Exhibit 10.1

 

CONVERSION AND EXCHANGE AGREEMENT

 

This Conversion and Exchange Agreement (this “Agreement”) is made and entered into as of June 29, 2026 (the “Effective Date”), by and among Foreland Refining Corporation, a Texas corporation (“Foreland”), 2020 Resources LLC (“2020 Resources”), Sky Quarry Inc., a Delaware corporation (“SKY,” and together with Foreland and 2020 Resources, each a “Company Party” and collectively the “Company”), and Libertas Funding LLC, a limited liability company formed under the laws of the State of Connecticut (“Libertas” or “Holder”). Each Company Party was a co-obligor under the MCA Agreements (as defined below) and shall be jointly and severally liable for the obligations of the Company hereunder.

 

RECITALS

 

WHEREAS, Libertas previously provided merchant cash advance financing to the Company pursuant to that certain Agreement of Sale of Future Receipts dated May 16, 2024, by and between Libertas Funding LLC, as Purchaser, and the Company Parties, as Sellers (as identified in the Seller Definition Addendum thereto), together with all addenda, amendments, schedules, and exhibits thereto, and including the fundings made on October 23, 2023, January 12, 2024, January 18, 2024, and February 23, 2024 (collectively, the “MCA Agreements”), pursuant to which the aggregate outstanding obligations owed by the Company to Libertas are approximately $3,985,000.00 (the “MCA Obligations”);

 

WHEREAS, the Company and Libertas desire to convert and exchange the MCA Obligations into an 8% promissory note in the principal amount of Three Million Nine Hundred Eighty-Five Thousand and No/100 Dollars ($3,985,000.00) to be issued by the Company in favor of Libertas (the “Note”), substantially in the form attached hereto as Exhibit A accordance with the terms of this Agreement;

 

WHEREAS, as a material inducement to Libertas to enter into this Agreement, Marcus Laun shall execute and deliver a personal guarantee in favor of Libertas guaranteeing the obligations of the Company under the Note (the “Personal Guarantee”), substantially in the form attached hereto as Exhibit B;

 

WHEREAS, in consideration of the issuance of the Note and the execution of the Personal Guarantee, Libertas desires to release and discharge the Company from all obligations arising under the MCA Agreements; and

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.CONVERSION AND EXCHANGE. 

 

(a)Exchange. Libertas hereby agrees to exchange, convert, and cancel the full amount of the MCA Obligations in consideration for the issuance of the Note by the Company to Libertas. Upon such issuance, the MCA Obligations shall be deemed fully paid, satisfied, and extinguished without any further action required by any party. 

 

(b)Cancellation of MCA Obligations. Upon issuance of the Note to Libertas, the MCA Obligations and the MCA Agreements shall be deemed fully satisfied, cancelled, and extinguished in their entirety, and no party shall have any further rights, obligations, or liabilities thereunder, except as expressly set forth in this Agreement. 

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(c)Principal Amount. The principal amount of the Note shall be Three Million Nine Hundred Eighty-Five Thousand and No/100 Dollars ($3,985,000.00), issued in full and final satisfaction of the MCA Obligations. 

 

2.REPRESENTATIONS AND WARRANTIES OF THE COMPANY. 

 

Each Company Party hereby represents and warrants to Libertas as of the Effective Date as follows:

 

(a)Organization and Good Standing. Each of SKY and Foreland is a corporation duly organized, validly existing, and in good standing under the laws of its respective state of incorporation. 2020 Resources is duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization. Each Company Party is duly qualified to conduct business and in good standing in each jurisdiction where the nature of its business or ownership of its properties requires such qualification. 

 

(b)Authorization; Enforceability. The execution, delivery, and performance of this Agreement and the issuance of the Note have been duly authorized by all necessary corporate or other organizational action on the part of each Company Party. This Agreement constitutes, and the Note when issued will constitute, the legal, valid, and binding obligation of each Company Party, enforceable against each in accordance with its terms, subject to applicable bankruptcy, insolvency, and similar laws affecting creditors’ rights generally and to general principles of equity. 

 

(c)No Conflict; Consents. The execution, delivery, and performance of this Agreement and the issuance of the Note do not and will not: (i) conflict with or violate the organizational documents of any Company Party; (ii) conflict with, result in a breach of, or constitute a default under any material agreement, indenture, or instrument to which any Company Party is a party or by which any of its assets are bound; or (iii) violate any law, rule, regulation, order, judgment, or decree applicable to any Company Party. No consent, approval, or authorization of, or filing with, any governmental authority or other third party is required in connection with the execution and delivery of this Agreement or the issuance of the Note, except such as have been obtained or made. 

 

(d)Acknowledgment of MCA Obligations. The Company acknowledges and confirms that the MCA Obligations in the aggregate amount of approximately $3,985,000.00 are validly outstanding, due, and owing to Libertas as of the Effective Date, and the Company has no defenses, offsets, or counterclaims with respect thereto. 

 

(e)No Litigation. There is no action, suit, proceeding, or investigation pending or, to the knowledge of any Company Party, threatened against any Company Party that would materially affect the ability of any Company Party to perform its obligations under this Agreement or the Note. 

 

3.REPRESENTATIONS AND WARRANTIES OF LIBERTAS. 

 

Libertas hereby represents and warrants to the Company as of the Effective Date as follows:

 

(a)Organization and Authority. Libertas is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Connecticut. Libertas has full power and authority to enter into and perform this Agreement, and the execution, delivery, and performance of this Agreement have been duly authorized by all necessary action on the part of Libertas. 

 

(b)Enforceability. This Agreement constitutes the legal, valid, and binding obligation of Libertas, enforceable against Libertas in accordance with its terms, subject to applicable bankruptcy, insolvency, and similar laws affecting creditors’ rights generally and to general principles of equity. 

