8-K
Transportation & Logistics Systems, Inc. (TLSS)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): November 6, 2023
Transportationand Logistics Systems, Inc.
(Exact name of registrant as specified in its charter)
| Nevada | 001-34970 | 26-3106763 |
|---|---|---|
| (State<br> or other jurisdiction<br><br> <br>of<br> incorporation) | (Commission<br><br> <br>File<br> Number) | (IRS<br> Employer<br><br> <br>Identification<br> No.) |
5500Military Trail, Suite 22-357
Jupiter,Florida 33458
(Address of Principal Executive Offices)
(833)764-1443
(Issuer’s telephone number)
Not
Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation to the registrant under any of the following provisions:
| ☐ | Written<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securitiesregistered pursuant to Section 12(b) of the Act: None.
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ForwardLooking Statements
Statements in this report regarding Transportation and Logistics Systems, Inc. (the “Company”) that are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause actual future events or results to differ materially from such statements. Any such forward-looking statements, including, but not limited to, financial guidance, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not directly or exclusively relate to historical facts. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “intend,” “plan,” “goal,” “seek,” “strategy,” “future,” “likely,” “believes,” “estimates,” “projects,” “forecasts,” “predicts,” “potential,” or the negative of those terms, and similar expressions and comparable terminology. These include, but are not limited to, statements relating to future events or our future financial and operating results, plans, objectives, expectations, and intentions. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these expectations may not be achieved. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they represent our intentions, plans, expectations, assumptions, and beliefs about future events and are subject to known and unknown risks, uncertainties and other factors outside of our control that could cause our actual results, performance or achievement to differ materially from those expressed or implied by these forward-looking statements. In addition to the risks described above, these risks and uncertainties include: our ability to successfully execute our business strategies, including integration of acquisitions and the future acquisition of other businesses to grow our company; customers’ cancellation on short notice of master service agreements from which we derive a significant portion of our revenue or our failure to renew such master service agreements on favorable terms or at all; our ability to attract and retain key personnel and skilled labor to meet the requirements of our labor-intensive business or labor difficulties which could have an effect on our ability to bid for and successfully complete contracts; the ultimate geographic spread, duration and severity of the coronavirus outbreak and the effectiveness of actions taken, or actions that may be taken, by governmental authorities to contain the outbreak or ameliorate its effects; our failure to compete effectively in our highly competitive industry could reduce the number of new contracts awarded to us or adversely affect our market share and harm our financial performance; our ability to adopt and master new technologies and adjust certain fixed costs and expenses to adapt to our industry’s and customers’ evolving demands; our history of losses, deficiency in working capital and stockholders’ equity and our ability to achieve sustained profitability; remaining weaknesses in our internal control over financial reporting and our ability to maintain effective controls over financial reporting in the future; our remaining liabilities and indebtedness could adversely affect our business, financial condition and results of operations and our ability to meet our payment obligations; unanticipated and materially adverse developments in our few remaining litigations; the impact of new or changed laws, regulations or other industry standards that could adversely affect our ability to conduct our business; and changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural or man-made disasters.
These forward-looking statements represent our estimates and assumptions only as of the date of this report and, except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this report. Given these uncertainties, you should not place undue reliance on these forward-looking statements and should consider various factors, including the risks described, among other places, in our most recent Annual Report on Form 10-K and in our Quarterly Reports on Form 10-Q, as well as any amendments thereto, filed with the Securities and Exchange Commission.
Item1.01 Entry into a Material Definitive Agreement.
On November 8, 2023, certain wholly-owned subsidiaries of Transportation and Logistics Systems, Inc. (OTC PINK: TLSS) (“TLSS” or the “Company”), a publicly-traded holding company in which its wholly-owned operating subsidiaries, Cougar Express, Inc., Freight Connections, Inc., JFK Cartage, Inc., and Severance Trucking Co., together provide a full suite of logistics and transportation services, namely, TLSS-STI, Inc., Severance Trucking Co., Inc., Severance Warehousing, Inc., and McGrath Trailer Leasing, Inc., entered into a Post-Closing Agreement with Kathryn Boyd, Clyde J. Severance and Robert H. Severance, Jr. (the “Sellers”). On February 3, 2023, the Sellers had sold all of the outstanding stock of Severance Trucking Co., Inc., Severance Warehousing, Inc., and McGrath Trailer Leasing, Inc. to a subsidiary of the Company. The Post-Closing Agreement amended certain terms of the Stock Purchase Agreement, dated January 4, 2023 (the “SPA”), and provided for an accounting of certain post-closing obligations and accounts. Among other things, the Post-Closing Agreement provided for a reduction of $171,887.00 in the principal amount payable under the purchase price promissory note due to a post-closing adjustment of closing date working capital; an extension of the maturity date of the purchase price promissory note from August 1, 2024 to February 1, 2025, with adjustment to its payment schedule; and an indemnification of the former trustee of the Severance Trucking Co. Inc. 401(k) Profit Sharing Plan & Trust company plan for actions taken on behalf of the Company in the period from the closing to the date of her replacement.
Item8.01 Other Events.
