ENSV ENSERVCO Corporation

Delaware		001-36335		84-0811316
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.005 par value	ENSV	NYSE American

Exhibit Number		Description
3.1		Certificate of Designation of 2% Cumulative Mandatory Convertible Series A Preferred Stock of Enservco Corporation, as filed with the Secretary of State of Delaware on August 9, 2024
10.1		Assignment and Bill of Sale Agreement by and between Enservco Corporation and HP Oilfield Services, LLC dated as of August 6, 2024
10.2		Promissory Note payable to Enservco Corporation, dated August 6, 2024
10.3		Amendment to Membership Interest Purchase Agreement among Enservco Corporation and Tony Sims, Jim Fate, and Buckshot Trucking LLC dated as of August 8, 2024
10.4		Form of Promissory Note dated as of August 8, 2024 (Buckshot Note)
10.5		Share Exchange Agreement by and between Enservco Corporation and Star Equity Holdings, Inc. dated as of August 9, 2024
10.6		Board Designation Agreement by and between Enservco Corporation and Star Equity Holdings, Inc. dated as of August 9, 2024
10.7		Voting Agreement dated as of August 9, 2024
10.8		Registration Rights Agreement by and between Enservco Corporation and Star Equity Holdings, Inc. dated as of August 9, 2024
10.9		Note Purchase Agreement by and between Enservco Corporation and Star Equity Holdings, Inc. dated as of August 9, 2024
10.10		Promissory Note payable to Star Equity Investment Holdings, Inc., dated as of August 9, 2024
10.11		Stock Pledge Agreement dated as of August 9, 2024 by and between Enservco Corporation in favor of Star Equity Investment Holdings, Inc.
99.1		Unaudited Financial Statements of Buckshot Trucking, LLC as and for the three months ended March 31, 2024 and March 31, 2023 (incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K/A filed on June 28, 2024)
99.2		Audited Financial Statements of Buckshot Trucking, LLC as and for the years ended December 31, 2023 and 2022 (incorporated by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K/A filed on June 28, 2024)
99.3		Unaudited Pro Forma Financial Statements of Enservco Corporation (incorporated by reference to Exhibit 99.4 to the Company’s Current Report on Form 8-K/A filed on June 28, 2024)
99.4		Press release dated August 9, 2024
99.5		Press release dated August 12, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

	Enservco Corporation
	By:	/s/ Richard A. Murphy
		Richard A. Murphy, Chair and CEO

Exhibit 3.1

 

CERTIFICATE OF DESIGNATION
OF
2.0% CUMULATIVE MANDATORILY CONVERTIBLE SERIES A PREFERRED STOCK
OF
ENSERVCO CORPORATION

 

Pursuant to Section 151 of the General Corporation Law of the State of Delaware

 

ENSERVCO CORPORATION, a Delaware corporation (the “Company”), certifies that pursuant to the resolutions of the Board of Directors adopted on August 6, 2024,the creation of 2.0% Cumulative Mandatorily Convertible Series A Preferred Stock, par value $0.005 per share (the “Series A Preferred Stock”), of the Company was authorized and the designation, preferences, privileges, voting rights, and other special rights and qualifications, limitations and restrictions of the Series A Preferred Stock, in addition to those set forth in the Certificate of Incorporation and the Bylaws, are fixed as follows:

 

1.       Designation and Amount; Ranking. (a) There shall be created from the 10,000,000 shares of preferred stock, par value $0.005 per share, of the Company authorized to be issued pursuant to the Certificate of Incorporation, a series of preferred stock, designated as the “2.0% Cumulative Mandatorily Convertible Series A Preferred Stock,” par value $0.005 per share, and the authorized number of shares for issuance of Series A Preferred Stock shall be 4,000,000. Shares of Series A Preferred Stock that are purchased or otherwise acquired by the Company, or that are converted into shares of Common Stock, shall be cancelled and shall revert to authorized but unissued shares of Series A Preferred Stock.

 

(b)      The Series A Preferred Stock, with respect to dividend rights and rights upon the liquidation, winding-up or dissolution of the Company, ranks: (i) senior to all Junior Stock; (ii) on a parity, in all respects, with all Parity Stock; and (iii) junior to all Senior Stock, in each case, as provided more fully herein.

 

2.

Definitions. As used herein, the following terms shall have the following meanings:

 

(a)

“Accumulated Dividends” shall mean, with respect to any share of Series A Preferred Stock, as of any date, the aggregate accumulated and unpaid dividends on such share from the Issue Date until such date. There shall be no Accumulated Dividends with respect to any share of Series A Preferred Stock prior to the Issue Date.

 

(b)

“Affiliate” shall have the meaning ascribed to it, on the date hereof, under Rule 144.

 

(c)

“Board of Directors” shall mean the Board of Directors of the Company or, with respect to any action to be taken by the Board of Directors, any committee of the Board of Directors duly authorized to take such action

 

(d)

“Business Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law or executive order to close.

 

(e)

“Bylaws” shall mean the Amended and Restated Bylaws of the Company, as may be amended, amended and restated, or otherwise modified from time to time.

 

(f)

“Capital Stock” shall mean, for any entity, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) stock issued by that entity.

 

(g)

“Certificate of Incorporation” shall mean the Second Amended and Restated Certificate of Incorporation of the Company, as amended to date and as may be further amended, amended and restated, or otherwise modified from time to time.

 

(h)

“Close of Business” shall mean 5:00 p.m. (New York City time).

 

 

(i)

“Common Stock” shall mean the common stock, par value $0.005 per share, of the Company.

 

(j)

“Company” shall have the meaning specified in the preamble.

 

(k)

“Conversion Rate” shall have the meaning specified in Section 7(a).

 

(l)

“Dividend Payment Date” shall mean January 1, April 1, July 1 and October 1, of each year, commencing on January 1, 2025.

 

(m)

“Dividend Period” shall mean the period commencing on and including a dividend payment date and ending on but excluding the next succeeding dividend payment date, with the exception that the first Dividend Period shall commence on and include the Issue Date and end on but exclude the first scheduled dividend payment date.

 

(n)

“Dividend Rate” shall mean the rate per annum of 2.0% per share of Series A Preferred Stock on the Liquidation Preference; provided that such rate shall automatically increase to (i) 8.0% on August 8, 2025, and (ii) 12.0% on August 8, 2026.

 

(o)

“Dividend Record Date” shall mean, with respect to any Dividend Payment Date, December 15, March 15, June 15 and September 15, as the case may be, immediately preceding such Dividend Payment Date.

 

(p)

“Governmental Authority” shall mean (a) any national, supranational, federal, state, provincial, county, municipal or local government or any entity exercising executive, legislative, judicial, quasi-judicial, arbitral, regulatory, taxing or administrative functions of or pertaining to government and (b) any agency, commission, division, bureau, department, court, tribunal, instrumentality, authority, quasi-governmental authority or other political subdivision of any government, entity or organization described in the foregoing clause (a), in each case, whether U.S. or non-U.S.

 

(q)

“Holder” shall mean a holder of record of the Series A Preferred Stock.

 

(r)

“Issue Date” shall mean August 9, 2024, the original date of issuance of the Series A Preferred Stock.

 

(s)

“Junior Stock” shall mean the Common Stock, all other classes of the Company’s common stock and each other class of Capital Stock or series of preferred stock established after the Issue Date, the terms of which do not expressly provide that such class or series ranks senior to or on a parity with the Series A Preferred Stock as to dividend rights or rights upon the liquidation, winding-up or dissolution of the Company.

 

(t)

“Law” shall mean any Order, law, statute, regulation, code, ordinance, policy, rule, consent decree, consent order or other requirement of any Governmental Authority.

 

(u)

“Liquidation Preference” shall mean, with respect to each share of Series A Preferred Stock, $0.40 per share.

 

(v)

“Mandatory Conversion Date” shall have the meaning specified in Section 7(b).

 

(w)

“Market Disruption Event” shall mean the occurrence or existence on any Trading Day of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the stock exchange or otherwise) in the Common Stock or in any options contracts or futures contracts relating to the Common Stock, and such suspension or limitation occurs or exists at any time within the thirty (30) minutes prior to the scheduled close of trading on such Trading Day.

 

 

(x)

“Order” shall mean any award, injunction, judgment, decree, order, ruling, subpoena or verdict or other decision issued, promulgated or entered by or with a Governmental Authority of competent jurisdiction.

 

(y)

“Parity Stock” shall mean any class of Capital Stock or series of preferred stock established after the Issue Date, the terms of which expressly provide that such class or series will rank on a parity with the Series A Preferred Stock as to dividend rights or rights upon the liquidation, winding-up or dissolution of the Company.

 

(z)

“Person” shall mean any individual, corporation, general partnership, limited partnership, limited liability partnership, joint venture, association, joint-stock company, trust, limited liability company, unincorporated organization or government or any agency or political subdivision thereof.

 

(aa)

“Redemption” shall have the meaning specified in Section 13(a).

 

(bb)

“Redemption Date” shall have the meaning specified in Section 13(c).

 

(cc)

“Redemption Notice” shall have the meaning specified in Section 13(c).

 

(dd)

“Redemption Price” shall have the meaning specified in Section 13(b).

 

(ee)

“Rule 144” shall mean Rule 144 as promulgated under the Securities Act.

 

(ff)

“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

(gg)

“Senior Stock” shall mean any class of the Company’s Capital Stock or series of preferred stock established after the Issue Date, the terms of which expressly provide that such class or series will rank senior to the Series A Preferred Stock as to dividend rights or rights upon the liquidation, winding-up or dissolution of the Company.

 

(hh)

“Series A Preferred Stock” shall have the meaning specified in the preamble.

 

(ii)

“Stockholder Approval” shall mean the approval by holders of a majority of the issued and outstanding shares of Common Stock eligible to vote, required by the applicable rules and regulations of the NYSE/American Stock Exchange (or any successor entity) from the stockholders of the Company with respect to the issuance of the shares upon conversion of the shares of Series A Preferred Stock.

 

(jj)

“Trading Day” shall mean a day during which (i) trading in the Common Stock generally occurs on the New York Stock Exchange or, if the Common Stock is not listed on the NYSE/American Stock Exchange, on the principal other national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not listed on a national or regional securities exchange, on the principal other market on which the Common Stock is then listed or admitted for trading and (ii) there is no Market Disruption Event. If the Common Stock is not so listed or traded, “Trading Day” shall mean a Business Day.

 

 

3.

Dividends.

 

(a)

Holders shall be entitled to receive, when, as and if declared by the Board of Directors out of funds of the Company legally available for payment, cumulative dividends at the Dividend Rate. Dividends on the Series A Preferred Stock shall be payable quarterly in arrears at the Dividend Rate, and shall accumulate, whether or not earned or declared, from the most recent date to which dividends have been paid, or, if no dividends have been paid, from the Issue Date (whether or not in any Dividend Period or Periods there shall be funds of the Company legally available for the payment of such dividends), and shall be paid in cash, as provided pursuant to Section 4. Dividends shall be payable in arrears on each Dividend Payment Date (commencing on January 1, 2025) to the holders of record of Series A Preferred Stock as they appear on the Company’s stock register at the Close of Business on the relevant Dividend Record Date. Accumulations of dividends on shares of Series A Preferred Stock shall not bear interest. Dividends payable for any period less than a full Dividend Period (based upon the number of days elapsed during the period) shall be computed on the basis of a 360-day year consisting of twelve 30-day months.

 

(b)

No dividend shall be declared or paid upon, or any sum set apart for the payment of dividends upon, any outstanding share of the Series A Preferred Stock with respect to any Dividend Period, unless all dividends for all preceding Dividend Periods have been declared and paid, or declared and a sufficient sum has been set apart for the payment of such dividend, upon all outstanding shares of Series A Preferred Stock.

 

(c)

No dividends or other distributions (other than a dividend or distribution payable solely in shares of Parity Stock or Junior Stock (in the case of Parity Stock) or Junior Stock (in the case of Junior Stock)) may be declared, made or paid, or set apart for payment upon, any Parity Stock or Junior Stock, nor may any Parity Stock or Junior Stock be redeemed, purchased or otherwise acquired for any consideration or retired for value (or any money paid to or made available for a sinking fund for the redemption of any Parity Stock or Junior Stock) by the Company or on behalf of the Company (except by (i) conversion into or exchange for shares of Parity Stock or Junior Stock (in the case of Parity Stock) or Junior Stock (in the case of Junior Stock) and (ii) payments in connection with the satisfaction of employees’ tax withholding obligations pursuant to employee benefit plans or outstanding awards (and payment of any corresponding requisite amounts to the appropriate Governmental Authority)), unless, in either case of clause (i) or (ii), above, all Accumulated Dividends shall have been or contemporaneously are declared and paid, or are declared and a sum sufficient for the payment thereof is set apart for such payment, on the Series A Preferred Stock and any Parity Stock for all dividend payment periods ending on or prior to the date of such declaration, payment, redemption, purchase or acquisition. Notwithstanding the foregoing, if full dividends have not been paid on the Series A Preferred Stock and any Parity Stock, dividends may be declared and paid on the Series A Preferred Stock and such Parity Stock so long as the dividends are declared and paid pro rata so that the amounts of dividends declared per share on the Series A Preferred Stock and such Parity Stock shall in all cases bear to each other the same ratio that accumulated and unpaid dividends per share on the shares of Series A Preferred Stock and such Parity Stock bear to each other.

 

(d)

Holders shall not be entitled to any dividend, whether payable in cash, property or stock, in excess of full cumulative dividends.

 

4.

Method of Payment of Dividends.

 

(a)      Dividends on the Series A Preferred Stock shall be payable entirely in cash.

 

(b)      If a Dividend Payment Date falls on a day that is not a Business Day, the dividend to be made on such Dividend Payment Date will be made, without penalty, on the next succeeding Business Day with the same force and effect as if made on such Dividend Payment Date.

 

5.

Voting.

 

(a) The shares of Series A Preferred Stock shall have no voting rights except as set forth below or as otherwise required by Delaware law from time to time:

 

(i)       So long as any shares of Series A Preferred Stock remain outstanding, unless a greater percentage shall then be required by Law, the Company shall not, without the affirmative vote or consent (which shall not be unreasonably withheld) of the Holders of at least a majority of the outstanding shares of Series A Preferred Stock voting or consenting, as the case may be, separately as one class, (A) create, authorize or issue any class or series of Parity Stock or Senior Stock (or any security convertible into Parity Stock or Senior Stock) or (B) amend the Company’s constituent documents by merger or otherwise so as to affect adversely the rights, preferences, privileges or voting rights of Holders, including, without limitation, provisions relating to dividends, conversion rights and ranking.

 

 

(ii)       In all cases in which Holders shall be entitled to vote, each share of Series A Preferred Stock shall be entitled to one vote.

 

(b)      The Company may authorize, increase the authorized amount of, or issue any class or series of Junior Stock, without the consent of the Holders, and in taking such actions the Company shall not be deemed to have affected, and any amendment of the Certificate of Incorporation of the Company that effects such actions shall not be deemed to affect, adversely the rights, preferences, privileges or voting rights of Holders specified herein.

 

6.

Liquidation Rights.

 

(a)       In the event of any liquidation, winding-up or dissolution of the Company, whether voluntary or involuntary, each Holder shall be entitled to receive and to be paid out of the assets of the Company available for distribution to its stockholders an amount of cash per share equal to the greater of (x) the Liquidation Preference and (y) such amount per share as would have been payable had all shares of Series A Preferred Stock been converted into Common Stock pursuant to Section 7 immediately prior to such liquidation, winding-up or dissolution, in each case plus Accumulated Dividends to the date fixed for liquidation, winding-up or dissolution in preference to the holders of, and before any payment or distribution is made on, any Junior Stock, including, without limitation, the Common Stock.

 

(b)       Neither the sale (for cash, shares of stock, securities or other consideration) of all or substantially all the assets or business of the Company (other than in connection with the liquidation, winding-up or dissolution of the Company) nor the merger or consolidation of the Company into or with any other Person shall be deemed to be a liquidation, winding-up or dissolution, voluntary or involuntary, for the purposes of this Section 6.

 

(c)       After the payment in full to the Holders of the preferential amounts provided for in this Section 6, the Holders as such shall have no right or claim to any of the remaining assets of the Company.

 

(d)       In the event the assets of the Company available for distribution to the Holders and holders of shares of Parity Stock upon any liquidation, winding-up or dissolution of the Company, whether voluntary or involuntary, shall be insufficient to pay in full all amounts to which such Holders are entitled pursuant to this Section 6 and all amounts to which such holders of Parity Stock are entitled, no such distribution shall be made on account of any shares of Parity Stock upon such liquidation, dissolution or winding-up unless proportionate distributable amounts shall be paid on account of the shares of Series A Preferred Stock, equally and ratably, in proportion to the full distributable amounts for which holders of all Series A Preferred Stock and of any Parity Stock are entitled upon such liquidation, winding-up or dissolution.

 

7.

Mandatory Conversion.

 

(a)

Following receipt of Stockholder Approval, the Company shall convert all outstanding shares of the Series A Preferred Stock into shares of Common Stock, in which case each Holder will receive, for each share of Series A Preferred Stock being converted, a number of shares of Common Stock in aggregate equal to the Conversion Rate. The initial conversion rate for the Series A Preferred Stock is one (1) share of Common Stock per share of Series A Preferred Stock (the “Conversion Rate”).

 

 

(b)

To exercise the mandatory conversion right described in this Section 7, the Company must issue a press release for publication on the Dow Jones News Service or Bloomberg Business News (or if either such service is not available, another broadly disseminated news or press release service selected by the Company) announcing such a mandatory conversion. The Company shall also give notice by mail or by publication to the Holders (not later than two Business Days after the date of the press release) of the mandatory conversion announcing the Company’s intention to convert the Series A Preferred Stock. The conversion date will be a date selected by the Company (the “Mandatory Conversion Date”) and will be no earlier than five Business Days and no later than 20 Business Days after the date on which the Company issues the press release described in this Section 7(b).

 

(c)

In addition to any information required by applicable Law, the press release and notice of a mandatory conversion described in Section 7(b) shall state, as appropriate: (i) the Mandatory Conversion Date; and (ii) the number of shares of Common Stock to be issued upon conversion of each share of Series A Preferred Stock.

 

(d)

On and after the Mandatory Conversion Date, all rights of Holders of such Series A Preferred Stock shall terminate, except for the right to receive the whole shares of Common Stock issuable upon conversion thereof with such adjustment or cash payment for fractional shares as the Company may elect pursuant to Section 9. Upon conversion, the Company will deliver to each Holder a number of shares of Common Stock equal to the number of shares of Series A Preferred Stock being converted by such Holder multiplied by the then applicable Conversion Rate (with shares of Common Stock issued in whole integral multiples, rounded down in lieu of any fractional shares that a Holder would be entitled to receive) on the third (3rd) Business Day immediately following the relevant conversion date.

 

8.         Adjustment of Conversion Rate. If the Company shall, at any time or from time to time while the Series A Preferred Stock is outstanding, pay a dividend or make a distribution on its Common Stock in shares of Common Stock, subdivide its outstanding shares of Common Stock into a greater number of shares or combine its outstanding shares of Common Stock into a smaller number of shares or issue by reclassification of its outstanding shares of Common Stock any shares of its Capital Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), then the Conversion Rate in effect immediately prior to the date upon which such change shall become effective shall be adjusted on a pro rata basis.

 

9.         Dividends Upon Conversion. If dividends are required to be paid in cash with respect to the Dividend Period during which a Mandatory Conversion Date occurs:

 

(a)    if such Mandatory Conversion Date occurs before the Dividend Record Date for such Dividend Period, any accrued and unpaid dividends (to, but not including, such Mandatory Conversion Date) on the shares of Series A Preferred Stock subject to such conversion shall be paid in cash on such Mandatory Conversion Date; and

 

(b)    if such Mandatory Conversion Date occurs on or after the Dividend Record Date for such Dividend Period but on or before the Dividend Payment Date for such Dividend Period, any such dividends (to, but not including, such Mandatory Conversion Date) shall be paid in cash on the relevant Dividend Payment Date.

 

10.         No Fractional Shares. No fractional shares of Common Stock or securities representing fractional shares of Common Stock shall be delivered upon conversion of the Series A Preferred Stock. If, upon conversion of the Series A Preferred Stock, a Holder would be entitled to receive a fractional interest in a share of Common Stock, the Company will round down to the nearest whole number the number of shares of Common Stock to be issued to such Holder.

 

11.         Rights as Stockholders. The Series A Preferred Stock will not entitle their Holders to any of the rights of a stockholder of the Company, except as expressly provided in this Certificate of Designation.

 

 

12.

Legends.

 

(a)

Each share of Series A Preferred Stock shall bear a legend in substantially the following form:

 

“THIS SHARE OF 2.0% CUMULATIVE MANDATORILY CONVERTIBLE SERIES A PREFERRED STOCK AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SHARE OF 2.0% CUMULATIVE MANDATORILY CONVERTIBLE SERIES A PREFERRED STOCK HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS SHARE OF 2.0% CUMULATIVE MANDATORILY CONVERTIBLE SERIES A PREFERRED STOCK NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO REGISTRATION PURSUANT TO THE SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.”

 

(b)

Each share of Common Stock issuable upon conversion of the Series A Preferred Stock shall bear a legend in substantially the following form:

 

“THIS SHARE OF COMMON STOCK HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS SHARE OF COMMON STOCK NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO REGISTRATION PURSUANT TO THE SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.”

 

13.

Company Redemption.

 

(a)         At any time and from time to time, from and after the Issue Date, to the extent not prohibited by Law, the Company may elect to redeem all outstanding shares of Series A Preferred Stock, or any portion thereof, in cash at a redemption price per share of Series A Preferred Stock equal to the Redemption Price (as defined below) on the terms and subject to the conditions set forth in this Section 13 (a “Redemption”).

 

(b)         The total price for each share of Series A Preferred Stock redeemed pursuant to this Section 13 shall be an amount per share of Series A Preferred Stock (the “Redemption Price”) equal to the greater of the Liquidation Preference of such share of Series A Preferred Stock plus Accumulated Dividends.

 

(c)         Any election by the Company pursuant to this Section 13 shall be made by delivery to the Holders of written notice (the “Redemption Notice”) of the Company’s election to redeem, at least ten (10) calendar days but no more than sixty (60) calendar days prior to the elected redemption date (each such date, a “Redemption Date”), which Redemption Notice shall state:

 

(i)      that an Redemption is being made and the number of shares of Series A Preferred Stock being redeemed; and

 

(ii)    (1) the Redemption Price, (2) the bank or trust company with which the aggregate Redemption Price shall be deposited on or prior to the Redemption Date, and (3) the Redemption Date (or, to the extent not ascertainable at the time of such notice, a good faith estimate of the Redemption Date).

 

(d)         Any Redemption Notice may, at the Company's discretion, be subject to one or more conditions precedent.

 

(e)         Any Redemption that is effected pursuant to this Section 13 shall be made on a pro rata basis among all Holders in proportion to the number of shares of Series A Preferred Stock held by such Holders.

 

(f)         On or before any Redemption Date, the Company shall deposit the amount of the applicable aggregate Redemption Price with a bank, trust company or exchange agent having an office in New York City in trust for the benefit of such Holders. On the Redemption Date, the Company shall cause to be paid in cash the applicable aggregate Redemption Price for such shares of Series A Preferred Stock to such Holders at an account or accounts designated by such Holders. Upon such payment in full, such shares of Series A Preferred Stock will be deemed to have been redeemed, whether or not the certificates (if the shares are certificated) for such shares of Series A Preferred Stock have been surrendered for redemption and canceled, and dividends with respect to such redeemed shares of Series A Preferred Stock shall cease to accumulate and all designations, rights, preferences, powers, qualifications, restrictions and limitations of such redeemed shares of Series A Preferred Stock shall forthwith terminate.

 

 

(g)         If any shares of Series A Preferred Stock are not redeemed on the Redemption Date for any reason, until such shares are redeemed, all such unredeemed shares of Series A Preferred Stock shall remain outstanding and entitled to all of the designations, powers, preferences and relative, optional, special and other rights, and the qualifications, limitations and restrictions of the Series A Preferred Stock set forth in this Certificate of Designation, including the right to accumulate and receive dividends thereon as set forth in Section 3 until the date on which the Company redeems and pays in full the Redemption Price for such Series A Preferred Stock.

 

14.

Miscellaneous Provisions.

 

(a)          With respect to any notice to a Holder required to be provided hereunder, neither failure to mail such notice, nor any defect therein or in the mailing thereof, to any particular Holder shall affect the sufficiency of the notice or the validity of the proceedings referred to in such notice with respect to the other Holders or affect the legality or validity of any distribution, rights, warrant, reclassification, consolidation, merger, conveyance, transfer, dissolution, liquidation or winding-up, or the vote upon any such action. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the Holder receives the notice.

 

(b)         Shares of Series A Preferred Stock that have been issued and reacquired in any manner, including shares of Series A Preferred Stock that are purchased or exchanged or converted, shall (upon compliance with any applicable provisions of the Laws of Delaware) have the status of authorized but unissued shares of preferred stock of the Company undesignated as to series and may be designated or redesignated and issued or reissued, as the case may be, as part of any series of preferred stock of the Company; provided that any issuance of such shares as Series A Preferred Stock must be in compliance with the terms hereof.

 

(c)         The shares of Series A Preferred Stock shall be issuable only in whole shares.

 

(d)         All notice periods referred to herein shall commence on the date of the mailing of the applicable notice. Notice to any Holder shall be given to the registered address set forth in the Company’s records for such Holder.

 

(e)         Any payment required to be made hereunder on any day that is not a Business Day shall be made on the next succeeding Business Day and no interest or dividends on such payment will accrue or accumulate, as the case may be, in respect of such delay.

 

(f)         Holders shall not be entitled to any preemptive rights to acquire additional Capital Stock of the Company.

 

 

 

[Remainder of page intentionally blank]

 

 

IN WITNESS WHEREOF, the Company has caused this certificate to be signed and attested this 9th day of August, 2024.

 

	ENSERVCO CORPORATION
	By: /s/ Mark Patterson
	Name: Mark Patterson Title: Senior Vice President and Chief Financial Officer

 

 

Signature Page to

Certificate of Designation of

2.0% Cumulative Mandatorily Convertible Series A Preferred Stock

 

Exhibit 10.1

 

ASSIGNMENT AND BILL OF SALE

 

THIS ASSIGNMENT AND BILL OF SALE (this “Agreement”) is made and entered into this 6th day of August 2024 (the “Signing Date”), by and between Enservco Corporation, a Delaware corporation (the “Seller” or “Enservco”), and HP Oilfield Services, LLC, a Nevada limited liability company (the “Buyer” or “HP”).

 

RECITALS

 

WHEREAS, Seller wishes to sell and assign to Buyer those certain assets of Heat Waves Hot Oil Service, LLC, a Colorado limited liability company and wholly owned subsidiary of Seller, listed on Exhibit A and B attached hereto (the “Purchased Assets”), and Buyer wishes to purchase from Seller, all of the Purchased Assets, subject to the terms and conditions set forth herein (the “Transaction”).

 

TERMS AND CONDITIONS

 

NOW THEREFORE, in consideration of the mutual promises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller hereby agree as follows:

 

1.	Bill of Sale.

Subject to the terms and conditions set forth herein, at the Closing, Buyer agrees to purchase from Seller and Seller agrees to sell, convey, transfer and deliver to Buyer all of Seller’s right, title and interest in all the Purchased Assets free and clear of all liens and encumbrances for the consideration specified in Section 2 below. Seller shall deliver to Buyer titles and corresponding lien releases to the Purchased Assets listed on Exhibit A within 5 business days of at Closing. Seller will deliver within 5 business after closing photocopies of the titles of Purchased Assets listed on Exhibit B. Seller shall deliver the remaining titles and lien releases for the equipment listed on Exhibit B in proportion to principal payments made under the promissory note. Buyer and Seller shall mutually agree upon equipment released with each principal payment.

 

2.

Purchase Price. The aggregate purchase price for the Purchased Assets shall be $1,695,000 (the “Purchase Price”). Buyer shall pay the Purchase Price as follows: (i) Buyer shall pay $1,221,625 by wire transfer of immediately available cash (the “Cash Payment”) at Closing; and (ii) Buyer shall deliver a promissory note in the amount of $473,375 (attached hereto as Exhibit B) issued by Buyer to Seller, with principal payments of $94,675 becoming due and payable on the first day of each month beginning on October 1, 2024 for a term of five months at a 10% per annum interest rate (the “Note”). “Transaction Documents means 1) this Agreement; 2) the Note (Exhibit B); and 3) all other agreements, instruments and documents required to be delivered in connection with this Transaction.

 

a)

HP agrees not to solicit any business in PA, WV, OH for 8 months commencing from the date of this agreement. In the event HP is approached by any customer in the above region during this period, they are required to alert Enservco of the solicitation. During the no solicitation period, HP will not offer services until Enservco agrees the said customer will not work with Enservco.

 

 

b)

HP has the option to purchase for a period of 10 months from closing the Enservco East Coast Heating operations for $1.85 million including the equipment detailed on Exhibit C.

 

3.

Signing and Closing. Subject to the terms and conditions of this Agreement, the execution of this Agreement shall occur on the Signing Date specified above and the consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place remotely by exchange of documents and signatures (or their electronic counterparts), on or before August 12, 2024 at 9:00 A.M. Mountain Time (the “Closing Date”). Buyer and Seller mutually agree to use their best efforts to effectuate the Closing prior to the Closing Date.

