ACT Energy Technologies Ltd. — Capital/Financing Update 2021

Oct 20, 2021

FIFTH AMENDING AGREEMENT

THIS AGREEMENT dated as of June 22, 2021

AMONG :

CATHEDRAL ENERGY SERVICES LTD. and CATHEDRAL ENERGY SERVICES, INC., as Borrowers

• and -

THE FINANCIAL INSTITUTIONS PARTY HERETO IN THEIR CAPACITIES AS LENDERS

• and -

ATB FINANCIAL, as Administrative Agent

WHEREAS the parties hereto are parties to the Credit Agreement;

AND WHEREAS the parties hereto have agreed to amend and supplement certain provisions of the Credit Agreement as set out herein;

NOW THEREFORE in consideration of the covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby conclusively acknowledged by each of the parties hereto, the parties hereto covenant and agree as follows:

1. INTERPRETATION

1.1 In this Agreement and the recitals hereto, unless something in the subject matter or context is inconsistent therewith:

" Agreement " means this Fifth Amending Agreement;

" Amended Credit Agreement " means the Credit Agreement as amended and supplemented by this Agreement, and as the same may be further amended, modified, supplemented or restated from time to time;

" Credit Agreement " means the credit agreement dated as of December 13, 2017 among , inter alia , the Borrowers, the Agent (under its former name Alberta Treasury Branches) and the Lenders, as amended by a First Amending Agreement dated as of November 8, 2018, a Second Amending Agreement dated as of December 19, 2019, a Third Amending Agreement dated June 29, 2020 and a Fourth Amending Agreement dated December 11, 2020; and

" Effective Date " means the date on which all of the conditions precedent in Section 4.1 of this Agreement have been satisfied or waived by the Lenders.

1.2 Capitalized terms used herein without express definition shall have the same meanings herein as are ascribed thereto in the Credit Agreement.

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1.3 The division of this Agreement into Sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. The terms "this Agreement", "hereof", "hereunder" and similar expressions refer to this Agreement and not to any particular Section or other portion hereof and include any agreements supplemental hereto. Unless expressly indicated otherwise, all references to "Section" or "Sections" are intended to refer to a Section or Sections of the Credit Agreement.

1.4 This Agreement shall be governed by and construed in accordance with the laws of the Province of Alberta and federal laws of Canada applicable therein.

2. AMENDMENTS TO CREDIT AGREEMENT

• 2.1 Section 1.1 of the Credit Agreement is amended by:

• (a) amending the definition of "Applicable Margin" by deleting the phrase "notwithstanding anything in this Agreement to the contrary, during the Covenant Relief Period, the Applicable Margin shall be set at Level 5" and replacing it with: "notwithstanding anything in this Agreement to the contrary, the Applicable Margin shall be set at Level 5 until the earlier of:

  • (i) the delivery of a Compliance Certificate with respect to the Fiscal Quarter ending June 30, 2022; and

  • (ii) the delivery of a Compliance Certificate with respect to the first Fiscal Quarter ending after written notice delivered by the Cdn. Borrower to the Agent, which notice shall be irrevocable, that Consolidated EBITDA Annualization shall cease to be in effect.";

• (b) amending the definition of "Maturity Date" by deleting the reference to "June 30, 2022" therein and replacing it with "June 30, 2023";

• (c) amending the definition of "Lender Outstandings" to add the following at the end of such definition: "and HASCAP Obligations";

• (d) amending Section 3.23(b) to add the following after "Creditcard Obligations": "and HASCAP Obligations";

• (e) adding the following as new definitions in the alphabetically correct location:

" BDC " means Business Development Bank of Canada, its successors and assigns.

" BDC Representation Letter " means the letter issued to BDC and the HASCAP Lender in BDC standard form required as a condition to the availability of the HASCAP Loan;

" Consolidated EBITDA Annualization " shall have the meaning given to such term in Section 9.1;

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" HASCAP Borrower " means Cathedral Energy Services Ltd., its successors and permitted assigns;

" HASCAP Lender " means a Lender or an Affiliate of a Lender which has provided the HASCAP Term Loan;

" HASCAP Loan " means the demand, non-revolving term loan in the amount of $1,000,000 made available by the HASCAP Lender to the HASCAP Borrower on the terms set forth in Schedule "O";

" HASCAP Loan Effective Date " means June 22, 2021;

" HASCAP Obligations " means indebtedness, liabilities and obligations of the HASCAP Borrower to the HASCAP Lender arising under the HASCAP Loan;";

• 2.2 Article 3 shall be amended by adding the following as a new Section 3.27:

• "3.27 HASCAP Loan

Any Lender may provide the HASCAP Loan on and subject to the terms contained in Schedule "O". The parties agree that all obligations of a Loan Party with respect to the HASCAP Loan shall be secured by the Security on a pari passu basis and shall rank pari passu with the Borrowings, Permitted Swap Indebtedness, Creditcard Obligations and obligations under Cash Management Services, notwithstanding that they do not form part of the Borrowings.";

2.3 Section 7.2 shall be amended by deleting the last paragraph in Section 7.2 and replacing with the following:

"with the balance to be applied, firstly, to repay or otherwise reduce Borrowings and Creditcard Obligations then due and payable so that the Borrowings outstanding hereunder to each Lender will to the extent possible, be in the same proportion as its Applicable Percentage; and secondly to repay the HASCAP Loan.";

• 2.4 Section 10.7 shall be amended by adding the following as a new paragraph (g):

• "(g) seventhly, towards repayment to the HASCAP Lender of the HASCAP Obligations";

2.5 Section 9.1 of the Credit Agreement is deleted in its entirety and replaced with the following:

" 9.1 Financial Covenants

The Borrowers covenant with each of the Lenders and the Agent that:

• (a) Maximum Funded Debt to Tangible Net Worth Ratio : as at the Fiscal Quarter ending June 30, 2021, the Funded Debt to Tangible Net Worth

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Ratio shall not exceed 15%. For the avoidance of doubt, the Funded Debt to Tangible Net Worth Ratio shall not be tested after June 30, 2021;

• (b) Maximum Consolidated Funded Debt to Consolidated EBITDA Ratio : at all times commencing on the Fiscal Quarter ending September 30, 2021, the Consolidated Funded Debt to Consolidated EBITDA Ratio shall not exceed 3.00:1.00. For the avoidance of doubt, the Consolidated Funded Debt to Consolidated EBITDA Ratio shall not be tested on the Fiscal Quarter ending June 30, 2021;

• (c) Minimum Consolidated Interest Coverage Ratio : at all times commencing on the Fiscal Quarter ending September 30, 2021, the Consolidated Interest Coverage Ratio shall not be less than 2.50:1.00. For the avoidance of doubt, the Consolidated Interest Coverage Ratio shall not be tested on the Fiscal Quarter ending June 30, 2021; and

(d) EBITDA; Ownership of Assets

• (i) at all times, Consolidated EBITDA, adjusted to exclude EBITDA of all Subsidiaries that are not Loan Parties, shall not be less than 95% of Consolidated EBITDA; and

• (ii) Consolidated Net Tangible Assets, adjusted to exclude the Assets of all Subsidiaries that are not Loan Parties, shall not be less than 95% of Consolidated Net Tangible Assets.

Provided that for purposes of calculating the Consolidated Funded Debt to Consolidated EBITDA Ratio and the Consolidated Interest Coverage Ratio, in each case, commencing on the Fiscal Quarter ending September 30, 2021, the Consolidated EBITDA component of the Consolidated Funded Debt to Consolidated EBITDA Ratio and the Consolidated Interest Coverage Ratio shall be calculated and annualized as follows (such adjustments to the calculation of Consolidated EBITDA are referred to herein as " Consolidated EBITDA Annualization ") unless and until the delivery of a Compliance Certificate with respect to the first Fiscal Quarter ending after written notice by the Cdn. Borrower to the Agent, which notice shall be irrevocable, that Consolidated EBITDA Annualization shall cease to be in effect: i) the Consolidated EBITDA for the Fiscal Quarter ending September 30, 2021 shall be multiplied by four, (ii) the aggregate quarterly Consolidated EBITDA for the Fiscal Quarters ending September 30, 2021 and December 31, 2021 shall be multiplied by two, and (iii) the aggregate quarterly Consolidated EBITDA for the first, second and third Fiscal Quarters ending September 30, 2021, December 31, 2021 and March 31, 2022 shall be multiplied by four-thirds.";

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• 2.6 Section 9.3(n) shall be deleted and replaced with the following:

• "(n) Capital Expenditures : the Borrowers shall not, and shall not permit any other Loan Party to, make capital expenditures, if, after giving effect to such capital expenditures, the aggregate capital expenditures of all Loan Parties (excluding non-cash utilization of existing inventory, but otherwise as determined in accordance with GAAP) for the Fiscal Year ended December 31, 2021, would exceed the Equivalent Amount in Canadian Dollars of $6,000,000.";

• 2.7 Section 9.4(e) shall be deleted and replaced with the following:

• "(e) Borrowing Base : the Cdn. Borrower shall furnish to the Agent within 30 days after the end of each month a Borrowing Base Certificate with an attached listing of each of aged Canadian A/R, US A/R, Approved Insured A/R together with all insurance coverage for such Approved Insured A/R, Blue Chip A/R and EDC A/R, and any Export Development Canada insurance coverage for such EDC A/R, Non-Invoiced A/R, Priority Payables, the Fixed Asset Lending Value, the Eligible Inventory, a calculation of the Lending Limit, and a listing of all aged accounts payable of the Cdn. Borrower on a consolidated basis, allocating trade payables and accruals for the Cdn. Borrower on a consolidated basis, all as at the end of such month;"; and

• 2.8 A new Schedule "O" shall be added to the Agreement in the form attached hereto as Exhibit 1.

3. Fees

3.1 The Cdn. Borrower agrees to pay to the Agent upon the effectiveness of this Agreement, on behalf of each Lender on a pro rata basis, a fee of [Redacted – commercially sensitive information] per annum on the amount of the respective Commitments of each Lender under the Amended Credit Agreement that have been extended pursuant to the terms of this Agreement, and an amendment fee of [Redacted – commercially sensitive information] on the aggregate Commitments of each Lender after giving effect to this Agreement, for a total aggregate fee of [Redacted – commercially sensitive information].

4. CONDITIONS PRECEDENT TO EFFECTIVENESS

4.1 This Agreement shall be effective on the date each of the following conditions precedent are satisfied (or waived by the Lenders hereunder):

• (a) as of the Effective Date, there exists no Default or Event of Default;

• (b) the representations and warranties contained in Article 2 of the Credit Agreement (with this Agreement being a Loan Document and references to the Credit Agreement being deemed to be references to the Amended Credit Agreement) are true and correct as of the Effective Date;

• (c) there shall have not occurred any event or change in either Borrower or any other Loan Party (each on a consolidated basis) since March 31, 2021 which would reasonably be expected to have a Material Adverse Effect;

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• (d) the Cdn. Borrower shall deliver or cause to be delivered to the Agent the following:

• (i) an executed copy of this Agreement; and

• (ii) such other documents, consents, acknowledgements and agreements as may be reasonably requested by the Agent or its counsel; and

• (e) payment of the Agent’s legal fees incurred to date including in connection with this Agreement and any other Loan Documents.

4.2 The conditions precedent set out in Section 4.1 above are inserted for the sole benefit of the Lenders and may be waived only by unanimous consent of the Lenders.

4.3 All certificates, reports, opinions and other documentation which the Lenders are entitled to receive hereunder from time to time shall be in form and substance satisfactory to the Lenders and their counsel, acting reasonably, and shall be provided with sufficient numbers to enable the Agent to distribute at least one original thereof to each Lender.

5. REPRESENTATIONS AND WARRANTIES

Each Borrower hereby represents and warrants as follows to each Lender and the Agent and acknowledges and confirms that each Lender and the Agent is relying upon such representations and warranties:

(a) Capacity, Power and Authority

• (i) It is duly incorporated and is validly subsisting under the laws of its jurisdiction of incorporation, and has all the requisite corporate capacity, power and authority to carry on its business as presently conducted and to own its property; and

• (ii) It has the requisite corporate capacity, power and authority to execute and deliver this Agreement.

• (b) Authorization; Enforceability. It has taken or caused to be taken all necessary action to authorize, and has duly executed and delivered, this Agreement, and each of this Agreement and the Amended Credit Agreement is a legal, valid and binding obligation of it enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, winding up, insolvency, moratorium or other laws of general application affecting the enforcement of creditors' rights generally and to the equitable and statutory powers of the courts having jurisdiction with respect thereto.

• (c) Compliance with Other Instruments. The execution, delivery by it of this Agreement, the performance by it of this Agreement and the Amended Credit Agreement and the consummation of the transactions contemplated therein do not conflict with, result in any breach or violation of, or constitute a default under the terms, conditions or provisions of its articles, by-laws or other constating documents or any unanimous shareholder agreement relating to it, or of any law, regulation, judgment, decree or order binding on or applicable to it or to which its

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property is subject or of any material agreement, lease, licence, permit or other instrument to which it or any of its Subsidiaries is a party or is otherwise bound or by which any of them benefits or to which any of their property is subject and do not require the consent or approval of any Governmental Authority or any other party.

