STAGE BOOM, MANLIFT BUCKET, 4X4, [C] |
Equipment list
Page 9 of 10
97263 - Sky Quarry - v2 - EXHIBIT B
LTS # |
OEM |
Model |
Serial# |
Year Built |
Qty |
Machine Description |
LTS - '092 |
BOBCAT |
S300 |
521512110 |
|
1 |
SKID LOADER, BOBCAT MDL. S300, S/N 521512110, DIESEL ENGINE, HYDRAULIC SYSTEM, ROUGH TERRAIN TIRES, INCLUDES (2) BUCKETS, FORKS ATTACHMENT, [C+] |
LTS - '093 |
HOTSY |
1260SS |
11105330- 165236 |
|
1 |
PRESSURE WASHER TRAILER, INCLUDES HOTSY MDL. 1260SS PRESSURE WASHER, S/N 11105330-165236, 3,000 PSI, APPROX. 225 GALLON POLY TANK, HOSE, GUN, ALL MOUNTED ON SINGLE AXLE TRAILER |
LTS - '094 |
VACSTAR |
800DT |
|
|
1 |
VACUUM TRAILER, VACSTAR 800DT, APPROX. 500 GALLON TANK, ENGINE, HYDRAULIC SYSTEM, TANKS, RELATED EQUIPMENT, COMPONENTS, ALL MOUNTED ON TANDEM AXLE TRAILER, ENGINE CURRENTLY IN PROCESS OF REPAIR, OLDER APPEARANCE, [C-] |
LTS - '095 |
HUSQVARNA |
ST227P |
|
|
1 |
SNOW BLOWER, HUSQVARNA MDL. ST227P, GAS ENGINE, SELF PROPELLED |
LTS - '096 |
SUZUKI |
KING QUAD |
|
|
1 |
ATV, SUZUKI KING QUAD, 4X4-700, 4-WHEELER |
LTS - '097 |
MILLER |
BOBCAT 225 G PLUS |
KG223046 |
|
1 |
WELDER, MILLER BOBCAT 225 G PLUS, S/N KG223046, GAS ENGINE |
LTS - '098 |
|
|
|
|
LOT | SHOP EQUIPMENT, ASSORTED, INCLUDING BUT NOT LIMITED TO: AIR COMPRESSORS, FLAMMABLE CABINET, CONCRETE BARRIERS, CONTAINERS, DOLLIES, FANS, FIRE EXTINGUISHERS, LADDERS, MECHANICAL LIFT, MOBILE OFFICES, HEATERS, PALLET LIFT, PALLET RACKS, SAFETY HARNESSES, SAFETY CONES, SCAFFOLDING, SHELVING SECTIONS, VACUUM CLEANERS, VISES, WORK TABLES, WHEELBARROW, VARIOUS POWER AND HAND TOOLS, (4) MISSION MAGNUM CENTRIFUGAL PUMPS, 100 HP & 325 HP, VARIOUS THROUGHOUT ENTIRE FACILITY, ESTIMATE ONLY |
LTS - '099 |
BRUKER MPA |
|
|
|
1 |
SPECTROMETER, BRUKER MPA, NO PLATE, WITH HP ELITE-S PC, RELATED HARDWARE, SOFTWARE, BENCH MODEL |
LTS - '100 |
QUINCY |
21.350-ER |
B23ER-01511 |
|
1 |
LAB OVEN, QUINCY MDL. 21.350-ER, S/N B23ER-01511, DIGITAL TEMPERATURE INDICATOR, 2- DOOR, BENCH TYPE |
LTS - '101 |
|
|
|
|
LOT |
FUME HOOD WITH FISHER SCIENTIFIC BURNERS, INCLUDES KEWAUNEE FUME HOOD WITH CABINETS, (4) BURNERS, VARIOUS |
LTS - '102 |
ROBINSON |
872A4 |
22455 & 22454 |
|
2 |
CENTRIFUGES, ROBINSON MDL. 872A4, S/N 22455 & 22454 |
LTS - '103 |
|
|
|
|
LOT | LAB EQUIPMENT, INCLUDING BUT NOT LIMITED TO: PLATE WARMERS, ANALYTICAL BALANCES, SCALES, SHAKER, DOUBLE ROLL CRUSHER, SAFETY CLEANING STAND, (2) FLAMMABLE CABINETS, VARIOUS CABINETS, ROLL CRUSHER, HONDA PORTABLE GEN SET, BATTERY CHARGER, (4) RETORT HEATERS, ETC., INCLUDES THOSE NOT OTHERWISE LISTED |
LTS - '104 |
|
|
|
|
LOT |
OFFICES, INCLUDES ASSORTED COMPUTER HARDWARE, NETWORK SERVER SYSTEM, OFFICE EQUIPMENT, OFFICE MACHINES, OFFICE FURNITURE, ASSORTED KENWOOD RADIOS, DEFIBRILLATOR, LOCKER SECTIONS, ETC., LOCATED THROUGHOUT, ESTIMATE ONLY |
Equipment list
Page 10 of 10
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
Principal Amount: $2,000,000 Issue Date: November 24, 2023 9% Secured Convertible Promissory Note
FOR VALUE RECEIVED, SKY QUARRY INC., a Delaware corporation (hereinafter called “Borrower” or “Company”), hereby promises to pay to the order of Bengt Eriksson (the “Holder”), address at APPT 115, Level 7, Quay 27, GXIIIA, Kings Wharf, Gibraltar, the sum of Two Million Dollars ($2,000,000.00) (“Principal Amount”), with interest accruing thereon, payable on November 24, 2026 (the “Maturity Date”), if not sooner paid, converted or modified as permitted herein. This Note is being issued in connection with the Note Purchase Agreement entered into by and between Borrower and Holder dated November 20, 2023 (“Purchase Agreement”). Terms not otherwise defined herein shall have the meanings assigned to them in the Purchase Agreement.