 

4.

Condition of Assets and Release. Buyer hereby acknowledges and agrees that the Purchased Assets are being sold on an “as-is” and “where-is” basis, with all faults, imperfections, defects, and errors of description. Buyer hereby releases Seller from all claims, losses, liabilities, damages, demands, and expenses, of any kind or nature whatsoever, known or unknown, which may arise out of or are related to the condition, use or operation of the Purchased Assets after Closing. Buyer acknowledges that it has conducted its own inspection of the Purchased Assets and agrees that it has been provided adequate access to the personnel, properties, assets, premises, books and records and other documents and data of Seller for such purpose. Seller represents that the equipment is in the same condition as when it was originally inspected by the Seller and that no parts or equipment have been removed or changed since this inspection.

 

5.

Use of Longmont, CO Facility. For a period of up to 30 days following the Closing Date, Buyer may maintain, at no cost, Purchased Assets at Seller’s facility in Longmont, CO. Buyer expressly agrees to use its best efforts to relocate all Purchased Assets listed on Exhibit A during such period. Buyer has 30 days after final payment to remove all equipment listed on Exhibit B

 

6.

Required Approvals; Closing Conditions: The parties’ obligation to consummate the Transaction is subject to receipt of approval of the Transaction (i) by Seller’s board of directors and receipt of any other required approvals; and (ii) by the Company’s lender and/or lienholder and an agreement to release all liens on the Purchased Assets.

 

7.	Binding Effect. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

 

8.	Governing Law. This Agreement shall be governed by and construed in accordance with Colorado law.

 

9.	Counterparts. This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be deemed to be an original, and all of which shall together constitute one and the same instrument.

 

[Signatures to Follow]

 

 

IN WITNESS WHEREOF, the parties, intending to be legally bound, have caused this Agreement to be executed as of the ate first written above.

 

 

SELLER:			BUYER:
ENSERVCO CORPORATION			HP OILFIELD SERVICES, LLC, a Nevada limited
a Delaware corporation			liability company
By:	/s/ Richard Murphy		By:	/s/ Robert Devers
Richard Murphy			Name: Robert Devers
Its: Chairman and CEO			Its: CFO

 

 

 

 

[Assignment and Bill of Sale]

 

 

 

Exhibit 10.2

 

PROMISSORY NOTE

 

$473,375.00

Date: August 6, 2024

 

WHEREAS, this promissory note is to be issued pursuant to the terms and conditions of that certain Assignment and Bill of Sale Agreement between Buyer (defined below) and Seller (defined below) dated August __, 2024 (the “Purchase Agreement”).

 

HP Oilfield Services, LLC, a Nevada limited liability company (“Buyer”), hereby promises to pay $473,375 with interest at the rate of ten percent (10%) per annum, all in accordance with the terms and conditions of this Promissory Note (the “Note”), to the order of Enservco Corporation, a Delaware corporation (the “Seller”).

 

Payments. Payments shall be due and payable in monthly installments of $94,675 plus accrued interest for a term of 5 months beginning October 1, 2024, with the unpaid principal and interest shall be due on February 1, 2025 (the “Maturity Date”).

 

1.           Prepayment. This Note may be prepaid in whole or in part at any time, without penalty or premium.

 

2.          Default. Any of the following shall constitute an event of default under this Note upon written notice from Seller to Buyer: (i) the failure of Buyer to make payment in accordance with the terms hereof; (ii) the filing of any petition or the commencement of any proceeding voluntarily by Buyer for any relief under any bankruptcy or insolvency laws or any law relating to the relief of debtors; and (iii) the entry of an order or decree by a court of competent jurisdiction in any involuntary case that is for relief against Buyer under any bankruptcy or insolvency laws or any law relating to the relief of debtors which is not dismissed within Thirty (30) days (each, an “Event of Default”).

 

Upon an Event of Default, all of the indebtedness evidenced hereby and remaining unpaid shall become immediately due and payable. All reasonable expenses (including, without limitation, reasonable attorneys’ fees) incurred by Seller in enforcing any term or condition of this Note shall be due and payable upon demand.

 

3.           Governing Law; Forum. This Note is governed by and shall be construed according to the laws of the State of Colorado, excluding any conflicts of law rule or principle that might apply to the law of another jurisdiction.

 

4.          Maximum Interest. In no event shall the amount of interest due or payable hereunder exceed the maximum rate of interest allowed by applicable law, and in the event any such payment is inadvertently paid by the Buyer or inadvertently received by the Sellers or other holder hereof, then such excess sum shall be credited as a payment of principal. It is the express intent hereof that the Borrower not pay, and the Sellers or other holder not receive, directly or indirectly, in any manner whatsoever, interest in excess of that which may be lawfully paid by the Borrower under applicable law.

 

5.           Miscellaneous. This Note is binding upon Buyer and its legal representatives, successors and permitted assigns and shall inure to the benefit of Sellers and their heirs, legal and personal representatives, successors and permitted assigns. Buyer may not assign this Note or any obligation hereunder. No amendment or waiver of any provision of this Note shall in any event be effective unless the same shall be in writing and signed by the Sellers and Buyer.

 

 

SO AGREED THIS 6^th day of August, 2024.

 

	Buyer:
	HP Oilfield Services, LLC
	By:	/s/ Robert Devers
	Name: Robert Devers
	Title: CFO

 

 

Exhibit 10.3

 

AMENDMENT TO

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

This Amendment to Membership Interest Purchase Agreement (the “Amendment”) is dated as of August 8, 2024, by and between Buckshot Trucking, LLC a Wyoming limited liability company (the “Company”), Tony Sims, an individual resident of the state of Colorado, Jim Fate, an individual resident of the state of Colorado (each of the foregoing a “Seller”, together the “Sellers”), and Enservco Corporation, a Delaware corporation (“Buyer”). The Company, Sellers and Buyer are each referred to as a “Party” and, collectively, as the “Parties.” Any capitalized terms used but not defined herein shall have the meanings given in the Purchase Agreement.

 

RECITALS

 

A.         The Parties entered into that certain Membership Interest Purchase Agreement dated as of March 19, 2024 (the “Purchase Agreement”), pursuant to which, among other things, subject to the terms and conditions of the Purchase Agreement, on the Closing Date, Sellers agree to sell to Buyer, and Buyer agrees to purchase from Sellers, the Membership Interests.

 

B.         Pursuant to Section 11.09 of the Purchase Agreement, the Parties agree to amend the Purchase Agreement upon the terms and conditions set forth herein.

 

AMENDMENT

 

In consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

 

1.    Amendments to Purchase Agreement. The Purchase Agreement is hereby amended as follows:

 

(a)

Section 2.02 of the Purchase Agreement is hereby deleted entirely and replaced with a new Section 2.02, as set forth on the attached Exhibit A.

 

(b)

A new Section 2.06 is hereby added to the Purchase Agreement, as set forth on the attached Exhibit A.

 

(c)

A new Annex 1 is added as an annex to the Purchase Agreement, as set forth on the attached Annex 1.

 

2.    No Other Changes. Except as explicitly amended by this Amendment, all of the terms and conditions of the Purchase Agreement shall remain in full force and effect.

 

3.    References. All references in the Purchase Agreement to “this Agreement” shall refer to the Purchase Agreement, as amended hereby.

 

4.    Counterparts. This Agreement may be executed in counterparts, each of which shall be considered an original. Signatures may be delivered electronically or by facsimile, and the parties agree to accept and be bound by electronic and facsimile copies of original signatures to this Amendment.

 

Signature Page follows

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date first written above.

 

 

	BUYER:
	ENSERVCO CORPORATION
		By:	/s/ Richard Murphy
			Name: Richard Murphy
			Title: Chief Executive Officer

 

 

 

	COMPANY:
	BUCKSHOT TRUCKING, LLC
		By:	/s/ Tony Sims
			Name: Tony Sims
			Title: President

 

 

 

	SELLERS:
		/s/ Tony Sims
		Tony Sims
		/s/ Jim Fate
		Jim Fate

 

 

 

 

[Signature page to Amendment to Purchase Agreement]

 

 

Exhibit A

 

Amended Sections in Purchase Agreement

 

(See attached.)

 

 

Section 2.02         Closing Payments.

 

(a)

At the Closing, Buyer shall:

 

a.

Deliver to each Seller a promissory note, the form of which is attached hereto as Annex 1 (the “Note”), in the original principal amounts set forth below:

 

i.

Tony Sims: $2,025,000

ii.

Jim Fate: $675,000

 

b.

Set aside in escrow the following amounts: (a) Fifty Thousand Dollars ($50,000) to secure the Sellers’ obligations with respect to the NWC Adjustment (the “NWC Escrow Amount”), plus (b) Two Hundred Thousand Dollars ($200,000) of Shares of Buyer’s common stock, based on the volume weighted moving average of Buyer common stock for the 10-day period ending on the close of trading on August 2, 2024, to secure Sellers’ indemnification obligations under Article IX hereof (the “Indemnification Escrow Amount”); and

 

c.

Deliver to each Seller Shares of Buyer common stock, based on the volume weighted moving average of Buyer common stock for the 10-day period ending on the close of trading on August 2, 2024, in the following amounts:

 

i.

Tony Sims: $787,500

ii.

Jim Fate: $262,500

 

(b)

One day after the Closing Date, Buyer shall pay or cause to be paid to the Sellers, in accordance with their pro rata ownership of the Company’s Membership Interests, cash consideration in an amount equal to One Million Dollars ($1,000,000). For convenience, Sellers have directed Buyer to pay from these funds the transaction expenses for which Sellers are responsible pursuant to Section 6.06 hereof. Sellers agree and understand that such payments will be netted from the cash payments they receive. Sellers further represent and warrant that after such payments are made, Sellers will not owe any transaction expenses to any other third parties in connection with the transactions contemplated herein.

 

 

 

Section 2.06.          Escrow Agent; Escrow Agreement. For convenience, the Parties have agreed not to engage a third party as escrow agent, and that instead, Buyer will serve as the Escrow Agent for purposes of this Agreement. The Parties covenant and agree that they will comply with the terms of Section 2.02(c), Section 2.05, and Section 9.04. This Section 2.06 is the “Escrow Agreement” for purposes of the Agreement. The NWC Escrow Amount and Indemnification Escrow Amount are reflected on the Flow of Funds as having been set aside and reserved for these purposes.

 

 

 

 

Exhibit 10.4

 

PROMISSORY NOTE

 

US $[*]

August 8, 2024

      

FOR VALUE RECEIVED, Enservco Corporation, a Delaware corporation (the “Borrower”), promises to pay to the order of [*], an individual resident of Colorado (the “Holder”), pursuant to the terms set forth in this Promissory Note (this “Note”), the principal amount of US $[*] (the “Principal”).

 

1.        Final Payment Date. This is a BALLOON NOTE requiring payment in full of the Principal and accrued interest on December 31, 2024 (the “Maturity Date”).

 

2.       Interest. The outstanding amount of Principal shall bear simple interest at the rate of ten percent (10%) per annum. Interest shall be calculated using the ‘exact method’, that is, the product resulting when multiplying the rate of interest by the outstanding balance of Principal, dividing by 365, then multiplying by the exact numbers of days that interest has accrued.

 

3.      Payment; Prepayment. Borrower shall make interim payments of principal and interest as funds become available from the sale of Borrower’s common stock pursuant to the Registered Equity Line of Credit with Keystone Capital Partners, LLC. The indebtedness evidenced by this Note may be prepaid at any time without premium or penalty.

 

4.        Events of Default. Upon the occurrence and during the continuance of an Event of Default (as defined below), the Holder shall be entitled, as its sole remedy, by written notice to the Borrower, to declare this Note to be, and upon such declaration this Note shall be and become, immediately due and payable. The occurrence of any of the following events shall constitute an “Event of Default”:

 

(a)

The Borrower fails to pay to the Holder, when due, the full amount outstanding under this Note in full by December 31, 2024;

 

(b)

Any liquidation, dissolution, or winding up of the Borrower, whether voluntary or involuntary;

 

(c)

The institution by the Borrower of proceedings to be adjudicated as bankrupt or insolvent, or the consent by the Borrower to institution of bankruptcy or insolvency proceedings against the Borrower (or of any substantial part of its property) under any federal or state law, or the consent by the Borrower to or acquiescence in the filing of any petition relating thereto, or the appointment of a receiver, liquidator, assignee, trustee, or other similar official of the Borrower, or the making by the Borrower of an assignment for the benefit of creditors, or the admission by the Borrower in writing of its inability to pay its debts generally as such debts become due; or

 

(d)

Commencement of proceedings against the Borrower seeking any bankruptcy, insolvency, liquidation, dissolution, or similar relief under any present or future statute, law, or regulation, if such proceedings have not been dismissed or stayed within ninety (90) days of commencement thereof, or the setting aside of any such stay of any such proceedings, or the appointment without the consent or acquiescence of the equity holders of the Borrower of any trustee, receiver, or liquidator of the Borrower or of all or any substantial portion of the properties of the Borrower, if such appointment has not been vacated within ninety (90) days thereof.

 

 

5.       Waivers. The Borrower hereby waives presentment, demand for payment, notice of non-performance, protest, notice of protest, and notice of dishonor with respect to this Note. Other than pursuant to a writing by the Holder, no failure to exercise any right of the Holder with respect to this Note, nor any delay in or waiver of the exercise thereof, shall impair any such right or be deemed to be a waiver thereof.

 

6.         Miscellaneous.

 

6.1.     Amendment. Any amendment to this Note or any term hereof must be in a writing signed by the Borrower and the Holder.

 

6.2.     Assignment. Neither the Borrower nor the Holder may assign its rights or delegate any obligations hereunder without the prior written consent of the other party.

 

6.3.    Successors and Assigns. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective executors, administrators, heirs, successors, and assigns of the parties.

 

6.4.     Loss or Mutilation of Note. Upon receipt by the Borrower of evidence satisfactory to the Borrower of the loss, theft, destruction, or mutilation of this Note, together with indemnity reasonably satisfactory to the Borrower (in the case of loss, theft, or destruction), or the surrender and cancellation of this Note (in the case of mutilation), the Borrower shall execute and deliver to the Holder a new Note of like tenor and denomination as this Note. Principal is payable only to the registered Holder of this Note.

 

6.5.    Governing Law; Venue. The terms of this Note shall be construed in accordance with the laws of the State of Colorado, without regard to its conflicts-of-law principles. The parties agree that the exclusive venue for any claims arising under this Note shall be the federal or state courts located in Denver County, State of Colorado and each party submits to the personal jurisdiction thereof and hereby waives any argument that such venue is not convenient.

 

6.6.     Notices. All notices or other communications hereunder shall be in writing and shall be deemed given on (a) the day delivered in person or (b) the next business day if sent by overnight delivery services to the address provided by such recipient party to the sender party.

 

6.7.     Severability. If any term or provision of this Note is held to be invalid, illegal, or unenforceable under applicable law, such term(s) or provision(s) shall be excluded from this Note, and the balance of this Note shall be interpreted as if such term(s) or provision(s) were so excluded and shall be enforceable in accordance with its terms.

 

6.8.    Counterparts and Electronic Signatures. This Note may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Electronic copies of signatures shall be deemed to be originals.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the undersigned has caused this Note to be effective as of the date first set forth above.

 

 

	BORROWER:
	ENSERVCO CORPORATION
	By:	/s/ Mark Patterson
	Name: Mark Patterson
	Title: Chief Financial Officer

 

 

Exhibit 10.5

 

Execution Copy

 

SHARE EXCHANGE AGREEMENT

 

This Share Exchange Agreement (this “Agreement”) is made and entered into as of August 9, 2024 (the “Effective Date”) by and between Star Equity Holdings, Inc., a Delaware corporation (the “Company”), and Enservco Corporation, a Delaware corporation (“Enservco”). The Company and Enservco are sometimes referred to herein individually as a “Party” and, collectively, as the “Parties”. Capitalized terms, unless otherwise defined herein, shall have the meanings ascribed to such terms in Article X hereof.

 

RECITALS:

 

WHEREAS, upon the terms and subject to the conditions set forth in this Agreement, Enservco desires to sell to the Company, and the Company desires to purchase from Enservco: (i) newly issued shares of Enservco common stock, par value $0.005 per share (the “Initial Common Shares”) representing 19.9% of the issued and outstanding equity interests in the Company as of the Effective Date, and (ii) newly issued shares of Enservco 2% Cumulative Mandatorily Convertible Series A Preferred Stock (the “Convertible Preferred Shares”, and collectively with the Initial Common Shares, the “Purchased Shares”) in exchange for an aggregate of 250,000 shares of the Company’s Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share (the “Exchange Shares”);

 

WHEREAS, concurrently with the Closing, the Company and Enservco will enter into the Registration Rights Agreement, pursuant to which Enservco has agreed to provide customary demand registration rights with respect to the Purchased Shares;

 

WHEREAS, concurrently with the Closing, the Company and Enservco will enter into the Board Designation Agreement, pursuant to which Enservco has agreed to provide the Company with the right to designate one person to serve on the Enservco board of directors pursuant to the terms and conditions set forth in the Board Designation Agreement;

 

WHEREAS, the board of directors of the Company has (i) determined that the transactions contemplated by this Agreement would be advisable and fair to, and in the best interests of, its stockholders and (ii) approved and adopted this Agreement, the issuance of the Exchange Shares and the other transactions contemplated by this Agreement in accordance with the DGCL; and

 

WHEREAS, the board of directors of Enservco has (i) determined that the transactions contemplated by this Agreement would be advisable and fair to, and in the best interests of, its stockholders and (ii) approved and adopted this Agreement, the issuance of the Purchased Shares and the other transactions contemplated by this Agreement in accordance with the DGCL.

 

NOW, THEREFORE, in consideration of the premises set forth above, which are incorporated in this Agreement as if fully set forth below, and the representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound hereby, the Parties hereto agree as follows:

 

 

ARTICLE I
THE SHARE EXCHANGE

 

1.1     Purchase and Sale of Purchased Shares. At the Closing and subject to and upon the terms and conditions of this Agreement, Enservco shall sell, transfer, convey, assign and deliver to the Company, or as directed to an affiliate of the Company, and the Company shall purchase, acquire and accept from Enservco:

 

(a)      the Initial Common Shares, free and clear of all Liens (other than potential restrictions on resale under applicable securities Laws). The number of Purchased Shares shall be 9,023.035(determined by multiplying Enservco’s outstanding Common Stock as of the Effective Date by .199); and

 

(b)     the Convertible Preferred Shares, free and clear of all Liens (other than potential restrictions on resale under applicable securities Laws) as created by the Certificate of Designation, attached hereto as Exhibit C, convertible into 3,476,965 Converted Purchased Shares (determined by subtracting the Initial Common Shares from 12,500,000 (i.e. $2.5 million divided by $0.20 per share) (“Transaction Price”).

 

1.2     Consideration. At the Closing and subject to and upon the terms and conditions of this Agreement, in full payment for the Purchased Shares, the Company shall issue and deliver to Enservco the Exchange Shares free and clear of all Liens (other than potential restrictions on resale under applicable securities Laws).

 

ARTICLE II
CLOSING

 

2.1     Closing. The consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place remotely, via electronic exchange of documents, commencing upon the satisfaction or waiver of all conditions and obligations of the Parties to consummate the transactions contemplated hereby (other than conditions and obligations with respect to the actions that the respective Parties will take at Closing) or such other place, date and time as the Parties may mutually determine (such date, the “Closing Date”).

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to Enservco as follows:

3.1     Due Organization and Good Standing. The Company is a corporation duly incorporated, validly existing and in good standing under the Laws of Delaware. The Company has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company is duly qualified or licensed and in good standing to conduct business in each jurisdiction in which the nature of the business conducted by it makes such qualification or licensing necessary, except for any deviations from any of the foregoing that would not reasonably be expected to have a Material Adverse Effect on the Company.

 

 

3.2     Authorization; Binding Agreement. The Company has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is a party, to perform the Company’s obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each Ancillary Document to which it is a party and the consummation of the transactions contemplated hereby and thereby (a) have been duly and validly authorized by the board of directors of the Company and (b) no other corporate proceedings, other than as set forth elsewhere in the Agreement, on the part of the Company, are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each Ancillary Document to which the Company is a party shall be when delivered, duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery of this Agreement and such Ancillary Documents by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent that enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization and moratorium laws and other laws of general application affecting the enforcement of creditors’ rights generally or by any applicable statute of limitation or by any valid defense of set-off or counterclaim, and the fact that equitable remedies or relief (including the remedy of specific performance) are subject to the discretion of the court from which such relief may be sought (collectively, the “Enforceability Exceptions”).

 

3.3     Governmental Approvals. No Consent of or with any Governmental Authority, on the part of the Company is required to be obtained or made in connection with the execution, delivery or performance by the Company of this Agreement and each Ancillary Document to which it is a party or the consummation by the Company of the transactions contemplated hereby and thereby, other than (a) such filings as may be required in any jurisdiction where the Company is qualified or authorized to conduct business as a foreign corporation in order to maintain such qualification or authorization, (b) such filings as contemplated by this Agreement and the Ancillary Agreements, (c) any filings required with the Nasdaq Global Market with respect to the transactions contemplated by this Agreement and the Ancillary Agreements, (d) applicable requirements, if any, of the Securities Act, the Exchange Act, and/ or any state “blue sky” securities Laws, and the rules and regulations thereunder, and (e) where the failure to obtain or make such Consents or to make such filings or notifications, would not reasonably be expected to have a Material Adverse Effect on the Company.

 

3.4     Non-Contravention. The execution and delivery by the Company of this Agreement and each Ancillary Document to which it is a party, the consummation by the Company of the transactions contemplated hereby and thereby, and compliance by the Company with any of the provisions hereof and thereof, will not (a) conflict with or violate any provision of the Company’s Organizational Documents, (b) be subject to obtaining any Consents from Governmental Authorities referred to in Section 3.3 hereof, and any condition precedent to such Consent or waiver having been satisfied, conflict with or violate any Law, Order or Consent applicable to the Company or any of its properties or assets, or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by the Company under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien upon any of the properties or assets of the Company under, (viii) give rise to any obligation to obtain any third party consent or provide any notice to any Person or (ix) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of, any material contract, except for any deviations from any of the foregoing clauses (b) or (c) that would not reasonably be expected to have a Material Adverse Effect on the Company.

 

 

3.5      Capitalization.

 

(a)     The Company is authorized to issue 50,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000,000 shares of preferred stock, of which 8,000,000 shares are designated as Series A Preferred Stock, par value $0.0001 per share. All outstanding capital stock of the Company has been duly authorized, validly issued, fully paid and non-assessable and not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL, the Company Charter or any Contract to which the Company is a party, except as applicable to common shares and as set forth within the Company SEC Reports regarding certain tax preservation plans historically implemented from time to time, and warrant provisions that take effect upon certain subsequent Company actions. None of the outstanding capital stock of the Company has been issued in violation of any applicable securities Laws.

 

(b)     Except as set forth in the Company SEC Reports, there are no (i) outstanding options, warrants, puts, calls, convertible securities, preemptive or similar rights, (ii) bonds, debentures, notes or other Indebtedness having general voting rights or that are convertible or exchangeable into securities having such rights or (iii) subscriptions or other rights, agreements, arrangements, Contracts or commitments of any character (A) relating to the issued or unissued shares of the Company, or (B) obligating the Company to issue, transfer, deliver or sell or cause to be issued, transferred, delivered, sold or repurchased any options or shares or securities convertible into or exchangeable for such shares, or (C) obligating the Company to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment for such capital shares. Other than as expressly set forth in this Agreement, or in the Company SEC Reports, there are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire any shares of the Company or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any Person. Except as set forth in the Company SEC Reports, there are no shareholders agreements, voting trusts or other agreements or understandings to which the Company is a party with respect to the voting of any shares of the Company.

 

 

3.6      SEC Filings and Financials.

 

(a)     The Company, since May 20, 2024, has filed all forms, reports, schedules, statements, prospectuses and other documents required to be filed or furnished by the Company with the SEC under the Securities Act and/or the Exchange Act, together with any amendments, restatements or supplements thereto. Except to the extent otherwise available on the SEC’s web site through EDGAR, the Company has delivered to Enservco copies in the form filed with the SEC of all of the following: (i) the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, (ii) the Company’s Quarterly Reports on Form 10-Q for each fiscal quarter in the fiscal year ended December 31, 2023, (iii) all other forms, reports, registration statements, prospectuses and other documents (other than preliminary materials) filed by the Company with the SEC since May 20, 2024 (the forms, reports, registration statements, prospectuses and other documents referred to in clauses (i), (ii) and (iii) above, whether or not available through EDGAR, are, collectively, the “Company SEC Reports”) and (iv) all certifications and statements required by (A) Rules 13a-14 or 15d-14 under the Exchange Act, and (B) 18 U.S.C. §1350 (Section 906 of SOX) with respect to any report referred to in clause (i) above (collectively, the “Company Public Certifications”). The Company SEC Reports (y) were prepared in all material respects in accordance with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder and (z) did not, as of their respective effective dates (in the case of Company SEC Reports that are registration statements filed pursuant to the requirements of the Securities Act) and at the time they were filed with the SEC (in the case of all other Company SEC Reports) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The Company Public Certifications are each true as of their respective dates of filing. As of the Effective Date, the Company’s common stock and Series A Preferred Stock are listed on the Nasdaq Global Market.

 

(b)     The financial statements and notes contained or incorporated by reference in the Company SEC Reports (the “Company Financials”) fairly present in all material respects the financial position and the results of operations, changes in shareholders’ equity, and cash flows of the Company at the respective dates of and for the periods referred to in such financial statements, all in accordance with (i) GAAP methodologies applied on a consistent basis throughout the periods involved and (ii) Regulation S-X or Regulation S-K, as applicable (except as may be indicated in the notes thereto and for the omission of notes and audit adjustments in the case of unaudited quarterly financial statements to the extent permitted by Regulation S-X or Regulation S-K, as applicable).

 

(c)     Except as and to the extent reflected or reserved against in the Company Financials, the Company has not incurred any Liabilities or obligations of the type required to be reflected on a balance sheet in accordance with GAAP that is not adequately reflected or reserved on or provided for in the Company Financials, other than Liabilities of the type required to be reflected on a balance sheet in accordance with GAAP that have been incurred in the ordinary course of business.

 

 

3.7     Absence of Certain Changes. As of the Effective Date, the Company has not received any written notice of or has reason to believe that there exists a Material Adverse Effect.

 

3.8     Actions; Orders; Permits. There is no pending or, to the Knowledge of the Company, threatened Action to which the Company is subject which would reasonably be expected to have a Material Adverse Effect on the Company. There is no material Action that the Company has pending against any other Person. The Company is not subject to any material Orders of any Governmental Authority, nor are any such Orders pending. The Company holds all Permits necessary to lawfully conduct its business as presently conducted, and to own, lease and operate its assets and properties, all of which are in full force and effect, except where the failure to hold such Permit or for such Permit to be in full force and effect would not reasonably be expected to have a Material Adverse Effect on the Company.

 

3.9     Ownership. All Exchange Shares have been duly authorized and, upon issuance and delivery of such Exchange Shares, shall be validly issued, fully paid and non-assessable, free and clear of all Liens, other than restrictions arising from applicable securities Laws and any Liens incurred by Enservco, and the issuance and sale of such Exchange Shares pursuant hereto will not be subject to or give rise to any preemptive rights or rights of first refusal.

 

3.10     Independent Investigation. The Company has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of Enservco and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of Enservco for such purpose. The Company acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, it has relied solely upon its own investigation and the express representations and warranties of Enservco set forth in Article IV (including the related portions of the Enservco Disclosure Schedules (as defined below)) and (b) neither Enservco nor its Representatives have made any representation or warranty as to Enservco or this Agreement, except as expressly set forth in Article IV (including the related portions of the Enservco Disclosure Schedules).

 

 

3.11     Investment Representations. The Company: (a) is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the Securities Act; (b) is acquiring the Purchased Shares for itself for investment purposes only, and not with a view towards any resale or distribution of such Purchased Shares; (c) has been advised and understands that the Purchased Shares (i) are being issued in reliance upon one or more exemptions from the registration requirements of the Securities Act and any applicable state securities Laws, (ii) have not been registered under the Securities Act or any applicable state securities Laws and, therefore, and cannot be resold unless they are registered under the Securities Act and all applicable state securities Laws, unless exemptions from registration are available, and (iii) will bear an appropriate restrictive legend reflecting that they cannot be resold unless they are registered under the Securities Act and all applicable state securities Laws, unless exemptions from registration are available; and (d) is aware that an investment in Enservco is a speculative investment and is subject to the risk of complete loss. The Company does not have any Contract with any Person to sell, transfer, or grant participations to such Person, or to any third Person, with respect to the Purchased Shares. By reason of the Company’s business or financial experience, or by reason of the business or financial experience of the Company’s “purchaser representatives” (as that term is defined in Rule 501(h) under the Securities Act), the Company is capable of evaluating the risks and merits of an investment in Enservco and of protecting its interests in connection with this investment. The Company has carefully read and understands all materials provided by or on behalf of Enservco or its Representatives to the Company or its Representative pertaining to an investment in Enservco, including without limitation the Enservco SEC Reports and Enservco Financials (as defined below) and has consulted, as the Company has deemed advisable, with its own attorneys, accountants or investment advisors with respect to the investment contemplated hereby and its suitability for the Company. The Company acknowledges that the Purchased Shares are subject to dilution for events not under the control of Enservco. The Company has completed its independent inquiry and has relied fully upon the advice of its own legal counsel, accountant, financial and other Representatives in determining the legal, tax, financial and other consequences of this Agreement and the transactions contemplated hereby and the suitability of this Agreement and the transactions contemplated hereby for the Company and its particular circumstances, and, except as set forth herein, has not relied upon any representations or advice by Enservco or its Representatives. The Company acknowledges and agrees that the Company has not been guaranteed or represented to by any Person, (i) any specific amount or the event of the distribution of any cash, property or other interest in Enservco or (ii) the profitability or value of the Purchased Shares in any manner whatsoever. The Company: (A) has been represented by independent counsel (or has had the opportunity to consult with independent counsel and has declined to do so); (B) has had the full right and opportunity to consult with the Company’s attorneys and other advisors and has availed itself of this right and opportunity; (C) has carefully read and fully understands this Agreement, the Enservco SEC Reports and the Enservco Financials in their entirety and has had such documents and filings and financial statements fully explained to it by such counsel; (D) is fully aware of the contents hereof and the meaning, intent and legal effect thereof; and (E) is competent to execute this Agreement and has executed this Agreement free from coercion, duress or undue influence.

