| 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.