• (d) Credit Agreement Representations and Warranties. Each of the representations and warranties of the Borrowers set forth in Section 2.1 of the Amended Credit Agreement is true and accurate in all material respects as of the date hereof (and in all respects if any such representation or warranty is already qualified by materiality) other than any such representations and warranties which expressly speak of an earlier date.

• (e) No Default. No Default or Event of Default has occurred or is continuing or shall result from or exist immediately after the coming into effect of the amendments and supplements to the Credit Agreement contemplated hereby.

6. CONFIRMATION OF CREDIT AGREEMENT AND OTHER DOCUMENTS

The Credit Agreement and all covenants, terms and provisions thereof, except as expressly amended and supplemented by this Agreement, shall be and continue to be in full force and effect. The Credit Agreement as amended hereby is hereby ratified and confirmed and shall from and after the date hereof continue in full force and effect. Each of the Cdn. Borrower and the U.S. Borrower confirms and agrees that the Guarantee executed and delivered by it in connection with the Credit Agreement is and shall remain in full force and effect in all respects notwithstanding the amendments and supplements contained in this Agreement and that the Guaranteed Obligations (as defined in such Guarantee) shall include all obligations, liabilities and indebtedness of each Borrower to the Lenders under the Amended Credit Agreement.

7. FURTHER ASSURANCES

The parties hereto shall from time to time do all such further acts and things and execute and deliver all such documents as are required in order to effect the full intent of and fully perform and carry out the terms of this Agreement.

8. COUNTERPARTS

This Agreement may be executed in any number of counterparts, including by way of facsimile, each of which shall be deemed to be an original and all of which taken together shall be deemed to constitute one and the same instrument, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. Delivery of an executed counterpart of a signature page of this Agreement by telecopier or other electronic means shall be effective as delivery of a manually executed counterpart of this Agreement.

[ Remainder of Page Intentionally Left Blank ]

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

CDN. BORROWER:

CATHEDRAL ENERGY SERVICES LTD.

Per: "Tom Connors" Name Tom Connors Title President & CEO

Per: "Ian Graham" Name Ian Graham Title Chief Financial Officer

U.S. BORROWER:

CATHEDRAL ENERGY SERVICES, INC.

Per: "Tom Connors" Name Tom Connors Title President

Per: "Ian Graham" Name Ian Graham Title Chief Financial Officer

[Signature Page to Fifth Amending Agreement – Cathedral]

ATB FINANCIAL , as Agent and Lender

Per: (Signed) "Authorized Signatory"

Per: (Signed) "Authorized Signatory"

[Signature Page to Fifth Amending Agreement – Cathedral]

EXHIBIT I

Schedule "O" to the Credit Agreement dated December 13, 2017 between CATHEDRAL ENERGY SERVICES LTD. and CATHEDRAL ENERGY SERVICES, INC., as Borrowers, and a consortium of Lenders with ATB FINANCIAL, as Agent

HASCAP Loan Additional Terms and Conditions

The following terms and conditions will apply to the HASCAP Loan in addition to any terms and conditions set out in the Agreement. Capitalized terms used herein and not otherwise defined herein have the meanings given to them by the Agreement.

1. Establishment of HASCAP Loan: The HASCAP Lender hereby establishes in favour of the HASCAP Borrower the HASCAP Loan which may drawn down by means of a single advance which may be requested by the HASCAP Borrower up to thirty (30) days from the HASCAP Loan Effective Date. Any amount of the HASCAP Loan which is not borrowed on or before such date will be cancelled and the HASCAP Borrower will not be entitled to borrow any amounts under the HASCAP Loan after such date. The HASCAP Loan is nonrevolving. Amounts repaid may not be reborrowed.

2. Purpose of HASCAP Loan: The HASCAP Loan is to be used exclusively to provide additional liquidity to the HASCAP Borrower to finance the Loan Parties' business/commercial operations (excluding, for certainty and without limitation, to fund distributions, payment of management fees, bonuses and similar instruments) for a period of time not exceeding 18 months following the HASCAP Loan Effective Date; for certainty, the application of the proceeds from the HASCAP Loan to (x) repay Operating Borrowings will be permitted so long as the Operating Facility Commitment is not reduced (other than to the extent of temporary advances or Operating Borrowings in excess of the Borrowing Base); (y) repay normally scheduled principal (which schedule of repayments has not been accelerated since March 1, 2020) and interest payments on the Operating Facility; as well as (z) pay ordinary course of business lease, equipment or supplier financing payments; for further certainty, the proceeds from the HASCAP Loan will not be used (A) to make scheduled principal or interest payments that were due prior to the date hereof; (B) for repayment of outstanding Borrowings on the maturity date thereof; or (C) to fund cash sweep payments under outstanding Borrowings and similar types of payments.