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ENSERVCO

 

Enservco represents and warrants to the Company as follows, after due inquiry:

 

4.1     Due Organization and Good Standing. Enservco is a corporation duly incorporated, validly existing and in good standing under the Laws of Delaware. Enservco has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Enservco is duly qualified or licensed and in good standing to conduct business in each jurisdiction in which the nature of the business conducted by it makes such qualification or licensing necessary, except for any deviations from any of the foregoing that would not reasonably be expected to have a Material Adverse Effect on Enservco. Enservco has provided to the Company accurate and complete copies of its Organizational Documents, as amended to date and as currently in effect. Enservco is not in violation of any provision of its Organizational Documents.

 

 

4.2     Authorization; Binding Agreement. Enservco has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is a party, to perform Enservco’s obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each Ancillary Document to which Enservco is a party and the consummation of the transactions contemplated hereby and thereby, (a) have been duly and validly authorized by Enservco’s board of directors to the extent required by Enservco’s Organizational Documents, any other applicable Law or any Contract to which Enservco or any of its shareholders is a party or by which it or its securities are bound and (b) no other proceedings on the part of Enservco are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each Ancillary Document to which Enservco is a party shall be when delivered, duly and validly executed and delivered by Enservco and assuming the due authorization, execution and delivery of this Agreement and any such Ancillary Document by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the legal, valid and binding obligation of Enservco, enforceable against Enservco in accordance with its terms, subject to the Enforceability Exceptions.

 

4.3      Capitalization.

 

(a)     Enservco is authorized to issue (i) 100,000,000 shares of its common stock, $0.005 par value per share of which 45,341,876 are issued and outstanding as of the Effective Date, and (ii) 10,000,000 shares of its preferred stock of which 4,000,000 are designated pursuant to the Certificate of Designation for which none are issued and outstanding as of the Effective Date. All of the outstanding equity interests in or of Enservco have been duly authorized, validly issued, fully paid and non-assessable and not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of any applicable Law, the Enservco Charter or any Contract to which Enservco is a party. None of the outstanding equity interests in or of Enservco were issued in violation of any applicable securities Laws.

 

(b)     Except as set forth in the Enservco SEC Reports, there are no (i) outstanding options, warrants, puts, calls, convertible securities, preemptive or similar rights, (ii) bonds, debentures, notes or other Indebtedness having general voting rights or that are convertible or exchangeable into securities having such rights or (iii) subscriptions or other rights, agreements, arrangements, Contracts or commitments of any character (A) relating to the issued or unissued shares of Enservco, or (B) obligating Enservco to issue, transfer, deliver or sell or cause to be issued, transferred, delivered, sold or repurchased any options or shares or securities convertible into or exchangeable for such shares, or (C) obligating Enservco to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment for such capital shares. Other than as expressly set forth in this Agreement, or in the Enservco SEC Reports, there are no outstanding obligations of Enservco to repurchase, redeem or otherwise acquire any shares of Enservco or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any Person. Except as set forth in the Enservco SEC Reports, there are no shareholders agreements, voting trusts or other agreements or understandings to which Enservco is a party with respect to the voting of any shares of Enservco. As a result of the consummation of the transactions contemplated by this Agreement, no equity interests in or of Enservco are issuable and no rights in connection with any interests, warrants, rights, options or other securities of Enservco accelerate or otherwise become triggered (whether as to vesting, exercisability, convertibility or otherwise).

 

 

(c)     Enservco has not declared or paid any distribution or dividend in respect of its equity interests and has not repurchased, redeemed or otherwise acquired any shares or other equity interests in or of Enservco, and the board of directors of Enservco has not authorized any of the foregoing.

 

4.4     Subsidiaries. Schedule 4.4 sets forth the name of each Subsidiary of Enservco, and with respect to each Subsidiary (a) its jurisdiction of organization, (b) its authorized shares or other equity interests (if applicable), (c) the number of issued and outstanding shares or other equity interests and the record holders and beneficial owners thereof and (d) its Tax election to be treated as a corporate or a disregarded entity under the Code and any state or applicable non-U.S. Tax laws, if any. All of the outstanding equity securities of each Subsidiary of Enservco are duly authorized and validly issued, fully paid and non-assessable (if applicable), and were offered, sold and delivered in compliance with all applicable securities Laws, and owned by Enservco or one of its Subsidiaries free and clear of all Liens (other than those, if any, imposed by such Subsidiary’s Organizational Documents). There are no Contracts to which Enservco or any of its Affiliates is a party or bound with respect to the voting (including voting trusts or proxies) of the shares or other equity interests of any Subsidiary of Enservco other than the Organizational Documents of any such Subsidiary. There are no outstanding or authorized options, warrants, rights, agreements, subscriptions, convertible securities or commitments to which any Subsidiary of Enservco is a party or which are binding upon any Subsidiary of Enservco providing for the issuance or redemption of any shares or other equity interests in or of any Subsidiary of Enservco. There are no outstanding equity appreciation, phantom equity, profit participation or similar rights granted by any Subsidiary of Enservco. No Subsidiary of Enservco has any limitation on its ability to make any distributions or dividends to its equity holders, whether by Contract, Order or applicable Law. Except for the equity interests of the Subsidiaries listed on Schedule 4.4, Enservco does not own or have any rights to acquire, directly or indirectly, any shares or other equity interests of any Person. None of Enservco or its Subsidiaries is a participant in any joint venture, partnership or similar arrangement. There are no outstanding material contractual obligations of Enservco or its Subsidiaries to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person (other than loans to customers in the ordinary course of business).

 

4.5     Governmental Approvals. No Consent of or with any Governmental Authority on the part of Enservco is required to be obtained or made in connection with the execution, delivery or performance by Enservco of this Agreement or any Ancillary Documents to which it is a party or the consummation by Enservco of the transactions contemplated hereby or thereby, other than (a) such filings as may be required in any jurisdiction where Enservco is qualified or authorized to conduct business as a foreign corporation in order to maintain such qualification or authorization, (b) such filings as contemplated by this Agreement and the Ancillary Agreements, (c) any filings required with NYSE American with respect to the transactions contemplated by this Agreement and the Ancillary Agreements, (d) applicable requirements, if any, of the Securities Act, the Exchange Act, and/ or any state “blue sky” securities Laws, and the rules and regulations thereunder, and (e) where the failure to obtain or make such Consents or to make such filings or notifications, would not reasonably be expected to have a Material Adverse Effect on Enservco.

 

 

4.6     Non-Contravention. The execution and delivery by Enservco of this Agreement and each Ancillary Document to which Enservco is a party, and the consummation by Enservco of the transactions contemplated hereby and thereby and compliance by Enservco with any of the provisions hereof and thereof, will not (a) conflict with or violate any provision of Enservco’s Organizational Documents, (b) subject to obtaining any Consents from Governmental Authorities referred to in Section 4.5 hereof, and any condition precedent to such Consent or waiver having been satisfied, conflict with or violate any Law, Order or Consent applicable to Enservco or any of its properties or assets, or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by Enservco under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien upon any of the properties or assets of Enservco under, (viii) give rise to any obligation to obtain any third party consent or provide any notice to any Person or (ix) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of, any Enservco Material Contract, except for any deviations from any of the foregoing clauses (b)-(c) that would not reasonably be expected to have an Adverse Effect on Enservco, and have been set forth in Schedule 4.6.

 

4.7      SEC Filings and Financials.

 

(a)     Enservco, since May 15, 2024, has filed all forms, reports, schedules, statements, prospectuses and other documents required to be filed or furnished by Enservco with the SEC under the Securities Act and/or the Exchange Act, together with any amendments, restatements or supplements thereto. Except to the extent otherwise available on the SEC’s web site through EDGAR, Enservco has delivered to the Company copies in the form filed with the SEC of all of the following: (i) Enservco’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, (ii) Enservco’s Quarterly Reports on Form 10-Q for each fiscal quarter in the fiscal year ended December 31, 2023, (iii) all other forms, reports, registration statements, prospectuses and other documents (other than preliminary materials) filed by Enservco with the SEC since May 15, 2024 (the forms, reports, registration statements, prospectuses and other documents referred to in clauses (i), (ii) and (iii) above, whether or not available through EDGAR, are, collectively, the “Enservco SEC Reports”) and (iv) all certifications and statements required by (A) Rules 13a-14 or 15d-14 under the Exchange Act, and (B) 18 U.S.C. §1350 (Section 906 of SOX) with respect to any report referred to in clause (i) above (collectively, the “Enservco Public Certifications”). The Enservco SEC Reports (y) were prepared in all material respects in accordance with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder and (z) did not, as of their respective effective dates (in the case of Enservco SEC Reports that are registration statements filed pursuant to the requirements of the Securities Act) and at the time they were filed with the SEC (in the case of all other Enservco SEC Reports) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The Enservco Public Certifications are each true as of their respective dates of filing. As of the Effective Date, the shares of Enservco common stock are listed on NYSE American.

 

 

(b)     The financial statements and notes contained or incorporated by reference in the Enservco SEC Reports (the “Enservco Financials”) fairly present in all material respects the financial position and the results of operations, changes in shareholders’ equity, and cash flows of Enservco at the respective dates of and for the periods referred to in such financial statements, all in accordance with (i) GAAP methodologies applied on a consistent basis throughout the periods involved and (ii) Regulation S-X or Regulation S-K, as applicable (except as may be indicated in the notes thereto and for the omission of notes and audit adjustments in the case of unaudited quarterly financial statements to the extent permitted by Regulation S-X or Regulation S-K, as applicable).

 

(c)     Except as and to the extent reflected or reserved against in the Enservco Financials, Enservco has not incurred any Liabilities or obligations of the type required to be reflected on a balance sheet in accordance with GAAP that is not adequately reflected or reserved on or provided for in the Enservco Financials, other than Liabilities of the type required to be reflected on a balance sheet in accordance with GAAP that have been incurred in the ordinary course of business.

 

4.8     Absence of Certain Changes. Except as set forth for the Notice of Delisting from the NYSE American, since December 31, 2023, Enservco (a) has conducted its business only in the ordinary course of business consistent with past practice and (b) has not received any written notice of a Material Adverse Effect.

 

4.9      Compliance with Laws. Enservco is not or has not been in material conflict or non-compliance with, or in material default or violation of, nor has Enservco received, since December 31, 2023, any written or, to the Knowledge of the Company, oral notice of any material conflict or non-compliance with, or material default or violation of, any applicable Laws by which it or any of its properties, assets, employees, business or operations are or were bound or affected.

 

4.10     Actions; Orders; Permits. Set forth on Schedule 4.10 is a complete list of litigation matters. There is no pending or, to the Knowledge of Enservco, threatened Action to which Enservco is subject which would reasonably be expected to have a Material Adverse Effect on Enservco. There is no material Action that Enservco has pending against any other Person. Enservco is not subject to any material Orders of any Governmental Authority, nor are any such Orders pending. Enservco holds all Permits necessary to lawfully conduct its business as presently conducted, and to own, lease and operate its assets and properties, all of which are in full force and effect, except where the failure to hold such Permit or for such Permit to be in full force and effect would not reasonably be expected to have a Material Adverse Effect on Enservco.

 

4.11     Material Contracts.

 

(a)     Schedule 4.11(a) sets forth a true, correct and complete list of each Contract to which Enservco is a party (each contract required to be set forth on Schedule 4.11(a), a “Enservco Material Contract”) that:

 

(i)     contains covenants that limit the ability of Enservco (A) to compete in any line of business or with any Person or in any geographic area or to sell, or provide any service or product or solicit any Person, including any non-competition covenants, employee and customer non-solicit covenants, exclusivity restrictions, rights of first refusal or most-favored pricing clauses or (B) to purchase or acquire an interest in any other Person;

 

 

(ii)     involves any joint venture, profit-sharing, partnership, limited liability company or other similar agreement or arrangement relating to the formation, creation, operation, management or control of any partnership or joint venture;

 

(iii)     involves any exchange traded, over the counter or other swap, cap, floor, collar, futures contract, forward contract, option or other derivative financial instrument or Contract, based on any commodity, security, instrument, asset, rate or index of any kind or nature whatsoever, whether tangible or intangible, including currencies, interest rates, foreign currency and indices;

 

(iv)     evidences Indebtedness (whether incurred, assumed, guaranteed or secured by any asset) of Enservco having an outstanding principal amount in excess of $100,000;

 

(v)     involves the acquisition or disposition, directly or indirectly (by merger or otherwise), of assets with an aggregate value in excess of $100,000 (other than in the ordinary course of business consistent with past practice) or shares or other equity interests in or of another Person;

 

(vi)     relates to any merger, consolidation or other business combination with any other Person or the acquisition or disposition of any other entity or its business or material assets or the sale of Enservco, its business or material assets;

 

(vii)     by its terms, individually or with all related Contracts, calls for aggregate payments or receipts by Enservco under such Contract or Contracts of at least $50,000 per year or $150,000 in the aggregate;

 

(viii)     obligates Enservco to provide continuing indemnification or a guarantee of obligations of a third party after the date hereof in excess of $100,000;

 

(ix)     is between Enservco and any Top Customer or Top Supplier (other than in the ordinary course of business);

 

(x)     is between Enservco and any directors, officers or employees of Enservco (other than at-will employment arrangements with employees entered into in the ordinary course of business consistent with past practice), including all non-competition, severance and indemnification agreements, or any Related Person;

 

(xi)     obligates Enservco to make any capital commitment or expenditure in excess of $25,000 (including pursuant to any joint venture);

 

(xii)     relates to a material settlement entered into within two (2) years prior to the Effective Date or under which Enservco has outstanding obligations (other than customary confidentiality obligations or in the ordinary course of business);

 

 

(xiii)     provides another Person (other than another Enservco or any manager, director or officer of Enservco) with a power of attorney;

 

(xiv)     relates to any real estates, including, without limitation, leases, lease guarantees, agreements and documents related thereto;

 

(xv)      evidences any Liens; or

 

(xvi)     is otherwise material to Enservco and not described in clauses (i) through (xv) above.

 

(b)     With respect to each Enservco Material Contract: (i) such Enservco Material Contract is valid and binding and enforceable in all respects against Enservco party thereto (subject to the Enforceability Exceptions) and, to the Knowledge of Enservco, each other party thereto, and is in full force and effect; (ii) neither the execution of this Agreement nor the consummation of the transactions contemplated by this Agreement will affect the validity or enforceability of any Enservco Material Contract; (iii) Enservco is not in breach or default in any respect, and no event has occurred that with the passage of time or giving of notice or both would constitute a breach or default by Enservco, or permit termination or acceleration by the other party thereto, under such Enservco Material Contract; (iv) to the Knowledge of Enservco, no other party to such Enservco Material Contract is in breach or default in any respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a breach or default by such other party, or permit termination or acceleration by Enservco, under such Enservco Material Contract; (v) Enservco has not received written or, to the Knowledge of Enservco, oral notice of an intention by any party to any such Enservco Material Contract that provides for a continuing obligation by any party thereto to terminate such Enservco Material Contract or amend the terms thereof, other than modifications in the ordinary course of business that do not adversely affect Enservco; and (vi) Enservco has not waived any rights under any such Enservco Material Contract.

 

4.12     Taxes and Returns.

 

(a)     Enservco has or will have timely filed, or caused to be timely filed, all Tax Returns and reports required to be filed by it (taking into account all available extensions), which Tax Returns are true, accurate, correct and complete in all material respects, and has paid, collected or withheld, or caused to be paid, collected or withheld, all Taxes required to be paid, collected or withheld, other than such Taxes for which adequate reserves in the Enservco Financials have been established.

 

(b)     There is no current pending or, to the Knowledge of Enservco, threatened Action against Enservco by a Governmental Authority in a jurisdiction where Enservco does not file Tax Returns that alleges it is or may be subject to taxation by that jurisdiction.

 

(c)     Enservco is not being audited by any Tax authority or has been notified in writing or, to the Knowledge of Enservco, orally by any Tax authority that any such audit is contemplated or pending. There are no claims, assessments, audits, examinations, investigations or other Actions pending against Enservco in respect of any Tax, and Enservco has not been notified in writing of any proposed Tax claims or assessments against it (other than, in each case, claims or assessments for which adequate reserves in the Enservco Financials have been established). Enservco has complied with all applicable Laws relating to Tax, except for those laws where noncompliance would not have a Material Adverse Effect.

 

 

4.13     Transactions with Related Persons. Except as set forth in the financial statements and related notes, or as disclosed in Enservco SEC Reports, delivered to the Company, neither Enservco nor any of its Affiliates, nor any officer, director, manager, employee, trustee or beneficiary of Enservco or any of its Affiliates, nor any immediate family member of any of the foregoing (whether directly or indirectly through an Affiliate of such Person) (each of the foregoing, a “Related Person”) is party to any transaction with Enservco, including any Contract or other arrangement (a) providing for the furnishing of services by (other than as officers, directors or employees of Enservco), (b) providing for the rental of real property or Personal Property from or (c) otherwise requiring payments to (other than for services or expenses as directors, officers or employees of Enservco in the ordinary course of business consistent with past practice), any Related Person or any Person in which any Related Person has an interest as an owner, officer, manager, director, trustee or partner or in which any Related Person has any direct or indirect interest (other than the ownership of securities representing no more than two percent (2%) of the outstanding voting power or economic interest of a publicly traded company). Except as set forth in the financial statements and related notes or as disclosed in Enservco SEC Reports previously delivered to the Company, Enservco has no outstanding Contract or other arrangement or commitment with any Related Person, and no Related Person owns any real property or Personal Property, or right, tangible or intangible which is used in the business of Enservco.

 

4.14     Books and Records. All of the financial books and records of Enservco are complete and accurate in all material respects and have been maintained in the ordinary course consistent with past practice and in accordance with applicable Laws.

 

4.15     Certain Business Practices. Enservco, nor, to the Knowledge of Enservco any of its respective Representatives acting on its behalf has (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees, to foreign or domestic political parties or campaigns or violated any provision of the Foreign Corrupt Practices Act of 1977 or any comparable or similar Law of any other country or other jurisdiction, or (iii) made any other unlawful payment. Enservco, nor, to the Knowledge of Enservco any of its respective Representatives acting on its behalf has directly or indirectly, given or agreed to give any gift or similar benefit in any material amount to any customer, supplier, governmental employee or other Person who is or may be in a position to help or hinder Enservco or assist Enservco in connection with any actual or proposed transaction. The operations of Enservco are and have been conducted at all times in compliance with laundering statutes in all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority, and no Action involving Enservco with respect to the any of the foregoing is pending or, to the Knowledge of Enservco, threatened. Enservco nor, to the Knowledge of Enservco, any of its respective Representative acting on behalf of Enservco is currently identified on the specially designated nationals or other blocked person list or otherwise currently subject to any U.S. sanctions administered by OFAC, and Enservco has not, directly or indirectly, used any funds, or loaned, contributed or otherwise made available such funds to any Subsidiary, joint venture partner or other Person, in connection with any sales or operations in any country sanctioned by OFAC or for the purpose of financing the activities of any Person currently subject to, or otherwise in violation of, any U.S. sanctions administered by OFAC in the last five (5) fiscal years. Enservco has not engaged in transactions with, or exported any of its products or associated technical data (i) into (or to a national or resident of) Cuba, Iran, Iraq, Libya, North Korea, Syria or any other country to which the United States has embargoed goods to or has proscribed economic transactions with or (ii) to the knowledge of the Company, to any Person included on the United States Treasury Department’s list of Specially Designated Nationals or the U.S. Commerce Department’s Denied Persons List. Enservco has not, except has otherwise been disclosed in writing to the Company breached or been in violation of any Laws regulating or covering conduct in, or the nature of, the workplace, including regarding sexual harassment or, on any impermissible basis, a hostile work environment. Enservco is and has been since December 31, 2020 in compliance with all labor laws, including immigration laws and regulations.

 

 

4.16     Finders and Investment Bankers. Enservco has not incurred or will not incur any Liability for any brokerage, finder’s or other fee or commission in connection with the transactions contemplated hereby.

 

4.17     Independent Investigation. Enservco has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Company, and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, Company SEC Reports and Company Financials and other documents and data of the Company for such purpose. Enservco acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, it has relied solely upon its own investigation and the express representations and warranties of the Company set forth in Article III; and (b) neither the Company nor any of its Representatives have made any representation or warranty as to the Company or this Agreement, except as expressly set forth in Article III.

 

4.18     Ownership.

 

(a) All Initial Common Shares issued and delivered in accordance with Article I to the Company shall be, upon issuance and delivery of such Initial Common Shares duly authorized, validly issued, fully paid and non-assessable, free and clear of all Liens, other than restrictions arising from applicable securities Laws and any Liens incurred by the Company, and the issuance and sale of such Initial Common Shares pursuant hereto will not be subject to or give rise to any preemptive rights or rights of first refusal.

 

(b) All Convertible Preferred Shares delivered in accordance with Article I to the Company, and all shares of Enservco common stock issuable upon conversion of the Convertible Preferred Shares as provided in the Certificate of Designation (the “Approved Common Shares”), shall be, upon the duly authorized, validly issued, fully paid and non-assessable, free and clear of all Liens, other than restrictions arising from applicable securities Laws and any Liens incurred by the Company, and the issuance and sale of such Converted Purchased Shares pursuant hereto will not be subject to or give rise to any preemptive rights or rights of first refusal.

 

 

4.19     Investment Representations. Enservco: (a) is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the Securities Act; (b) is acquiring the Exchange Shares for itself for investment purposes only, and not with a view towards any resale or distribution of such Exchange Shares; (c) has been advised and understands that the Exchange Shares (i) are being issued in reliance upon one or more exemptions from the registration requirements of the Securities Act and any applicable state securities Laws, (ii) have not been registered under the Securities Act or any applicable state securities Laws and, therefore, and cannot be resold unless they are registered under the Securities Act and all applicable state securities Laws, unless exemptions from registration are available, and (iii) will bear an appropriate restrictive legend reflecting that they cannot be resold unless they are registered under the Securities Act and all applicable state securities Laws, unless exemptions from registration are available; and (d) is aware that an investment in the Company is a speculative investment and is subject to the risk of complete loss. Enservco does not have any Contract with any Person to sell, transfer, or grant participations to such Person, or to any third Person, with respect to the Exchange Shares. By reason of Enservco business or financial experience, or by reason of the business or financial experience of Enservco’s “purchaser representatives” (as that term is defined in Rule 501(h) under the Securities Act), Enservco is capable of evaluating the risks and merits of an investment in the Company and of protecting its interests in connection with this investment. Enservco has carefully read and understands all materials provided by or on behalf of the Company or its Representatives to Enservco or its Representative pertaining to an investment in the Company, including without limitation the Company SEC Reports and Company Financials and has consulted, as Enservco has deemed advisable, with its own attorneys, accountants or investment advisors with respect to the investment contemplated hereby and its suitability for Enservco. Enservco acknowledges that the Exchange Shares are subject to dilution for events not under the control of the Company. Enservco has completed its independent inquiry and has relied fully upon the advice of its own legal counsel, accountant, financial and other Representatives in determining the legal, tax, financial and other consequences of this Agreement and the transactions contemplated hereby and the suitability of this Agreement and the transactions contemplated hereby for Enservco and its particular circumstances, and, except as set forth herein, has not relied upon any representations or advice by the Company or its Representatives. Enservco acknowledges and agrees that Enservco has not been guaranteed or represented to by any Person, (i) any specific amount or the event of the distribution of any cash, property or other interest in the Company or (ii) the profitability or value of the Exchange Shares in any manner whatsoever. Enservco: (A) has been represented by independent counsel (or has had the opportunity to consult with independent counsel and has declined to do so); (B) has had the full right and opportunity to consult with such attorneys and other advisors and has availed itself of this right and opportunity; (C) has carefully read and fully understands this Agreement, the Company SEC Reports and the Company Financials in their entirety and has had such documents and filings and financial statements fully explained to it or him by such counsel; (D) is fully aware of the contents hereof and the meaning, intent and legal effect thereof; and (E) is competent to execute this Agreement and has executed this Agreement free from coercion, duress or undue influence.

 

 

ARTICLE V
COVENANTS

 

5.1     No Trading. The Parties acknowledge and agree that they are aware, and that their respective Affiliates are aware (and each of their respective Representatives is aware or, upon receipt of any material nonpublic information of the Company, will be advised) of the restrictions imposed by the Federal Securities Laws and other applicable foreign and domestic Laws on a Person possessing material nonpublic information about a publicly traded company. The Parties hereby agree that, while they are in possession of such material nonpublic information, they shall not purchase or sell any securities of the other Party (other than acquire the Exchange Shares or Purchased Shares), communicate such information to any third party, take any other action with respect to the other Party in violation of such Laws, or cause or encourage any third party to do any of the foregoing.

 

5.2      Public Announcements. The Parties agree that no public release, filing or announcement concerning this Agreement or the Ancillary Documents or the transactions contemplated hereby or thereby shall be issued by any Party or any of their Affiliates without the prior written consent of Enservco and the Company (which consent shall not be unreasonably withheld, conditioned or delayed), except as such release or announcement may be required by applicable Law or the rules or regulations of any securities exchange, in which case the applicable Party shall use commercially reasonable efforts to allow the other Parties reasonable time to comment on, and arrange for any required filing with respect to, such release or announcement in advance of such issuance.

 

5.3     NYSE Application. Enservco shall file with NYSE American a Supplemental Listing Application for the listing of the Purchased Shares on NYSE American, and NYSE American shall have raised no objection with respect thereto.

 

5.4      Enservco Stockholder Meeting for Approval of Approved Common Shares. Enservco shall seek, and the Enservco Board of Directors shall recommend, approval of the shares of Approved Common Shares at a Special Meeting of Stockholders or Enservco’s Annual Meeting of Stockholders for purposes of the NYSE American Company Guide. If at least one-hundred and fifty days (150) days after the Effective Date the Company requests, the Board of Directors shall call a Special Meeting of Stockholders to occur within at least one hundred twenty (120) days after the remittance of the request.

 

5.5       Participation in Future Financings.

 

(a)     From and after the Closing Date until the 12-month anniversary of the Closing Date (the “Participation Period”), upon any issuance by Enservco of equity interests in Enservco for cash consideration, indebtedness or a combination thereof, other than an issue of equity interests in Enservco pursuant to the Equity Line of Credit, (a “Subsequent Financing”), the Company shall have the right, but not the obligation, to participate in such Subsequent Financing on the same terms, conditions and price set forth in the Subsequent Financing Notice in any amount necessary to maintain the Company’s pro rata ownership in Enservco common stock prior to such Subsequent Financing.

 

(b)     At least fifteen (15) Business Days prior to the closing of the Subsequent Financing, Enservco shall deliver to the Company a written notice of its intention to effect a Subsequent Financing (“Subsequent Financing Notice”), which Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include a term sheet or similar document relating thereto as an attachment.

 

 

(c)     If the Company desires to participate in such Subsequent Financing. it must provide written notice to Enservco by not later than 5:30 p.m. (Eastern time) on the fifth (5th) Business Day after the Company has received the Subsequent Financing Notice that the Company desires to participate in the Subsequent Financing, the amount of the Company’s participation, and representing and warranting that the Company has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice. If Enservco receives no such notice from the Company as of such fifth (5th) Business Day, the Company shall be deemed to have notified Enservco that it elects not to participate.

 

(d)     If by 5:30 p.m. Eastern time on the fifth (5th) Business Day after the Company has received the Subsequent Financing Notice, notification by the Company of its desire to participate in the Subsequent Financing (or to cause its designees to participate) has been provided, then Enservco may effect the remaining portion of such Subsequent Financing, if any, on the terms and with the Persons set forth in the Subsequent Financing Notice.

 

(e)     If the Subsequent Financing subject to the Subsequent Financing Notice is not consummated for any reason on the terms set forth in such Subsequent Financing Notice within thirty (30) Business Days after the date of the Subsequent Financing Notice, Enservco must provide the Company with a second Subsequent Financing Notice, and the Company will again have the right of participation set forth above in this Section 5.5.

 

(f)     In the event Enservco consummates a Subsequent Financing during the Participation Period at a price which is below the Transaction Price (the “Offer Price”), Enservco shall issue additional shares of common stock to the Company (the “Participation Shares”). The number of Participation Shares shall be calculated by:

 

(i) dividing $2,500,000 by the Adjusted Transaction Price, and

 

(ii) subtracting the number of Purchased Shares.

