Item 1.01 Entry into a Material Definitive Agreement.
Settlement Agreement and Promissory Note
On April 14, 2023, EVO Transportation & Energy Services, Inc. (the “Company”), Titan CNG LLC, a wholly-owned subsidiary of the Company (“Titan CNG”), Falcon Capital, LLC (“Falcon”) and Scott Honour (a former member of the Company’s board of directors), entered into a Settlement Agreement (the “Settlement Agreement”) pursuant to which the parties settled the dispute between the Company and Titan, on the one hand, and Falcon and Mr. Honour, on the other hand, relating to that certain Loan Agreement, dated December 31, 2014, among Tradition Capital Bank, Titan El Toro LLC and Titan CNG, certain equipment located in Fort Worth, Texas, and compensation for board service.
Pursuant to the Settlement Agreement, (i) the parties settled all claims relating to the lawsuit by Falcon against Titan CNG and the Company, (ii) the Company agreed to pay Falcon $60,000, (iii) the Company issued Falcon an unsecured promissory note in the principal amount of $250,000 (the “Promissory Note”), (iv) Falcon released all security interests and liens in all physical property of the Company and Titan CNG, (v) the parties agreed on a process by which to sell the equipment and on the distribution of net proceeds from such sale and (vi) Falcon and Honour released all right, title and interest in and to Titan CNG, the Company and the Company’s subsidiaries. Falcon is entitled to file a confession of judgment if the Company fails to timely cure a missed payment to Falcon or makes more than three untimely payments.
The Promissory Note matures on September 30, 2027 and bears interest at a rate of 6.0% per annum. On January 1, 2024, interest only on the outstanding principal amount will be due and payable in arrears. On February 1, 2024, and on the first day of each month thereafter, principal and interest will be due and payable in arrears. The Promissory Note has customary events of default.
The foregoing summary descriptions of the Settlement Agreement and the Promissory Note do not purport to be complete and are qualified in their entirety by reference to the full texts of the Settlement Agreement and the Promissory Note, copies of which are filed as Exhibit 10.1 and Exhibit 10.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Third Modification Agreement to the Main Street Priority Loan Program Facility
On April 19, 2023, EVO Holding Company, LLC, Ritter Transport, Inc., John W. Ritter Trucking, Inc., Johmar Leasing Company, LLC and Ritter Transportation Systems, Inc. (collectively, the “Borrowers”), the Company, as guarantor, and Commerce Bank of Arizona, Inc. (“Commerce”) entered into the Third Modification Agreement (the “Amendment”) of the Loan Agreement, dated December 14, 2020, among such parties. The Amendment modifies (i) the financial reporting requirements of the Borrowers and
Environmental Alternative Fuels, LLC and (ii) permitted investments to include additional intercompany loans so long as the Borrowers’ debt service coverage ratio, as defined in the Amendment, is at least 1:20:1.00 as of the relevant date.
The foregoing summary description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is filed as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated herein by reference.