3. Availment and Interest Rates: The HASCAP Loan is available by way of a fixed rate loan. The interest rate applicable to the HASCAP Loan is 4% per annum.

4. Repayment: The HASCAP Loan is payable in full on demand by the HASCAP Lender, and the HASCAP Lender may terminate the availability thereof (including any undrawn portion) at any time without notice. Notwithstanding the foregoing, until demand, the HASCAP Borrower shall make interest only payments on the HASCAP Loan monthly in arrears on the last Business Day of each month commencing in the month in which the HASCAP Loan is advanced up to and including the last Business Day of the month in which the anniversary of the advance of the HASCAP Loan occurs. Commencing on the last Business Day of the next succeeding month and on the last Business Day of each month thereafter, the HASCAP Borrower shall make monthly principal payments on the outstanding amount of the HASCAP Loan based on a 108 month amortization period plus accrued interest thereon, with the balance of all amounts owing under the HASCAP Loan being due and payable in full on the Maturity Date.

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1. Prepayment: The HASCAP Loan may be prepaid at anytime upon payment of the Prepayment Amount. For the purposes hereof, "Prepayment Amount" (which the HASCAP Lender and the HASCAP Borrower agree is a genuine pre-estimate of damages and not a penalty) means, in connection with any acceleration or prepayment of the HASCAP Loan prior to the Maturity Date, an amount equal to the greater of three (3) months' interest calculated on the amount accelerated or prepaid, as applicable, and the Yield Maintenance Amount. For the purposes hereof, "Yield Maintenance Amount" means, at any time and with respect to any acceleration or prepayment of the HASCAP Loan prior to the Maturity Date, an amount equal to the amount by which (X) the sum of the present value of all blended monthly instalments of principal and interest payable after the acceleration or prepayment date, as applicable, and until the Maturity Date and the present value of the principal balance which would have been payable on the Maturity Date, exceeds (Y) the principal amount of the HASCAP Loan being accelerated or prepaid, as applicable. These present values shall be calculated using a discount rate equal to the bid-side yield listed in a Bloomberg screen at 11:00 A.M. (Calgary time) on the business day immediately preceding the date of acceleration or prepayment, as applicable, on non-callable Government of Canada bonds having a term equivalent to the remaining term of the HASCAP Loan; the “bid-side yield on non-callable Government of Canada bonds having a term equivalent to the remaining term of the HASCAP Loan” shall mean the bid-side yield to maturity, as determined by the HASCAP Lender, expressed as an annual rate of interest calculated semi-annually and not in advance, on a theoretical non-callable Government of Canada bond, payable in Canadian Dollars, obtained from the interpolation between the bid-side yield of two non-callable Government of Canada bonds, each issued the Business Day prior to the acceleration or prepayment date, as applicable, the first having a maturity closest to but prior to the Maturity Date and the second having a maturity closest to but following the Maturity Date.

2. Conditions Precedent: The obligation of the HASCAP Lender to make available the HASCAP Loan is subject to and conditional upon:

3. (a) no Default or Event of Default having occurred and being continuing;

4. (b) on the date of advance of the HASCAP Loan, the representations and warranties in Section 2.1, other than those stated to be made as at a specific date, are true and correct in all material respects with the same effect as if made as of such date;

5. (c) the HASCAP Lender having received confirmation of the Unique ID # issued by BDC upon completion and submission of BDC’s electronic information form available on BDC's website, bdc.ca/hascap-form (English) in respect of the HASCAP Loan;

6. (d) the HASCAP Lender and BDC have received the BDC Representation Letter, in form and content acceptable to BDC and to the HASCAP Lender, including, without restriction, its enlarged privacy / information-sharing content for each of the months for which the HASCAP Borrower has applied for and has received subsidies under the CEWS Program or the CERS Program (as such terms are defined in the BDC Representation Letter):

   • (i) confirmation from Canada Revenue Agency (the " CRA Confirmation ") evidencing the HASCAP Borrower's application to the CEWS Program or CERS Program and showing a minimum 50% revenue decrease; and

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• (ii) the statements or, as the case may be, cancelled cheques or other acceptable evidence provided by the HASCAP Borrower to the HASCAP Lender evidencing the confirmation that subsidies in amounts identified in the CRA Confirmation, in amounts substantially similar to the amounts set out in the CRA Confirmation, have been received; and

• (e) the HASCAP Lender shall have received such additional documents, information or agreements as it may reasonably require in connection with the HASCAP Loan.

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