On November 6, 2023, the Company received notice that, at a hearing on October 27, 2023, the court In the Matters of the General Assignment for the Benefit of Creditors of Prime EFS LLC and Shypdirect LLC granted the motions of the assignee to approve the Stipulation of Settlement Resolving Potential Avoidance Claims Against Transportation and Logistics Systems, Inc, dated September 28, 2023 (the “Stipulation”). Prime EFS LLC and Shydirect LLC are former subsidiaries of the Company. Under the Stipulation, by payment of $50,000 to the assignee, all further claims of the assignee as well as of Prime EFS LLC and Shypdirect LLC are fully and irrevocably released and discharged.
Item9.01 Financial Statements and Exhibits.
(d) Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated:<br> November 13, 2023 | TRANSPORTATION AND LOGISTICS SYSTEMS, INC. | |
|---|---|---|
| By: | /s/ Sebastian Giordano | |
| Name: | Sebastian<br> Giordano |
Exhibit 10.1
POST-CLOSING AGREEMENT
THISPOST-CLOSING AGREEMENT (this “Agreement”) is made effective as of the 8^th^ day of November, 2023 (the “Effective Date”), by and among Kathryn Boyd (the “Lender’s Representative”), Clyde J. Severance and Robert H. Severance, Jr. (collectively with the Lender’s Representative, the “Lender”) with an address at 10 North Jebb Road, Merrimack, NH 03054, and TLSS-STI, Inc., a Delaware corporation (“Buyer”), Severance Trucking Co., Inc., a Massachusetts corporation, Severance Warehousing, Inc., a Massachusetts corporation and McGrath Trailer Leasing, Inc., a Maine corporation (collectively, the “Companies” and together with Buyer, the “Makers”), with an address at 5500 Military Trail, Suite 22-357, Jupiter, FL 33458. Capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in “SPA” (as hereinafter defined).
WHEREAS, on January 4, 2023, TLSS Acquisition, Inc., a Delaware corporation, and Severance Trucking Co., Inc., a Massachusetts corporation, Severance Warehousing, Inc., a Massachusetts corporation and McGrath Trailer Leasing, Inc., a Maine corporation, as owned by the Lender (collectively, the “Targets”), the Lender, the Lender’s Representative, and other parties thereto entered into a Stock Purchase and Sale Agreement (the “Original SPA”), which was later assigned and amended by that First Amendment to Stock Purchase and Sale Agreement effective February 1, 2023 by and among Buyer, the Targets, the Lender, and other parties thereto (the “First Amendment to the SPA”, and collectively with the Original SPA, the “SPA”);
WHEREAS, the transactions contemplated under the SPA closed effective February 1, 2023;
WHEREAS, in connection with the closing of the transactions under the SPA (the “Closing”), the Lender provided financing to the Makers, as evidenced by a certain Secured Promissory Note dated February 1, 2023, in the principal amount of $1,572,938.86 (the “Note”);
WHEREAS, pursuant to the Note, the first payment of the principal and interest was due on August 1, 2023 (the “First Payment Date”), however, Makers failed to make such first payment as of the First Payment Date;
WHEREAS, Makers paid Lender a late fee of $30,921.54 and certain costs incurred by Lender resulting from Makers’ non-payment in the amount of $19,078.46 on August 15, 2023, and Makers made partial interest payments of (i) $50,000.00 on September 1, 2023 and October 2, 2023, respectively, and (ii) $41,035.98 on November 1, 2023;
WHEREAS, Makers have requested that the Note be amended to modify and extend the repayment terms thereunder, and the Lender has agreed to such modifications pursuant to the terms and conditions set forth herein;
WHEREAS, Buyer made certain covenants in the SPA regarding actions it would take after the Closing that Buyer has failed to complete as required under the SPA including but not limited to under Sections 25(a) and 25(d) of the First Amendment to the SPA;
WHEREAS, Lender permitted Buyer to make the payments required under Section 25(d) of the First Amendment to the SPA in the amount of $25,776.22, representing excess cash and accruals (the “Reconciliation Amount”);
WHEREAS, Lender has agreed that Buyer shall have until November 15, 2023 to terminate close, and make all payments due and outstanding under the credit cards (including, without limitation, the payment of the aggregate outstanding balance of $8,785.91 due on November 15, 2023 for the Amex credit cards), gas cards, bonds, and bank accounts used by the Makers that are associated with or guaranteed by Lender as required by Section 25(a) of the First Amendment to the SPA;
WHEREAS, Lender has requested that the Lender’s Representative be removed as the fiduciary and from any other capacity with respect to the retirement plans of the Companies and Makers have agreed to effectuate the same pursuant to the terms and conditions set forth herein;
WHEREAS, Lender has requested the survival periods set forth under Section 7.1 of the SPA be amended such that the representations and warranties made by Lender under the SPA shall not survive longer than August 1, 2023 and the Lender and the Makers have agreed to modify the survival period of the representations and warranties under the SPA pursuant to the terms and conditions set forth herein;
WHEREAS, the Lender has requested that CSC invoice # 81113825030 in the amount of $208.42, with respect to CSC’s services as registered agent for Severance Trucking Co., Inc., a Massachusetts corporation, in the state of Maine, for the period ending December 31, 2023, be paid by the Makers and the Makers have paid such invoice pursuant to the terms and conditions set forth herein; and
WHEREAS, the Lender requested, and Buyer agrees, to not directly or indirectly take any action that would have the purpose or effect of avoiding or preventing Makers from satisfying their obligations to the Lender, including under the Note as it may be amended from time to time.