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(c)Investment Intent. Libertas is acquiring the Note for its own account for investment purposes only and not with a view to, or for resale in connection with, any distribution in violation of the Securities Act of 1933, as amended (the “Securities Act”), or any applicable state securities laws. 

 

(d)Accredited Investor. Libertas is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. 

 

(e)Acknowledgment of Risk. Libertas acknowledges that the investment in the Note involves a high degree of risk, that the Note has not been registered under the Securities Act and is subject to restrictions on transfer, and that Libertas has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment in the Note. 

 

(f)Ownership of MCA Obligations. Libertas is the sole legal and beneficial owner of the MCA Obligations and the MCA Agreements, free and clear of any liens, encumbrances, or third-party claims, and has not assigned, transferred, or pledged any interest therein. 

 

4.RELEASE AND WAIVER. 

 

Effective upon the issuance of the Note at the Closing, and in consideration of the mutual covenants set forth herein:

 

(a)Satisfaction and Extinguishment of MCA Obligations. All MCA Obligations are hereby deemed fully and finally satisfied, cancelled, and extinguished in their entirety. The MCA Agreements shall be of no further force or effect, and no party shall have any rights, obligations, or liabilities thereunder. 

 

(b)General Release. Libertas, on behalf of itself and its affiliates, successors, assigns, members, managers, officers, directors, employees, agents, and representatives, hereby irrevocably and unconditionally releases, waives, and forever discharges the Company and each Company Party, together with their respective affiliates, parents, subsidiaries, officers, directors, employees, agents, guarantors, successors, and assigns (collectively, the “Released Parties”), from any and all claims, demands, actions, causes of action, suits, damages, losses, costs, expenses, liabilities, and obligations of every kind and nature, whether known or unknown, suspected or unsuspected, fixed or contingent, past, present, or future, at law or in equity, arising out of or in any way related to the MCA Agreements or the MCA Obligations, including without limitation any claims for breach of contract, default, nonpayment, late payment, underpayment, conversion, fraud, negligent misrepresentation, unjust enrichment, or any other matter whatsoever. 

 

(c)Covenant Not to Sue. Libertas hereby covenants and agrees that it shall not, and shall cause its affiliates not to, commence, institute, maintain, or prosecute any action, suit, proceeding, or claim against any Released Party arising out of or related to the MCA Agreements or the MCA Obligations. Any breach of this covenant not to sue shall entitle the applicable Released Party to recover all costs and expenses (including reasonable attorneys’ fees) incurred in defending such action. 

 

(d)Supersession of MCA Remedies. All remedies, rights of acceleration, and enforcement mechanisms specific to the MCA Agreements—including without limitation any “Bad Acts” provisions, acceleration of Weekly Delivery Amounts, Reconciliation rights, ACH debit authorizations, and any other MCA-specific collection or enforcement rights—shall be deemed null and void and of no further force or effect upon issuance of the Note. Following the Closing, the sole remedies of Libertas with respect to amounts owed by the Company shall be those set forth in the Note and, to the extent applicable, the Personal Guarantee. 

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(e)Unknown Claims Waiver. Libertas acknowledges that it may hereafter discover claims or facts in addition to or different from those that it now knows or believes to exist with respect to the subject matter of this release, and Libertas expressly agrees that this release shall remain effective in all respects notwithstanding such discovery. Libertas hereby waives any and all rights under any statute or common law principle that would otherwise limit the effect of this release to those claims known or suspected at the time of execution. 

 

5.SUPERSESSION OF REMEDIES; STANDARD NOTE ACCELERATION. 

 

(a)Supersession. The parties acknowledge and agree that, upon the Closing, all remedies and enforcement mechanisms contained in the MCA Agreements are superseded in their entirety by the remedies and enforcement mechanisms set forth in the Note. Without limiting the generality of the foregoing, Libertas acknowledges that: (i) it shall have no right to accelerate or demand payment of any “Weekly Delivery Amounts” or similar periodic payments under the MCA Agreements; (ii) any “Bad Acts” provisions, “Reconciliation” rights, or automatic debit authorizations under the MCA Agreements shall be of no further force or effect; and (iii) Libertas’s sole remedy upon a default by the Company shall be acceleration of the Note and exercise of remedies thereunder. 

 

(b)Note Acceleration. Upon the occurrence of an Event of Default (as defined in the Note) that has not been properly cured within any applicable cure period, Libertas may, in accordance with the terms of the Note, declare the entire unpaid principal balance of the Note, together with all accrued and unpaid interest, immediately due and payable. The rights and remedies of Libertas upon an Event of Default shall be exclusively as set forth in the Note and, to the extent applicable, the Personal Guarantee. 

 

(c)No Reinstatement. The MCA Agreements shall not be reinstated or revived for any reason, including without limitation any default under the Note, any bankruptcy or insolvency of any Company Party, or any invalidity or unenforceability of the Note. The conversion and exchange contemplated hereunder is irrevocable. 

 

6.CONDITIONS TO CLOSING. 

 

The obligations of the parties to consummate the transactions contemplated hereby are subject to the satisfaction or waiver, on or before the Closing Date, of each of the following conditions:

 

(a)Execution and delivery of this Agreement by all parties hereto; 

(b)Execution and delivery of the Note by the Company in favor of Libertas; 

(c)Execution and delivery of the Personal Guarantee by Marcus Laun in favor of Libertas; 

(d)Receipt of all necessary corporate or organizational approvals from each Company Party; 

(e)The representations and warranties of each party set forth herein shall be true and correct in all material respects as of the Closing Date; and 

(f)No event shall have occurred that would constitute an Event of Default under the Note immediately upon its issuance. 