The following terms shall apply to this Note:
ARTICLE I GENERAL PROVISIONS
1.1Interest Rate and Interest Payment Date. Interest payable on this Note shall accrue at a rate of nine percent (9.0%) per annum from the Issue Date through the Maturity Date. Interest shall be paid on a semi-annual basis commencing on December 31, 2023. Payment of interest shall be made to the Holder in the form of cash or shares of the Company’s common stock, at the Holder’s option. Holder shall notify the Borrower at least 10 days prior to the interest payment date (“Interest Notification Date”) as to the form of interest payment Holder elects to receive. If Holder does not notify the Borrower, on or before the Interest Notification Date, as to the form of interest payment it elects to receive with respect to a semi- annual interest payment, such semi-annual interest payment will be paid in cash. If Holder elects to receive a semi-annual interest payment in the form of shares of the Company’s common stock, the number of shares to be issued to Holder shall be calculated based on the interest payment amount divided by the Conversion Price (defined below) as then in effect.
1.2Maturity Date. The Maturity Date shall be November 24, 2026 (36 months from date of the issuance of the Note).
1.3Payment Grace Period. The Borrower shall have a ten (10) day grace period to pay any monetary amounts due under this Note. After the Maturity Date and during the pendency of an Event of Default, (as defined in Article IV) the interest rate shall be increased to twelve percent (12%) per annum.
1.4Miscellaneous. Interest on this Note shall be calculated on the basis of a 365-day year and the actual number of days elapsed. Principal and interest on this Note and other payments in connection with this Note shall be payable at the Holder’s offices as designated above in lawful money of the United States of America in immediately available funds without set-off, deduction or counterclaim. Upon assignment of the interest of Holder in this Note, Borrower shall instead make its payment pursuant to the assignee’s instructions upon receipt of written notice thereof.
ARTICLE II CONVERSION RIGHTS
The Holder shall have the right to convert the principal and any interest due under this Note into Shares of the Borrower’s Common Stock, $0.0001 par value per share (“Common Stock”) as set forth below.
2.1.Conversion into the Borrower’s Common Stock.
(a)The Holder shall have the right at any time commencing on the date hereof until this Note is fully paid, to convert any outstanding and unpaid principal portion of this Note, and accrued interest, at the election of the Holder (the date of giving of such notice of conversion being a “Conversion Date”) into fully paid and non-assessable shares of Common Stock. Upon delivery to the Borrower of a completed Notice of Conversion, a form of which is annexed hereto as Schedule A, Borrower shall issue and deliver to the Holder within five (5) business days after the Conversion Date (such fifth day being the “Delivery Date”) that number of shares of Common Stock for the portion of the Note converted in accordance with the foregoing. The Holder will not be required to surrender the Note to the Borrower until the Note has been fully converted or satisfied. The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing that portion of the principal of the Note and interest, if any, to be converted, by the Conversion Price.
(b)Subject to adjustment as provided in Article 2.1(c) hereof, the conversion price (“Conversion Price”) per share shall be a price equal to $1.60 per share of the Company’s Common Stock.