NOW,THEREFORE, in consideration of the sum of Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Makers and Lender, intending to be legally bound, do hereby covenant and agree as follows:
1. The parties hereto hereby agree that the Note shall be amended pursuant to the First Amendment to Secured Promissory Note, the form of which is attached hereto as Exhibit A (the “First Amendment to Note”). The First Amendment to Note shall provide for the following payments:
| Payment Date | Late Fee and Collection Costs (assuming no future late payments) | Outstanding Interest (2/1/23 – 1/31/24) | Regular Interest (2/1/24 – 2/1/25) | Principal | Working Capital Deficit | Total Payment | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 12/1/2023 | $ | 0.00 | $ | 47,716.68 | $ | 0.00 | $ | 5,283.32 | $ | 0.00 | $ | 53,000.00 |
| 1/1/2024 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 53,000.00 | $ | 0.00 | $ | 53,000.00 |
| 2/1/2024 | $ | 0.00 | $ | 0.00 | $ | 497.97 | $ | 504,885.18 | $ | 0.00 | $ | 505,383.15 |
| 8/1/2024 | $ | 0.00 | $ | 0.00 | $ | 60,088.25 | $ | 504,885.18 | $ | 0.00 | $ | 564,973.43 |
| 2/1/2025 | $ | 0.00 | $ | 0.00 | $ | 30,708.08 | $ | 504,885.18 | $ | -171,887.00 | $ | 363,706.26 |
Notwithstanding the foregoing, if any of the payments due under the Note, as amended by the First Amendment to Note, are not received by the Lender within five (5) days after its due date, Makers shall pay to Lender, on demand, a late charge of five (5%) percent of such delinquent payment in accordance with the Note, which late charge shall be in addition to any other remedies permitted under the Note.
2. Lender acknowledges that Makers paid to Lender (a) the Reconciliation Amount on August 1, 2023; (b) a late fee of $30,921.54 and certain costs incurred by Lender resulting from Makers’ non-payment in the amount of $19,078.46 on August 15, 2023; and (c) partial interest payments of (i) $50,000.00 on September 1, 2023 and October 2, 2023, respectively, and (ii) $41,035.98 on November 1, 2023. Lender further acknowledges that Makers has paid CSC invoice # 81113825030 in the amount of $208.42, with respect to CSC’s services as registered agent for Severance Trucking Co., Inc., a Massachusetts corporation, in the state of Maine, for the period ending December 31, 2023.
3. Makers hereby acknowledge that Lender has terminated all credit cards and gas cards associated with all parties comprising the Lender and used by the Makers. Makers hereby agree to cause all parties comprising the Lender to be removed from any and all bonds and bank accounts associated with and/or used by the Makers by terminating such bonds and bank accounts on or before November 15, 2023, provided, however, Lender hereby agrees to cooperate with the Makers to execute any documentation reasonably required by the applicable financial institutions to effectuate such removal. In the event the applicable financial institutions do not provide the required documentation in advance of November 15, 2023, or in the event the financial institutions do not process such removal prior to November 15, 2023, despite the good faith efforts of the Makers to cause the applicable documentation to be provided to the Lender’s Representative, such November 15, 2023 deadline shall be extended for a reasonable period of time to effectuate such removal. Makers hereby further agree that Makers shall cause all outstanding amounts due under such credit cards (including, without limitation, the outstanding aggregate balance of $8,785.91 due on November 15, 2023 for the Amex credit cards), gas cards, bonds and bank accounts to be indefeasibly paid in full on or before November 15, 2023. Makers shall provide all evidence requested by Lender’s Representative evidencing (a) Lender’s removal from all credit cards, gas cards, bonds and bank accounts (the “Financial Accounts”) used by the Makers and (b) a statement from the financial institutions of the Financial Accounts with respect to the payment of any and all outstanding amounts due under such Financial Accounts.
4. Lender hereby acknowledges that Makers caused Lender’s Representative to be removed as the Plan Administrator/Trustee for the Severance Trucking Co. Inc. 401(k) Profit Sharing Plan & Trust company plan, effective as of August 24, 2023. Makers hereby agree to cause all parties comprising the Lender to be removed from any other capacity with respect to the retirement plans of the Companies, including any bonds (the “Plan”) on or before November 15, 2023, provided, however, Lender’s Representative hereby agrees to cooperate with the Makers to execute any documentation reasonably required by the applicable financial institution to effectuate such removal. In the event the applicable financial institution does not provide the required documentation in advance of November 15, 2023, or in the event the financial institution does not process such removal prior to November 15, 2023, despite the good faith efforts of the Makers to cause the applicable documentation to be provided to the Lender’s Representative, such November 15, 2023 deadline shall be extended for a reasonable period of time to effectuate such removal. Makers further agree to provide evidence that during the period between Closing and the time that the Lender is removed from the Plan, (a) that the Plan is in compliance with all laws and contractual requirements, and (b) that all applicable contributions and earnings have been deposited into the required Plan accounts.