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7.CLOSING. 

 

The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on such date as agreed to by the parties following satisfaction or waiver of all conditions set forth in Section 6 (the “Closing Date”). At the Closing:

 

(a)the Company shall execute and deliver the Note to Libertas; 

(b)Marcus Laun shall execute and deliver the Personal Guarantee to Libertas; and 

(c)The MCA Obligations and MCA Agreements shall be deemed fully satisfied and extinguished in accordance with Section 4. 

 

8.DEFINED TERMS. 

As used in this Agreement, the following terms shall have the meanings set forth below:

 

“MCA Agreements” means, collectively, that certain Agreement of Sale of Future Receipts dated May 16, 2024, by and between Libertas Funding LLC, as Purchaser, and the Company Parties, as Sellers, together with all addenda (including the Seller Definition Addendum), amendments, schedules, and exhibits thereto, and including the fundings made on October 23, 2023, January 12, 2024, January 18, 2024, and February 23, 2024.

 

“MCA Obligations” means all obligations, liabilities, and indebtedness of the Company Parties to Libertas arising under or related to the MCA Agreements, in the aggregate outstanding amount of approximately $3,985,000.00 as of the Effective Date.

 

“Note” means that certain Promissory Note dated as of the Closing Date, in the original principal amount of $3,985,000.00, issued by the Company in favor of Libertas, substantially in the form attached hereto as Exhibit A.

 

“Personal Guarantee” means that certain Personal Guarantee dated as of the Closing Date, executed by Marcus Laun in favor of Libertas, guaranteeing the obligations of the Company under the Note, substantially in the form attached hereto as Exhibit B.

 

9.MISCELLANEOUS. 

 

(a)Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflict of laws principles. 

 

(b)Entire Agreement. This Agreement, together with the Note, the Personal Guarantee, and the Exhibits hereto, constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions, whether oral or written, relating to such subject matter. 

 

(c)Amendments; Waivers. This Agreement may not be amended, modified, or supplemented except by a written instrument signed by all parties hereto. No waiver of any provision hereof shall be effective unless in writing signed by the party granting such waiver, and no such waiver shall constitute a waiver of any other provision or a continuing waiver. 

 

(d)Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Execution by facsimile, PDF, or other electronic transmission shall have the same force and effect as original signatures. 

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(e)Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. No party may assign its rights or obligations hereunder without the prior written consent of the other parties, except that Libertas may assign its rights under this Agreement and the Note to any affiliate or successor without consent. 

 

(f)Severability. If any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall continue in full force and effect, and the invalid provision shall be modified to the minimum extent necessary to make it valid and enforceable. 

(g)Further Assurances. Each party shall execute and deliver such additional documents, instruments, and agreements and take such further actions as may be reasonably necessary or appropriate to effectuate the purposes of this Agreement. 

 

(h)Joint and Several Liability. The obligations of the Company Parties under this Agreement are joint and several. 

 

[Signature Pages Follow]

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

 

	SKY QUARRY INC.
	By:	/s/ Marcus Laun
	Name:	Marcus Laun
	Title:	CEO
	FORELAND REFINING CORPORATION
	By:	/s/ Marcus Laun
	Name:	Marcus Laun
	Title:	CEO
	2020 RESOURCES LLC
	By:	/s/ Marcus Laun
	Name:	Marcus Laun
	Title:	CEO
	LIBERTAS FUNDING LLC
	By:	/s/ Randy Saluck
	Name:	Randy saluck
	Title:	Vice chairman

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Exhibit 10.2

 

PROMISSORY NOTE

$3,985,000.00

 

Principal Amount: $3,985,000.00

Interest Rate: 8% per annum

Date: June 29, 2026

 

Maker: Sky Quarry Inc., a Delaware corporation (“SKY”), Foreland Refining Corporation, a Texas corporation (“Foreland”), 2020 Resources LLC (“2020 Resources”) (SKY, Foreland, and 2020 Resources, shall be collectively referred to herein as ("Maker"))

 

Payee: Libertas Funding LLC, a Connecticut limited liability company ("Payee" or "Libertas")

 

FOR VALUE RECEIVED, and in exchange for the cancellation and extinguishment of that certain outstanding merchant cash advance indebtedness in the aggregate amount of $3,985,000 owed by SKY, Foreland and 2020 Resources (collectively, the "Company") to Libertas pursuant to that certain Agreement of Sale of Future Receipts dated May 16, 2024, together with all addenda (including the Seller Definition Addendum), amendments, schedules, and exhibits thereto, and including the fundings made on October 23, 2023, January 12, 2024, January 18, 2024, and February 23, 2024 (collectively, the "MCA Agreements," and all obligations of the Company arising thereunder, the "MCA Obligations"), Maker hereby unconditionally promises to pay to the order of Libertas Funding LLC, a Connecticut limited liability company ("Payee"), or its registered assigns, the principal sum of THREE MILLION NINE HUNDRED EIGHTY- FIVE THOUSAND AND NO/100 DOLLARS ($3,985,000.00), together with interest accrued thereon, in accordance with the terms and conditions set forth herein.

 

1.PRINCIPAL AND INTEREST 

 

1 Principal. The outstanding principal balance of this Note shall be $3,985,000.00 as of the date hereof. 

 

2 Interest Rate. Interest shall accrue on the outstanding principal balance at the rate of eight percent (8%) per annum, calculated on the basis of a 365-day year and actual days elapsed. Interest shall accrue from the date of this Note on a simple, non- compounding basis, and accrued but unpaid interest shall not bear interest. 

