Item 1.01. Entry into a Material Definitive Agreement.
Issuance of a Secured Promissory Note
As previously disclosed by Vivakor, Inc. (the "Company") in its Current Report
on Form 8-K filed with the Securities and Exchange Commission (the "Commission")
on December 20, 2021, on December 14, 2021, the Company, together with its
subsidiary, Vivaventures Energy Group, Inc., entered into a Services Agreement
(the "Agreement") with Al Dali International for Gen. Trading & Cont. Co., a
company organized under the laws of Kuwait ("DIC"). The Government of Kuwait and
the United Nations, acting through the Kuwait Oil Company ("KOC") has awarded to
Enshaat Al Sayer rights to remediate contaminated soil under the Kuwait
Remediation Program pursuant to the South Kuwait Excavation, Transportation and
Remediation Project ("KOC Remediation Contract"). To fulfill its role, Enshaat
Al Sayer has engaged DIC and the Company to perform contaminated soil treatment
for the KOC Remediation Contract using the Company's patented technology for
extracting hydrocarbons, through the Company's Remediation Processing Center
("RPC") plants.
On June 20, 2023, the Company issued a 15% secured promissory note (the "Note")
due as described below, to DIC, in the principal amount of up to $1,950,000 (the
"Principal Amount"), in relation to the Services Agreement. The Company will use
the proceeds of the Note in refurbishing, relocating and fully installing the
Company's RPC currently located in Vernal, Utah to DIC's location in Kuwait.
As security interest to secure repayment of the Note, the Company issued DIC an
option to purchase 1,000,000 shares of the Company's common stock at an exercise
price of $1.179 per share (the "Option"). At any time there are amounts due to
DIC under the Note, DIC may use the amounts then outstanding to purchase some or
all of the shares under the Option by using the outstanding amounts as payment
of the exercise price under the Option. The Company also granted DIC a security
interest in the Company's Trial Remediation Processing Center that is currently
on-site at the DIC facility in Kuwait. Additionally, the Company granted DIC a
security interest in the RPC.
The Company will repay the amounts due under the Note from the operations of the
RPC. Under the terms of the Agreement, the Company is entitled to $20 per ton of
material processed through the RPC from DIC. In order to repay the amounts due
under the Note, DIC will deduct $12 per ton of material processed from the
amounts due to the Company until all amounts due under the Note have been
repaid.
Following an event of default, as defined in the Note, the Company will be
subject to a penalty of $5,000 per day. Any penalties incurred under the Note
will be added to the Principal Amount due and owing under the Note.
This summary is not a complete description of all of the terms of the Note and
the Option and is qualified in its entirety by reference to the full text of the
Note and the Option, forms of which are filed as Exhibit 4.1 and 4.2
respectively hereto, which are incorporated by reference into this Item 1.01.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of a Registrant.
To the extent required by this Item 2.03, the information contained in Item 1.01
is incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity Securities.
To the extent required by this Item 3.02, the information contained in Item 1.01
is incorporated herein by reference. The Options were issued to DIC in reliance
upon an exemption from the registration requirements of the Securities Act of
1933, as amended, pursuant to Section 4(a)(2) thereof as a transaction not
involving any public offering.
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Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
Exhibit No. Description
4.1 Aldali Int'l for Gen. Trading & Cont. Co. Promissory Note in the
principal amount of $1,950,000 dated May 31, 2023
4.2 Vivakor Inc. Notice of Grant of Non-Qualified Stock Options
10.1 Form of Services Agreement (incorporated by reference to Exhibit 10.1
of the Company's Current Report on Form 8-K filed with the Commission on
December 20, 2021)
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