5. Makers shall not directly or indirectly take any action that would have the purpose or effect of avoiding or preventing Makers from satisfying their obligations to the Lender, including under the Note as it may be amended from time to time.
6. Makers and Lender hereby agree that the SPA shall be amended and modified as follows:
(a) Section 7.1 of the SPA, entitled Survival of Representations and Warranties, shall be deleted in its entirety and replaced as follows:
“The representations and warranties contained in Article II and in any certificate delivered pursuant to this Agreement shall survive the Closing for a period of twelve (12) months after the Closing Date. The representations and warranties contained in Article III hereof and in any certificate delivered pursuant to this Agreement shall survive the Closing for a period of six (6) months after the Closing Date. All covenants and other agreements in this Agreement shall survive the Closing in accordance with their express terms, and if there are no such survival terms, the covenants and agreement shall expire on the Closing Date.
(b) Section 7.2 of the SPA, entitled Indemnification by Shareholders, shall be amended by deleting “twelve (12) months” and replacing the same with “six (6) months”, which six (6) month period ended on August 1, 2023.
(c) The term “Force Majeure Event” under Article X of the SPA shall be deleted in its entirety and replaced as follows:
“ForceMajeure Event” means an act or event that is beyond the reasonable control, and not the result of the fault or negligence, of the affected Party and such Party had been unable to overcome such act or event with the exercise of due diligence. Subject to the foregoing conditions, “Force Majeure Event” shall include, but shall not be limited to, the following acts or events: (a) natural phenomena such as storms, hurricanes, floods, lightening, and earthquakes; (b) explosions or fires arising from lightning or other causes unrelated to the acts or omissions of the Party seeking to be excused from performance; (c) acts of war or public disorders, civil disturbances, riots, insurrection, sabotage, epidemics, pandemics, terrorist acts, or rebellion; (d) strikes or labor disputes, and (e) the impossibility for one of the Parties, despite reasonable efforts, to obtain any approval necessary to enable the affected Party to fulfill its obligations, provided that the Party suffering a Force Majeure Event shall give notice within three (3) days of the Force Majeure Event to the other Parties, stating the period of time the occurrence is expected to continue and shall use diligent efforts to end the failure or delay and ensure the effects of such Force Majeure Event are minimized. Notwithstanding anything herein to the contrary, in no event shall a Force Majeure Event excuse Buyer’s and the Companies’ payment obligations under the Note and the Security Agreement, as they may be amended or modified from time to time.
7. Makers shall enter into that certain Indemnification Agreement attached hereto as Exhibit B.
8. Lender and Makers hereby acknowledge and agree that the Target Working Capital was $802,756.00 and the Closing Working Capital was $630,869.00 resulting in a deficit of $171,887.00 (the “Working Capital Deficit”). Lender and Makers further agree that the Working Capital Deficit is due and owing to Buyer from Lender and such amount shall be reduced from the payments made by Maker under and pursuant to the First Amendment to the Note.
9. (a) This Agreement shall be governed by, enforced and construed under the laws of the Commonwealth of Massachusetts. Venue for all actions, litigation and/or other proceedings arising out of this Agreement shall be exclusively in the state or federal courts located in the Commonwealth of Massachusetts. If any action, litigation or other proceeding arising out of this Agreement is commenced by any party against any other party, then the prevailing party in such action, litigation or proceeding shall recover all fees, costs and expenses incurred thereby therein (including, without limitation, reasonable attorneys’ fees through and including all appellate levels and proceedings) from the non-prevailing party.
(b) Except as expressly modified by this Agreement, the SPA shall remain in full force and effect. In the event of any inconsistency between the terms of this Agreement and the SPA, the terms of this Agreement shall supersede and control only to the extent of such inconsistency. This Agreement contains the entire agreement and understanding between the parties with respect to the subject matter hereof, and all prior or contemporaneous agreements, understandings, terms, conditions, representations, warranties, covenant, agreements and statements, whether oral or written, are merged herein. This Agreement may be amended or modified only by a written instrument executed by the party against whom enforcement is sought. This Agreement shall inure to the benefit of and shall be binding upon the parties and their respective heirs, personal representatives, successors and/or assigns.
(c) The waiver of a party of any default, term, condition, covenant, agreement or other provision of this Agreement must be in writing signed by the party waiving such default, term, condition, covenant, agreement or other provision. If any provision of this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, then such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement and this Agreement shall be construed as if the invalid, illegal or unenforceable provision had never been contained herein. The parties have participated fully in the negotiation of this Agreement, and accordingly, this Agreement shall not be more strictly construed against any one of the parties.
(d) Time is of the essence with regard to every term, condition, covenant, agreement and other provision of this Agreement.
(e) This Agreement may be executed in multiple counterparts, each of which individually shall be deemed an original, but when taken together shall be deemed to be one and the same Agreement.
(f) The recitals in this Agreement are incorporated in and made a part of this Agreement as if fully set forth in the body of the Agreement.
IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date first set forth above.
| LENDER: | |
|---|---|
| Kathryn<br> Boyd | |
| Clyde<br> J. Severance | |
| Robert<br> H. Severance, Jr. | |
| MAKERS: | |
| --- | --- |
| TLSS-STI, Inc., a Delaware corporation | |
| By: | |
| Sebastian<br> Giordano, CEO | |
| Severance Trucking Co., Inc., a Massachusetts | |
| corporation | |
| By: | |
| Sebastian<br> Giordano, CEO | |
| Severance Warehousing, Inc., a Massachusetts corporation | |
| By: | |
| Sebastian<br> Giordano, CEO | |
| McGrath Trailer Leasing, Inc., a Maine corporation | |
| By: | |
| Sebastian<br> Giordano, CEO |
ExhibitA
FirstAmendment to Secured Promissory Note
Seeattached
ExhibitB
IndemnificationAgreement
Seeattached
Exhibit10.2
FIRSTAMENDMENT TO SECURED PROMISSORY NOTE
THISFIRST AMENDMENT TO SECURED PROMISSORY NOTE (this “First Amendment”) is entered into by and between TLSS-STI, Inc., a Delaware corporation, Severance Trucking Co., Inc. a Massachusetts corporation, Severance Warehousing, Inc., a Massachusetts corporation and McGrath Trailer Leasing, Inc., a Maine corporation (individually, a “Maker” and collectively, the “Makers”), and Kathryn Boyd, Clyde J. Severance, and Robert H. Severance, Jr. (collectively, the “Lender”) effective as of November 8, 2023.
WHEREAS, Makers executed a Secured Promissory Note dated as of February 1, 2023 in favor of Lender, in the original principal amount of OneMillion Five Hundred Thousand Seventy Two Thousand Nine Hundred and Thirty Eight and 86/100 ($1,572,938.86) Dollars (the “Note”);
WHEREAS, pursuant to the Note, the first payment of the principal in the amount of $524,312.95 and interest in the amount of $94,117.77 was to be due on August 1, 2023 (the “First Payment Date”);
WHEREAS, the Makers were unable to make the first payment on the First Payment Date, however, Makers paid Lender a late fee of $30,921.54 and certain costs incurred by Lender resulting from Makers’ non-payment in the amount of $19,078.46 on August 15, 2023, and Makers made partial interest payments of (i) $50,000.00 on September 1, 2023 and October 2, 2023, respectively, and (ii) $41,035.98 on November 1, 2023; and
WHEREAS, Makers have requested the Note be amended to modify and extend the payment terms and, without waiving any rights or remedies with respect to any future defaults, Lender agrees to amend the Note as more particularly set forth herein.
NOWTHEREFORE, in consideration of the sum of Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Makers and Lender hereby agree as follows:
1. The foregoing recitations are true and correct and are incorporated herein by reference. To the extent of any inconsistency between the terms of this First Amendment and the terms of the Note, the terms of this First Amendment shall supersede and control to the extent of such inconsistency. Terms not otherwise defined herein shall have the meaning set forth in the Note.
2. Section 2 of the Note, entitled, Payments, shall be amended by deleting subsection (a) in its entirety and replace the same with the following:
“(a) The outstanding principal balance, accrued and unpaid interest, future interest payments, costs incurred in the collection and enforcing payments under the Note, and a late charge shall be paid by Makers to Lender as set forth on the schedule attached hereto as ExhibitA (the “Modified Payment Schedule”). In addition to the payments required under the Modified Payment Schedule, Makers may incur additional late charges or other fees and charges due to an Event of Default (“Default Amounts”). Makers agree to pay such Default Amount to Lender upon demand. All payments due hereunder shall be paid by wire transfer pursuant to the wire instructions attached hereto as Exhibit B.”
3. Section 4 of the Note, entitled, Default, shall be amended by adding the following after subsection (f), “or, (g) any breach, default, or non fulfilment of obligations by any Maker under (i) the Post-Closing Agreement dated November 8, 2023 among Makers and Lender (the “Post-Closing Agreement”), the Indemnification Agreement among Makers, Kathryn Boyd, and other parties thereto dated November 8, 2023, or (iii) the Stock Purchase and Sale Agreement dated January 4, 2023 among TLSS Acquisition, Inc., a Delaware corporation, Makers, Lender, and other parties thereto, which was later assigned and amended by that First Amendment to Stock Purchase and Sale Agreement effective February 1, 2023 by and among Makers, Lender, and other parties thereto, and further modified by the Post-Closing Agreement (collectively, the “SPA”).
4. Section 5 of the Note, entitled, Late Charge, shall be amended by deleting “ten (10) days” and replacing the same with “five (5) days”.
5. Except as modified herein, all other terms and conditions of the Note shall remain in full force and effect. The Note, as amended by this First Amendment, shall continue to be secured and guaranteed by the Security Agreement, the corporate guaranty provided by Makers’ affiliate, all liens securing Lender’s rights under the Note, and all other rights of Lender under law or contract.
6. This First Amendment may be executed in any number of counterparts, each of which, when executed, shall be deemed an original and all of which shall be deemed one and the same instrument.