 

3 Repayment Structure. This Note shall be repaid pursuant to a principal-first repayment structure, meaning that all scheduled weekly payments shall be applied first to reduce the outstanding principal balance until such principal balance is reduced to zero, whereupon all remaining payments shall be applied to accrued and unpaid interest until the Note is paid in full. 

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2.PAYMENT SCHEDULE 

 

2.1Weekly Payments. Maker shall make weekly payments to Payee in accordance with the following escalating schedule: 

 

Period	Weeks	Weekly Payment
Months 1–3	1–13	$15,000
Months 4–6	14–26	$30,000
Months 7–10	27–43	$50,000
Months 11–14	44–60	$62,500
Months 15-21(plus one week)	61-85	$70,000
Week 86	86	$45,146.15

 

2.2Payment Day. Payments shall be due and payable each week on the same day of the week as the date of this Note. If any payment date falls on a Saturday, Sunday, or federal holiday, such payment shall be due on the next succeeding business day. 

 

2.3Final Payment. This Note shall continue in full force and effect until all principal and all accrued interest have been paid in full. The final payment shall be in the amount necessary to pay all remaining principal and accrued interest in full. 

 

3.MATURITY 

 

This Note shall mature and all outstanding principal and accrued interest shall be due and payable in full upon the earlier of: (a) the date on which all amounts due hereunder have been paid pursuant to the payment schedule set forth in Section 2; or (b) acceleration of the Note following an Event of Default as described in Section 6 hereof.

 

4.PREPAYMENT 

 

Maker may prepay this Note, in whole or in part, at any time without premium or penalty. Any partial prepayment shall be applied first to outstanding principal and then to accrued interest, and shall not relieve Maker of its obligation to make all subsequent scheduled payments until the Note is paid in full.

 

5.PAYMENT METHOD 

 

All payments under this Note shall be made in lawful money of the United States by wire transfer or ACH to the account designated by Payee in writing, or by such other method as Payee may from time to time designate.

 

6.CONTINUATION OF EXISTING SECURITY INTEREST 

 

The parties expressly agree that this Note is not intended to constitute, and shall not be construed as, a novation, satisfaction, discharge, release, termination, or extinguishment of any existing security interest, lien, collateral assignment, guaranty, financing statement, or other security document granted in favor of Payee pursuant to the MCA Agreements.

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All security interests, liens, collateral assignments, guarantees, and other collateral rights previously granted to Payee under the MCA Agreements shall remain in full force and effect, uninterrupted and unimpaired, and shall continue to secure the payment and performance of all obligations evidenced by this Note, together with all interest, fees, costs, expenses, and other amounts due hereunder. The collateral securing the obligations under the MCA Agreements shall automatically secure the obligations under this Note without the necessity of any further action by either party.

 

Maker ratifies and confirms all existing security agreements, financing statements, guarantees, and collateral documents previously executed in favor of Payee and agrees that such documents shall continue to secure the obligations evidenced by this Note as though originally executed in connection herewith. Payee shall retain all rights and remedies of a secured party with respect to such collateral until all obligations under this Note have been fully paid and satisfied.

 

The execution and delivery of this Note shall not constitute a novation of any indebtedness, obligations, security interests, liens, guarantees, or collateral arrangements existing under the MCA Agreements. Rather, the obligations evidenced hereby are intended as a continuation, amendment, restructuring, and replacement of the obligations arising under the MCA Agreements, with all existing collateral and security continuing in full force and effect until the obligations evidenced by this Note are indefeasibly paid in full.

 

7.EVENTS OF DEFAULT 

 

Each of the following shall constitute an Event of Default hereunder:

 

(a)Payment Default. Maker fails to make any payment required under this Note within ten (10) calendar days after such payment is due; 

(b)Insolvency. Maker (i) becomes insolvent or is unable to pay its debts as they mature; (ii) makes an assignment for the benefit of creditors; (iii) applies for, consents to, or acquiesces in the appointment of a trustee, receiver, or other custodian for Maker; (iv) commences any proceeding seeking relief under any bankruptcy, insolvency, reorganization, or similar law; or (v) has an involuntary proceeding commenced against it that is not dismissed within sixty (60) days; 

(c)Breach of Covenants. Maker breaches any material covenant or agreement contained in this Note or the Conversion and Exchange Agreement dated even date herewith, by and among Maker, Foreland Refining Corporation, 2020 Resources LLC, and Payee (the "Exchange Agreement"). 

 

8.REMEDIES UPON DEFAULT 

 

Upon the occurrence of an Event of Default, Payee may, at its option and without notice or demand, declare the entire unpaid principal balance of this Note, together with all accrued and unpaid interest, immediately due and payable. Payee shall have all rights and remedies available at law or in equity. No failure or delay by Payee in exercising any right shall operate as a waiver thereof.

 

9.PERSONAL GUARANTEE 

 

The obligations of Maker under this Note are supported by a personal guarantee of Marcus Laun, individually, in favor of Payee (the "Guarantee"), executed contemporaneously herewith. The Guarantee shall remain in full force and effect until all amounts due under this Note have been paid in full.

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10.RELEASE AND DISCHARGE OF MCA OBLIGATIONS 

 

10.1Full Satisfaction and Discharge. Upon execution and delivery of this Note and the Exchange Agreement, and in consideration of the agreements set forth herein, the MCA Obligations and the MCA Agreements are hereby exchanged for this Note and deemed fully and irrevocably satisfied, cancelled, discharged, and extinguished in their entirety. Neither the Company nor any of its affiliates, officers, directors, employees, or agents shall have any further liability or obligation to Payee under or in connection with the MCA Agreements or the MCA Obligations, except as evidenced by the obligations set forth in this Note. 