 

The term “Adjusted Transaction Price” (ATP) is calculated according to the following formula:

 

ATP = TP * (A+B)/(A+C)

 

Where:

 

ATP = Adjusted Transaction Price

 

TP = Transaction Price

 

A = Number of shares of Common Stock deemed to be outstanding immediately prior to new issue (includes all shares of outstanding common stock, all shares of outstanding preferred stock on an as-converted basis, and all outstanding options on an as-exercised basis

 

B = Aggregate consideration received by the Company with respect to the new issue divided by TP

 

C = Number of shares of stock issued in the subject transaction.

 

 

(g)     Enservco Financials. If the Company’s ownership of Enservco equity securities requires the Company to consolidate its financial statements with Enservco, Enservco shall use its best efforts to deliver a copy of the audited or reviewed Enservco financials and applicable notes to the Company thirty (30) days past each quarter end, and other documents to include but not limited to Enservco trial balance and reasonably cooperate with the Company’s auditors and accounting personnel. If the Exchange Shares do not prompt a consolidation, upon a request of the Company, Enservco shall provide Enservco financials in draft form as soon as reasonably practical.

 

5.6      Add-On Rights. During the Participation Period, the Company shall have the right, but not the obligation, to exchange up to an additional $2,500,000 of Series A Preferred Stock for additional shares of Enservco common stock calculated based on the Transaction Price. Any shares of Series A Preferred Stock exchanged pursuant to this Section 5.6 shall be exchanged in increments of at least $100,000. Any additional shares of Enservco common stock issued to the Company pursuant to this Section 5.6 shall be subject to the Registration Rights Agreement.

 

5.7     Enservco Piggy-Back Registration Rights. The Company shall provide Enservco with customary and standard piggy-back registration rights for the Exchange Shares for purposes of registering the resale of the Exchange Shares with the SEC.

 

ARTICLE VI
SURVIVAL AND INDEMNIFICATION

 

6.1     Survival. All representations and warranties contained in this Agreement (including all schedules and exhibits hereto and all certificates, documents, instruments and undertakings furnished pursuant to this Agreement) shall survive the Closing through and until the second (2nd) anniversary of the Closing Date; provided, however, that the representations and warranties contained in Sections 4.1 (Due Organization and Good Standing), 4.2 (Authorization; Binding Agreement), 4.3 (Capitalization), 4.4 (Subsidiaries), 4.16 (Finders and Investment Bankers), 4.17 (Independent Investigation), and 4.18 (Ownership) will survive indefinitely. Additionally, Fraud Claims against either Party shall survive indefinitely. If written notice of a claim for breach of any representation or warranty has been given before the applicable date when such representation or warranty no longer survives in accordance with this Section 6.1, then the relevant representations and warranties shall survive as to such claim, until the claim has been finally resolved. All covenants, obligations and agreements of the Parties contained in this Agreement (including all schedules and exhibits hereto and all certificates, documents, instruments and undertakings furnished pursuant to this Agreement) shall survive the Closing and continue until fully performed in accordance with their terms.

 

 

6.2     Mutual Indemnification. Subject to the terms and conditions of this Article VI, from and after the Closing, each Party and its respective successors and assigns (the “Indemnifying Parties”) will jointly and severally indemnify, defend and hold harmless the other Party and its Affiliates and their respective officers, directors, managers, employees, successors and permitted assigns (the “Indemnified Parties”) from and against any and all losses, Actions, Orders, Liabilities, damages (including consequential damages), diminution in value, Taxes, interest, penalties, Liens, amounts paid in settlement, costs and expenses (including reasonable expenses of investigation and court costs and reasonable attorneys’ fees and expenses) (any of the foregoing, a “Loss”) paid, suffered or incurred by, or imposed upon, any Indemnified Party to the extent arising in whole or in part out of or resulting directly or indirectly from (whether or not involving a Third Party Claim): (i) the breach of any representation or warranty made by the Indemnifying Party as set forth in this Agreement or in any certificate delivered by the Indemnifying Party pursuant to this Agreement; (ii) the breach of any covenant or agreement on the part of the Indemnifying Party as set forth in this Agreement or in any certificate delivered by the Indemnifying Party pursuant to this Agreement; (iii) any Action by Person(s) who were holders of equity securities of the Indemnifying Party, including options, warrants, convertible debt or other convertible securities or other rights to acquire equity securities of the Indemnifying Party, prior to the Closing arising out of the sale, purchase, termination, cancellation, expiration, redemption or conversion of any such securities; or (iv) any Fraud Claims.

 

6.3      General Indemnification Provisions.

 

(a)     Solely for purposes of determining the amount of Losses under this Section 6.3 (and, for the avoidance of doubt, not for purposes of determining whether there has been a breach giving rise to the indemnification claim), all of the representations, warranties and covenants set forth in this Agreement (including the Enservco Disclosure Schedules) or any Ancillary Document that are qualified by materiality, Material Adverse Effect or words of similar import or effect will be deemed to have been made without any such qualification.

 

(b)     No investigation or knowledge by an Indemnified Party or its Representatives of a breach of a representation, warranty, covenant or agreement of an Indemnifying Party shall affect the representations, warranties, covenants and agreements of the Indemnifying Party or the recourse available to the Indemnified Parties under any provision of this Agreement, including this Section 6.3, with respect thereto.

 

(c)     The amount of any Losses suffered or incurred by any Indemnified Party shall be reduced by the amount of any insurance proceeds paid to the Indemnified Party or any Affiliate thereof as a reimbursement with respect to such Losses (and no right of subrogation shall accrue to any insurer hereunder, except to the extent that such waiver of subrogation would prejudice any applicable insurance coverage), net of the costs of collection and the increases in insurance premiums resulting from such Loss or insurance payment.

 

6.4      Notification of Claims.

 

(a)     In order to make a claim for indemnification hereunder, an Indemnified Party must provide written notice (a “Claim Notice”) of such claim to the Indemnifying Parties, which Claim Notice shall include (i) a reasonable description of the facts and circumstances which relate to the subject matter of such indemnification claim to the extent then known and (ii) the amount of Losses suffered by the Indemnified Party in connection with the claim to the extent known or reasonably estimable (provided, that the Indemnified Party may thereafter in good faith adjust the amount of Losses with respect to the claim by providing a revised Claim Notice to the Indemnifying Party).

 

 

(b)     In the case of any claim for indemnification under this Article VI arising from a claim of a third party (including any Governmental Authority) (a “Third Party Claim”), the Indemnified Party must give a Claim Notice with respect to such Third Party Claim to the Indemnifying Party promptly (but in no event later than thirty (30) days) after the Indemnified Party’s receipt of notice of such Third Party Claim; provided, that the failure to give such notice will not relieve the Indemnifying Party of its indemnification obligations except to the extent that the defense of such Third Party Claim is materially and irrevocably prejudiced by the failure to give such notice. The Indemnifying Party will have the right to defend and to direct the defense against any such Third Party Claim, at its expense and with counsel selected by the Indemnifying Party, unless (i) the Indemnifying Party fails to acknowledge fully its obligations to the Indemnified Party within twenty (20) days after receiving notice of such Third Party Claim or contests, in whole or in part, their indemnification obligations therefor or (ii) at any time while such Third Party Claim is pending, (A) there is a conflict of interest between the Indemnifying Party and the Indemnified Party in the conduct of such defense, (B) the applicable third party alleges a Fraud Claim or (C) such claim is criminal in nature, could reasonably be expected to lead to criminal proceedings, or seeks an injunction or other equitable relief against the Indemnified Party. If the Indemnifying Party elects, and is entitled, to compromise or defend such Third Party Claim, it will within twenty (20) days (or sooner, if the nature of the Third Party Claim so requires) notify the Indemnified Party of its intent to do so, and the Indemnified Party will, at the request and expense of the Indemnifying Party, cooperate in the defense of such Third Party Claim. If the Indemnifying Party elects not to, or at any time are not entitled under this Section 6.4 to, compromise or defend such Third Party Claim, fails to notify the Indemnified Party of their election as herein provided or refuse to acknowledge or contest their obligation to indemnify under this Agreement, the Indemnified Party may pay, compromise or defend such Third Party Claim. Notwithstanding anything to the contrary contained herein, the Indemnifying Party will have no indemnification obligations with respect to any such Third Party Claim which is settled by the Indemnified Party without the prior written consent of the Indemnifying Party (which consent will not be unreasonably withheld, delayed or conditioned); provided, however, that notwithstanding the foregoing, the Indemnified Party will not be required to refrain from paying any Third Party Claim which has matured by a final, non-appealable Order, nor will it be required to refrain from paying any Third Party Claim where the delay in paying such claim would result in the foreclosure of a Lien upon any of the property or assets then held by the Indemnified Party or where any delay in payment would cause the Indemnified Party material economic loss. The Indemnifying Party’s right to direct the defense will include the right to compromise or enter into an agreement settling any Third Party Claim; provided, that no such compromise or settlement will obligate the Indemnified Party to agree to any settlement that requires the taking or restriction of any action (including the payment of money and competition restrictions) by the Indemnified Party other than the execution of a release for such Third Party Claim and/or agreeing to be subject to customary confidentiality obligations in connection therewith, except with the prior written consent of the Indemnified Party (such consent to be withheld, conditioned or delayed only for a good faith reason). Notwithstanding the Indemnifying Party’s right to compromise or settle in accordance with the immediately preceding sentence, the Indemnifying Party may not settle or compromise any Third Party Claim over the objection of the Indemnified Party; provided, however, that consent by the Indemnified Party to settlement or compromise will not be unreasonably withheld, delayed or conditioned. The Indemnified Party will have the right to participate in the defense of any Third Party Claim with counsel selected by it subject to the Indemnifying Party’s right to direct the defense.

 

 

(c)     With respect to any direct indemnification claim that is not a Third Party Claim, the Indemnifying Party will have a period of thirty (30) days after receipt of the Claim Notice to respond thereto. If the Indemnifying Party does not respond within such thirty (30) days, the Indemnifying Party will be deemed to have accepted responsibility for the Losses set forth in such Claim Notice subject to the limitations on indemnification set forth in this Article VI and will have no further right to contest the validity of such Claim Notice. If the Indemnifying Party responds within such thirty (30) days after the receipt of the Claim Notice and reject such claim in whole or in part, the Indemnified Party will be free to pursue such remedies as may be available under this Agreement, any Ancillary Documents or applicable Law.

 

ARTICLE VII
CLOSING CONDITIONS

 

7.1     Conditions to Obligations of Enservco. In addition to the conditions specified in Section 7.1, the obligations of Enservco to consummate the transactions contemplated by this Agreement are subject to the satisfaction or written waiver (by the Company) of the following conditions:

 

(a)     Representations and Warranties. All of the representations and warranties of the Company set forth in this Agreement and in any certificate delivered by the Company pursuant hereto shall be true and correct on and as of the Effective Date and on and as of the Closing Date as if made on the Closing Date, except for (i) those representations and warranties that address matters only as of a particular date (which representations and warranties shall have been accurate as of such date), and (ii) any failures to be true and correct that do not materially and adversely affect the Company’s ability to consummate the transactions contemplated hereby.

 

(b)     Agreements and Covenants. The Company shall have performed in all material respects all of the Company’s obligations and complied in all material respects with all of the Company’s agreements and covenants under this Agreement to be performed or complied with by the Company on or prior to the Closing Date.

 

(c)     No Material Adverse Effect. No Material Adverse Effect shall have occurred with respect to the Company (excluding the Subsidiaries of the Company) since the Effective Date.

 

(d)     Closing Deliveries.

 

(i)     Officer Certificate. The Company shall have delivered to Enservco a certificate, dated as of the Closing Date, signed by an executive officer of the Company in such capacity, certifying as to the satisfaction of the conditions specified in Sections 7.1(a), 7.1(b) and 7.1(c).

 

 

(ii)     Secretary Certificate. The Company shall have delivered to Enservco a certificate from its secretary certifying as to (A) copies of the Company’s Organizational Documents as in effect as of the Closing Date, (B) the resolutions of the Company’s board of directors authorizing the execution, delivery and performance of this Agreement and each of the Ancillary Documents to which it is a party or by which it is bound, and the consummation of the transactions contemplated hereby and thereby and (C) the incumbency of officers authorized to execute this Agreement or any Ancillary Document to which the Company is or is required to be a party or otherwise bound.

 

(iii)     Good Standing. The Company shall have delivered to Enservco proof of good standing for the Company as of the Closing Date from the proper Governmental Authority of the Company’s jurisdiction of organization.

 

(iv)     Share Statements and Transfer Instruments. Enservco shall have received from the transfer agent of the Company as instructed by the Company, book entry statements delineating and confirming the Exchange Shares, together with executed instruments of transfer in respect of the Exchange Shares in favor of Enservco (or its nominee) and in form reasonably acceptable for transfer on the books of Enservco.

 

(v)     Registration Rights Agreement. The Company shall have delivered to Enservco a counterpart signature to the Registration Rights Agreement, which shall have been duly executed by the Company.

 

(vi)     Board Designation Agreement. The Company shall have delivered to Enservco a counterpart signature to the Board Designation Agreement, which shall have been duly executed by the Company.

 

7.2     Conditions to Obligations of the Company. In addition to the conditions specified in Section 7.1, the obligations of the Company to consummate the transactions contemplated by this Agreement are subject to the satisfaction or written waiver (by the Company) of the following conditions:

 

(a)     Representations and Warranties. All of the representations and warranties of Enservco set forth in this Agreement and in any certificate delivered by Enservco pursuant hereto shall be true and correct on and as of the Effective Date and on and as of the Closing Date as if made on the Closing Date, except for (i) those representations and warranties that address matters only as of a particular date (which representations and warranties shall have been accurate as of such date), and (ii) any failures to be true and correct that (without giving effect to any qualifications or limitations as to materiality or Material Adverse Effect), individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on, or with respect to, Enservco or adversely affects Enservco’s ability to consummate the transactions contemplated hereby.

 

(b)     Agreements and Covenants. Enservco shall have performed in all material respects all of such Party’s obligations and complied in all material respects with all of such Party’s agreements and covenants under this Agreement to be performed or complied with by it on or prior to the Closing Date.

 

(c)     No Material Adverse Effect. No Material Adverse Effect shall have occurred with respect to Enservco since the Effective Date.

 

 

(d)      Closing Deliveries.

 

(i)        Officer Certificate. Enservco shall have delivered to the Company a certificate, dated as the Closing Date, signed by an executive officer of Enservco in such capacity, certifying as to the satisfaction of the conditions specified in Sections 7.2(a), 7.2(b), 7.2(c) [and 7.2(d)].

 

(ii)      Secretary Certificate. Enservco shall have delivered to the Company a certificate from its secretary certifying as to (A) copies of Enservco’s Organizational Documents as in effect as of the Closing Date, (B) the resolutions of Enservco’s board of directors authorizing the execution, delivery and performance of this Agreement and each of the Ancillary Documents to which it is a party or by which it is bound, and the consummation of the transactions contemplated hereby and thereby, and (C) the incumbency of officers authorized to execute this Agreement or any Ancillary Document to which Enservco is or is required to be a party or otherwise bound.

 

(iii)      Good Standing. Enservco shall have delivered to the Company proof of good standing for Enservco as of the Closing Date from the proper Governmental Authority of Enservco’s jurisdiction of organization.

 

(iv)     Certificate of Designation. Enservco shall have delivered to the Company proof of filing of the Certificate of Designation with the Delaware Secretary of State.

 

(v)      Share Certificates and Transfer Instruments. The Company shall have received from Enservco book entry statements from the Enservco transfer agent delineating and confirming the Initial Common Shares and shall have received from Enservco, a stock certificate representing the Convertible Preferred Shares, together with executed instruments of transfer in respect of the Initial Common Shares and Convertible Preferred Shares in favor of the Company (or its nominee) and in form reasonably acceptable for transfer on the books of the Company.

 

(vi)     Registration Rights Agreement. Enservco shall have delivered to the Company a counterpart signature to the Registration Rights Agreement, which shall have been duly executed by Enservco.

 

(vii)    Board Designation Agreement. Enservco shall have delivered to the Company a counterpart signature to the Board Designation Agreement, which shall have been duly executed Enservco.

 

7.3     Frustration of Conditions. Notwithstanding anything contained herein to the contrary, no Party may rely on the failure of any condition set forth in this Article VII to be satisfied if such failure was caused by the failure of such Party or its Affiliates (or with respect to the Company or Enservco) to comply with or perform any of its covenants or obligations set forth in this Agreement.

 

 

ARTICLE VIII
TERMINATION AND EXPENSES

 

8.1     Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing as follows:

 

(a)     by mutual written consent of Enservco and the Company;

 

(b)     by written notice by Enservco, if (i) there has been a breach by the Company of any of its representations, warranties, covenants or agreements contained in this Agreement, or if any representation or warranty of the Company shall have become untrue or inaccurate, in any case, which would result in a failure of a condition set forth in Section 7.1(a) or Section 7.1(b) to be satisfied (treating the Closing Date for such purposes as the Effective Date or, if later, the date of such breach), and (ii) the breach or inaccuracy is incapable of being cured or is not cured within five (5) Business Days after written notice of such breach or inaccuracy is provided by Enservco; provided, that Enservco shall not have the right to terminate this Agreement pursuant to this Section 8.1(b) if at such time Enservco is in material uncured breach of this Agreement; or

 

(c)     by written notice by the Company, if (i) there has been a breach by Enservco of any of its representations, warranties, covenants or agreements contained in this Agreement, or if any representation or warranty of such Parties shall have become untrue or inaccurate, in any case, which would result in a failure of a condition set forth in Section 7.2(a) or Section 7.2(b) to be satisfied (treating the Closing Date for such purposes as the Effective Date or, if later, the date of such breach), and (ii) the breach or inaccuracy is incapable of being cured or is not cured within five (5) Business Days after written notice of such breach or inaccuracy is provided by the Company; provided, that the Company shall not have the right to terminate this Agreement pursuant to this Section 8.1(c) if at such time the Company is in material uncured breach of this Agreement.

 

8.2     Fees and Expenses. All expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such expenses. As used in this Agreement, “expenses” shall include all out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, financial advisors, financing sources, experts and consultants to a Party hereto or any of its Affiliates) incurred by a Party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution or performance of this Agreement or any Ancillary Document related hereto and all other matters related to the consummation of this Agreement.

 

 

ARTICLE IX
MISCELLANEOUS

 

9.1     Notices. All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered (i) in person, (ii) by electronic means, with affirmative written confirmation of receipt from the recipient, (iii) one Business Day after being sent, if sent by reputable, nationally recognized overnight courier service with confirmed receipt of delivery or (iv) as of the date of the confirmation of delivery, if mailed by registered or certified mail, , in each case to the applicable Party at the following addresses (or at such other address for a Party as shall be specified by like notice):

 

If to the Company, to:

 

Star Equity Holdings, Inc.
53 Forest Avenue, Suite 101
Old Greenwich, Connecticut 06870
Attention: Legal Department/CEO

 

With copies to:

 

Baker Hosteler
45 Rockefeller Plaza
New York, NY 10111-0100 Attention: Adam Finerman
E-mail: afinerman@bakerlaw.com

 

If to Enservco, to:

 

Enservco Corporation
14133 County Road 9 ½
Longmont, Colorado 80504
Attention: Richard Murphy, Chairman and Chief Executive Officer

 

With copies to:

 

Maslon LLP

225 South Sixth Street, Suite 2900

Minneapolis, MN 55402

Attention: Doug Holod

Email: doug.holod@maslon.com

 

9.2     Binding Effect; Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. This Agreement shall not be assigned by operation of Law or otherwise without the prior written consent of the Company and Enservco, and any assignment without such consent shall be null and void; provided that no such assignment shall relieve the assigning Party of its obligations hereunder.

 

9.3     Third Parties. Nothing contained in this Agreement or in any instrument or document executed by any party in connection with the transactions contemplated hereby shall create any rights in, or be deemed to have been executed for the benefit of, any Person that is not a Party hereto or thereto or a successor or permitted assign of such a Party.

 

 

9.4     Governing Law; Jurisdiction. This Agreement shall be governed by, construed and enforced in accordance with the Laws of the State of Delaware without regard to the conflict of laws principles thereof. All Actions arising out of or relating to this Agreement shall be heard and determined exclusively in any state or federal court located in New York (or in any court in which appeal from such courts may be taken) (the “Specified Courts”). Each Party hereto hereby (a) submits to the exclusive jurisdiction of any Specified Court for the purpose of any Action arising out of or relating to this Agreement brought by any Party hereto and (b) irrevocably waives, and agrees not to assert by way of motion, defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the Action is brought in an inconvenient forum, that the venue of the Action is improper, or that this Agreement or the transactions contemplated hereby may not be enforced in or by any Specified Court. Each Party agrees that a final judgment in any Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each Party irrevocably consents to the service of the summons and complaint and any other process in any other action or proceeding relating to the transactions contemplated by this Agreement, on behalf of itself, or its property, by personal delivery of copies of such process to such Party at the applicable address set forth in Section 9.1. Nothing in this Section 9.4 shall affect the right of any Party to serve legal process in any other manner permitted by Law.

 

9.5     WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.5.

 

9.6     Specific Performance. Each Party acknowledges that the rights of each Party to consummate the transactions contemplated hereby are unique, recognizes and affirms that in the event of a breach of this Agreement by any Party, money damages may be inadequate and the non-breaching Parties may have not adequate remedy at law, and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by an applicable Party in accordance with their specific terms or were otherwise breached. Accordingly, each Party shall be entitled to seek an injunction or restraining order to prevent breaches of this Agreement and to seek to enforce specifically the terms and provisions hereof, without the requirement to post any bond or other security or to prove that money damages would be inadequate, this being in addition to any other right or remedy to which such Party may be entitled under this Agreement, at law or in equity.

 

9.7     Severability. In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a jurisdiction, such provision shall be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity, legality or enforceability of such provision be affected thereby in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties will substitute for any invalid, illegal or unenforceable provision a suitable and equitable provision that carries out, so far as may be valid, legal and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.

 

 

9.8    Amendment. This Agreement may be amended, supplemented or modified only by execution of a written instrument signed by Enservco and the Company.

 

9.9      Waiver. The Company on behalf of itself and its Affiliates, on the one hand, and Enservco on behalf of itself and its Affiliates, may in its sole discretion (i) extend the time for the performance of any obligation or other act of any other non-Affiliated Party hereto, (ii) waive any inaccuracy in the representations and warranties by such other non-Affiliated Party contained herein or in any document delivered pursuant hereto and (iii) waive compliance by such other non-Affiliated Party with any covenant or condition contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party or Parties to be bound thereby. Notwithstanding the foregoing, no failure or delay by a Party in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right hereunder.

 

9.10     Entire Agreement. This Agreement and the documents or instruments referred to herein, including any exhibits and schedules attached hereto, which exhibits and schedules are incorporated herein by reference, together with the Ancillary Documents, embody the entire agreement and understanding of the Parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or the documents or instruments referred to herein, which collectively supersede all prior agreements and the understandings among the Parties with respect to the subject matter contained herein.

 

9.11     Interpretation. The table of contents and the Article and Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties and shall not in any way affect the meaning or interpretation of this Agreement. In this Agreement, unless the context otherwise requires: (a) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and words in the singular, including any defined terms, include the plural and vice versa; (b) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity; (c) any accounting term used and not otherwise defined in this Agreement or any Ancillary Document has the meaning assigned to such term in accordance with GAAP; (d) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding or succeeding such term and shall be deemed in each case to be followed by the words “without limitation”; (e) the words “herein,” “hereto,” and “hereby” and other words of similar import in this Agreement shall be deemed in each case to refer to this Agreement as a whole and not to any particular Section or other subdivision of this Agreement; (f) the word “if” and other words of similar import when used herein shall be deemed in each case to be followed by the phrase “and only if”; (g) the term “or” means “and/or”; (h) any reference to the term “ordinary course” or “ordinary course of business” shall be deemed in each case to be followed by the words “consistent with past practice”; (i) any agreement, instrument, insurance policy, Law or Order defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument, insurance policy, Law or Order as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes, regulations, rules or orders) by succession of comparable successor statutes, regulations, rules or orders and references to all attachments thereto and instruments incorporated therein; (j) except as otherwise indicated, all references in this Agreement to the words “Section,” “Article”, “Schedule”, and “Exhibit” are intended to refer to Sections, Articles, Schedules and Exhibits to this Agreement; and (k) the term “Dollars” or “$” means United States dollars. Any reference in this Agreement to a Person’s directors shall include any member of such Person’s governing body and any reference in this Agreement to a Person’s officers shall include any Person filling a substantially similar position for such Person. Any reference in this Agreement or any Ancillary Document to a Person’s shareholders shall include any applicable owners of the equity interests of such Person, in whatever form, including with respect to the Company its shareholders under the DGCL or its Organizational Documents. The Parties have participated jointly in the negotiation and drafting of this Agreement. Consequently, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

 

 

9.12     Counterparts. This Agreement may be executed and delivered (including by facsimile or other electronic transmission) in one or more counterparts, and by the different Parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

 

ARTICLE X
DEFINITIONS

 

10.1     Certain Definitions. For purpose of this Agreement, the following capitalized terms have the following meanings:

 

“Action” means any notice of noncompliance or violation, or any claim, demand, charge, action, suit, litigation, audit, settlement, complaint, stipulation, assessment or arbitration, or any request (including any request for information), inquiry, hearing, proceeding or investigation, by or before any Governmental Authority.

 

“Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with such Person.

 

“Ancillary Documents” means each agreement, instrument or document attached hereto as an Exhibit, including the Registration Rights Agreement, the Board Designation Agreement, and the other agreements, certificates and instruments to be executed or delivered by any of the Parties in connection with or pursuant to this Agreement.

 

“Board Designation Agreement” means the Board Designation Agreement to be dated the Closing Date and entered into by and between Enservco and the Company, the form of which is attached as Exhibit B hereto.

 

 

“Business Day” means any day other than a Saturday, Sunday or a legal holiday on which commercial banking institutions in New York, New York are authorized to close for business.

 

“Certificate of Designation” means that certain Certificate of Designation of 2% Cumulative Mandatorily Convertible Series A Preferred Stock, the form of which is attached as Exhibit C hereto.

 

“Code” means the Internal Revenue Code of 1986, as amended, and any successor statute thereto, as amended. Reference to a specific section of the Code shall include such section and any valid treasury regulation promulgated thereunder.

 

“Company Charter” means the Restated Certificate of Incorporation of Star Equity Holdings, Inc., as amended.

 

“Consent” means any consent, approval, waiver, authorization or Permit of, or notice to or declaration or filing with any Governmental Authority or any other Person.

 

“Contracts” means all contracts, agreements, binding arrangements, bonds, notes, indentures, mortgages, debt instruments, purchase order, licenses, franchises, leases and other instruments or obligations of any kind, written or oral (including any amendments and other modifications thereto).

 

“Control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise. “Controlled”, “Controlling” and “under common Control with” have correlative meanings. Without limiting the foregoing a Person (the “Controlled Person”) shall be deemed Controlled by (a) any other Person (the “10% Owner”) (i) owning beneficially, as meant in Rule 13d-3 under the Exchange Act, securities entitling such Person to cast ten percent (10%) or more of the votes for election of directors or equivalent governing authority of the Controlled Person or (ii) entitled to be allocated or receive ten percent (10%) or more of the profits, losses, or distributions of the Controlled Person; (b) an officer, director, general partner, partner (other than a limited partner), manager, or member (other than a member having no management authority that is not a 10% Owner) of the Controlled Person; or (c) a spouse, parent, lineal descendant, sibling, aunt, uncle, niece, nephew, mother-in-law, father-in-law, sister-in-law, or brother-in-law of an Affiliate of the Controlled Person or a trust for the benefit of an Affiliate of the Controlled Person or of which an Affiliate of the Controlled Person is a trustee.

 

“DGCL” means the General Corporation Law of the State of Delaware.

 

“Enservco Charter” means the Second Amended and Restated Certificate of Incorporation of Enservco Corporation, as amended.

 

“Enservco Disclosure Schedules” means the disclosure schedules delivered by Enservco to the Company on the date hereof.

 

 

“Equity Line of Credit Agreement” means that certain common stock purchase agreement by and between Keystone Capital Partners, LLC and Enservco dated June 11, 2024 pursuant to which Enservco has the right, but not the obligation, to sell to Keystone Capital Partners, LLC under certain circumstances up to the lesser of: (i) $10 million of newly issued shares of Enservco’s common stock, par value $0.005 per share, and (ii) 7,310,000 share of common stock.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Fraud Claim” means any claim based in whole or in part upon fraud, willful misconduct or intentional misrepresentation.

 

“GAAP” means generally accepted accounting principles as in effect in the United States of America.

 

“Governmental Authority” means any federal, state, local, foreign or other governmental, quasi-governmental or administrative body, instrumentality, department or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body.

 

“Indebtedness” of any Person means (a) all indebtedness of such Person for borrowed money (including the outstanding principal and accrued but unpaid interest) or for the deferred purchase price of property or services, (b) any other indebtedness of such Person that is evidenced by a note, bond, debenture, credit agreement or similar instrument, (c) all obligations of such Person under leases that should be classified as capital leases in accordance with GAAP, (d) all obligations of such Person for the reimbursement of any obligor on any line or letter of credit, banker’s acceptance, guarantee or similar credit transaction, in each case, that has been drawn or claimed against, (e) all obligations of such Person in respect of acceptances issued or created, (f) all interest rate and currency swaps, caps, collars and similar agreements or hedging devices under which payments are obligated to be made by such Person, whether periodically or upon the happening of a contingency, (g) all obligations secured by an Lien on any property of such Person and (h) any premiums, prepayment fees or other penalties, fees, costs or expenses associated with payment of any Indebtedness of such Person and (h) all obligation described in clauses (a) through (g) above of any other Person which is directly or indirectly guaranteed by such Person or which such Person has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which it has otherwise assured a creditor against loss.