[Signaturepage follows]
INWITNESS WHEREOF, Lender and Makers have executed this First Amendment as of the day and year first above written.
| LENDER: | |
|---|---|
| Kathryn<br> Boyd | |
| Clyde<br> J. Severance | |
| Robert<br> H. Severance, Jr. | |
| MAKERS: | |
| --- | --- |
| TLSS-STI, Inc., a Delaware corporation | |
| By: | |
| Sebastian<br> Giordano, CEO | |
| Severance Trucking Co., Inc., a Massachusetts | |
| Corporation | |
| By: | |
| Sebastian<br>Giordano, CEO | |
| Severance Warehousing, Inc., a Massachusetts | |
| Corporation | |
| By: | |
| Sebastian<br>Giordano, CEO | |
| McGrath Trailer Leasing, Inc., a Maine corporation | |
| By: | |
| Sebastian<br>Giordano, CEO |
ExhibitA
PaymentSchedule
| Payment Date | Late Fee and Collection Costs (assuming no future late payments) | Outstanding Interest (2/1/23 – 1/31/24) | Regular Interest (2/1/24 – 2/1/25) | Principal | Working Capital Deficit | Total Payment | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 12/1/2023 | $ | 0.00 | $ | 47,716.68 | $ | 0.00 | $ | 5,283.32 | $ | 0.00 | $ | 53,000.00 |
| 1/1/2024 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 53,000.00 | $ | 0.00 | $ | 53,000.00 |
| 2/1/2024 | $ | 0.00 | $ | 0.00 | $ | 497.97 | $ | 504,885.18 | $ | 0.00 | $ | 505,383.15 |
| 8/1/2024 | $ | 0.00 | $ | 0.00 | $ | 60,088.25 | $ | 504,885.18 | $ | 0.00 | $ | 564,973.43 |
| 2/1/2025 | $ | 0.00 | $ | 0.00 | $ | 30,708.08 | $ | 504,885.18 | $ | -171,887.00 | $ | 363,706.26 |
ExhibitB
WireInstructions for Lender
To be attached
Exhibit 10.3
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (“Agreement”), dated effective November 8, 2023 is by and among Kathryn Boyd (the “Indemnitee”); TLSS-STI, Inc., a Delaware corporation (“Buyer”); and Severance Trucking Co., Inc., a Massachusetts corporation, Severance Warehousing, Inc., a Massachusetts corporation and McGrath Trailer Leasing, Inc., a Maine corporation (each an “Indemnitor”, and collectively, the “Indemnitors”).
WHEREAS, Indemnitee was a trustee of a certain retirement plan established and maintained for the benefit of the employees of certain of the Indemnitors (the “Plan”);
WHEREAS, as a trustee of the Plan, Indemnitee had certain obligations and responsibilities including under the Employee Retirement Income Security Act of 1974 (“ERISA”);
WHEREAS, effective February 1, 2023 (the “Closing Date”), Buyer purchased all of the issued and outstanding equity of the Indemnitors (the “Company Sale”);
WHEREAS, following the Company Sale, Buyer, Sebastian Giordano (the “Successor Trustee”), and certain employees and affiliates of Buyer had, and continue to have, sole control over the operations of the Plan, including but not limited to contributions, deposits, investments, and all related administrative activities;
WHEREAS, Successor Trustee is the current trustee of the Plan following the resignation and removal of Indemnitee; and
WHEREAS, in order to provide protection for certain actions occurring following the Company Sale but prior to Indemnitee’s resignation and removal from the Plan, the Buyer and the Indemnitors wish to provide in this Agreement for the indemnification of, and the advancement of expenses to, Indemnitee as set forth in this Agreement, and coverage under any applicable insurance policies, to the extent such insurance is maintained for the coverage of Indemnitee under Buyer or an Indemnitor’s insurance policies.
NOW, THEREFORE in consideration of the sum of Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall have the following meanings:
“Claim” means:
(a) any threatened, pending, or completed action, suit, proceeding, or alternative dispute resolution mechanism, whether civil, criminal, administrative, arbitrative, investigative, or other, and whether made pursuant to federal, state, or other law; or
(b) any inquiry, hearing, or investigation that Indemnitee determines might lead to the institution of any such action, suit, proceeding, or alternative dispute resolution mechanism.
“ExpenseAdvance” means any payment of Expenses advanced to Indemnitee by the Indemnitor Group.
“Expenses” means any and all reasonable expenses, including reasonable attorneys’ and experts’ fees, court costs, transcript costs, travel expenses, duplicating, printing, and binding costs, telephone charges, and all other costs and expenses incurred in connection with investigating, defending, being a witness in, or participating in (including on appeal), or preparing to defend, be a witness in, or participate in, any Claim. Expenses also shall include (a) Expenses incurred in connection with any appeal resulting from any Claim, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent and (b) Expenses incurred by Indemnitee in connection with the interpretation, enforcement, or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
“IndemnifiableEvent” means any event or occurrence, whether occurring before, on, or after the date of this Agreement, related to (a) Indemnitee serving as a trustee, fiduciary, representative, or agent of the Plan following the Closing Date; (b) the failure to pay over contributions into the Plan after the Closing Date; or (c) by reason of an action or inaction by Successor Trustee, Buyer, any Indemnitor, or any of their officers, directors, employees, agents, or affiliates in any capacity (whether or not serving in such capacity at the time any Loss is incurred for which indemnification can be provided under this Agreement) with respect to the Plan. For clarification, an Indemnifiable Event shall not include any Claim arising solely from any act or omission of Indemnitee before the Closing Date.
