Item 1.01Entry Into a Materially Definitive Agreement.
Eleventh Amendment to Credit Agreement
On July 28, 2021, Evolve Transition Infrastructure LP (“Evolve”), as borrower, entered into that certain Eleventh Amendment to Third Amended and Restated Credit Agreement with the guarantors party thereto, Royal Bank of Canada, as administrative agent (the “Agent”) and the lenders party thereto (the “Eleventh Amendment” and the Third Amended and Restated Credit Agreement, as amended by the Eleventh Amendment, the “Amended Credit Agreement”). Pursuant to the Eleventh Amendment, the parties agreed to, among other things: (a) amend the definition of “Excluded Cash” to include (i) cash and cash equivalents set aside by Evolve for the purposes of acquiring equity interests in Levo Mobility LLC (“Levo JV”) in consideration for capital contributions of cash or cash equivalents made by Evolve to Levo JV (a “Levo JV Investment”), (ii) cash and cash equivalents of up to $1 million for the proceeds of the issuance or at-the-market sale of Evolve’s equity interests, and (iii) any cash and cash equivalents received by Evolve from Stonepeak Investors (as defined in the Amended Credit Agreement) for the purposes of making a Levo JV Investment, in each case, subject to prior or concurrent written notice to the Agent of the amounts and Evolve’s intention to use such amounts for purposes of making a Levo JV Investment in accordance with the Amended Credit Agreement; and (b) expand the exemptions under the Investments, Loans and Advances negative covenant to permit (i) the payment or reimbursement by Evolve of up to $350,000 in legal and due diligence costs of Levo JV, (ii) any Levo JV Investment made by Evolve using cash or cash equivalent proceeds of a concurrent contribution of capital to Evolve from Stonepeak Investors, or (iii) additional Levo JV Investments, capped at $1 million, made by Evolve from the proceeds of the issuance or at-the-market sale by Evolve of any equity interests in Evolve.
The foregoing description of the Eleventh Amendment does not purport to be complete and is qualified in its entirety by the full text of the Eleventh Amendment, a copy of which is filed as Exhibit 10.1 hereto and incorporated herein by reference.
Warrant Amendment
As previously disclosed, on August 2, 2019, the Partnership issued that certain Warrant Exercisable for Junior Securities to Stonepeak Catarina Holdings LLC (“Stonepeak”), which was amended by Amendment No. 1 to Warrant Exercisable for Junior Securities, dated February 24, 2021, and Amendment No. 2 to Warrant Exercisable for Junior Securities, dated May 4, 2021 (as amended, the “Warrant”). The Warrant may be exercised at any time and from time to time until the later of August 2, 2026 and the date 30 days after the date on which all of the Class C Preferred Units representing limited partner interests in the Partnership (“Class C Preferred Units”) have been redeemed for a number of Junior Securities (as such term is defined in the Warrant) equal to 10% of each applicable class of Junior Securities then outstanding as of the exercise date.
As previously disclosed, on November 16, 2020, the Partnership and Stonepeak entered into a letter agreement (the “Stonepeak Letter Agreement”), and in accordance with the Stonepeak Letter Agreement, on July 30, 2021, the Partnership received written notice of Stonepeak’s election to receive distributions on the Class C Preferred Units for the quarter ended June 30, 2021 in common units representing limited partner interests in the Partnership (“Common Units”). In accordance with the Stonepeak Letter Agreement, the Partnership will issue 8,012,850 Common Units (the “Q221 Stonepeak Units”) to Stonepeak on August 20, 2021.
As previously disclosed, the Partnership’s Long-Term Incentive Plan, effective March 6, 2015 (the “LTIP”), provides that upon the issuance of additional Common Units from time to time, the maximum number of Common Units that may be delivered or reserved for delivery with respect to the LTIP shall be automatically increased (such increase, the “LTIP Increase”) by a number of Common Units equal to the lesser of (i) fifteen percent (15%) of such additional Common Units, or (ii) such lesser number of Common Units as determined by the board of directors (the “Board”) of Evolve Transition Infrastructure GP LLC, the Partnership’s general partner (the “General Partner”). On August 2, 2021, the Board determined that the LTIP Increase with respect to the Q221 Stonepeak Units will be fifteen percent (15%).