 

“Knowledge” means, with respect to (i) Enservco the actual knowledge of the executive officers and directors of Enservco after due inquiry or (ii) any other Party, the actual knowledge of its directors and executive officers, after due inquiry.

 

“Law” means any federal, state, local, municipal, foreign or other law, statute, legislation, principle of common law, ordinance, code, edict, decree, proclamation, treaty, convention, rule, regulation, directive, requirement, writ, injunction, settlement, Order or Consent that is or has been issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Governmental Authority.

 

“Liabilities” means any and all liabilities, Indebtedness, Actions or obligations of any nature (whether absolute, accrued, contingent or otherwise, whether known or unknown, whether direct or indirect, whether matured or unmatured and whether due or to become due), including Tax liabilities due or to become due.

 

 

“Lien” means any mortgage, pledge, security interest, attachment, right of first refusal, option, proxy, voting trust, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof), restriction (whether on voting, sale, transfer, disposition or otherwise), any subordination arrangement in favor of another Person, any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar Law.

 

“Material Adverse Effect” means, with respect to any specified Person, any fact, event, occurrence, change or effect that has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect upon (a) the business, assets, Liabilities, results of operations, prospects or condition (financial or otherwise) of such Person and its Subsidiaries, taken as a whole, or (b) the ability of such Person or any of its Subsidiaries on a timely basis to consummate the transactions contemplated by this Agreement or the Ancillary Documents to which it is a party or bound or to perform its obligations hereunder or thereunder; provided, however, that any changes or effects directly or indirectly attributable to, resulting from, relating to or arising out of the following (by themselves or when aggregated with any other, changes or effects) shall not be deemed to be, constitute, or be taken into account when determining whether there has or may, would or could have occurred a Material Adverse Effect: (i) general changes in the financial or securities markets or general economic or political conditions in the country or region in which such Person or any of its Subsidiaries do business; (ii) changes, conditions or effects that generally affect the industries in which such Person or any of its Subsidiaries principally operate; (iii) changes in GAAP or other applicable accounting principles or mandatory changes in the regulatory accounting requirements applicable to any industry in which such Person and its Subsidiaries principally operate; (iv) conditions caused by acts of God, terrorism, war (whether or not declared) or natural disaster; (v) any failure in and of itself by such Person and its Subsidiaries to meet any internal or published budgets, projections, forecasts or predictions of financial performance for any period (provided that the underlying cause of any such failure may be considered in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur to the extent not excluded by another exception herein); provided further, however, that any event, occurrence, fact, condition, or change referred to in clauses (i) - (iv) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition, or change has a disproportionate effect on such Person or any of its Subsidiaries compared to other participants in the industries in which such Person or any of its Subsidiaries primarily conducts its businesses.

 

“Organizational Documents” means, with respect to the Company, the Company Charter and the Company’s bylaws, and with respect to Enservco, the Enservco Charter and Enservco’s bylaws, or similar organizational documents, in each case with respect to the Company and Enservco, as amended.

 

“Order” means any order, decree, ruling, judgment, injunction, writ, determination, binding decision, verdict, judicial award or other action that is or has been made, entered, rendered, or otherwise put into effect by or under the authority of any Governmental Authority.

 

 

“Permits” means all federal, state, local or foreign or other third-party permits, grants, easements, consents, approvals, authorizations, exemptions, licenses, franchises, concessions, ratifications, permissions, clearances, confirmations, endorsements, waivers, certifications, designations, ratings, registrations, qualifications or orders of any Governmental Authority or any other Person.

 

“Permitted Liens” means (a) Liens for Taxes or assessments and similar governmental charges or levies, which either are (i) not delinquent or (ii) being contested in good faith and by appropriate proceedings, and adequate reserves have been established with respect thereto, (b) other Liens imposed by operation of Law arising in the ordinary course of business for amounts which are not due and payable and as would not in the aggregate materially adversely affect the value of, or materially adversely interfere with the use of, the property subject thereto, (c) Liens incurred or deposits made in the ordinary course of business in connection with social security, (d) Liens on goods in transit incurred pursuant to documentary letters of credit, in each case arising in the ordinary course of business, or (v) Liens arising under this Agreement or any Ancillary Document.

 

“Person” means an individual, corporation, partnership (including a general partnership, limited partnership or limited liability partnership), limited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political subdivision thereof, or an agency or instrumentality thereof.

 

“Personal Property” means any machinery, equipment, tools, vehicles, furniture, leasehold improvements, office equipment, plant, parts and other tangible personal property.

 

“Registration Rights Agreement” means the Registration Rights Agreement to be dated the Closing Date and entered into by and between Enservco and the Company, the form of which is attached as Exhibit A hereto.

 

“Representative” means, as to any Person, such Person’s Affiliates and its and their managers, directors, officers, employees, agents and advisors (including financial advisors, counsel and accountants).

 

“SEC” means the Securities and Exchange Commission (or any successor Governmental Authority).

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Series A Preferred Stock” means the Company’s 10.0% Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share.

 

“SOX” means the Sarbanes-Oxley Act of 2002, as amended.

 

“Stockholder Approval” means the approval by Enservco’s stockholders, in accordance with NYSE American’s listing rules, of the issuance of the Converted Purchased Shares.

 

 

“Subsidiary” means, with respect to any Person, any corporation, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, association or other business entity, a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons will be deemed to have a majority ownership interest in a partnership, association or other business entity if such Person or Persons will be allocated a majority of partnership, association or other business entity gains or losses or will be or control the managing director, managing member, general partner or other managing Person of such partnership, association or other business entity.

 

“Tax Return” means any return, declaration, report, claim for refund, information return or other documents (including any related or supporting schedules, statements or information) filed or required to be filed in connection with the determination, assessment or collection of any Taxes or the administration of any Laws or administrative requirements relating to any Taxes.

 

“Taxes” means (a) all direct or indirect federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, value-added, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, social security and related contributions due in relation to the payment of compensation to employees, excise, severance, stamp, occupation, premium, property, windfall profits, alternative minimum, estimated, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts with respect thereto, (b) any Liability for payment of amounts described in clause (a) whether as a result of being a member of an affiliated, consolidated, combined or unitary group for any period or otherwise through operation of law and (c) any Liability for the payment of amounts described in clauses (a) or (b) as a result of any tax sharing, tax group, tax indemnity or tax allocation agreement with, or any other express or implied agreement to indemnify, any other Person.

 

“Trading Day” means a day on which the principal Trading Market is open for trading.

 

“Trading Market” means any of the following markets or exchanges on which the Enservco common stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).

 

“Twenty-Day VWAP” means, for any date, the daily volume weighted average price of the Enservco common stock during the twenty (20) Trading Days preceding such date (or the nearest preceding date) on the Trading Market on which the Enservco common stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time).

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]

 

 

IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be signed and delivered by its respective duly authorized officer as of the date first written above.

 

	STAR EQUITY HOLDINGS, INC.
	By:	/s/ Richard K. Coleman, Jr.
		Name:	Richard K. Coleman, Jr.
		Title:	Chief Executive Officer

 

 

 

	ENSERVCO CORPORATION
	By:	/s/ Richard Murphy
		Name:	Richard Murphy
		Title:	Chairman and Chief Executive Officer

 

Exhibit 10.6

 

Execution Copy

 

BOARD DESIGNATION AGREEMENT

 

THIS BOARD DESIGNATION AGREEMENT, dated as of August 9, 2024 (this “Agreement”), is entered into by and between Enservco Corporation, a Delaware corporation (“Enservco”), and Star Equity Holdings, Inc., a Delaware corporation (“Star”). Enservco and Star are sometimes referred to herein individually as a “Party” and, collectively, as the “Parties”. Capitalized terms used but not defined herein shall have the meaning assigned to such term in the Share Exchange Agreement, dated as of the date hereof, by and between the Parties (the “Share Exchange Agreement”).

 

Recitals

 

WHEREAS, pursuant to, and subject to the terms and conditions of, the Share Exchange Agreement, Enservco has agreed to sell to Star, and Star has agreed to purchase from Enservco, a number of newly issued shares of common stock, par value $0.005 per share and a number of newly issued shares of preferred stock, $005 per share, of Enservco in exchange for an aggregate of 250,000 shares of Star’s Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share; and

 

WHEREAS, to induce the Parties to enter into the transactions contemplated by the Share Exchange Agreement, each of the Parties is required to deliver this Agreement, duly executed by each of the Parties, contemporaneously with the closing of the transaction contemplated by the Share Exchange Agreement (the “Closing”).

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each of the Parties hereto, the Parties hereby agree as follows:

 

Agreement

 

Section 1.

Board Designation Rights.

 

(a)    So long as Star owns equity interests in Enservco that comprise in the aggregate, equal to or more than 5% of the issued and outstanding common stock interests in Enservco (“Minimum Ownership Interest”), Star shall have the right to designate one person to serve on the board of directors of Enservco (the “Board” and such person and any other person designated to serve on the Board pursuant to this Agreement, a “Star Director”) and Enservco shall take all actions necessary or advisable to effect the foregoing which include recommendation to Enservco’s shareholders that they vote for such Star Director If Star’s ownership interest in Enservco is at any time less than the Minimum Ownership Interest of the issued and outstanding equity interests in Enservco, then the Star Director shall not be required to be recommended by the Board for nomination to the Board at the next shareholder meeting; provided, however, that at any time after the date of any such termination, if Star’s ownership interest in Enservco increases to the Minimum Ownership Interest [or such other %] or greater, then the director designation right set forth in this clause shall be reinstated in all respects. Notwithstanding, if Star’s aggregate ownership of the issued and outstanding equity interests in Enservco is reduced below the Minimum Ownership Interest as a result of an equity line of credit (“ELOC”) dilution, the Minimum Ownership Interest shall be determined by adding back any percentage reduction occurring due to the ELOC. The initial Star Director designated to serve on the Board pursuant to this clause (a) is Richard K. Coleman, Jr.

 

 

(b)    Enservco shall not take any action that directly or indirectly adversely affects the rights of Star to (i) designate the Star Director to the Board pursuant to Section 1(a) of this Agreement or (ii) seek indemnification pursuant to Section 3(a) of this Agreement.

 

Enservco shall increase the size of the Board of Directors to six six(6) directors and shall appoint the Star Director to fill such vacancy. , Certain Requirements. Any Star Director may be removed or replaced by Star at any time. Any action by Star to designate, remove or replace the Star Director shall be evidenced in writing furnished to Enservco, shall include a statement that the action has been approved by Star, and shall be executed by or on behalf of Star. While serving as a Star Director, a Star Director shall be entitled to vote on all matters, including any matter on which independent members of the Board are entitled to vote on. Notwithstanding any rights to be granted or provided to a Star Director hereunder or in the Share Exchange Agreement, Enservco may exclude the Star Director from access to any Board or committee of the Board (a “Committee”) materials or information or meeting or portion thereof or written consent if the Board determines, in good faith on advise of counsel, and includes the Star Director in discussions relating to such determination (but not requiring the affirmative vote of such Star Director), that such access would reasonably be expected to result in a conflict of interest with Enservco (other than a conflict of interest with respect to Star’s ownership interest in Enservco or rights under the Share Exchange Agreement); provided, that such exclusion shall be limited to the portion of the Board or Committee material or information and/or meeting or written consent that is the basis for such exclusion and shall not extend to any portion of the Board or Committee material and/or meeting that does not involve or pertain to such exclusion. A Star Director shall receive the same information provided to other similarly situated members of the Board, at the same time as such information is provided to other similarly situated members of the Board and including monthly information packages, as well as being provided with reasonable access to management and shall be entitled to receive customary reimbursement of fees and expenses incurred in connection with his or her service as a member of the Board and/or any Committee thereof consistent with Enservco’s policies applicable to similarly situated directors. A Star Director shall be entitled to receive the same compensation provided to other similarly situated members of the Board from Enservco.

 

Section 2.

Limitation of Liability; Indemnification; Business Opportunities.

(a)    At all times while a Star Director is serving as a member of the Board, and following any such Star Director’s death, resignation, removal or other cessation as a director in such former Star Director’s capacity as a former director, the Star Director shall be entitled to (i) the same modification and restriction of traditional fiduciary duties, (ii) the same safe harbors for resolving conflicts of interest transactions and (iii) all rights to indemnification and exculpation, in each case, as are made available to any other independent member of the Board as at the date hereof, together with any and all incremental rights added to any of (i), (ii) or (iii) above as are subsequently made available to any other independent members of the Board in their capacity as Board members.

 

 

(b)    At all times while a Star Director is serving as a member of the Board in accordance with Section 1 of this Agreement, such Star Director, Star and their respective Affiliates may engage in, possess an interest in, or trade in the securities of, other business ventures of any nature or description, independently or with others, similar or dissimilar to the business of Enservco, the Board and their respective Affiliates shall have no rights by virtue of this Agreement in and to such independent ventures or the income or profits derived therefrom, and the pursuit of any such venture, even if competitive with the business of Enservco, shall not be deemed wrongful or improper. None of any Star Director, Star or their respective Affiliates shall be obligated to present any investment opportunity to Enservco even if such opportunity is of a character that Enservco or any of their respective subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so, and any Star Director, Star or their respective Affiliates shall have the right to take for such person’s own account (individually or as a partner or fiduciary) or to recommend to others any such investment opportunity. Notwithstanding the foregoing, each Star Director, Star and their respective Affiliates shall be subject to, and comply with, the requirement to maintain confidential information and shall be subject to Enservco’s Insider Trading Policy.

 

(c)    Enservco shall use its best efforts to purchase and maintain insurance (“D&O Insurance”) on behalf of the Star Director, consistent with the D&O Insurance currently maintained for Enservco’s directors and officers.

 

(d)    For the avoidance of doubt, each Star Director shall constitute an “Indemnitee.”

 

Section 3.

Miscellaneous.

 

(a)    Entire Agreement. This Agreement, the Share Exchange Agreement and the other agreements and documents referred to herein and therein are intended by the Parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the Parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, warranties or undertakings other than those set forth or referred to herein or in the Share Exchange Agreement with respect to the rights granted by Enservco or any of its Affiliates or Star or any of its Affiliates set forth herein or therein. This Agreement and the other agreements and documents referred to herein or therein supersede all prior agreements and understandings between the Parties with respect to such subject matter.

 

(b)    Notices. All notices and demands provided for in this Agreement shall be in writing and shall be given as provided in Section 9.1 of the Share Exchange Agreement.

 

 

(c)    Interpretation. Section references in this Agreement are references to the corresponding Section to this Agreement, unless otherwise specified. All references to instruments, documents, contracts and agreements are references to such instruments, documents, contracts and agreements as the same may be amended, supplemented and otherwise modified from time to time, unless otherwise specified. The word “including” shall mean “including but not limited to” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it. Whenever any determination, consent or approval is to be made or given by a Party, such action shall be in such Party’s sole discretion, unless otherwise specified in this Agreement. If any provision in this Agreement is held to be illegal, invalid, not binding or unenforceable, (i) such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid, not binding or unenforceable provision had never comprised a part of this Agreement, and the remaining provisions shall remain in full force and effect and (ii) the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible. When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded, and if the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day. Any words imparting the singular number only shall include the plural and vice versa. The words such as “herein,” “hereinafter,” “hereof” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires. The division of this Agreement into Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement.

 

(d)    Governing Law; Submission to Jurisdiction. This Agreement, and all claims or causes of action (whether in contract or tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement), will be construed in accordance with and governed by the Laws of the State of New York without regard to principles of conflicts of Laws. Any action against any Party relating to the foregoing shall be brought in any federal or state court of competent jurisdiction located within the State of New York, and the Parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of New York over any such action. Each of the Parties hereby irrevocably waives, to the fullest extent permitted by applicable Law, any objection that it may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the Parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.

 

(e)    Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY WAIVES, AND AGREES TO CAUSE ITS AFFILIATES TO WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

 

(f)    No Waiver; Modifications in Writing.

 

(i)    Delay. No failure or delay on the part of any Party 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 preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to a Party at law or in equity or otherwise.

 

(ii)    Specific Waiver. Except as otherwise provided herein, no amendment, waiver, consent, modification or termination of any provision of this Agreement shall be effective unless signed by each of the Parties hereto affected by such amendment, waiver, consent, modification or termination. Any amendment, supplement or modification of or to any provision of this Agreement, any waiver of any provision of this Agreement and any consent to any departure by a Party from the terms of any provision of this Agreement shall be effective only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement, no notice to or demand on a Party in any case shall entitle such Party to any other or further notice or demand in similar or other circumstances. Any investigation by or on behalf of any Party shall not be deemed to constitute a waiver by the Party taking such action of compliance with any representation, warranty, covenant or agreement contained herein.

 

(g)    Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different Parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute one and the same agreement.

 

(h)    Binding Effect; Assignment. This Agreement will be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns, but will not be assignable or delegable by any Party hereto without the prior written consent of each of the other Parties.

 

(i)    Independent Counsel. Each of the Parties acknowledges that it has been represented by independent counsel of its choice throughout all negotiations that have preceded the execution of this Agreement and that it has executed the same with consent and upon the advice of said independent counsel. Each Party and its counsel cooperated in the drafting and preparation of this Agreement and the documents referred to herein, and any and all drafts relating thereto will be deemed the work product of the Parties and may not be construed against any Party by reason of its preparation. Accordingly, any rule of Law or any legal decision that would require interpretation of any ambiguities in this Agreement against the Party that drafted it is of no application and is hereby expressly waived.

 

 

(j)    Specific Enforcement. Each of the Parties acknowledges and agrees that monetary damages would not adequately compensate an injured Party for the breach of this Agreement by any Party, that this Agreement shall be specifically enforceable and that any breach or threatened breach of this Agreement shall be the proper subject of a temporary or permanent injunction or restraining order without a requirement of posting bond. Further, each Party hereto waives any claim or defense that there is an adequate remedy at law for such breach or threatened breach.

 

(k)    Liability of Star. Star shall have no liability (whether in contract or in tort, in law or in equity, or granted by statute) for any claims, causes of action, obligations or liabilities arising under, out of, in connection with, or related in any manner to, this Agreement. Enservco shall be entitled to rely conclusively and without any inquiry on any and all instructions of, decisions of or action taken or omitted to be taken by Star under this Agreement without any liability to Star or obligation to inquire as to such instructions, decisions of, or actions or omissions including the authority or validity thereof, all of which instructions, decisions, actions or omissions shall be legally binding on Star.

 

(l)    Further Assurances. Each of the Parties hereto shall, from time to time and without further consideration, execute such further instruments and take such other actions as any other Party hereto shall reasonably request in order to fulfill its obligations under this Agreement to effectuate the purposes of this Agreement.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the Parties hereto execute this Agreement, effective as of the date first above written.

 

	ENSERVCO CORPORATION
	By:	/s/ Richard Murphy
		Name:	Richard Murphy
		Title:	Chairman and Chief Executive Officer

 

 

	STAR EQUITY HOLDINGS, INC.
	By:	/s/ Richard J. Coleman, Jr.
		Name:	Richard J. Coleman, Jr.
		Title:	Chief Executive Officer

 

 

Exhibit 10.7

Execution Copy

 

ENSERVCO CORPORATION

 

VOTING AGREEMENT

 

This VOTING Agreement (the “Agreement”) is made and entered into as of August 9, 2024, by and among Enservco Corporation, a Delaware corporation (the “Company”), and those certain holders of the Company’s Common Stock listed on Exhibit A hereto (the “Key Holders”).

 

Witnesseth

 

Whereas, the Key Holders are the beneficial owners of an aggregate of approximately 16,985,873 shares of the common stock of the Company (the “Common Stock”) representing approximately 37.5% of the issued and outstanding shares of Common Stock as of the date hereof (the “Shares”);

 

Whereas, consideration was provided to Star Equity Holdings, Inc. (“STRR”) as set forth in the Share Exchange Agreement and in the Board Designation Agreement (the “Board Designation Agreement”) each between STRR and the Company, dated August 9, 2024 (the “Exchange Agreement”) providing for certain matters to be voted on at a future Shareholder Meeting, including (i) the appointment of a STRR representative to the Board and (ii) approval of the shares of Approved Common Shares, as defined in the Exchange Agreement.

 

Whereas, the Key Holders agree that the Exchange Agreement and Board Designation Agreement is in the best interest of the Company and its Shareholders, and therefore in their best interest, and the consideration and Shareholder vote requested by STRR is reasonable and proper;

 

Whereas, the Company is required under the Exchange Agreement to notice and hold a meeting of shareholders under applicable Delaware laws, which meeting and any adjournments thereof (the “Shareholder Meeting”) will require the preparation, filing and delivery of a proxy statement and the incurrence of significant expenditures by the Company; and

 

Whereas, to provide, among other things, certainty of the outcome of the vote conducted at the Shareholder Meeting, the Company and the Key Holders have agreed to provide for the future voting of the Shares and certain other matters, all as set forth below.

 

Now, Therefore, in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

AGREEMENT

 

1.

Voting.

 

1.1    Key Holder Shares. The Key Holders each agree to vote all Shares registered in their respective names or beneficially owned by them as of the date hereof and any and all other securities of the Company legally or beneficially acquired by each of the Key Holders after the date hereof (hereinafter collectively referred to as the “Key Holder Shares”) and in accordance with, the provisions of this Agreement.

 

 

1.2    Election of Directors. On all matters relating to the election of directors of the Company at the Shareholder Meeting, the Key Holders agree to vote all Key Holder Shares held by them so as to elect as members of the board of directors of the Company (the “Board”) the following individual: Richard K. Coleman, Jr or such other replacement as may be selected by STRR in accordance with the Exchange Agreement and Board Designation Agreement, to serve as director until the next annual meeting or special meeting of the shareholders of the Company in accordance with applicable law and the Articles and Bylaws, and all subsequent annual meetings thereof in accordance with the Board Designation Agreement.

 

1.3    Approval of Additional Common Shares. The Key Holders agree to vote all Key Holder Shares held by them for the approval of the conversion and issuance of common stock underlying the Convertible Preferred Shares, as defined in the Exchange Agreement, at a Shareholder Meeting at which such item is voted upon.

 

1.4    No Liability for Election of Directors. None of the parties hereto and no officer, director, stockholder, partner, employee or agent of any party makes any representation or warranty as to the fitness or competence of the persons identified in Section 1.2 above to serve on the Board by virtue of such party’s execution of this Agreement or by the act of such party in voting for such person pursuant to this Agreement.

 

1.5    The Shareholder Meeting.

 

(a)    The Key Holders hereby agree to vote their Key Holder Shares at the Shareholder Meeting in favor of and to approve the amendments, if such become necessary to facilitate the terms above, to the Articles and Bylaws as recommended by the Board, including but not limited to: (i) an increase in the number of shares of Common Stock authorized for issuance by the Company, whether through a reverse split, increase in authorized shares or otherwise if such become necessary, (ii) an increase in the minimum required ownership of shares of Common Stock by a holder to call a meeting of shareholders is such becomes necessary, (iv) reduce the percentage of shares required to further amend the Articles if such becomes necessary, (v) to provide that the number of directors of the Company shall be a fixed number, and (vi) such other matters as deemed appropriate by the Board.

 

2.	Successors, Rights and Proxy.

 

2.1    Successors. The provisions of this Agreement shall be binding upon the successors in interest to the Key Holder (which includes any beneficial owners of such Key Holder) of the Key Holder Shares which would not include any bona fide transfer or sale to a third party of such Key Holder Shares.

 

2.2    Other Rights. Except as provided by this Agreement or any other agreement entered by or on behalf of the Key Holders, each Key Holder shall exercise the full rights of a holder of capital stock of the Company with respect to the Key Holder Shares

 

2.3    Irrevocable Proxy. To secure the Key Holder’s obligations to vote the Key Holder Shares in accordance with this Agreement, each Key Holder hereby appoints the Chief Executive Officer and Chief Financial Officer or any of them from time to time, or their designees, as such Key Holder’s true and lawful proxy and attorney, with the power to act alone and with full power of substitution, to vote all of such Key Holder’s Key Holder Shares as set forth in this Agreement and to execute all appropriate instruments consistent with this Agreement on behalf of such Key Holder if, and only if, such Key Holder fails to vote all of such Key Holder’s Key Holder Shares or execute such other instruments in accordance with the provisions of this Agreement within five (5) days of the Company’s or any other party’s written request for such Key Holder’s vote, consent or signature. The proxy and power granted by each Key Holder pursuant to this Section 2.3 are coupled with an interest and are given to secure the performance of such party’s duties under this Agreement. Each such proxy and power will be irrevocable for the term hereof. The proxy and power, so long as any party hereto is an individual, will survive the death, incompetency and disability of such party or any other individual holder of the Shares and, so long as any party hereto is an entity, will survive the merger or reorganization of such party or any other entity holding any Key Holder Shares.

 

 

3.	Termination.

 

3.1    This Agreement shall continue in full force and effect from the date hereof through the later of (x) the date of the Shareholder Meeting, including any adjournments thereof, at which the matters described in Section 1.3 above have been approved and (y) that STRR is no longer entitled to designate a member of the Board pursuant to the Board Designation Agreement.

 

4.	Miscellaneous.

 

4.1    Ownership. Each Key Holder represents and warrants to the Company that (a) such Key Holder now owns the Key Holder Shares listed on Exhibit A hereto, free and clear of liens or encumbrances (other than, the Lock-Up Agreements, the Contingent Liquidation of Shares agreement, encumbrances created by any pledge of Shares in favor of the Company, or under applicable securities laws), and has not, prior to or on the date of this Agreement, executed or delivered any proxy or entered into any other voting agreement or similar arrangement other than one which has expired or has been terminated prior to the date hereof, and (b) such Key Holder has full power and capacity to execute, deliver and perform this Agreement, which has been duly executed and delivered by, and evidences the valid and binding obligation of, such Key Holder enforceable in accordance with its terms.

 

4.2    Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware and shall be binding upon the parties hereto in the United States and worldwide. Each of the parties hereto irrevocably consents to the exclusive jurisdiction and venue of any federal or state court within New York, NY in connection with any matter based upon or arising out of this Agreement or the matters contemplated herein (whether based on breach of contract, tort, breach of duty or any other theory), agrees that process may be served upon it in any manner authorized by the laws of the State of New York for such persons and waives and covenants not to assert or plead any objection that they might otherwise have to jurisdiction, venue and such process. Each party agrees not to commence any legal proceedings based upon or arising out of this Agreement or the matters contemplated herein (whether based on breach of contract, tort, breach of duty or any other theory) except in such courts.

 

4.3    Amendment or Waiver. This Agreement may be amended or modified (or provisions of this Agreement waived) only upon the written consent of the Company and a majority in interest of the Key Holders. Any amendment or waiver so effected shall be binding upon the Company, each of the parties hereto and any assignee of any such party. Notwithstanding the foregoing, this Agreement and the exhibits hereto may be amended to add additional holders of Common Stock as “Key Holders” hereunder by an instrument in writing signed by the Company and such holders.

 

4.4    Severability. In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

 

4.5    Successors and Assigns. The provisions hereof shall inure to the benefit of, and be binding upon, the parties hereto and their respective successors, assigns, heirs, executors and administrators and other legal representatives.

 

 

4.6    Additional Shares. In the event that subsequent to the date of this Agreement any shares or other securities are bought by, issued on, or in exchange for, any of the Key Holder Shares by reason of any stock dividend, stock split, combination of shares, reclassification or the like, such shares or securities shall be deemed to be Key Holder Shares for purposes of this Agreement.

 

4.7    Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together shall constitute one instrument.

 

4.8    Waiver. No waivers of any breach of this Agreement extended by any party hereto to any other party shall be construed as a waiver of any rights or remedies of any other party hereto or with respect to any subsequent breach.

 

4.9    Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character on any party’s part of any breach, default or noncompliance under this Agreement or any waiver on such party’s part of any provisions or conditions of the Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement by law, or otherwise afforded to any party, shall be cumulative and not alternative.

 

4.10    Costs and Attorney’s Fees. In the event that any action, suit or other proceeding is instituted based upon or arising out of this Agreement or the matters contemplated herein (whether based on breach of contract, tort, breach of duty or any other theory), the prevailing party shall recover all of such party's costs (including, but not limited to expert witness costs) and reasonable attorneys' fees incurred in each such action, suit or other proceeding, including any and all appeals or petitions therefrom.

 

4.11    Notices. All notices required in connection with this Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written notification of receipt. All communications shall be sent to the address appearing on the books of the Company or at such other address or electronic mail address as such party may designate by 10 days advance written notice to the other parties hereto.

 

4.12    Entire Agreement. This Agreement and the Exhibits hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any oral or written representations, warranties, covenants and agreements except as specifically set forth herein. Each party expressly represents and warrants that it is not relying on any oral or written representations, warranties, covenants or agreements outside of this Agreement.

 

[THIS SPACE INTENTIONALLY LEFT BLANK]

 

 

In Witness Whereof, the parties hereto have executed this Voting Agreement as of the date first above written.