(c)The Conversion Price and number and kind of shares or other securities to be issued upon conversion determined pursuant to Article 2.1(a), shall be subject to adjustment from time to time upon the happening of certain events while this conversion right remains outstanding, as follows:
A.Merger, Sale of Assets, etc. If (A) the Borrower effects any merger or consolidation of the Borrower with or into another entity, (B) the Borrower effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Borrower or another entity) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, (D) the Borrower consummates a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more persons or entities whereby such other persons or entities acquire more than the 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by such other persons or entities making or party to, or associated or affiliated with the other persons or entities making or party to, such stock purchase agreement or other business combination), (E) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate Common Stock of the Borrower), or (F) the Borrower effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than a reverse merger) (in any such case, a “Fundamental
Transaction”), this Note, as to the unpaid principal portion thereof and accrued interest thereon, if any, shall thereafter be deemed to evidence the right to convert into such number and kind of shares or other securities and property as would have been issuable or distributable on account of such Fundamental Transaction, upon or with respect to the securities subject to the conversion right immediately prior to such Fundamental Transaction. The foregoing provision shall similarly apply to successive Fundamental Transactions of a similar nature by any such successor or purchaser. Without limiting the generality of the foregoing, the anti-dilution provisions of this Article shall apply to such securities of such successor or purchaser after any such Fundamental Transaction.
B.Reclassification, etc. If the Borrower at any time shall, by reclassification or otherwise, change the Common Stock into the same or a different number of securities of any class or classes that may be issued or outstanding, this Note, as to the unpaid principal portion thereof and accrued interest thereon, shall thereafter be deemed to evidence the right to purchase an adjusted number of such securities and kind of securities as would have been issuable as the result of such change with respect to the Common Stock immediately prior to such reclassification or other change.
C.Stock Splits, Combinations and Dividends. If the shares of Common Stock are subdivided or combined into a greater or smaller number of shares of Common Stock, or if a dividend is paid on the Common Stock in shares of Common Stock, the Conversion Price shall be proportionately reduced in case of subdivision of shares or stock dividend or proportionately increased in the case of combination of shares, in each such case by the ratio which the total number of shares of Common Stock outstanding immediately after such event bears to the total number of shares of Common Stock outstanding immediately prior to such event.
(d)Whenever the Conversion Price is adjusted pursuant to Article 2.1(c) above, the Borrower shall promptly but not later than the fifth (5th) business day after the effectiveness of the adjustment, provide notice to the Holder setting forth the Conversion Price after such adjustment and setting forth a statement of the facts requiring such adjustment. Failure to provide the foregoing notice is an Event of Default under this Note.
2.2 Method of Conversion. This Note may be converted by the Holder in whole or in part as described in Article 2.1(a) hereof. Upon partial conversion of this Note, a new Note containing the same date and provisions of this Note shall, at the request of the Holder, be issued by the Borrower to the Holder for the principal balance of this Note and interest which shall not have been converted or paid.
ARTICLE III REDEMPTION
This Note may be prepaid, in whole or in part, by the Borrower, at any time after the issuance hereof, without the consent of the Holder except as otherwise described in this Note. Such prepayment option may only be exercised by Borrower one time during each twelve (12) month period while the note is outstanding commencing on the date hereof. If the Note is prepaid prior to the date that is twelve months from the date of this Note, the Borrower shall pay a three percent (3%) prepayment penalty to Holder and if prepaid after twelve months but prior to the date that is twenty-four (24) months from the date of this Note, the Borrower shall pay a two percent (2%) prepayment penalty to Holder. Any pre-payment penalty shall only be applied to the then outstanding principal amount being prepaid. Any prepayment made after the date that is twenty-four (24) months from the date of this Note shall not be subject to any pre-payment penalty. Borrower shall provide Holder at least thirty (30) days prior written notice of its intent to prepay the Note, which shall be affirmatively acknowledged by Holder of its receipt of written notice thereof, during which time Holder may elect to convert all or a portion of the outstanding principal and accrued
interest of the Note. Holder shall notify Borrower in writing of its election to convert the Note at least five
(5) days prior to the prepayment date, pursuant to which it shall indicate the amount of principal and/or accrued interest it intends to convert into shares of the Borrower’s common stock at the Conversion Price then in effect. If Holder does not timely notify Borrower of its election to convert the Note in accordance herewith, Holder shall not be entitled to convert the Note at such time, however, if the Note is not repaid in full Holder shall continue to have the right to convert the Note in connection with any future repayment notices provided to Holder.
ARTICLE IV EVENT OF DEFAULT
The occurrence of any of the following events of default (“Event of Default”) shall, at the option of the Holder hereof, make all sums of principal and interest then remaining unpaid hereon and all other amounts payable hereunder immediately due and payable, upon demand, without presentment or grace period, all of which hereby are expressly waived, except as set forth below:
4.1Failure to Pay Principal or Interest. The Borrower fails to pay any installment of principal, interest or other sum due under this Note when due in full, subject to any applicable grace period set forth herein.
4.2Breach of Covenant. The Borrower or any Subsidiary breaches any material covenant or other term or condition of the Note Purchase Agreement or this Note in any material respect and such breach, if subject to cure, continues for a period of twenty (20) business days after written notice to the Borrower from the Holder.