“Losses” means any and all Expenses, damages, losses, liabilities, judgments, fines, penalties (whether civil, criminal, or other), ERISA excise taxes, amounts paid or payable in settlement, including any interest, assessments, any federal, state, local, or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this Agreement, and all other charges paid or payable in connection with investigating, defending, being a witness in, or participating in (including on appeal), or preparing to defend, be a witness in, or participate in, any Claim.
2. Indemnification. Buyer and the Indemnitors (the “IndemnitorGroup”) shall indemnify and hold harmless Indemnitee against any and all Losses if Indemnitee was or is or becomes a party to or participant in, or is threatened to be made a party to or participant in, any Claim by reason of or arising in part out of an Indemnifiable Event, including without limitation Claims brought by or in the right of the Indemnitor Group, Claims brought by third parties, and Claims in which Indemnitee is solely a witness, to the fullest extent permitted by the laws of the applicable state or tribunal where a Claim has been threatened or initiated.
3. Hold Harmless. The Indemnitor Group expressly waives and releases any and all Claims, now known or hereafter known, against the Indemnitee on account of any Indemnifiable Event and covenant not to make or bring any such Claim against Indemnitee, and forever release and discharge Indemnitee from liability under such Claims.
4. Advancement of Expenses. Indemnitee shall have the right to advancement by the Indemnitor Group, prior to the final disposition of any Claim by final adjudication to which there are no further rights of appeal, of any and all Expenses actually and reasonably paid or incurred by Indemnitee in connection with any Claim arising out of an Indemnifiable Event. Without limiting the generality or effect of the foregoing, within three (3) business days after any written request by Indemnitee, the Indemnitor Group shall, in accordance with such request, (a) pay such Expenses on behalf of Indemnitee, (b) advance to Indemnitee funds in an amount sufficient to pay such Expenses, or (c) reimburse Indemnitee for such Expenses. In connection with any request for Expense Advances, Indemnitee shall not be required to provide any documentation or information to the extent that the provision thereof would undermine or otherwise jeopardize attorney-client privilege.
5. Indemnification for Expenses in Enforcing Rights. To the fullest extent allowable under applicable law, the Indemnitor Group shall also indemnify against, and, if requested by Indemnitee, shall advance to Indemnitee, any Expenses actually and reasonably paid or incurred by Indemnitee in connection with (a) any action or proceeding by Indemnitee for indemnification or reimbursement or advance payment of Expenses by the Indemnitor Group under any provision of this Agreement or under any other agreement now or hereafter in effect relating to Indemnifiable Events or (b) seeking recovery under any insurance policies maintained by any Indemnitor or Buyer.
6. Notification and Defense of Claims.
(a) Notification of Claims. Indemnitee shall notify the Successor Trustee in writing as soon as practicable of any Claim which could relate to an Indemnifiable Event or for which Indemnitee could seek Expense Advances, including a brief description (based upon information then available to Indemnitee) of the nature of, and the facts underlying, such Claim. The failure by Indemnitee to timely notify the Successor Trustee hereunder shall not relieve the Indemnitor Group from any liability hereunder. To the extent insurance coverage is available, upon notification of any Claim, the Indemnitor Group shall give prompt written notice to the applicable insurers in accordance with the procedures set forth in the applicable policies and shall thereafter take all necessary or desirable action to cause it to pay, on behalf of the applicable Indemnitor, all amounts payable as a result of such Claims in accordance with the terms of such policies. The Indemnitor Group shall provide to Indemnitee a copy of such notice delivered to the applicable insurers, and copies of all subsequent correspondence between such Indemnitor or Buyer, as the case may be, and such insurers regarding the Claim, in each case substantially concurrently with the delivery or receipt thereof by the Indemnitor or Buyer.
(b) Defense of Claims. The Indemnitor Group shall be entitled to participate in the defense of any Claim relating to an Indemnifiable Event at its own expense. Indemnitee shall have the right to employ her own legal counsel in such Claim and all Expenses related to such counsel shall be borne by the Indemnitor Group.
7. Indemnification as a Witness. To the extent that Indemnitee’s involvement in a Claim relating to an Indemnifiable Event is to prepare to serve and serve as a witness, and not as a party, Indemnitee shall be indemnified against all Losses incurred in connection therewith to the fullest extent allowable by law.