 

10.2Release by Payee. Payee, on behalf of itself and its successors and assigns, hereby irrevocably and unconditionally releases, acquits, and forever discharges the Company, Maker, Foreland Refining Corporation, 2020 Resources LLC, and each of their respective officers, directors, employees, agents, successors, and assigns from any and all claims, demands, actions, causes of action, liabilities, damages, losses, costs, and expenses (including attorneys’ fees) of any kind or nature, whether known or unknown, arising out of or relating to the MCA Agreements or the MCA Obligations, other than the Company’s obligations pursuant to the terms of this Note. 

 

10.3 Sole Governing Instrument. From and after the date hereof, the rights and obligations of the parties with respect to the indebtedness previously evidenced by the MCA Agreements shall be governed solely and exclusively by this Note, the Exchange Agreement, and the Guarantee. Any future default by Maker with respect to such indebtedness shall be subject solely to the Event of Default provisions set forth in Section 7 and the remedies set forth in Section 8 of this Note, and shall not be governed by any default, acceleration, or enforcement provision of the MCA Agreements. 

 

11.SUPERSESSION OF MCA REMEDIES 

 

Other than the UCC-1 security interest and security agreement filed in connection with the MCA Agreements, upon execution and delivery of this Note, all remedies, rights, and enforcement mechanisms available to Payee under the MCA Agreements are hereby superseded, terminated, and shall be of no further force or effect, including without limitation: (a) any right to declare “Bad Acts” or invoke similar default triggers under the MCA Agreements; (b) any right to accelerate “Weekly Deliveries” or any analogous periodic payment obligation under the MCA Agreements; (c) any power of attorney or authority to act on behalf of the Company or any of its subsidiaries or affiliates granted under the MCA Agreements; and (d) any other right, remedy, or enforcement mechanism of any kind arising under or in connection with the MCA Agreements. Payee hereby irrevocably waives and relinquishes all such rights and remedies and acknowledges that its sole recourse with respect to the obligations evidenced hereby shall be pursuant to the terms and conditions of this Note, the Exchange Agreement, and the Guarantee.

 

12.RESTRICTIONS 

 

At all times while this Note is outstanding, the Company shall not sell or pledge any of its future receivables, except in connection with an accounts receivable or inventory financing agreement. Additionally, the Company shall not sell any assets that are material to the operation of its business without the prior written consent of Payee, which consent shall not be unreasonably withheld.

 

13.WAIVER 

 

Maker hereby waives presentment, demand for payment, protest, notice of protest, notice of dishonor, and all other notices or demands in connection with the delivery, acceptance, performance, default, or enforcement of this Note.

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14.GOVERNING LAW; JURISDICTION 

 

This Note shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflicts of law principles. The parties irrevocably submit to the exclusive jurisdiction of the state and federal courts located in Delaware for resolution of any dispute arising under or related to this Note.

 

15.ATTORNEYS’ FEES 

 

If any action at law or in equity is brought to enforce or interpret the terms of this Note, the prevailing party shall be entitled to recover its reasonable attorneys’ fees, court costs, and other expenses in addition to any other relief to which such party may be entitled.

 

16.AMENDMENTS 

 

This Note may not be amended, modified, or waived except by a written instrument signed by both Maker and Payee.

 

17.SUCCESSORS AND ASSIGNS 

 

This Note shall be binding upon Maker and its successors and assigns and shall inure to the benefit of Payee and its successors and permitted assigns. Maker may not assign its obligations hereunder without the prior written consent of Payee.

 

18.SEVERABILITY 

 

If any provision of this Note is held invalid or unenforceable, such provision shall be modified to the minimum extent necessary to make it valid and enforceable, and the remaining provisions shall continue in full force and effect.

 

19.ENTIRE AGREEMENT 

 

This Note, together with the Exchange Agreement and the Guarantee, constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior negotiations, representations, and understandings with respect thereto.

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IN WITNESS WHEREOF, Maker has caused this Note to be executed as of the date first written above.

 

MAKER:
SKY QUARRY INC.,
a Delaware corporation
By:	/s/ Marcus Laun
Name:	Marcus Laun
Title:	CEO
FORELAND REFINING CORPORATION
By:	/s/ Marcus Laun
Name:	Marcus Laun
Title:	CEO
2020 RESOURCES LLC
By:	/s/ Marcus Laun
Name:	Marcus Laun
Title:	CEO
ACKNOWLEDGED AND AGREED: LIBERTAS FUNDING LLC
a Connecticut limited liability company
By:	/s/ Randy Saluck
Name:	Randy saluck
Title:	Vice chairman
Date:	June 29, 2026

 

 

Exhibit 10.3

 

PERSONAL GUARANTEE

 

This Personal Guarantee (this “Guarantee”) is entered into as of June 29, 2026, by Marcus Laun, an individual (“Guarantor”), in favor of Libertas Funding LLC, a limited liability company formed under the laws of the State of Connecticut (“Payee” or “Libertas”).