COMPANY:
ENSERVCO CORPORATION
By:	/s/ Richard Murphy
	Name:	Richard Murphy
	Title:	Chairman and Chief Executive Officer

 

KEY HOLDERS:
CROSS RIVER PARTNERS, LP
By:	/s/ Richard Murphy
	Name:	Richard Murphy
	Title:	General Partner

 

 

/s/ Richard Murphy
Richard Murphy
/s/ Mark Patterson
Mark Patterson
/s/ Robert Herlin
Robert Herlin
/s/ William Jolly
William Jolly
/s/ Kevin Chesser
Kevin Chesser

 

 

 

Signature Page to
Shareholder Agreement

 

 

Exhibit A

 

LIST OF KEY HOLDERS AND KEY HOLDER SHARES

 

Name of Beneficial Owner	Amount and Nature of Beneficial Ownership
Cross River Partners, L.P.	14,895,422
Richard Murphy	457,664
Mark Patterson	345,000
Kevin Chesser	396,847
Robert Herlin	445,637
William Jolly	445,303
Marc A. Kramer	0

 

Exhibit 10.8

 

Execution Copy

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is made as of August 9, 2024, by and between Enservco Corporation, a Delaware corporation (the “Company”), and Star Equity Holdings, Inc., a Delaware corporation (including its successors and assigns, “Star”). The Company and the Holders are sometimes referred to herein individually as a “Party” and, collectively, as the “Parties”. Capitalized terms used but not defined herein shall have the meaning assigned to such term in the Share Exchange Agreement, dated as of the date hereof, by and between the Company and Star (the “Share Exchange Agreement”).         

 

WHEREAS, pursuant to, and subject to the terms and conditions of, the Share Exchange Agreement, the Company has agreed to sell to Star, and Star has agreed to purchase from the Company, (i) 9,023,035 newly issued shares of common stock, par value $0.001 per share, of the Company (the “Initial Purchased Shares”) representing 19.9% of the issued and outstanding equity interests in the Company, and (ii) 3,476,965 shares of 2% Cumulative Mandatorily Convertible Series A Convertible Preferred Stock convertible into 3,476,965 shares of newly issued common stock (upon conversion into common stock the “Converted Purchased Shares”) (collectively, the “Purchased Shares”), and after giving effect to, the closing of the transactions contemplated by the Share Exchange Agreement(the “Closing”) in exchange for an aggregate of 250,000 shares of Star’s Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share (the “Exchange Shares”);

 

WHEREAS, concurrently with the Closing, the Parties have agreed to enter into this Agreement, pursuant to which the Company will provide customary registration rights with respect to the Purchased Shares; and

 

WHEREAS, to induce the Parties to enter into the transactions contemplated by the Share Exchange Agreement, each of the Parties is required to deliver this Agreement, duly executed by each of the Parties, contemporaneously with the Closing.

 

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:

 

1.

Definitions.

 

Capitalized terms used and not otherwise defined herein that are defined in the Share Exchange Agreement shall have the meanings given such terms in the Share Exchange Agreement. As used in this Agreement, the following terms shall have the following meanings:

 

“Advice” shall have the meaning set forth in Section 6(c).

 

“Effectiveness Date” means, with respect to the Initial Registration Statement required to be filed hereunder, the sixtieth (60^th) calendar day following the Filing Date and with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 3(c), the thirtieth (30^th) calendar day following the date on which an additional Registration Statement is required to be filed hereunder; provided, however, that in the event the Company is notified by the SEC that one or more of the above Registration Statements will not be reviewed or is no longer subject to further review and comments, the Effectiveness Date as to such Registration Statement shall be the fifth Trading Day following the date on which the Company is so notified if such date precedes the dates otherwise required above, provided, further, if such Effectiveness Date falls on a day that is not a Trading Day, then the Effectiveness Date shall be the next succeeding Trading Day.

 

 

“Effectiveness Period” shall have the meaning set forth in Section 2(a).

 

“Event” shall have the meaning set forth in Section 2(d).

 

“Event Date” shall have the meaning set forth in Section 2(d).

 

“Filing Date” means, with respect to the Initial Registration Statement required hereunder, the fourtieth (40^th) calendar day following the date hereof and, with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 3(c), the earliest practical date on which the Company is permitted by SEC Guidance to file such additional Registration Statement related to the Registrable Securities.

 

“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.

 

“Indemnified Party” shall have the meaning set forth in Section 5(c).

 

“Indemnifying Party” shall have the meaning set forth in Section 5(c).

 

“Initial Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.

 

“Losses” shall have the meaning set forth in Section 5(a).

 

“Plan of Distribution” shall have the meaning set forth in Section 2(a).

 

“Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated by the SEC pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

“Registrable Securities” means (i) the Purchased Shares and (ii) any and all shares of Company common stock issued or issuable as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, any Purchased Shares, including, without limitation, by way of stock splits, stock dividends, stock combinations, recapitalizations or like occurrences. Registrable Securities shall cease to be Registrable Securities upon the earliest to occur of the following events: (1) such Registrable Securities have been sold pursuant to an effective Registration Statement; (2) such Registrable Securities have been sold by the Holders pursuant to Rule 144 (or other similar rule); (3) such Registrable Securities may be resold by the Holder holding such Registrable Securities without limitations as to volume or manner of sale pursuant to Rule 144; or (4) three (3) years after the date of this Agreement.

 

 

“Registration Statement” means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional registration statements contemplated by Section 2(c) or Section 3(c), including (in each case) the Prospectus, amendments and supplements to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in any such registration statement.

 

“Rule 144” means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such Rule.

 

“Rule 415” means Rule 415 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such Rule.

 

“Rule 424” means Rule 424 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such Rule.

 

“Selling Stockholder Questionnaire” shall have the meaning set forth in Section 3(a).

 

“SEC Guidance” means (i) any publicly available written or oral guidance of the SEC staff, or any comments, requirements or requests of the SEC staff and (ii) the Securities Act.

 

2.

Shelf Registration.

 

(a)         On or prior to each Filing Date, the Company shall prepare and file with the SEC a Registration Statement covering the resale of all of the Registrable Securities that are not then registered on an effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415. Each Registration Statement filed hereunder shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith, subject to the provisions of Section 2(e)). Subject to the terms of this Agreement, the Company shall use its best efforts to cause a Registration Statement filed under this Agreement (including, without limitation, under Section 3(c)) to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event no later than the applicable Effectiveness Date, and shall use its best efforts to keep such Registration Statement continuously effective under the Securities Act until the date that all Registrable Securities covered by such Registration Statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144, as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company’s transfer agent and the affected Holders (the “Effectiveness Period”). The Company shall telephonically request effectiveness of a Registration Statement as of 5:00 p.m. (New York City time) on a Trading Day. The Company shall immediately notify the Holders via e-mail of the effectiveness of a Registration Statement on the same Trading Day that the Company telephonically confirms effectiveness with the SEC, which shall be the date requested for effectiveness of such Registration Statement. The Company shall, by 9:30 a.m. (New York City time) on the Trading Day after the effective date of such Registration Statement, file a final Prospectus with the SEC as required by Rule 424.

 

 

(b)         Notwithstanding the registration obligations set forth in Section 2(a), if the SEC informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly inform each of the Holders thereof and use its commercially reasonable efforts to file amendments to the Initial Registration Statement as required by the SEC, covering the maximum number of Registrable Securities permitted to be registered by the SEC, on Form S-3 or such other form available to register for resale the Registrable Securities as a secondary offering, subject to the provisions of Section 2(e); with respect to filing on Form S-3 or other appropriate form, and subject to the provisions of Section 2(d) with respect to the payment of liquidated damages; provided, however, that prior to filing such amendment, the Company shall be obligated to use diligent efforts to advocate with the SEC for the registration of all of the Registrable Securities in accordance with the SEC Guidance, including without limitation, Compliance and Disclosure Interpretation 612.09.

 

(c)        Notwithstanding any other provision of this Agreement and subject to the payment of liquidated damages pursuant to Section 2(d), if the SEC or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the SEC for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced or eliminated to exclude any securities other than Registrable Securities. In the event of a cutback hereunder, the Company shall give the Holder at least three (3) Trading Days prior written notice along with the calculations as to such Holder’s allotment. In the event the Company amends the Initial Registration Statement in accordance with the foregoing, the Company will use its best efforts to file with the SEC, as promptly as allowed by SEC or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-3 or such other form available to register for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended.

 

 

(d)       Subject to Section 2(g), if: (i) the Initial Registration Statement is not filed on or prior to its Filing Date (if the Company files the Initial Registration Statement without affording the Holders the opportunity to review and comment on the same as required by Section 3(a) herein or the Company subsequent withdraws the filing of the Registration Statement, the Company shall be deemed to have not satisfied this clause as of the Filing Date (i)), or (ii) the Company fails to file with the SEC a request for acceleration of a Registration Statement in accordance with Rule 461 promulgated by the SEC pursuant to the Securities Act, within five Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Registration Statement will not be “reviewed” or will not be subject to further review, or (iii) prior to the effective date of a Registration Statement, the Company fails to file a pre-effective amendment and otherwise respond in writing to comments made by the SEC in respect of such Registration Statement within ten (10) calendar days after the receipt of comments by or notice from the SEC that such amendment is required in order for such Registration Statement to be declared effective, or (iv) a Registration Statement registering for resale all of the Registrable Securities is not declared effective by the SEC by the Effectiveness Date of the Initial Registration Statement (provided if the Registration Statement does not allow for the resale of Registrable Securities at prevailing market prices (i.e., only allows for fixed price sales), the Company shall have been deemed to have not satisfied this clause) or (v) after the effective date of a Registration Statement, and except as otherwise provided in Section 2(g), such Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities included in such Registration Statement, or the Holders are otherwise not permitted to utilize the Prospectus therein to resell such Registrable Securities, for more than ten (10) consecutive calendar days or more than an aggregate of fifteen (15) calendar days (which need not be consecutive calendar days) during any twelve (12)-month period (any such failure or breach being referred to as an “Event,” and for purposes of clauses (i) and (iv), the date on which such Event occurs, and for purpose of clause (ii) the date on which such five (5) Trading Day period is exceeded, and for purpose of clause (iii) the date which such ten (10) calendar day period is exceeded, and for purpose of clause (v) the date on which such ten (10) or fifteen (15) calendar day period, as applicable, is exceeded being referred to as “Event Date”), then, in addition to any other rights the Holders may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Holder an amount in-kind of additional common shares, as partial liquidated damages and not as a penalty, equal to (1) the product of (A) 20% multiplied by (B) the number of such Holder’s Registrable Securities that are not then covered by a Registration Statement that is then effective and available for use by such Holder, for each and every forty (40) day periods past the initial 100 days after the date of this Agreement (or 45 days after the date of the Agreement if the Company is notified that the Initial Registration Period will not be reviewed), which shares shall be deemed Purchased Shares and subsequently registered under the terms of this Agreement.

 

(e)         If Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on another appropriate form and (ii) undertake to register the Registrable Securities on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the SEC.

 

(f)         Notwithstanding anything to the contrary contained herein, in no event shall the Company be permitted to name any Holder or affiliate of a Holder as any Underwriter without the prior written consent of such Holder.

 

 

(g)        Notwithstanding any other provision of this Agreement, the Company may (a) delay filing or initial effectiveness of the Registration Statement or any amendment thereto, or (b) suspend the Holders’ use of any prospectus that is a part of the Registration Statement upon written notice to each Holder whose Registrable Securities are included in such Registration Statement (provided that in no event shall such notice contain any material non-public information regarding the Company) (in which event such Holder shall discontinue sales of Registrable Securities pursuant to such Registration Statement but may settle any then-contracted sales of Registrable Securities), in each case for a period of up to sixty (60) consecutive days, if the board of directors of the Company determines (i) that such delay or suspension is in the best interest of the Company and its stockholders generally due to a pending financing or other transaction involving the Company and that the disclosure of such pending financing or other transaction in any such prospectus would materially and adversely affect the Company’s ability to consummate such pending financing or other transaction, (ii) that such registration or offering would render the Company unable to comply with applicable securities laws or (iii) that such registration or offering would require disclosure of material information that the Company has a bona fide business purpose for preserving as confidential (any such period, a “Suspension Period”); provided, however, that in no event shall any Suspension Periods collectively exceed an aggregate of ninety (90) days in any 180-day period or exceed an aggregate of one hundred twenty (120) days in any 12-month period..

 

3.

Registration Procedures.

 

In connection with the Company’s registration obligations hereunder, the Company shall:

 

(a)        Not less than five (5) Trading Days prior to the filing of each Registration Statement and not less than one (1) Trading Day prior to the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference), the Company shall (i) furnish to each Holder copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review of such Holders, and (ii) cause its officers and directors, counsel and independent registered public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to each Holder, to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of a majority of the Registrable Securities shall reasonably object in good faith, provided that, the Company is notified of such objection in writing no later than five (5) Trading Days after the Holders have been so furnished copies of a Registration Statement or one (1) Trading Day after the Holders have been so furnished copies of any related Prospectus or amendments or supplements thereto. Each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex A (a “Selling Stockholder Questionnaire”) on a date that is not less than two (2) Trading Days prior to the Filing Date or by the end of the fourth (4^th) Trading Day following the date on which such Holder receives draft materials in accordance with this Section.

 

 

(b)       (i) Prepare and file with the SEC such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the SEC such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any comments received from the SEC with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to the Holders true and complete copies of all correspondence from and to the SEC relating to a Registration Statement (provided that, the Company shall excise any information contained therein which would constitute material non-public information regarding the Company or any of its Subsidiaries), and (iv) comply in all material respects with the applicable provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.

 

(c)         If during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of the number of shares of Company common stock then registered in a Registration Statement, then the Company shall file as soon as reasonably practicable, but in any case prior to the applicable Filing Date, an additional Registration Statement covering the resale by the Holders of not less than the number of such Registrable Securities.

 

(d)         Notify the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible (and, in the case of (i)(A) below, not less than one (1) Trading Day prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one (1) Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed, (B) when the SEC notifies the Company whether there will be a “review” of such Registration Statement and whenever the SEC comments in writing on such Registration Statement, and (C) with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC or any other federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information, (iii) of the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (vi) of the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material and that, in the determination of the Company, makes it not in the best interest of the Company to allow continued availability of a Registration Statement or Prospectus; provided, however, that in no event shall any such notice contain any information which would constitute material, non-public information regarding the Company or any of its Subsidiaries, and the Company agrees that the Holders shall not have any duty of confidentiality to the Company or any of its Subsidiaries and shall not have any duty to the Company or any of its Subsidiaries not to trade on the basis of such information.

 

 

(e)         Use its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.

 

(f)         Furnish to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the SEC, provided that any such item which is available on the EDGAR system (or successor thereto) need not be furnished in physical form.

 

(g)        Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(d).

 

(h)         Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the Registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or “blue sky” laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement, provided that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction.

 

(i)         If requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by the Share Exchange Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holder may request.

 

 

(j)         Upon the occurrence of any event contemplated by Section 3(d), as promptly as reasonably possible under the circumstances taking into account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holders in accordance with clauses (iii) through (vi) of Section 3(d) above to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus. The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this Section 3(j) to suspend the availability of a Registration Statement and Prospectus, subject to the payment of partial liquidated damages otherwise required pursuant to Section 2(d), for a period not to exceed 60 calendar days (which need not be consecutive days) in any 12-month period.

 

(k)        Otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under the Securities Act and the Exchange Act, including, without limitation, Rule 172 under the Securities Act, file any final Prospectus, including any supplement or amendment thereof, with the SEC pursuant to Rule 424 under the Securities Act, promptly inform the Holders in writing if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Holders are required to deliver a Prospectus in connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder.

 

(l)          The Company shall use its best efforts to maintain eligibility for use of Form S-3 (or any successor form thereto) for the registration of the resale of Registrable Securities.

 

(m)       The Company shall (i) cause all the Registrable Securities to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange, or (ii) secure designation and quotation of all the Registrable Securities on the Trading Market (as defined in the Share Exchange Agreement). The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section.

 

(n)         The Company shall cooperate with the Holders to facilitate the timely preparation and delivery of the Registrable Securities (not bearing any restrictive legend) either by DWAC, DRS, or in certificated form if DWAC or DRS is unavailable, to be offered pursuant to any registration statement and enable such Registrable Securities to be in such denominations or amounts as the Investor may reasonably request and registered in such names as such Holder may request.

 

(o)        The Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Company common stock beneficially owned by such Holder and, if required by the SEC, the natural persons thereof that have voting and dispositive control over the shares. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration of the Registrable Securities solely because any Holder fails to furnish such information within three Trading Days of the Company’s request, any liquidated damages that are accruing at such time as to such Holder only shall be tolled and any Event that may otherwise occur solely because of such delay shall be suspended as to such Holder only, until such information is delivered to the Company.

 

 

(p)         The Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Holders of Registrable Securities pursuant to any registration statement.

 

4.            Registration Expenses. All fees and expenses incident to the performance of or compliance with, this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made with the SEC, (B) with respect to filings required to be made with any Trading Market on which the Company common stock is then listed for trading, and (C) in compliance with applicable state securities or “blue sky” laws reasonably agreed to by the Company in writing (including, without limitation, fees and disbursements of counsel for the Company in connection with “blue sky” qualifications or exemptions of the Registrable Securities), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions of any Holder or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders.

 

 

5.

Indemnification.

 

(a)         Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, members, partners, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Company common stock), investment advisors and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus or in any amendment or supplement thereto, or (ii) in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(c). The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified person and shall survive the transfer of any Registrable Securities by any of the Holders in accordance with Section 6(f).

 

(b)         Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company expressly for inclusion in such Registration Statement or such Prospectus or (ii) to the extent, but only to the extent, that such information relates to such Holder’s information provided in the Selling Stockholder Questionnaire or the proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus or in any amendment or supplement thereto. In no event shall the liability of a selling Holder be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such Holder in connection with any claim relating to this Section 5 and the amount of any damages such Holder has otherwise been required to pay by reason of such untrue statement or omission) received by such Holder upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation.

 

 

(c)        Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof, provided that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have materially and adversely prejudiced the Indemnifying Party.

 

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

 

Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party, provided that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) not to be entitled to indemnification hereunder.

 

(d)         Contribution. If the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys’ or other fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

 

 

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. In no event shall the contribution obligation of a Holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such Holder in connection with any claim relating to this Section 5 and the amount of any damages such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.

 

The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

 

6.

Miscellaneous.

 

(a)        Remedies. In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. Each of the Company and each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.

 

(b)        No Piggyback on Registrations; Neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in any Registration Statements other than the Registrable Securities.

 

(c)       Discontinued Disposition. By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company agrees and acknowledges that any periods during which the Holder is required to discontinue the disposition of the Registrable Securities hereunder shall be subject to the provisions of Section 2(d).

 

 

(d)        Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of 50.1% or more of the then outstanding Registrable Securities (for purposes of clarification, this includes any Registrable Securities issuable upon exercise or conversion of any Security), provided that, if any amendment, modification or waiver disproportionately and adversely impacts a Holder (or group of Holders), the consent of such disproportionately impacted Holder (or group of Holders) shall be required. If a Registration Statement does not register all of the Registrable Securities pursuant to a waiver or amendment done in compliance with the previous sentence, then the number of Registrable Securities to be registered for each Holder shall be reduced pro rata among all Holders and each Holder shall have the right to designate which of its Registrable Securities shall be omitted from such Registration Statement. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of a Holder or some Holders and that does not directly or indirectly affect the rights of other Holders may be given only by such Holder or Holders of all of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the first sentence of this Section 6(d). No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration also is offered to all of the parties to this Agreement.

 

(e)        Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth in the Share Exchange Agreement.

 

(f)         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 Holder. The Company may not assign (except by merger) its rights or obligations hereunder without the prior written consent of all of the Holders of the then outstanding Registrable Securities. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under Section 9.2 of the Share Exchange Agreement.

 

(g)        No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Except as set forth on Schedule 6(g), neither the Company nor any of its Subsidiaries has previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied in full.

 

(h)       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 e-mail delivery of a “.pdf” format data file or any electronic signature complying with the U.S. federal ESIGN Act of 2000 (e.g., www.docusign.com), 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 “.pdf” signature page were an original thereof.

 

 

(i)         Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined in accordance with the provisions of the Share Exchange Agreement.

 

(j)          Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.

 

(k)         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.

 

(l)          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.

 

(m)       Independent Nature of Holders’ Obligations and Rights. The obligations of each Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Holders are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated by this Agreement or any other matters, and the Company acknowledges that the Holders are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or transactions. Each Holder shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose. The use of a single agreement with respect to the obligations of the Company contained was solely in the control of the Company, not the action or decision of any Holder, and was done solely for the convenience of the Company and not because it was required or requested to do so by any Holder. It is expressly understood and agreed that each provision contained in this Agreement is between the Company and a Holder, solely, and not between the Company and the Holders collectively and not between and among Holders.

 

 

[Signature Pages Follow]

 

 

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

 

 

	ENSERVCO CORPORATION
	By:	/s/ Mark Patterson
		Name:	Mark Patterson
		Title:	Chief Financial Officer

 

 

[SIGNATURE PAGE OF HOLDER FOLLOWS]

 

 

[SIGNATURE PAGE OF HOLDER TO REGISTRATION RIGHTS AGREEMENT]

 

 

Name of Holder:

Star Equity Holdings, Inc.

 

Signature of Authorized Signatory of Holder:

/s/ Richard K. Coleman, Jr.

 

Name of Authorized Signatory:

Richard K. Coleman, Jr.

 

Title of Authorized Signatory:

CEO

 

 

 

 

 

 

Exhibit 10.9

 

Execution Copy

 

NOTE PURCHASE AGREEMENT

 

This NOTE PURCHASE AGREEMENT (this “Agreement”) is made effective as of August 9, 2024 (the “Effective Date”), by and between Enservco Corporation, a Delaware corporation (the “Company”) and Star Equity Holdings, Inc., a Delaware corporation (the “Investor”).

 

For and in consideration of the foregoing and the mutual promises and covenants herein contained, the Company and the Investor agree as follows:

 

1.        Purchase of Note. Subject to the terms and conditions of this Agreement, the Investor agrees to purchase, and the Company agrees to sell and issue to the Investor, a promissory note, in substantially the form attached hereto as Exhibit A (the “Note”), in exchange for one-million dollars ($1,000,000) (the “Purchase Price”). All capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Note. The terms of the Note are incorporated herein by reference.

 

2.        Closing; Closing Mechanics.

 

2.1.         Closing. The closing of the sale and issuance of the Note (the “Closing”) to the Investor shall take place on the Effective Date, or at such other time as the Company and the Investor may mutually agree (such date is hereinafter referred to as the “Closing Date”).

 

2.2.       Closing Deliverables. At the Closing (a) the Investor shall deliver to the Company the Purchase Price (the “Consideration Amount”) via wire transfer of immediately available funds to an account designated by the Company, (b) the Company shall issue and deliver to the Investor, or its affiliate, an executed Note in favor of such Investor in the principal amount equal to the Consideration Amount, (c) the Investor shall deliver a countersigned Note, accepting and acknowledging the delivery of the Note, and (d) the Company shall record the Investor as the owner of the applicable Note in the Company’s books and records.

 

3.        Representations and Warranties of Company. The Company represents and warrants to the Investor that the following representations and warranties are true and complete as of the Effective Date.

 

3.1.        Organization and Qualification. The Company is a corporation duly incorporated, validly existing and in good standing under the Laws of Delaware. The Company has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company is duly qualified or licensed and in good standing to conduct business in each jurisdiction in which the nature of the business conducted by it makes such qualification or licensing necessary, except for any deviations from any of the foregoing that would not reasonably be expected to have a material adverse effect on the Company

 

3.2.         Authorization; Enforcement. The Company has all requisite corporate power and authority to execute and deliver this Agreement, to issue and sell the Note, and to perform the Company’s obligations hereunder and under the Note, and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Note and the consummation of the transactions contemplated hereby and thereby (a) have been duly and validly authorized by the board of directors of the Company (the “Board’) and (b) no other corporate proceedings, other than as set forth elsewhere in the Agreement, on the part of the Company, are necessary to authorize the execution and delivery of this Agreement and the Note or to consummate the transactions contemplated hereby and thereby. This Agreement and the Note have duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery of this Agreement and the Note by the Investor hereto and thereto, constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent that enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization and moratorium laws and other laws of general application affecting the enforcement of creditors’ rights generally or by any applicable statute of limitation or by any valid defense of set-off or counterclaim, and the fact that equitable remedies or relief (including the remedy of specific performance) are subject to the discretion of the court from which such relief may be sought.

 

 

3.3.         Subsidiaries. The Company owns, directly or indirectly, all of the capital shares or other equity securities of each subsidiary (“Subsidiary”). All of the outstanding equity securities of each Subsidiary of the Company are duly authorized and validly issued, fully paid and non-assessable (if applicable), and were offered, sold and delivered in compliance with all applicable securities Laws, and owned by the Company or one of its subsidiaries free and clear of all liens (other than those, if any, imposed by such Subsidiary’s organizational documents). There are no contracts to which the Company or any of its affiliates is a party or bound with respect to the voting (including voting trusts or proxies) of the shares or other equity interests of any Subsidiary of the Company other than the organizational documents of any such Subsidiary. There are no outstanding or authorized options, warrants, rights, agreements, subscriptions, convertible securities or commitments to which any Subsidiary of the Company is a party or which are binding upon any Subsidiary of the Company providing for the issuance or redemption of any shares or other equity interests in or of any Subsidiary of the Company. There are no outstanding equity appreciation, phantom equity, profit participation or similar rights granted by any Subsidiary of the Company. No Subsidiary of the Company has any limitation on its ability to make any distributions or dividends to its equity holders, whether by contract, order or applicable law. None of the Company or its subsidiaries is a participant in any joint venture, partnership or similar arrangement. There are no outstanding material contractual obligations of the Company or its subsidiaries to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other person (other than loans to customers in the ordinary course of business).

 

3.4.        Compliance with Laws. The Company is not or has not been in material conflict or non-compliance with, or in material default or violation of, nor has The Company received, since July 31, 2024, any written or, to the knowledge of the Company, oral notice of any material conflict or non-compliance with, or material default or violation of, any applicable Laws by which it or any of its properties, assets, employees, business or operations are or were bound or affected.

3.5.        Litigation. 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”), except as disclosed in the SEC Reports, as defined in Section 3.7 of this Agreement. 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, which could result in a Material Adverse Effect. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the United States Securities and Exchange Commission (the “SEC”) involving the Company or any current or former director or officer of the Company. The SEC 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 Exchange Act of 1934 (the “Exchange Act”) or the Securities Act of 1933 (the “Securities Act”).

 

 

3.6.        Governmental Approvals. No consent of or with any governmental authority on the part of the Company is required to be obtained or made in connection with the execution, delivery or performance by the Company of this Agreement or the Note or the consummation by the Company of the transactions contemplated hereby or thereby, other than (a) such filings as may be required in any jurisdiction where the Company is qualified or authorized to conduct business as a foreign corporation in order to maintain such qualification or authorization, (b) such filings as contemplated by this Agreement and the Note, (c) any filings required with NYSE American with respect to the transactions contemplated by this Agreement and the Note, (d) applicable requirements, if any, of the Securities Act, the Exchange Act, and/ or any state “blue sky” securities laws, and the rules and regulations thereunder, and (e) where the failure to obtain or make such consents or to make such filings or notifications, would not reasonably be expected to have a material adverse effect on the Company.

 

3.7.        Non-Contravention. The execution and delivery by the Company of this Agreement and the Note, and the consummation by the Company of the transactions contemplated hereby and thereby and compliance by the Company with any of the provisions hereof and thereof, will not (a) conflict with or violate any provision of the Company’s organizational documents, (b) subject to obtaining any consents from governmental authorities referred to in Section 3.5 hereof, and any condition precedent to such consent or waiver having been satisfied, conflict with or violate any law, order or consent applicable to the Company or any of its properties or assets, or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by the Company under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien upon any of the properties or assets of the Company under, (viii) give rise to any obligation to obtain any third party consent or provide any notice to any Person or (ix) give any person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of, any material contract, except for any deviations from any of the foregoing clauses (b)-(c) that would not reasonably be expected to have an adverse effect on the Company.

 

3.8.         Financial Statements.

 

(a)

The Company, since May 15, 2024, has filed all forms, reports, schedules, statements, prospectuses and other documents required to be filed or furnished by the Company with the SEC under the Securities Act and/or the Exchange Act, together with any amendments, restatements or supplements thereto. Except to the extent otherwise available on the SEC’s web site through EDGAR, the Company has delivered to the Investor copies in the form filed with the SEC of all of the following: (i) the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, (ii) the Company’s Quarterly Reports on Form 10-Q for each fiscal quarter in the fiscal year ended December 31, 2023, (iii) all other forms, reports, registration statements, prospectuses and other documents (other than preliminary materials) filed by the Company with the SEC since May 15, 2024 (the forms, reports, registration statements, prospectuses and other documents referred to in clauses (i), (ii) and (iii) above, whether or not available through EDGAR, are, collectively, the “Enservco SEC Reports”) and (iv) all certifications and statements required by (A) Rules 13a-14 or 15d-14 under the Exchange Act, and (B) 18 U.S.C. §1350 (Section 906 of SOX) with respect to any report referred to in clause (i) above (collectively, the “Enservco Public Certifications”). The Company SEC Reports (y) were prepared in all material respects in accordance with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder and (z) did not, as of their respective effective dates (in the case of the Company SEC Reports that are registration statements filed pursuant to the requirements of the Securities Act) and at the time they were filed with the SEC (in the case of all other Company SEC Reports) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The Company Public Certifications are each true as of their respective dates of filing. As of the date of this Agreement, the shares of the Company common stock are listed on NYSE American.