4.3Breach of Representations and Warranties. Any material representation or warranty of the Borrower made herein, in the Note Purchase Agreement, or in any agreement, statement or certificate given in writing pursuant hereto or in connection therewith shall be false or misleading in any material respect as of the date made and the Closing Date and such inaccuracy, if subject to cure, continues for a period of twenty (20) business days after written notice to the Borrower from the Holder.
4.4Liquidation. Any dissolution, liquidation or winding up of Borrower or a Subsidiary’s substantial portion of their business.
4.5Cessation of Operations. Any cessation of operations by Borrower or a Subsidiary.
4.6Maintenance of Assets. The failure by Borrower or any Subsidiary to maintain any material intellectual property rights, personal, real property, equipment, leases or other assets which are necessary to conduct its business (whether now or in the future) and such breach is not cured with twenty
(20) business days after written notice to the Borrower from the Holder.
4.7Receiver or Trustee. The Borrower or any Subsidiary shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business; or such a receiver or trustee shall otherwise be appointed.
4.8Judgments. Any money judgment, writ or similar final process shall be entered or made in a non-appealable adjudication against Borrower or any Subsidiary or any of its property or other assets for more than $250,000, unless stayed vacated or satisfied within ten days.
4.9Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy law or any law, or the issuance of any notice in relation to such event, for the relief of debtors shall be instituted by or against the Borrower or any Subsidiary.
4.10Notification Failure. A failure by Borrower to notify Holder of any material event of which Borrower is obligated to notify Holder pursuant to the terms of this Note or any other Transaction Document.
ARTICLE V MISCELLANEOUS
5.1Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.
5.2Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the first business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: (i) if to the Borrower to: Sky Quarry Inc., 707 W. 700 S, Suite 101, Woods Cross, UT 84087, Attn: President, facsimile: (801) 606-2722, and (ii) if to the Holder, to the name, address and facsimile number set forth in the Note Purchase Agreement.
5.3Amendment Provision. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument as originally executed, or if later amended or supplemented, then as so amended or supplemented.
5.4Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Holder and its successors and assigns.
5.5Cost of Collection. If default is made in the payment of this Note, Borrower shall pay the Holder hereof reasonable costs of collection, including reasonable attorneys’ fees.
5.6Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Delaware without regard to conflicts of laws principles that would result in the application of the substantive laws of another jurisdiction. Any action brought by either party against the other concerning the transactions contemplated by this Agreement must be brought only in the civil or state courts of the state of Delaware or in the federal courts located in the state of Delaware. Both parties and the individual signing this Agreement on behalf of the Borrower agree to submit to the jurisdiction of such
courts. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or unenforceability of any other provision of this Note. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Borrower in any other jurisdiction to collect on the Borrower’s obligations to Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other decision in favor of the Holder.
5.7Maximum Payments. Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum rate permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder exceed the maximum rate permitted by applicable law, any payments in excess of such maximum rate shall be credited against amounts owed by the Borrower to the Holder and thus refunded to the Borrower.
5.8Non-Business Days. Whenever any payment or any action to be made shall be due on a Saturday, Sunday or a public holiday under the laws of the State of Delaware, such payment may be due or action shall be required on the next succeeding business day and, for such payment, such next succeeding day shall be included in the calculation of the amount of accrued interest payable on such date.
IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by an authorized officer as of the 27th day of November, 2023.
| SKY QUARRY INC. | |
|
|
|
| By: | /s/ David Sealock |
|
| Name: David Sealock |
|
| Title: CEO |
SCHEDULE A - NOTICE OF CONVERSION
(To be executed by the Registered Holder in order to convert the Note)
The undersigned hereby elects to convert $______ of the principal and $______ of the interest due on the Note issued by Sky Quarry Inc. (“Borrower”) on ______, 2023 into Shares of Common Stock of Borrower according to the conditions set forth in such Note, as of the date written below.
Date of Conversion:
Conversion Price:
Shares To Be Delivered:
Signature:
Print Name:
Address:
Exhibit 21.1
LIST OF SUBSIDIARIES
Name of Subsidiary |
| Jurisdiction of Organization |
| Percentage of Ownership |
2020 Resources, LLC |
| Delaware |
| 100% |
2020 Resources (Canada) Ltd. |
| Alberta, Canada |
| 100% |
Foreland Refining Corporation |
| Texas |
| 100% |
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of
Sky Quarry Inc.
We consent to the use in this Prospectus constituting a part of this Registration Statement of our report dated March 31, 2025, relating to the consolidated financial statements of Sky Quarry Inc. and Subsidiaries (the Company), which are incorporated by reference in that Prospectus. Our report contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.
We also consent to the reference to us under the caption “Experts” in the Prospectus.
/s/ Tanner LLC
Lehi, Utah
July 17, 2025