 

RECITALS

 

WHEREAS, Sky Quarry Inc., a Delaware corporation (“Maker”), has issued that certain Promissory Note dated June 29, 2026, in the original principal amount of $3,985,000.00, bearing interest at the rate of 8% per annum (the “Note”), in favor of Payee, issued pursuant to that certain Conversion and Exchange Agreement dated June 29, 2026, among Maker, Foreland Refining Corporation, 2020 Resources LLC and Payee (the “Exchange Agreement”), in exchange for the cancellation and extinguishment of the MCA Obligations (as defined therein) arising under the merchant cash advance agreements dated October 23, 2023, January 12, 2024, January 18, 2024, and February 23, 2024 (collectively, the “MCA Agreements”);

 

WHEREAS, Guarantor serves as Interim Chief Executive Officer of Maker and will derive direct and substantial benefit from the transactions contemplated by the Note and Exchange Agreement;

 

WHEREAS, as a material condition to Payee’s agreement to accept the Note in exchange for the cancellation of the MCA Obligations (as defined in the Exchange Agreement), Payee requires that Guarantor personally and unconditionally guarantee the obligations of Maker under the Note; and

 

WHEREAS, Guarantor and/or other persons may have previously provided personal guarantees, performance guaranties, or similar undertakings in connection with the MCA Agreements (collectively, the “Prior MCA Guaranties”), and the parties intend that this Guarantee shall replace and supersede any and all such Prior MCA Guaranties in their entirety, and that Payee’s sole recourse against Guarantor in respect of obligations arising from or related to the MCA Agreements and the Note shall be exclusively under this Guarantee;

 

WHEREAS, Maker and Guarantor have agreed that, in consideration of Guarantor’s execution of this Guarantee, Maker shall indemnify and hold Guarantor harmless from and against any losses, liabilities, payments, costs, and expenses (including reasonable attorneys’ fees) incurred by Guarantor as a result of any claim made against Guarantor under this Guarantee, and that Guarantor shall retain all rights of subrogation against Maker as set forth herein;

 

NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor agrees as follows:

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1.GUARANTEE OF PAYMENT 

 

1.1 Unconditional Guarantee. Guarantor hereby absolutely, unconditionally, and irrevocably guarantees to Payee the full and prompt payment when due (whether at stated maturity, upon acceleration, or otherwise) of all amounts payable by Maker under the Note (and solely under the Note), including all principal, accrued interest, default interest, attorneys’ fees, costs, and any other amounts due thereunder (collectively, the “Guaranteed Obligations”). For the avoidance of doubt, the Guaranteed Obligations shall be limited exclusively to obligations arising under the Note and shall not include any obligations arising under or related to the MCA Agreements, all of which have been cancelled and extinguished pursuant to the Exchange Agreement. 

 

1.2 Guarantee of Payment, Not Collection. This Guarantee is a guarantee of payment and not merely of collection. Payee shall not be required to: (a) proceed against Maker or any other person; (b) exhaust any remedies against Maker or any collateral; or (c) pursue any other remedy before enforcing this Guarantee against Guarantor. Payee may proceed directly against Guarantor upon any Event of Default under the Note. 

 

1.3 Continuing Guarantee. This Guarantee is a continuing guarantee and shall remain in full force and effect until all Guaranteed Obligations have been indefeasibly paid in full in cash. 

 

2.ABSOLUTE NATURE OF GUARANTEE 

 

The obligations of Guarantor hereunder are absolute and unconditional and shall not be affected, impaired, or discharged by:

 

(a)any amendment, modification, renewal, extension, or waiver of or with respect to the Note or the Exchange Agreement; 

(b)any release, discharge, compromise, or settlement with respect to Maker or any other guarantor; 

(c)any failure or delay by Payee to exercise any right or remedy against Maker; 

(d)any insolvency, bankruptcy, reorganization, dissolution, or liquidation of Maker; 

(e)any defense, offset, or counterclaim that Maker may have against Payee; or 

(f)any other event, circumstance, or condition that might otherwise constitute a defense available to, or a discharge of, a guarantor or surety. 

 

3.WAIVERS BY GUARANTOR 

 

Guarantor hereby unconditionally waives, solely with respect to the enforcement of this Guarantee by Payee:

 

(a)presentment, demand for payment, and notice of dishonor with respect to the Guaranteed Obligations; 

(b)notice of acceptance of this Guarantee by Payee; 

(c)notice of any extension, modification, or renewal of the Note; 

(d)any right to require Payee to proceed against Maker or any collateral before proceeding against Guarantor; and 

(e)any defense based upon an election of remedies by Payee. 

For the avoidance of doubt, nothing in this Section 3 shall be construed to limit, waive, or impair any right of Guarantor as against Maker, including without limitation Guarantor’s rights of subrogation and indemnification set forth in Sections 5 and 6 hereof.

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4.ACCELERATION 

 

Upon the occurrence of any Event of Default under the Note (as defined therein), Payee may, in its sole discretion and without notice or demand, declare all Guaranteed Obligations immediately due and payable and may pursue any and all rights and remedies available under this Guarantee, at law, or in equity against Guarantor; provided, however, that any enforcement against Guarantor shall be limited to acceleration of amounts due under the Note in accordance with its terms. The parties expressly acknowledge and agree that: (a) any and all remedies, rights of action, or enforcement mechanisms available to Payee under the original MCA Agreements — including, without limitation, any provisions relating to “Bad Acts,” personal liability triggers, confession of judgment provisions, or any other MCA-specific remedies or penalties — are hereby fully and irrevocably superseded, extinguished, and of no further force or effect as of the date of issuance of the Note; (b) Payee shall have no right to pursue any claim, demand, or cause of action against Guarantor under, arising from, or related to the MCA Agreements or any Prior MCA Guaranties; and (c) all future enforcement against Guarantor shall be governed exclusively by the terms of the Note and this Guarantee.

 

5.SUBROGATION 

 

(a)Waiver and Postponement of Rights. Until the Guaranteed Obligations have been indefeasibly paid in full in cash, all commitments of Payee to extend credit have terminated, and this Guarantee has terminated in accordance with its terms, Guarantor irrevocably waives and agrees not to assert, enforce or exercise any right of subrogation, reimbursement, indemnification, contribution, exoneration or any similar right or remedy against Maker or any other obligor arising by reason of any payment made by Guarantor under this Guarantee or otherwise. 