 

 

(b)

The financial statements and notes contained or incorporated by reference in the Company SEC Reports (the “Enservco Financials”) fairly present in all material respects the financial position and the results of operations, changes in shareholders’ equity, and cash flows of the Company at the respective dates of and for the periods referred to in such financial statements, all in accordance with (i) GAAP methodologies applied on a consistent basis throughout the periods involved and (ii) Regulation S-X or Regulation S-K, as applicable (except as may be indicated in the notes thereto and for the omission of notes and audit adjustments in the case of unaudited quarterly financial statements to the extent permitted by Regulation S-X or Regulation S-K, as applicable).

 

(c)

Except as and to the extent reflected or reserved against in the Enservco Financials, the Company has not incurred any liabilities or obligations of the type required to be reflected on a balance sheet in accordance with GAAP that is not adequately reflected or reserved on or provided for in the Enservco Financials, other than Liabilities of the type required to be reflected on a balance sheet in accordance with GAAP that have been incurred in the ordinary course of business.

 

3.9.        Offering. Assuming the accuracy of the representations and warranties of the Investor contained in Section 4 hereof, the offer, issue, and sale of the Note are and will be exempt from the registration and prospectus delivery requirements of the Securities Act, and have been registered or qualified (or are exempt from registration and qualification) under the registration, permit, or qualification requirements of all applicable state securities laws.

 

3.10.       Use of Proceeds. The Company will use the proceeds of sale and issuance of the Note towards the acquisition of the Membership Interests of Buckshot Trucking, LLC and shall not be used to repay existing debt, subordinated or senior, of the Company.

 

3.11.       Brokers and Finders. No person or entity acting on behalf or under the authority of the Company or any of its Affiliates is or will be entitled to any broker’s, finder’s, or similar fee or commission in connection with the transactions contemplated by this Agreement.

 

3.12.      Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that it has not provided any of the Investors or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information which is not otherwise disclosed in the SEC Reports. The Company understands and confirms that the Investors will rely on the foregoing representation in effecting the transactions contemplated by this Agreement.

 

4.        Representations and Warranties of the Investor. The Investor represents and warrants to the Company that the following representations and warranties are true and complete.

 

 

4.1.        Organization. The Investor is duly organized or incorporated (as applicable), validly existing and in good standing under the laws of the state or country in which it is organized or incorporated (as applicable) and is authorized and qualified to become a holder of the Note, the person signing this Agreement on behalf of such entity has been duly authorized to execute and deliver this Agreement, and the acquisition of the Note by the Investor and the consummation by such Investor of the transactions contemplated hereby have been duly authorized by all necessary action to be taken on the part of such Investor.

 

4.2.         Authorization. The execution, delivery and performance of this Agreement and the Note by the Investor and the consummation by the Investor of the transactions contemplated hereby are within the powers of the Investor and have been duly authorized by all necessary individual, corporate, partnership or limited liability company action, as appropriate, on the part of the Investor. This Agreement and the Note constitute valid and binding agreements of the Investor, and, assuming the due execution and delivery of this Agreement and the Note by each other person or entity party thereto, enforceable against the Investor in accordance with its respective terms, subject to: (i) applicable bankruptcy, insolvency, reorganization and moratorium laws, (ii) other laws of general application affecting the enforcement of creditors’ rights generally and general principles of equity, (iii) the discretion of the court before which any proceeding therefor may be brought, and (iv) by federal or state securities laws or by public policy of rights to indemnification. All action required for the lawful execution and delivery of this Agreement and the Note has been taken.

 

4.3.         Acquisition of the Note for Investment. The Investor is acquiring the Note for its own account for investment purposes only and not with a view to or for the purpose of distributing or reselling the Note or any part thereof or interest therein, without prejudice, however, to the Investor’s right, subject to the provisions of this Agreement and the Note and in accordance with all applicable laws, at all times to sell or otherwise dispose of all or any part of such Note as otherwise permitted hereunder. The Investor is not acting jointly or in concert with any other person or entity for the purposes of acquiring the Note. The Investor has no contract, undertaking, agreement or arrangement with any person or entity to sell or otherwise transfer the Note to any such person or entity or to have any such person or entity sell the Note on the Investor’s behalf.

 

4.4.        Ability of the Investor to Bear Risk of Investment. The Investor acknowledges that the purchase of the Note is a highly speculative investment involving a high degree of risk, and the Investor is able to bear the economic risk of an investment in the Note and is able to afford a complete loss of such investment (i.e., the Purchase Price). The Investor has such financial and business knowledge and experience that he, she or it is capable of evaluating the risks and merits of this investment, and the Investor has had an opportunity to ask any questions and obtain any additional information concerning the Company.

 

4.5.         Accredited Investor. The Investor is an “accredited investor” as that term is defined in Rule 501 of Regulation D promulgated under the Securities Act.

 

4.6.        No Agency Review. The Investor acknowledges and understands that no U.S. federal or state agency, including the U.S. Securities and Exchange Commission (the “SEC”) or the securities commission or authority of any state, has approved or disapproved the Note, passed upon or endorsed the merits of the offering of the Note, or made any finding or determination as to the fairness or fitness of the Note for public sale.

 

 

4.7.       Professional Advice. The Investor has relied upon the advice of the Investor’s legal counsel and/or accountants and/or other financial advisors with respect to tax and other considerations relating to the purchase of the Note. The Investor is not relying upon the Company with respect to the economic considerations involved to make an investment decision in the Note. Nothing in this Section 4, including the foregoing sentence, limits or modifies the representations and warranties of the Company in Section 3, or the right of the Investor to rely thereon.

 

4.8.         No Intent to Transfer. The Investor is not aware of any occurrence, event or circumstance upon the happening of which the Investor intends to transfer or sell the Note and the Investor does not have any present intention to transfer or sell the Note.

 

4.9.         Further Limitations on Disposition. Without in any way limiting the representations set forth above, the Investor further agrees not to make any disposition of all or any portion of the Note unless and until:

 

(a)    There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or

 

(b)    The Investor shall have notified the Company of the proposed disposition and furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by the Company, the Investor shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration under the Securities Act or any applicable state securities laws; provided that no such opinion shall be required for dispositions in compliance with Rule 144 under the Act, except in unusual circumstances.

 

(c)    Notwithstanding the provisions of paragraphs (a) and (b) above, no such registration statement or opinion of counsel shall be necessary for a transfer by the Investor to a partner (or retired partner) or member (or retired member) of the Investor in accordance with partnership or limited liability company interests, or transfers by gift, will or intestate succession to any spouse or lineal descendants or ancestors, if all transferees agree in writing to be subject to the terms hereof to the same extent as if they were the Investor hereunder.

 

4.10.      Tax Consequences. The investment in the Note may have tax consequences under applicable taxation laws, that it is the sole responsibility of the Investor to determine and assess such tax consequences as may apply to the Investor’s particular circumstances, and the Investor has not received and is not relying on the Company for any tax advice whatsoever.

 

5.        Indemnity.

 

5.1.       The Investor agrees to indemnify and hold harmless the Company, its Affiliates and its members, governors, managers, officers, employees and consultants from and against any and all loss, liability, claim, damage and expense whatsoever (including but not limited to any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any litigation or any claim commenced or threatened) arising out of or based upon any false or misleading representation or warranty made by such Investor hereunder, misinformation, breach or failure by such Investor herein or hereunder or under any other document furnished or delivered by such Investor to any of the foregoing indemnified persons in connection with such Investor’s investment in the Company.

 

 

5.2.       The Company agrees to indemnify and hold harmless the Investor and, as applicable, their respective Affiliates and shareholders, directors and officers from and against any and all loss, liability, claim, damage and expense whatsoever (including but not limited to any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any litigation or any claim commenced or threatened) arising out of or based upon any false or misleading representation or warranty made by the Company hereunder, misinformation, breach or failure by the Company herein or hereunder or under any other document furnished or delivered by the Company to any of the foregoing indemnified persons in connection with the applicable Investor’s investment in the Company.

 

6.        Miscellaneous.

 

6.1.       Amendment; Waiver. No provision of this Agreement may be waived or amended except in a written instrument signed by the Company and the Investor. Except as otherwise provided in the Note, any provision of the Note may be amended or waived by the written consent of the Company and the Investor. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.

 

6.2.         Survival of Representations and Warranties. All representations, warranties and agreements contained herein or made in writing by or on behalf of any party to this Agreement in connection herewith shall survive the execution and delivery of this Agreement.

 

6.3.         Successors and Assigns; No Third Party. All covenants and agreements in this Agreement contained by or on behalf of the parties hereto shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.

 

6.4.         Governing Law. This Agreement and the Note shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflicts of law principles.

 

6.5.         Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

6.6.         Headings. The headings used in this Agreement are for reference and convenience only and shall not affect the construction or interpretation of this Agreement.

 

6.7.         Notices. Unless otherwise provided, any notice, other communication or deliveries required or permitted under this Agreement shall be given in writing and by electronic mail and shall be deemed effectively given (i) upon personal delivery to the party to be notified, (ii) four (4) days after deposit with the United States Post Office, by registered or certified mail, postage prepaid, (iii) one (1) day after deposit with a reputable overnight courier service and addressed to the party to be notified, or (iv) upon confirmation of receipt of a successful electronic mail transmission; provided, however, that all the times in (ii) and (iii) shall be increased by three (3) days in the event that notice is being sent internationally. The addresses for such notices and communications shall be as follows, or at such other address as the parties may designate in writing by delivering notice of such change of address to the other party:

 

If to the Company:

Enservco Corporation 14133 Country Road 9 ½ Longmont, CO 80504 Attention: Mark Patterson, Chief Financial Officer Email: mpatterson@enservco.com

 

 

	With a copy (which shall not constitute notice) to:
	Maslon LLP 3300 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402 Attention: Douglas T. Holod Email: doug.holod@maslon.com
If to the Investor:	As indicated on Schedule A

 

6.8.         Entire Agreement. This Agreement and the Note contain the entire agreement among the parties with respect to the subject matter hereof and supersede all prior and contemporaneous arrangements or understandings with respect thereto.

 

6.9.        Severability. If any term or provision of this Agreement is held to be invalid, illegal or unenforceable under applicable law, such term(s) or provision(s) shall be excluded from this Agreement, and the balance of this Agreement shall be interpreted as if such term(s) or provision(s) were so excluded and shall be enforceable in accordance with its terms.

 

6.10.       Fees and Expenses. Except as otherwise provided herein, each of the parties hereto shall pay its own fees and expenses, including attorney fees, in connection with the transactions contemplated by this Agreement.

 

6.11.      Confidentiality. Each party hereto agrees that, except (i) with the prior written permission of the other party or (ii) as required by law, regulation, rule, court order or subpoena, it shall at all times keep confidential and not divulge, furnish or make accessible to anyone any confidential information, knowledge or data concerning or relating to the business or financial affairs of the other party to which such party has been or shall become privy by reason of this Agreement, discussions or negotiations relating to this Agreement, the performance of its obligations hereunder or the Note purchased hereunder (“Confidential Information”), unless such Confidential Information (a) is known or becomes known to the public in general (other than as a result of a breach of this Section 7.15 by such party), (b) is or has been independently developed or conceived by such party without use of the other party’s Confidential Information, or (c) is or has been made known or disclosed to such party by a third party without a breach of any obligation of confidentiality such third party may have to the disclosing party. Notwithstanding anything to the contrary herein, (i) the Company may disclose the terms of the sale of the Note and the identity of the Investor as required by law or regulation, (ii) the Investor may disclose Confidential Information to: (w) the other Investors, (x) its respective attorneys, accountants, consultants, and other professionals, affiliates and representatives, (y) any prospective investor of any Company securities from such Investor, if such prospective investor agrees to be bound by the provisions of this Section 7.15, and (z) any existing or prospective affiliate, partner, member, stockholder, or wholly owned subsidiary of such Investor in the ordinary course of business.

 

6.12.      Further Assurances. Consistent with the terms and conditions hereof, the Investor and the Company agree to do and perform or cause to be done and performed all such further acts and things and to execute, acknowledge, and deliver such further documents and instruments as reasonably required in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

 

6.13.       Usury. Regardless of any other provision of this Agreement or the Note, the Investor shall never be entitled to receive, collect or apply as interest on the principal amount of the Note any amount in excess of the maximum rate of interest allowable under applicable law, and in the event any Investor ever receives, collects or applies as interest thereon any such excess, such amount which would be excessive interest shall be deemed a partial prepayment of the principal amount of such Note and shall be treated as such, and if the principal amount of such Note is paid in full, any remaining excess shall forthwith be paid to the Company.

 

6.14.       Independent Nature of Investor’s Obligations and Rights. The obligations of the Investor under this Agreement and the Note issued to such Investor are several and not joint with the obligations of any Investor, and no other Investor shall be responsible in any way for the performance of the obligations of such Investor under this Agreement and the applicable Note. Nothing contained herein, and no action taken by any Investor pursuant hereto, shall be deemed to constitute the Investors as, and the Company acknowledges that the Investors do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity and the Company shall not assert any such claim, with respect to such obligations or the transactions contemplated by this Agreement. The decision of the Investor to purchase a Note from the Company pursuant to this Agreement has been made by the Investor independently of any other Investor or other person or entity. No person or entity has acted as agent for the Investor in connection with the Investor making its investment hereunder and no person or entity will be acting as agent of the Investor in connection with monitoring such Investor’s investment in the Company or enforcing its rights under this Agreement. The Investor shall be entitled to independently protect and enforce his, her or its rights, including, without limitation, the rights arising out of this Agreement, and it shall not be necessary for any Investor to be joined as an additional party in any proceeding for such purpose. It is expressly understood and agreed that each provision contained in this Agreement is between the Company and the Investor solely and not between the Company and Investors collectively and not between and among the Investors.

 

[Signature pages follow]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Note Purchase Agreement to be effective as of the date first indicated above.

 

	COMPANY:
	ENSERVCO CORPORATION
	By:	/s/ Richard Murphy
	Name:   Richard Murphy
	Title:     Chief Executive Officer

 

 

	INVESTORS:
	STAR EQUITY HOLDINGS, INC.
	By:	/s/ Richard K. Coleman, Jr.
	Name:   Richard K. Coleman, Jr.
	Title:     Chief Executive Officer

 

 

 

Signature Page to
Note Purchase Agreement

 

 

 

Exhibit 10.10

 

ENSERVCO CORPORATION

 

PROMISSORY NOTE

 

$1,000,000

Issuance Date: August 9, 2024

 

 

FOR VALUE RECEIVED, Enservco Corporation, a Delaware corporation (the “Company”), promises to pay to the order of Star Equity Holdings, Inc., a Delaware Corporation or its assigns (the “Holder”), pursuant to the terms set forth in this Promissory Note (this “Note”), the principal amount of One Million Dollars ($1,000,000) (the “Principal Amount”), plus interest thereon. This Note is being issued pursuant to and subject to the terms of that certain Note Purchase Agreement of even date herewith by and between the Company and the Holder (the “Purchase Agreement”) which contains, among other things, appropriate representations and warranties of the Company and covenants of the Company reflecting the provisions set forth herein. All capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Purchase Agreement. The terms of the Purchase Agreement are incorporated herein by reference.

 

1.    Interest. Interest on the Principal Amount of this Note shall accrue from the Issuance Date at a rate equal to twenty percent (20%) per annum until this Note is paid in full. Interest shall be calculated on the basis of a three hundred sixty-five (365) day year, based on the actual number of days elapsed.

 

2.    Maturity Date. The Principal Amount of this Note, together with all accrued but unpaid interest thereon, shall be due and payable in full on the three-month anniversary of the Issuance Date, unless otherwise extended in one month increments by mutual agreement between the Company and the Holder (the “Maturity Date”). Notwithstanding the foregoing, the Maturity Date will be automatically extended to the four-month anniversary of the Issuance Date in the event the Company repays a minimum of $600,000 of the Principal Amount by the three-month anniversary of the Issuance Date and the Maturity Date will be automatically extended to the fifth-month anniversary of the Issuance Date in the event the Company repays a minimum of $800,000 before the four-month anniversary of the Issuance Date.

 

3.    Payment; Prepayment. On the Maturity Date the Company shall pay the full Principal Amount of this Note, together with all accrued but unpaid interest in full via wire transfer of immediately available funds to an account of the Holder as designated by the Holder in writing to the Company. This Note may be prepaid in whole or in part, without penalty, at the option of the Company and without the consent of the Holder.

 

4.    Events of Default. The occurrence of any of the following events shall constitute an “Event of Default” if such event remains uncured for a ten day period following such event:

 

(a)         Any breach by the Company of any representation, warranty, or covenant contained in this Note or the Purchase Agreement, if such default has not been cured by the Company within fifteen business days (15) business days following the Company’s receipt of written notice from the Holder of such default;

 

(b)         Any liquidation or dissolution of the Company, whether voluntary or involuntary;

 

 

(c)         The institution by the Company of proceedings to be adjudicated as bankrupt or insolvent, or the consent by the Company to institution of bankruptcy or insolvency proceedings against the Company (or of any substantial part of its property) under any federal or state law, or the consent by the Company to or acquiescence in the filing of any petition relating thereto, or the appointment of a receiver, liquidator, assignee, trustee or other similar official of the Company, or the making by the Company of an assignment for the benefit of creditors, or the admission by the Company in writing of its inability to pay its debts generally as such debts become due; or

 

(e)         Commencement of proceedings against the Company seeking any bankruptcy, insolvency, liquidation, dissolution, or similar relief under any present or future statute, law, or regulation, if such proceedings have not been dismissed or stayed within ninety (90) days of commencement thereof, or the setting aside of any such stay of any such proceedings, or the appointment without the consent or acquiescence of the equity holders of the Company of any trustee, receiver, or liquidator of the Company or of all or any substantial portion of the properties of the Company, if such appointment has not been vacated within ninety (90) days thereof.

 

5.    Remedies Upon Event of Default. Upon the occurrence and during the continuance of an Event of Default, the Holder may declare this Note to be, and upon such declaration this Note shall be and become, immediately due and payable in United States Dollars in addition to any other rights or remedies the Holder may have under applicable law or the provisions of this Note or any related agreement between the Holder and the Company.

 

6.    Security. This Note and the obligations of the Company hereunder are initially secured by 250,000 shares of Holder’s Series A Cumulative Perpetual Preferred Stock, par value $.0001 per share, as adjusted pursuant to that certain Pledge Agreement (the “Pledge Agreement”) of even date herewith by and between the Company and the Holder (“ple”), which shall bear a legend providing for the non-transferability of the Collateral except upon confirmation by the Holder of full payment of the Principal and Interest set forth herein .

 

7.    Waivers; Fees. The Company hereby waives presentment, demand for payment, notice of non-performance, protest, notice of protest and notice of dishonor with respect to this Note. Other than pursuant to a writing by the Holder, no failure to convert any right of the Holder with respect to this Note, nor any delay in or waiver of the convert thereof, shall impair any such right or be deemed to be a waiver thereof. If the Holder is required to commence legal proceedings or incur any other cost to collect amounts due and payable hereunder or to enforce its rights under this Note, the Company shall be liable to pay or reimburse the Holder for all reasonable costs and expenses actually incurred in connection with the collection of such amounts and any such legal proceedings, including reasonable attorneys’ fees actually incurred.

 

8.    Miscellaneous.

 

8.1.    Amendment; Waiver. The terms and conditions of this Note may only be amended after the Issuance Date by written agreement of the Company and the Holder. The amendment or waiver of any term of this Note, the resolution of any controversy or claim arising out of or relating to this Note and the provision of notice among the Company and the Holder will be governed by the terms of the Purchase Agreement, and any such amendment of this Note must be in a writing signed by the parties hereto.

 

8.2.    No Assignment by Company. The Company may not assign its rights or delegate any obligations hereunder without the prior written consent of the Holder.

 

 

8.3.    Successors and Assigns. Subject to the exceptions specifically set forth in this Note, the terms and conditions of this Note shall inure to the benefit of and be binding upon the respective executors, administrators, heirs, successors and assigns of the parties.

 

8.4.    Loss or Mutilation of Note. Upon receipt by the Company of evidence satisfactory to the Company of the loss, theft, destruction, or mutilation of this Note, together with indemnity reasonably satisfactory to the Company (in the case of loss, theft, or destruction), or the surrender and cancellation of this Note (in the case of mutilation), the Company shall execute and deliver to the Holder a new Note of like tenor and denomination as this Note.

 

8.5.    Note Holder, Not Shareholder. This Note does not confer upon the Holder any right to vote or to consent to or to receive notice as a holder of shares of the Company, as such, in respect of any matters whatsoever, or any other rights or liabilities as a member of the Company, prior to the conversion hereof.

 

8.6.    Officers and Directors Not Liable. In no event will any officer, manager, or director of the Company be liable for any amounts due and payable pursuant to this Note.

 

8.7.    Governing Law. The terms of this Note shall be construed in accordance with the laws of the State of Delaware, without regard to its conflicts-of-law principles.

 

8.8.    Notices. All notices, other communication, or payment required or permitted hereunder shall be in writing and shall be deemed to have been given upon delivery to the address provided in the Purchase Agreement, or to such other address as either party may designate in writing to the other.

 

8.9.    Attorneys’ Fees. If any principal or interest represented by this Note or any part thereof is collected in bankruptcy, receivership, or other judicial proceedings, or if this Note is placed in the hands of attorneys for collection after default, the Company agrees to pay, in addition to the principal and interest payable hereunder, reasonable attorneys’ fees and costs incurred by the Holder in connection therewith.

 

8.10.    Severability. If any term or provision of this Note is held to be invalid, illegal, or unenforceable under applicable law, such term(s) or provision(s) shall be excluded from this Note, and the balance of this Note shall be interpreted as if such term(s) or provision(s) were so excluded and shall be enforceable in accordance with its terms.

 

8.11.    Counterparts. This Note may be executed by the Company (and accepted and acknowledged by the Holder) in two or more counterparts, each of which will be deemed an original but all of which will constitute one and the same instrument. Counterparts may be delivered via facsimile, email (including PDF or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method, and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

[Signature Page Follows]

 

 

 

IN WITNESS WHEREOF, the undersigned has caused this Note to be effective as of the date first set forth above.

 

COMPANY:   ENSERVCO CORPORATION     By: /s/ Mark Patterson          Name:         Mark Patterson Title:         Chief Financial Officer     Accepted and Acknowledged:   HOLDER:

 

	STAR EQUITY INVESTMENT HOLDINGS, LLC
	Richard K. Coleman, Jr.                    (Name of signatory)
	CEO                                     (Title)
	/s/ Richard K. Coleman, Jr.                    (Signature)
	August 9, 2024                            (Date)

 

 

Exhibit 10.11

 

 

STOCK PLEDGE AGREEMENT

 

This Stock Pledge Agreement, effective as of August 9, 2024 (this “Pledge Agreement”), made by and between Enservco Corporation, a Delaware corporation (the “Pledgor”) in favor of Star Equity Holdings, Inc., a Delaware corporation and its affiliate Star Equity Investment Holdings, LLC, a Delaware limited liability company (the “Secured Party”).

 

A.         Concurrent with the execution and delivery of this Pledge Agreement, the Pledgor has executed and delivered a Promissory Note of even date herewith in the original principal amount of $1,000,000.00 (the “Note”). Capitalized terms used but not defined herein shall have the meanings set forth in the Note.

 

B.         This Pledge Agreement is given by the Pledgor in favor of the Secured Party to secure the payment and performance of the Pledgor’s obligations under the Note.

 

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

 

1.    Definitions.

 

(a)    Unless otherwise specified herein, all references to Sections and Schedules herein are to Sections and Schedules of this Agreement.

 

(b)    Unless otherwise defined herein, terms used herein that are defined in the UCC shall have the meanings assigned to them in the UCC. However, if a term is defined in Article 9 of the UCC differently than in another Article of the UCC, the term has the meaning specified in Article 9.

 

(c)    For purposes of this Pledge Agreement, the following terms shall have the following meanings:

 

“Collateral” has the meaning set forth in Section 2.

 

“Event of Default” has the meaning set forth in the Note.

 

“Pledged Shares” means the shares of stock described in Schedule 1 hereto and issued by the Secured Party, and the certificates, instruments and agreements representing the Pledged Shares and includes any securities or other interests, howsoever evidenced or denominated, received by the Pledgor in exchange for or as a dividend or distribution on or otherwise received in respect of the Pledged Shares as the same may be reduced on a pro rata basis with repayment under the Note as further described herein or in Schedule 1 hereto.

 

“Proceeds” means “proceeds” as such term is defined in Section 9-102 of the UCC and, in any event, shall include, without limitation, all dividends or other income from the Pledged Shares, collections thereon or distributions with respect thereto.

 

“Secured Obligations” has the meaning set forth in Section 3.

 

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of Delaware or, when the laws of any other state govern the method or manner of the perfection or enforcement of any security interest in any of the Collateral, the Uniform Commercial Code as in effect from time to time in such state.

 

 

2.    Pledge. The Pledgor hereby pledges, assigns and grants to the Secured Party, and hereby creates a continuing first priority lien and security interest in favor of the Secured Party in and to all of its right, title and interest in and to the following, wherever located, whether now existing or hereafter from time to time arising or acquired (collectively, the “Collateral”):

 

(a)    the Pledged Shares; and

 

(b)    all Proceeds and products of the foregoing, all books and records relating to the foregoing, all supporting obligations related thereto, and all accessions of and to, substitutions and replacements for, and profits and products of, each of the foregoing, and any and all Proceeds of any insurance, indemnity, warranty or guaranty payable to the Pledgor from time to time with respect to any of the foregoing.

 

On or before the 15^th day of each month in which the Pledgor makes a timely payment to Secured Party under the Note, Secured Party shall release from its security interest a number of Pledged Shares equal to percentage obtained by multiplying the number of Pledged Shares on the date of this Agreement by a percentage equal to the amount of the principal payment made by the Borrower divided by the original principal balance of the Note on the date of this Pledge Agreement. The Secured Party shall provide such instructions to its transfer agent as is necessary to reflect the release of such Pledged Shares as set forth in this paragraph.

 

3.    Secured Obligations. The Collateral secures the due and prompt payment and performance of:

 

(a)    the obligations of the Pledgor from time to time arising under the Note, this Pledge Agreement or otherwise with respect to the due and prompt payment of (i) the principal amount of the Note, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all other monetary obligations, including fees, costs, attorneys' fees and disbursements, reimbursement obligations, contract causes of action, expenses and indemnities, whether primary or secondary, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Pledgor under or in respect of the Note and this Pledge Agreement; and

 

(b)    all other covenants, duties, debts, obligations and liabilities of any kind of the Pledgor under or in respect of the Note or this Pledge Agreement, in each case whether evidenced by a note or other writing, whether allowed in any bankruptcy, insolvency, receivership or other similar proceeding, whether arising from an extension of credit, issuance of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, and whether primary or secondary, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, fixed or otherwise

 

(all such obligations, covenants, duties, debts, liabilities, sums and expenses set forth in Section 3 being herein collectively called the “Secured Obligations”).

 

 

4.    Perfection of Pledge.

 

(a)    The Pledgor shall, from time to time, as may be required by the Secured Party with respect to all Collateral, immediately take all actions as may be requested by the Secured Party to perfect the security interest of the Secured Party in the Collateral, including, without limitation, with respect to all Collateral over which control may be obtained within the meaning of Section 8-106 of the UCC, the Pledgor shall immediately take all actions as may be requested from time to time by the Secured Party so that control of such Collateral is obtained and at all times held by the Secured Party. All the foregoing shall be at the sole cost and expense of the Pledgor.

 

(b)    The Pledgor hereby irrevocably authorizes the Secured Party at any time and from time to time to file in any relevant jurisdiction any financing statements and amendments thereto that contain the information required by Article 9 of the UCC of each applicable jurisdiction for the filing of any financing statement or amendment relating to the Collateral, without the signature of the Pledgor where permitted by law. The Pledgor agrees to provide all information required by the Secured Party pursuant to this Section promptly to the Secured Party upon request.

 

(c)    The Pledgor and Secured Party agree that concurrent with the execution and delivery of this Agreement, they will provide the Notice of Pledge and Control Agreement in substantially the form set forth as Exhibit A to this Pledge Agreement (the “Control Agreement”) to the Secured Party (as issuer of the Pledge Shares) and/or its third party transfer agent, if applicable.

 

5.    Representations and Warranties. The Pledgor represents and warrants as follows:

 

(a)    The Pledged Shares are subject to no options to purchase or similar rights. All information set forth in Schedule 1 relating to the Pledged Shares is accurate and complete.

 

(b)    At the time the Collateral becomes subject to the lien and security interest created by this Pledge Agreement, the Pledgor will be the sole, direct, legal and beneficial owner thereof, free and clear of any lien, security interest, encumbrance, claim, option or right of others except for the security interest created by this Pledge Agreement.

 

(c)    The pledge of the Collateral pursuant to this Pledge Agreement creates a valid and perfected first priority security interest in the Collateral, securing the payment and performance when due of the Secured Obligations.

 

(d)    The Pledgor has full power, authority and legal right to pledge the Collateral pursuant to this Pledge Agreement.

 

(e)    This Pledge Agreement has been duly authorized, executed and delivered by the Pledgor and constitutes a legal, valid and binding obligation of the Pledgor enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and subject to equitable principles (regardless of whether enforcement is sought in equity or at law).