8. Standard of Conduct. The Indemnitor Group has determined that Indemnitee has met the applicable standard of conduct required for the Indemnitor Group to provide the indemnification set forth herein. To the extent that the Indemnitor Group is required by law to make any further standard of conduct determinations with respect to any Claim, the Indemnitor Group and any person or persons making such determination shall presume that Indemnitee has satisfied the applicable standard of conduct required for the Indemnitor Group to provide the indemnification set forth herein and is entitled to indemnification. In all circumstances, the Indemnitor Group shall have the burden of proof to establish that Indemnitee is not so entitled to the indemnification provided herein. Any standard of conduct determination that is adverse to Indemnitee may be challenged by Indemnitee. No determination by the Indemnitor Group (including by its directors or any independent counsel) that Indemnitee has not satisfied any applicable standard of conduct may be used as a defense to any legal proceedings brought by Indemnitee to secure indemnification or reimbursement or advance payment of Expenses by the Indemnitor Group hereunder or create a presumption that Indemnitee has not met any applicable standard of conduct. In addition, the knowledge and/or actions, or failures to act, of any director, officer, agent, or employee of the Indemnitor Group shall not be imputed to Indemnitee for purposes of determining any applicable standard of conduct or the right to indemnity hereunder. For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or without court approval), or conviction, or upon a plea of nolo contendere or its equivalent, will not create a presumption that Indemnitee did not meet any applicable standard of conduct or that indemnification hereunder is otherwise not permitted.
9. Duration. All agreements and obligations of the Indemnitor Group contained herein shall continue (a) so long as Indemnitee may be subject to any possible Claim relating to an Indemnifiable Event (including any rights of appeal thereto) and (b) throughout the pendency of any proceeding (including any rights of appeal thereto) commenced by Indemnitee to enforce or interpret their rights under this Agreement, even if, in either case, Indemnitee may have ceased to serve in such capacity at the time of any such Claim or proceeding.
10. Non-Exclusivity. The rights of Indemnitee hereunder will be in addition to any other rights Indemnitee may have under any other agreement, applicable law, or otherwise (each, an “OtherIndemnity Provision”); provided, however, that (a) to the extent that Indemnitee otherwise would have any greater right to indemnification under any Other Indemnity Provision, Indemnitee will be deemed to have such greater right hereunder and (b) to the extent that any change is made to any Other Indemnity Provision which permits any greater right to indemnification than that provided under this Agreement as of the date hereof, Indemnitee will be deemed to have such greater right hereunder. In cases of conflict between this Agreement and any Other Indemnity Provision, the terms providing the greater amount of indemnification for the Indemnitee shall control.
11. Amendments. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be binding unless in the form of a writing signed by the party against whom enforcement of the waiver is sought, and no such waiver shall operate as a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof.
12. Binding Effect. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all of the business and/or assets of any of the Indemnitor Group), assigns, spouses, heirs, and personal and legal representatives. The Indemnitor Group shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation, or otherwise) to all, substantially all, or a substantial part of the business and/or assets of an Indemnitor or Buyer, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that such Indemnitor or Buyer would be required to perform if no such succession had taken place.
13. Severability. The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any portion thereof) are held by a court of competent jurisdiction to be invalid, illegal, void, or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. Upon such determination that any term or other provision is invalid, illegal, or unenforceable, 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 a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
14. Notices. All notices, requests, demands, and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by electronic mail with confirmation of delivery receipt activated, hand delivered, or mailed, by postage prepaid, certified, or registered mail:
(a) if to Indemnitee, to the address set forth on the signature page hereto.
(b) if to any Indemnitor, the Indemnitor Group or the Successor Trustee, to:
| TLSS-STI,<br> Inc. | With<br> a copy to: |
|---|---|
| c/o<br> Sebastian Giordano | Robert<br> A. Feingold, Esq. |
| 500<br> Military Trail, Suite 22-357 | robert@rafeingoldlaw.com |
| Jupiter,<br> FL 33458 | |
| Sebastian.Giordano@tlss-inc.com |
Notice of change of address shall be effective only when given in accordance with this Section. All notices complying with this Section shall be deemed to have been received on the date of delivery if sent by electronic mail, the date of delivery if sent by hand delivery or on the third business day after mailing.
15. Governing Law and Forum. This Agreement shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Massachusetts without giving effect to its principles of conflicts of laws. The Indemnitor Group and Indemnitee hereby irrevocably and unconditionally: (a) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in a state or federal court in the Commonwealth of Massachusetts (the “Massachusetts Venue”), (b) consent to submit to the exclusive jurisdiction of a court within the Massachusetts Venue for purposes of any action or proceeding arising out of or in connection with this Agreement, and (c) waive, and agree not to plead or make, any claim that a court lacks venue or that any such action or proceeding brought in a court within the Massachusetts Venue has been brought in an improper or inconvenient forum.
16. Headings; Section References. The headings of the sections and paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction or interpretation thereof. Except as otherwise indicated, section references herein refer to sections of this Agreement.
17. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original, but all of which together shall constitute one and the same Agreement.
[signature page follows]
INWITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
| INDEMNITOR GROUP | |
|---|---|
| TLSS-STI, INC., a Delaware corporation | |
| By: | |
| Sebastian<br> Giordano, CEO | |
| SEVERANCE TRUCKING CO., INC., a Massachusetts | |
| corporation | |
| By: | |
| Sebastian<br> Giordano, CEO | |
| SEVERANCE WAREHOUSING, INC., a Massachusetts corporation | |
| By: | |
| Sebastian<br> Giordano, CEO | |
| MCGRATH TRAILER LEASING, INC., a Maine corporation | |
| By: | |
| Sebastian<br> Giordano, CEO | |
| INDEMNITEE | |
| Kathryn Boyd |
Exhibit99.1
Exhibit 99.2