 

(b)No Competition with Payee. Until the Guaranteed Obligations have been indefeasibly paid in full in cash and all commitments of Payee have terminated, Guarantor shall not (a) seek or accept reimbursement or repayment from Maker; (b) assert any claim against Maker or its property arising from any payment made under this Guarantee; (c) participate in any distribution of Maker's assets in any bankruptcy, insolvency, receivership or similar proceeding; or (d) take any action that would result in Guarantor competing with Payee for payment or recovery from Maker or any collateral securing the Guaranteed Obligations. 

 

(c)Assignment of Recoveries. If Guarantor receives any payment, distribution, recovery, security, collateral or other property from Maker or any other obligor on account of any right of reimbursement, contribution, indemnification, subrogation or otherwise before the Guaranteed Obligations have been indefeasibly paid in full in cash, Guarantor shall hold the same in trust for the benefit of Payee and shall immediately deliver such payment or property to Payee, in the form received (except for any necessary endorsement or assignment), to be applied by Payee to the Guaranteed Obligations in such order and manner as Payee may determine in its sole discretion. 

 

(d)No Impairment of Guarantee. The postponement and waiver of rights set forth in this Section shall not limit or impair the enforceability of this Guarantee. Guarantor acknowledges that these provisions are a material inducement to Payee's acceptance of this Guarantee and are necessary to preserve Payee's priority and rights against Maker and any collateral. 

 

(e)Rights Following Payment in Full. Only after the Guaranteed Obligations have been indefeasibly paid in full in cash, all commitments of Payee have terminated, and this Guarantee has terminated, shall Guarantor be entitled to exercise any rights of subrogation, reimbursement or contribution then available under applicable law, provided that the exercise of such rights shall not revive or impair any obligation previously satisfied in favor of Payee. 

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(f)No Duty Owed by Payee. Payee shall have no duty to preserve, protect, assign, perfect or otherwise maintain any rights or remedies that Guarantor may have against Maker or any other person, and no act or omission of Payee shall impair or release the obligations of Guarantor under this Guarantee. 

 

6.INDEMNIFICATION BY MAKER 

 

6.1Maker’s Indemnification Obligation. Maker (as a party acknowledging and consenting to this Guarantee by its countersignature below) hereby agrees to indemnify, defend, and hold harmless Guarantor from and against any and all losses, liabilities, damages, costs, and expenses (including reasonable attorneys’ fees and court costs) that Guarantor actually incurs or pays as a result of any claim made or judgment entered against Guarantor under this Guarantee, arising out of or related to the Note or the Exchange Agreement. 

 

6.2Reimbursement. To the extent Guarantor makes any payment to Payee in satisfaction of any Guaranteed Obligation, Maker shall promptly reimburse Guarantor in full for such payment, together with interest thereon at the rate of 8% per annum from the date of payment until reimbursed in full. 

 

6.3Indemnification Procedures. Guarantor shall promptly notify Maker in writing of any claim for which Guarantor seeks indemnification. Maker shall have the right, at its own expense, to assume control of the defense of any such claim with counsel reasonably acceptable to Guarantor; provided, however, that Guarantor shall have the right to participate in such defense with counsel of its own choosing at its own expense. Maker shall not settle any such claim without Guarantor’s prior written consent, which shall not be unreasonably withheld. 

 

6.4Survival. The indemnification obligations of Maker under this Section 6 shall survive the termination of this Guarantee and the payment in full of all Guaranteed Obligations. 

 

7.REPRESENTATIONS AND WARRANTIES OF GUARANTOR; Jury Trial Waver 

 

(a)Guarantor hereby represents and warrants to Payee as of the date hereof: 

 

(i)Authorization. Guarantor has full legal capacity and authority to execute, deliver, and perform this Guarantee, and this Guarantee constitutes the legal, valid, and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms. 

 

(ii)No Conflict. The execution and performance of this Guarantee does not conflict with any agreement, law, order, or obligation to which Guarantor is a party or by which Guarantor is bound. 

 

(iii)Financial Benefit. Guarantor has received, or will receive, direct or indirect benefit from the transactions evidenced by the Note and the Exchange Agreement. 

 

(iv)Guarantor acknowledges that Payee has no fiduciary or special duty to Guarantor and has no obligation to provide Guarantor with financial or other information concerning Maker. 

 

(b)Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH OF GUARANTOR, MAKER AND PAYEE KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTEE, THE NOTE, THE EXCHANGE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE EXECUTION OF THIS GUARANTEE. 

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(c)Judicial Reference. If the foregoing waiver of jury trial is determined to be unenforceable under applicable law, each party agrees that any dispute shall be determined by the court sitting without a jury to the fullest extent permitted by law. 

 

8.ADDITIONAL WAIVERS OF GUARANTOR 

 

In addition to all other waivers contained in this Guarantee, Guarantor irrevocably waives:

 

(a)any right of setoff, recoupment, counterclaim or deduction of any nature whatsoever against Payee in any action or proceeding to enforce this Guarantee; 

 

(b)any defense arising by reason of any disability, incapacity, bankruptcy, insolvency, reorganization, liquidation, dissolution or other similar proceedings involving Maker or any other obligor; 

 

(c)any defense based upon impairment, release, substitution, exchange, valuation, loss or disposition of any collateral securing the Guaranteed Obligations; 

 

(d)any right to require Payee to marshal assets or proceed first against any collateral, Maker or any other obligor before enforcing this Guarantee; 

 

(e)any defense arising from anti-deficiency statutes, suretyship laws or other laws that might otherwise limit the liability of a guarantor; and 

 

(f)any claim that Payee has failed to mitigate damages or has acted in any particular order in enforcing its rights or remedies. 