 

(f)    No authorization, approval, or other action by, and no notice to or filing with, any governmental authority, regulatory body or any other entity is required for the pledge by the Pledgor of the Collateral pursuant to this Pledge Agreement or for the execution and delivery of this Pledge Agreement by the Pledgor.

 

 

(g)    The execution and delivery of this Pledge Agreement by the Pledgor and the performance by the Pledgor of his obligations hereunder, will not violate any provision of any applicable law or regulation or any order, judgment, writ, award or decree of any court, arbitrator or governmental authority, domestic or foreign, applicable to the Pledgor or any of his property, or any agreement or instrument to which the Pledgor is party or by which he or his property is bound.

 

(h)    The Pledgor has taken all action required on its part for control (as defined in Section 8-106 of the UCC) to have been obtained by the Secured Party over all Collateral with respect to which such control may be obtained pursuant to the UCC. No person other than the Secured Party has control or possession of all or any part of the Collateral. Without limiting the foregoing, all certificates, agreements or instruments representing or evidencing the Pledged Shares in existence on the date hereof have been delivered to the Secured Party in suitable form for transfer by delivery or accompanied by duly executed undated instruments of transfer or assignment in blank.

 

6.     Dividends and Voting Rights.

 

(a)    The Secured Party agrees that unless an Event of Default shall have occurred and be continuing, the Pledgor may, to the extent the Pledgor has such right as a holder of the Pledged Shares, vote and give consents, ratifications and waivers with respect thereto, except to the extent that, in the Secured Party’s reasonable judgment, any such vote, consent, ratification or waiver could detract from the value thereof as Collateral or which could be inconsistent with or result in any violation of any provision of the Note or this Pledge Agreement.

 

(b)    The Secured Party agrees that the Pledgor may, unless an Event of Default shall have occurred and be continuing, receive and retain all dividends and other distributions with respect to the Pledged Shares, but if an Event of Default has occurred the Secured Party may direct any dividends to be paid immediately to the Secured Party.

 

7.    Further Assurances.

 

(a)    The Pledgor shall, at its own cost and expense, defend title to the Collateral and the first priority lien and security interest of the Secured Party therein against the claim of any person claiming against or through the Pledgor and shall maintain and preserve such perfected first priority security interest for so long as this Agreement shall remain in effect.

 

(b)    The Pledgor agrees that at any time and from time to time, at the expense of the Pledgor, the Pledgor will promptly execute and deliver all further instruments and documents, obtain such agreements from third parties, and take all further action, that may be necessary or desirable, or that the Secured Party may request, in order to create and/or maintain the validity, perfection or priority of and protect any security interest granted or purported to be granted hereby or to enable the Secured Party to exercise and enforce its rights and remedies hereunder or under any other agreement with respect to any Collateral.

 

8.    Transfers and Other Liens. The Pledgor agrees that it will not sell, offer to sell, dispose of, convey, assign or otherwise transfer, grant any option with respect to, restrict, or grant, create, permit or suffer to exist any mortgage, pledge, lien, security interest, option, right of first offer, encumbrance or other restriction or limitation of any nature whatsoever on, any of the Collateral or any interest therein except as expressly provided for herein or with the prior written consent of the Secured Party.

 

 

9.    Secured Party Appointed Attorney-in-Fact. The Pledgor hereby appoints the Secured Party the Pledgor’s attorney-in-fact, with full authority in the place and stead of the Pledgor and in the name of the Pledgor or otherwise, from time to time during the continuance of an Event of Default in the Secured Party’s discretion to take any action and to execute any instrument which the Secured Party may deem necessary or advisable to accomplish the purposes of this Pledge Agreement, including, without limitation, to receive, endorse and collect all instruments made payable to the Pledgor representing any dividend, interest payment or other distribution in respect of the Collateral or any part thereof and to give full discharge for the same (but the Secured Party shall not be obligated to and shall have no liability to the Pledgor or any third party for failure to do so or take action). Such appointment, being coupled with an interest, shall be irrevocable. The Pledgor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof.

 

10.    Secured Party May Perform. If the Pledgor fails to perform any obligation contained in this Pledge Agreement, or if any representation or warranty on the part of the Pledgor contained herein shall be breached, the Secured Party may itself perform, or cause performance of, such obligation, or remedy such breach, and the expenses of the Secured Party incurred in connection therewith shall be payable by the Pledgor; provided that the Secured Party shall not be required to perform or discharge any obligation of the Pledgor. Neither the provisions of this Section 10 nor any action taken by the Secured Party pursuant to the provisions of this Section 10 shall prevent any such failure to observe any covenant contained in this Pledge Agreement or any breach of representation or warranty from constituting an Event of Default.

 

11.    Remedies Upon Default.

 

(a)    If any Event of Default shall have occurred and be continuing, the Secured Party may, without any other notice to or demand upon the Pledgor, assert all rights and remedies of a secured party under the UCC or other applicable law, including, without limitation, the right to take possession of, hold, collect, sell, lease, deliver, grant options to purchase or otherwise retain, liquidate or dispose of all or any portion of the Collateral. If notice prior to disposition of the Collateral or any portion thereof is necessary under applicable law, written notice mailed to the Pledgor at its notice address as provided in Section 15 ten (10) days prior to the date of such disposition shall constitute reasonable notice, but notice given in any other reasonable manner shall be sufficient. So long as the sale, redemption, or cancellation of the Collateral is made in a commercially reasonable manner, the Secured Party may sell, redeem, or cancel such Collateral on such terms and to such purchaser(s) as the Secured Party in its absolute discretion may choose, without assuming any credit risk and without any obligation to advertise or give notice of any kind other than that necessary under applicable law. Without precluding any other methods of sale or divestiture, the sale of the Collateral or any portion thereof shall have been made in a commercially reasonable manner if conducted in conformity with reasonable commercial practices of creditors disposing of similar property. To the extent permitted by applicable law, the Pledgor waives all claims, damages and demands it may acquire against the Secured Party arising out of the exercise by it of any rights hereunder. The Pledgor hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Collateral, whether before or after sale hereunder, and all rights, if any, of marshalling the Collateral and any other security for the Secured Obligations or otherwise. Neither the Secured Party nor any custodian shall be liable for failure to collect or realize upon any or all the Collateral or for any delay in so doing, nor shall it be under any obligation to take any action whatsoever with regard thereto. The Secured Party shall not be obligated to clean-up or otherwise prepare the Collateral for sale.

 

 

(b)    If any Event of Default shall have occurred and be continuing, all rights of the Pledgor to (i) exercise the voting and other consensual rights it would otherwise be entitled to exercise pursuant to Section 6(a) and (ii) receive the dividends and other distributions which it would otherwise be entitled to receive and retain pursuant to Section 6(b), shall immediately cease, and all such rights shall thereupon become vested in the Secured Party, which shall have the sole right to exercise such voting and other consensual rights and receive and hold such dividends and other distributions as Collateral.

 

(c)    If any Event of Default shall have occurred and be continuing, any cash held by the Secured Party as Collateral and all cash Proceeds received by the Secured Party in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied in whole or in part by the Secured Party to the payment of expenses incurred by the Secured Party in connection with the foregoing or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Secured Party hereunder, including reasonable attorneys' fees, and the balance of such proceeds shall be applied or set off against all or any part of the Secured Obligations in such order as the Secured Party shall elect. Any surplus of such cash or cash Proceeds held by the Secured Party and remaining after payment in full of all the Secured Obligations shall be paid over to the Pledgor or to whomsoever may be lawfully entitled to receive such surplus. The Pledgor shall remain liable for any deficiency if such cash and the cash Proceeds of any sale or other realization of the Collateral are insufficient to pay the Secured Obligations and the fees and other charges of any attorneys employed by the Secured Party to collect such deficiency.

 

(d)    If the Secured Party shall determine to exercise its rights to sell all or any of the Collateral pursuant to this Section, the Pledgor agrees that, upon request of the Secured Party, the Pledgor will, at its own expense, do or cause to be done all such acts and things as may be necessary to make such sale of the Collateral or any part thereof valid and binding and in compliance with applicable law.

 

12.    No Waiver and Cumulative Remedies. The Secured Party shall not by any act (except by a written instrument pursuant to Section 14), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. All rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies provided by law.

 

13.    Waiver. The Pledgor hereby waives demand, notice, protest, notice of acceptance of this Pledge Agreement, notice of loan made, credit extended, Collateral received or delivered, or other action taken in reliance hereon and all other demands and notices of any description.

 

14.    Amendments. None of the terms or provisions of this Pledge Agreement may be amended, modified, supplemented, terminated or waived, and no consent to any departure by the Pledgor therefrom shall be effective unless the same shall be in writing and signed by the Secured Party and the Pledgor, and then such amendment, modification, supplement, waiver or consent shall be effective only in the specific instance and for the specific purpose for which made or given.

 

15.    Addresses For Notices. All notices and other communications provided for in this Agreement shall be in writing and shall be given in the manner and become effective as set forth in the Note Agreement and addressed to the respective parties at their addresses as specified therein or as to either party at such other address as shall be designated by such party in a written notice to each other party.

 

 

16.    Continuing Security Interest; Further Actions. This Agreement shall create a continuing first priority lien and security interest in the Collateral and shall (a) subject to Section 17, remain in full force and effect until payment and performance in full of the Secured Obligations, (b) be binding upon the Pledgor, its successors and assigns, and (c) inure to the benefit of the Secured Party and its successors, transferees and assigns; provided that the Pledgor may not assign or otherwise transfer any of its rights or obligations under this Pledge Agreement without the prior written consent of the Secured Party. Without limiting the generality of the foregoing clause (c), any assignee of the Secured Party’s interest in any agreement or document which includes all or any of the Secured Obligations shall, upon assignment, become vested with all the benefits granted to the Secured Party herein with respect to such Secured Obligations.

 

17.    Termination; Release. On the date on which the Note and other Secured Obligations have been paid and performed in full, the Secured Party will, within five (5) days of such payment or performance and at the sole expense of the Pledgor, (a) duly assign, transfer and deliver to or at the direction of the Pledgor (without recourse and without any representation or warranty) such of the Collateral as may then remain in the possession of the Secured Party, together with any monies at the time held by the Secured Party hereunder, and (b) execute and deliver to the Pledgor a proper instrument or instruments acknowledging the satisfaction and termination of this Agreement.

 

18.    Governing Law. This Agreement and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement and the transactions contemplated hereby shall be governed by, and construed in accordance with, the laws of the State of Minnesota.

 

19.    Counterparts. This Pledge Agreement and any amendments, waivers, consents or supplements hereto may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page to this Pledge Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Pledge Agreement. This Pledge Agreement and the Note constitute the entire contract among the parties with respect to the subject matter hereof and supersede all previous agreements and understandings, oral or written, with respect thereto.

 

 

[Signature Page Follows]

 

 

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

 

	PLEDGOR:   Enservco Corporation
	By:	/s/ Mark Patterson
	Name:	Mark Patterson
	Title:	Chief Financial Officer

 

 

 

	SECURED PARTY:   Star Equity Investment Holdings, Inc.
	By:	/s/ Richard K. Coleman, Jr.
	Name:	Richard K. Coleman, Jr.
	Title:	CEO

 

 

 

 

 

SCHEDULE 1 TO STOCK PLEDGE AGREEMENT

 

PLEDGED SHARES

 

 

250,000 shares of Series A Cumulative Preferred Stock in stock in Star Equity Holdings, Inc., a Delaware corporation.

 

Exhibit 99.4

 

 

ENSERVCO ANNOUNCES EXIT OF COLORADO FRAC WATER HEATING BUSINESS THROUGH SALE OF ASSETS

~ Acquisition of Buckshot Trucking, LLC on Track to Close Within Days ~

 

●

Sale of Assets from Seasonal Colorado Frac Water Heating Business Consistent with Enservco Strategy to Focus Efforts on Year-Round Businesses including Opportunities Afforded by Pending Buckshot Acquisition

●

Net Proceeds from Transaction to be Used to Pay Down Debt Under Utica Facility

●

Significantly Reduces Company’s Debt Burden and Paves Way for Debt Restructuring

 

 

LONGMONT, Colo., August 9, 2024 (GLOBE NEWSWIRE) – Enservco Corporation (NYSE American: ENSV) (“Enservco” or the “Company’) today announced it has sold to HP Oilfield Services, LLC (“HP”) certain Colorado based assets of Heat Waves Hot Oil Service, LLC, a wholly owned subsidiary of Enservco (the “Transaction”).

 

Transaction consideration from HP was $1,695,000, including $1,221,625, in cash and a short-term note of $473,375 (the “Note”). The Note will be paid ratably over five months from October 1, 2024 to February 1, 2025. The Transaction’s net proceeds are targeted for retirement of debt, specifically borrowings under the Company’s Utica Facility.

 

The Company also announced that it is nearing completion of the previously announced acquisition of Buckshot Tucking, LLC with closing expected within days.

 

TRANSACTION RATIONALE/HIGHLIGHTS & OTHER UPDATES

 

●

Sale of Colorado frac water heating assets is consistent with strategy of being less reliant on seasonal-focused business;

 

●

Net proceeds to be used to pay down certain of the Company’s debt obligations, specifically its Utica Facility. Following the pay down, the Company expects to restructure the remaining Utica Facility;

 

●

Divesting the heating business allows Enservco to redirect its resources, both financial and managerial, towards the transportation and logistics market servicing the broad energy sector;

 

o

Includes the previously announced and pending Buckshot Acquisition, which is expected to be immediately accretive and strategically transform the Company by entering the logistics market via a business with substantial operational and financial visibility; and

 

●

The Company will continue to provide both frac water heating and hot oil services across the Marcellus/Utica basins, where last year’s Rapid Hot acquisition contributed to significantly improved operating results in the region.

 

 

MANAGEMENT COMMENTARY

 

Rich Murphy, Chairman and CEO of Enservco, commented, “For more than a year, we have undergone a significant review of our business portfolio to identify, evaluate and execute on initiatives to drive increased efficiencies and other improvements throughout our operations. Concurrent with these activities, we spent considerable time and effort improving our financial position while we also evaluated various opportunities to enhance our value proposition both in the marketplace and with investors. I am pleased that our team – with the full support of our Board – continues to make significant progress on multiple fronts. This includes the previously announced Buckshot Acquisition and the Company’s Equity Line of Credit facility (“ELOC”), which has now been approved by a majority of the shareholders and is being implemented. The Buckshot transaction, the ELOC, and additional steps the Company is engaged in support our ongoing efforts to regain compliance with NYSE American Listing Standards.”

 

Mr. Murphy, continued, “With the sale of our Colorado frac water heating assets, we plan to use the net proceeds from the Transaction to pay down our higher-interest borrowings, specifically those under our Utica Facility. Following the pay down, we expect to work with Utica, or other lenders if needed, to renegotiate the remaining balance under the Utica Facility to terms that will further improve Enservco’s financial position.”

 

Mr. Murphy, concluded, “Today’s announcement represents another significant step in our process of transitioning our business portfolio away from one with a significant focus on seasonal industry activities to a much larger addressable market providing year-round cash flows and margin generation. Combined with today’s announcement and our successes over the past year, we believe we have placed the Company in a stronger position to drive near and long-term value for shareholders. We appreciate the continued support of all our stakeholders – especially our employee team – and look forward to keeping everyone apprised of our progress.”

 

ABOUT ENSERVCO

 

Enservco provides a range of oilfield services through its various operating subsidiaries, including hot oiling, acidizing, frac water heating, and related services in major domestic oil and gas basins across the United States. Additional information is available at www.enservco.com. On March 20, 2024, the Company announced an agreement to purchase Buckshot Trucking LLC, an energy logistics provider in multiple key oil and gas basins (the “Buckshot Acquisition”). The Buckshot Acquisition is scheduled to close in the third quarter of 2024. When closed, the Buckshot Acquisition would provide Enservco with a growing business that is not weather dependent, allow the Company to enter steady year-round logistics, provide an expanded operating footprint, and improve cash flow visibility.

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This news release contains information that is "forward-looking" in that it describes events and conditions Enservco reasonably expects to occur in the future. Expectations for the future performance of Enservco are dependent upon a number of factors, and there can be no assurance that Enservco will achieve the results as contemplated herein. Certain statements denoting future possibilities, are forward-looking statements. The accuracy of these statements cannot be guaranteed as they are subject to a variety of risks, which are beyond Enservco's ability to predict, or control and which may cause actual results to differ materially from the projections or estimates contained herein. Among these risks are those set forth in Enservco’s annual report on Form 10-K for the year ended December 31, 2023, and subsequently filed documents with the Securities and Exchange Commission (“SEC”). Forward looking statements in this news release that are subject to risks also include (a) closing of the Buckshot Acquisition on anticipated terms and timing, and the ability of Enservco to successfully integrate Buckshot’s market opportunities, personnel and operations and to achieve expected benefit; and (b) our ability to further transform into a logistics business; (c) the ability to restructure our debt; and (d) the ability to maintain compliance with the NYSE/American Stock Market. Enservco disclaims any obligation to update any forward-looking statement made herein.

 

CONTACT

 

Mark Patterson

Chief Financial Officer

Enservco Corporation

mpatterson@enservco.com

 

Exhibit 99.5

 

 

ENSERVCO TRANSFORMS BUSINESS WITH CLOSE OF BUCKSHOT ACQUISITION AND SHARE EXCHANGE WITH STAR EQUITY HOLDINGS

 

~ Buckshot Acquisition and Star Equity Investment Position Enservco for a New Phase of Growth and Expansion in the Energy Logistics Space ~

 

~ Provides Further Update on Plan to Regain Compliance with NYSE American Listing Standards ~

 

~ Announces Timing of Q2 2024 Earnings Release and Conference Call ~

 

●

Diversifies Company into Energy Logistics Services Via Growing and Profitable Business

 

●

Provides Increased Financial Strength with Year-Round Business

 

●

Buckshot’s Owners to Remain to Drive Further Growth in Overall Business

 

●

Strategic Share Exchange Agreement with Star Equity Holdings Makes Star a Significant Shareholder in Enservco and Provides Equity Infusion and Short-Term Debt

 

LONGMONT, Colo., Aug 12, 2024 (GLOBE NEWSWIRE) – Enservco Corporation (NYSE American: ENSV) (“Enservco” or the “Company”), today announced the closing of its previously-announced acquisition of Buckshot Trucking LLC (“Buckshot”) (the “Buckshot Transaction”). In addition, the Company has entered a Share Exchange Agreement and strategic financing with Star Equity Holdings, Inc. (Nasdaq: STRR; STRRP) (“Star”), a diversified holding company, which included a $2.5 million exchange of equity between the parties and Enservco’s issuance of a $1 million short-term promissory note to Star (the “Star Transaction”) to facilitate the closing the Buckshot acquisition.

 

Total consideration paid by Enservco at closing for the Buckshot Transaction was $5.0 million, before customary post-closing adjustments, which consisted of a combination of cash, Enservco common stock, certain promissory notes and escrowed funds. More details concerning the Buckshot Transaction and the Star Transaction are provided below.

 

BUCKSHOT TRANSACTION RATIONALE & KEY HIGHLIGHTS

 

●

Strategically transforms the Company by entering the energy logistics business with an immediately accretive Buckshot acquisition, including:

 

o

Adds higher margin business that has historically generated strong growth and cash generation without substantial new overhead;

 

o

Drives year-round prospective growth with operational and financial visibility;

 

o

Provides incremental services for the Company’s existing and expanded customer base while providing pathway for earnings and cash flow growth and improved predictability;

 

 

o

Creates new operating division that complements and expands market position beyond current services and customer base;

 

●

Provides for continued leadership of Buckshot team by owners Tony Sims and Jim Fate; and

 

●

Enhances Enservco’s financial position as Buckshot Transaction adds $1.25 million of stockholders’ equity.

 

STAR TRANSACTION RATIONALE & KEY HIGHLIGHTS

 

●

Strategically aligns the Company and Star for potential future growth with Star’s commitment to a long-term partnership and operational excellence, along with its focus on creating value in microcap stocks that are undergoing change;

 

●

Strengthens the Company’s leadership with the addition of Star CEO and Director, Rick Coleman to Enservco’s Board of Directors;

 

●

Star’s 10% Series A Cumulative Perpetual Preferred Stock (“STRRP”) provides a recurring dividend providing the Company with added cash flow; and

 

●

Further improves the Company’s financial position as the Star Transaction adds $2.5 million of stockholders’ equity.

 

MANAGEMENT COMMENTARY

 

Rich Murphy, Chairman and CEO of Enservco, commented, “We are pleased to close on these strategic transactions. Over the past week, we exited the seasonal frac water heating business in Colorado, acquired an immediately accretive energy logistics business that transforms Enservco through increased operational and financial visibility, and entered a new strategic relationship with the team at Star Equity Holdings. Driving our optimism for the future is Buckshot’s impact on the Company with operations in our key markets, promoting a year-round service offering that is not weather dependent. We look forward to executing on the significant growth prospects provided by the combination of Buckshot and Enservco’s strong customer relationships in the energy sector. Also, I want to thank Jeff Eberwein, Rick Coleman and the rest of the Star team for helping facilitate the closing of the Buckshot acquisition and our respective equity investments – a clear representation of our strategic relationship. We look forward to Rick’s contributions as a new Board member for Enservco and his valuable insight as we work to identify and execute on opportunities that further position the Company for long-term success.”

 

Tony Sims, Founder of Buckshot Trucking LLC, commented, “We believe there is significant potential to grow our business both organically and – more importantly – in support of taking Enservco’s service offering to new heights. On behalf of myself, Jim and the rest of the folks here at Buckshot, we look forward to working closely with Rich and his team on future initiatives designed to further transform the collective business.”

 

 

Mr. Murphy, concluded, “Following the recently announced exit from our seasonal-focused Colorado frac water heating business, the closing of the Buckshot acquisition places Enservco in a stronger position through an expanded non seasonal product offering, a complementary customer base, and increased expansion opportunities. This year will benefit from almost five months of Buckshot’s operations in Enservco’s 2024 financial results, which bodes well for our outlook for the remainder of the year. We look forward to reporting our second quarter 2024 results later this week and providing additional updates. In closing, we appreciate the continued hard work and dedication of our recently expanded employee team and – equally as important – thank our shareholders for their ongoing support as we continue to evolve the business in support of near and long-term value creation.”

 

ADDITIONAL BUCKSHOT TRANSACTION DETAILS

 

Total consideration paid by Enservco to the sellers of Buckshot at closing for the Transaction was $5.0 million, before customary post-closing adjustments, including collective payments of:

 

●

Cash of $1,000,000, excluding a cash reserve of $50,000 placed in escrow to secure the sellers’ obligation with respect to the Transaction’s net working capital adjustment;

 

●

Promissory note of $2,700,000 – to be paid back through interim payments or prepaid in full by the Company at any time – carrying an annual interest rate of 10% with principal and interest due on December 31, 2024; and

 

●

Enservco common stock valued at $1,250,000, which was based on a volume weighted moving average price, totaling 6,459,948 shares. Included was Enservco stock valued at $200,000, or 1,033,592 shares, held in escrow to secure certain of the sellers’ indemnification obligations.

 

The Buckshot owners now have collective ownership of approximately 13% of Enservco common shares. In addition, the Buckshot owners have the opportunity for an additional potential performance payout of up to $500,000 based on growth and financial performance relative to the performance of Enservco’s stock.

 

As a material incentive for entering his employment with Enservco, Tony Sims, the CEO of Buckshot, will receive 250,000 stock options with an exercise price of $0.17 per share, with 125,000 vesting on July 1, 2025, and 125,000 vesting on July 1, 2026.

 

ADDITIONAL STAR HOLDINGS EQUITY AND STRATEGIC FINANCING DISCUSSION & DETAILS

 

●

Enservco exchanged $2.5 million of its equity with Star for 250,000 newly issued shares of Star’s 10% Series A Cumulative Perpetual Preferred Stock (“STRRP”). Enservco’s equity transferred to Star consisted of 12.5 million shares of stock comprised of 9,023,035 ENSV common shares and 3,476,965 ENSV preferred shares. Star’s equity transferred to Enservco consisted of $2.5M of value using STRRP’s $10.00 per share preferred stock;

 

●

Enservco entered into a short-term $1 million promissory note with Star to facilitate ENSV’s initial cash payment for the acquisition of Buckshot;

 

●

Star has received one seat on Enservco’s board of directors, with Star’s CEO and Director – Richard (“Rick”) Coleman – being designated; and

 

●

Star has the option, over the next twelve months, to exchange up to an additional $2.5 million of STRRP for additional shares of Enservco common stock calculated on terms consistent with the initial Star Transaction.

 

 

Upon closing of the financing with Enservco and the Buckshot acquisition, Star has an equity ownership in ENSV of approximately 20% of Enservco common shares and additional preferred shares convertible into Enservco common stock.

 

UPDATE ON PLAN TO REGAIN COMPLIANCE WITH NYSE AMERICAN LISTING STANDARDS

 

On June 10, 2024, the Company received formal notice that NYSE Regulation has determined to commence proceedings to delist the Company’s Common Stock from the NYSE American. NYSE Regulation has determined that the Company is no longer suitable for listing pursuant to Section 1009(a) of the NYSE American Company Guide (the “Company Guide”) as the Company was unable to demonstrate that it had regained compliance with Sections 1003(a)(i), (ii) and (iii) of the Company Guide by the end of the 18-month compliance plan period, which expired on June 9, 2024. Specifically, the Company’s shareholders equity failed to meet the $6.0 million threshold prescribed by the NYSE.

 

The Company has appealed this determination with the Listings Qualification Panel of the Committee for Review of the Board of Directors of the Exchange, and is awaiting notice of a hearing date from the NYSE. While there can be no assurance that the Company will be successful in its appeal, the Company has now completed multiple measures culminating months of efforts to both resolve the equity deficit and eliminate the causes of the its continued net losses. These steps include: entry into an equity line of credit providing up to $10 million of capital as requested over a period of 36 months; conversion of convertible debt instruments into common stock; conversion of outstanding cash board fees into common stock; issuing shares to the sellers of Buckshot Trucking; and completion of the share exchange agreement with Star Equity Holdings.

 

Combined, these measures added more than $6.0 million in equity to Company’s balance sheet, providing some confidence that Enservco will be able to meet its equity requirement to remain listed on the NYSE.

 

Q2 2024 EARNINGS RELEASE & CONFERENCE CALL INFORMATION

 

Enservco will release its second quarter 2024 operational and financial results after market close on Wednesday, August 14, 2024 and hold a conference call on the morning of Thursday, August 15, 2024 to discuss its second quarter results, and provide further details concerning its recent transactions and outlook. The Company will provide detailed access and related information for the conference call – including start time – in its second quarter 2024 earnings press release. The conference call will also be webcast and available on Enservco’s website at www.enservco.com under “Events” on the “Investors” page. An audio replay will also be available on the Company’s website following the conference call.

 

ABOUT ENSERVCO

 

Enservco provides a range of oilfield services through its various operating subsidiaries in major domestic oil and gas basins across the United States. Additional information is available at www.enservco.com.

 

 

ABOUT BUCKSHOT TRUCKING LLC

 

Founded in 2017 and headquartered in Fort Lupton, Colorado, the Company’s greater Rocky Mountain focus is complemented by an extensive presence of operations in Wyoming, Utah, North Dakota, and Texas, supported by a key base of operations in Casper, Wyoming. Buckshot focuses on hot shot trucking, dedicated freight services, and less-than-truckload (“LTL”) services within the oil and gas sector.

 

ABOUT STAR EQUITY HOLDINGS

 

Star Equity Holdings, Inc. is a diversified holding company currently composed of two divisions: Building Solutions and Investments.

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This news release contains information that is “forward-looking” in that it describes events and conditions Enservco reasonably expects to occur in the future. Expectations for the future performance of Enservco are dependent upon a number of factors, and there can be no assurance that Enservco will achieve the results as contemplated herein. Certain statements denoting future possibilities, are forward-looking statements. The accuracy of these statements cannot be guaranteed as they are subject to a variety of risks, which are beyond Enservco's ability to predict, or control and which may cause actual results to differ materially from the projections or estimates contained herein. Among these risks are those set forth in Enservco’s annual report on Form 10-K for the year ended December 31, 2023, and subsequently filed documents with the Securities and Exchange Commission (“SEC”). Forward looking statements in this news release that are subject to risks also include (a) the ability of Enservco to successfully integrate Buckshot’s market opportunities, personnel and operations and to achieve expected benefit; and (b) our ability to further transform into a logistics business; (c) the ability to restructure our debt; and (d) the ability to maintain compliance with the NYSE/American Stock Markets. Enservco disclaims any obligation to update any forward-looking statement made herein.

 

CONTACT

 

Mark Patterson

Chief Financial Officer

Enservco Corporation

mpatterson@enservco.com

 

v3.24.2.u1

Document And Entity Information	Aug. 06, 2024
Document Information [Line Items]
Entity, Registrant Name	Enservco Corporation
Current Fiscal Year End Date	--12-31
Document, Type	8-K
Document, Period End Date	Aug. 06, 2024
Entity, Incorporation, State or Country Code	DE
Entity, File Number	001-36335
Entity, Tax Identification Number	84-0811316
Entity, Address, Address Line One	14133 County Road 9½
Entity, Address, City or Town	Longmont
Entity, Address, State or Province	CO
Entity, Address, Postal Zip Code	80504
City Area Code	303
Local Phone Number	333-3678
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock
Trading Symbol	ENSV
Security Exchange Name	NYSE
Entity, Emerging Growth Company	false
Amendment Flag	false
Entity, Central Index Key	0000319458

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