 

The liability of Guarantor shall remain absolute and unconditional notwithstanding any action or inaction of Payee that might otherwise constitute a legal or equitable discharge of a surety or guarantor.

 

8.LENDER RIGHTS; CUMULATIVE REMEDIES 

 

(a)Lender Discretion. Without notice to or the consent of Guarantor, and without affecting, impairing or releasing the obligations of Guarantor under this Guarantee, Payee may, at any time and from time to time, in its sole and absolute discretion: (a) amend, modify, supplement, renew, extend, accelerate, compromise or otherwise alter the terms of the Note, the Exchange Agreement or any other Loan Documents; (b) increase or decrease the interest rate or extend the time for payment or performance of any Guaranteed Obligations; (c) release, surrender, substitute, exchange, compromise, settle, impair, fail to perfect or otherwise deal with any collateral securing the Guaranteed Obligations; (d) release, compromise, settle with, or fail to pursue Maker or any other guarantor, obligor or other person liable with respect to the Guaranteed Obligations; (e) apply payments received from any source in such order and manner as Payee, in its sole discretion, deems appropriate; (f) exercise or refrain from exercising any right or remedy available under the Note, this Guarantee, any other Loan Document or applicable law; and (g) take any other action or omit to take any action with respect to the Guaranteed Obligations or any collateral, whether or not such action or omission impairs Guarantor's right of reimbursement, contribution or subrogation. 

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(b)Cumulative Remedies. All rights and remedies of Payee under this Guarantee, the Note, the Exchange Agreement, any other Loan Document and applicable law shall be cumulative and may be exercised independently or concurrently, in such order as Payee may determine in its sole discretion. The exercise of any one right or remedy shall not preclude the simultaneous or subsequent exercise of any other right or remedy, and no delay or omission by Payee in exercising any right or remedy shall constitute a waiver thereof. 

 

(c)No Election of Remedies. Guarantor expressly waives any defense based upon any election of remedies by Payee, even though such election, including any nonjudicial foreclosure or other exercise of remedies, destroys or otherwise impairs Guarantor's rights of subrogation, reimbursement or contribution against Maker or any other person. 

 

9.ATTORNEYS’ FEES AND COSTS 

 

If Payee is required to bring any action or proceeding to enforce this Guarantee, Guarantor shall pay all of Payee’s reasonable costs and expenses incurred in connection therewith, including reasonable attorneys’ fees. If Guarantor is required to bring any action or proceeding to enforce Guarantor’s rights of subrogation or indemnification under this Guarantee, Maker shall pay all of Guarantor’s reasonable costs and expenses incurred in connection therewith, including reasonable attorneys’ fees.

 

10.GOVERNING LAW; JURISDICTION 

 

This Guarantee shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflicts of law principles. Guarantor and Maker each irrevocably submit to the personal jurisdiction of the state and federal courts located in Delaware for purposes of any action arising under or related to this Guarantee.

 

11.NOTICES 

 

All notices under this Guarantee shall be in writing and delivered by hand, overnight courier, or certified mail (return receipt requested) to the addresses set forth below, or such other address as a party may designate in writing:

If to Guarantor:
Marcus Laun, Interim Chief Executive Officer
Sky Quarry Inc.
Address: 707 W 700 S, Woods Cross, Utah 84087
Email: [email protected]
If to Payee:
Libertas Funding LLC
Address:
Attention:
Email:
If to Maker:
Sky Quarry Inc.
Address: 707 W 700 S, Woods Cross, Utah 84087
Attention: Marcus Laun
Email: [email protected]

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12.ENTIRE AGREEMENT; AMENDMENTS 

 

This Guarantee, together with the Note and the Exchange Agreement, constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior negotiations, representations, understandings, and agreements, including, without limitation, any and all Prior MCA Guaranties and any other personal guarantee, performance guaranty, or similar undertaking previously provided by Guarantor or any other guarantor in connection with the MCA Agreements. This Guarantee may not be amended, modified, or waived except by a written instrument signed by Guarantor, and Payee.

 

13.SEVERABILITY 

 

If any provision of this Guarantee is held invalid or unenforceable, such provision shall be modified to the minimum extent necessary to make it enforceable, and the remaining provisions shall continue in full force and effect.

 

14.SUCCESSORS AND ASSIGNS 

 

This Guarantee shall be binding upon Guarantor and his heirs, personal representatives, and assigns, and shall inure to the benefit of Payee and its successors and assigns. The indemnification obligations of Maker set forth in Section 6 shall be binding upon Maker and its successors and assigns.

 

IN WITNESS WHEREOF, the undersigned have executed this Personal Guarantee as of the date first written above.

 

GUARANTOR:

 

Signature: /s/ Marcus Laun

Marcus Laun, Individually and as Interim Chief Executive Officer

Date: June 29, 2026

 

ACKNOWLEDGED, CONSENTED TO, AND AGREED
(as to Sections 5, 6, 8, and 14 hereof):
MAKER:
SKY QUARRY INC.,
a Delaware corporation
By:	/s/ Marcus Laun
Name:	Marcus Laun
Title:	CEO
Date:	June 29, 2026
PAYEE:
LIBERTAS FUNDING LLC,
a Connecticut limited liability company
By:
Name:
Title:
Date:	June 29, 2026

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NOTARIAL ACKNOWLEDGMENT

 

State of ___________________________

County of _________________________

 

On this ______day of ____________, 2026, before me, the undersigned notary public, personally appeared Marcus Laun, personally known to me or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the foregoing instrument, and acknowledged that he executed the same for the purposes therein contained.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

Notary Public: ___________________________________

My Commission Expires: ___________________________