Exhibit
10.3


 


SECURITY
AGREEMENT


 


EVO
Transportation & Energy Services, Inc., a Delaware corporation, and Thunder Ridge Transport, Inc., a Missouri corporation,
(collectively “Debtor”) having an address of 8285 West Lake Pleasant Parkway Peoria, Arizona 85382, and Billy L. Peck,
Jr. (“Secured Party”), hereby agree, effective June 1, 2018, as follows:


 


1.
Background and Purpose


 


The
parties acknowledge that EVO Transportation & Energy Services, Inc. has executed a promissory note, of even date herewith,
payable to Secured Party in the original principal amount of Two Million Five Hundred Thousand Dollars ($2,500,000) (“Note”).
The parties further acknowledge that to secure EVO Transportation & Energy Services, Inc.’s obligations under the Note,
and Debtor’s obligations under this Agreement, Debtor has agreed to grant Secured Party a security interest as provided
below.


 


2.
Grant of Security Interest


 


To
secure Debtor’s Obligations (as defined in Paragraph 3 below), Debtor grants to Secured Party a first priority, purchase
money security interest in the Collateral (as defined in Paragraph 4 below).


 


3.
Obligations


 


For
purposes of this Agreement, “Obligations” means any and all debts, obligations, and liabilities of EVO Transportation
& Energy Services, Inc., its affiliates, subsidiaries, successor or assigns to Secured Party arising out of, or relating in
any way to the Note, and any obligations of Debtor to Secured Party pursuant to this Agreement, whether existing or arising after
the date of this Agreement; whether voluntary or involuntary; whether jointly owned with others; whether direct or indirect; or
whether absolute or contingent; and whether or not from time to time increased, decreased, extinguished, created, or incurred.


 


4.
Collateral 


 


For
purposes of this Agreement, “Collateral” means:


 


(a)
All accounts, accounts receivable, contract rights, and general intangibles of Thunder Ridge Transport, Inc., including, without
limitation, all forms of payment, all present and future incomes, rents, revenues, issues and profits, goodwill, licenses and
license rights, bailment or leasehold interests, whether as lessor or lessee, all choses in action and recoveries for any loss
in value or items of property described in this Agreement, all rights of Thunder Ridge Transport, Inc. as an unpaid seller of
goods and services (including, but not limited to, the rights of stoppage in transit, replevin, reclamation, and resale), rights
in and to security agreements and other contracts or assignments providing security to Thunder Ridge Transport, Inc., book debts,
credits, indemnities, warranties or guarantees payable to Thunder Ridge Transport, Inc. on loss or damage of property, inventions,
designs, design registrations, trademarks, trade styles, trade names, know-how, powers, privileges, logos, franchise rights, payments
in kind, advertising and promotional materials, trade secrets, patents, patent rights, copyrights, patent applications, tax refunds,
customer lists, business and accounting records, including all ledger account cards, computer tapes and disks and other computer
information, in all cases whether now owned or hereafter created or acquired by Thunder Ridge Transport, Inc. or in which Thunder
Ridge Transport, Inc. may now have or may after the date of this Agreement acquire an interest;


 






     

     


    

 


(b)
All inventory, including, without limitation, all goods held for sale or lease, finished goods, merchandise, parts, supplies,
raw materials, and work-in-process of every kind and description, and all products thereof, whether now owned or acquired by Thunder
Ridge Transport, Inc. after the date of this Agreement, or in which Thunder Ridge Transport, Inc. may now have or may after the
date of this Agreement acquire an interest, including, without limitation, inventory temporarily out of Thunder Ridge Transport,
Inc.’s custody or possession and any returns or repossessions on any sales or accounts;


 


(c)
All goods, including, without limitation, equipment, machinery, materials, furniture, furnishings, engines, appliances, fixtures,
tools, parts, supplies, and vehicles of every kind and description, whether now owned or acquired by Thunder Ridge Transport,
Inc. after the date of this Agreement or delivered to the real property of Thunder Ridge Transport, Inc., or in which Thunder
Ridge Transport, Inc. may now have or may after the date of this Agreement acquire an interest, and all additions, accessions,
replacements, substitutions, and improvements to such goods and wherever located;


 


(d)
All documents, documents of title, deposit accounts, negotiable and nonnegotiable instruments, shares, stocks, bonds, debentures,
securities, moneys, sources of money, uncalled capital, letters of credit, investment property, and chattel paper whether now
owned or acquired after the date of this Agreement by Thunder Ridge Transport, Inc.;


 


(e)
All instruments, documents, securities, monies, and property in which Thunder Ridge Transport, Inc. has or hereafter acquires
rights which now or hereafter are at any time in the possession or control of Thunder Ridge Transport, Inc. or in transit by mail
or carrier to or in the possession of any third party acting on behalf of Thunder Ridge Transport, Inc. without regard to whether
Thunder Ridge Transport, Inc. received the same in pledge, for safekeeping, as agent for collection or transmission or otherwise
or whether Thunder Ridge Transport, Inc. had conditionally released the same; and


 


(f)
All proceeds and products of any of the personal property described above, in any form, including, without limitation, proceeds
of any insurance relating to such collateral or fire and builder’s risk insurance and unrenewed insurance premiums; proceeds
consisting of any of the above types of collateral; all awards made in eminent domain proceedings or purchased in lieu of such
eminent domain proceedings; proceeds of any noncommercial tort cause of action in existence, now or after the date of this Agreement;
and all replacements, substitutions, renewals, returns, additions, accessions, rents, royalties, issues, documents of ownership,
and receipts for any of the foregoing.


 


5.
Representations and Warranties


 


As
a material inducement to Secured Party under this Agreement, Debtor represents and warrants, based solely on the representations
and warranties of Secured Party in that certain Equity Purchase Agreement between EVO Transportation & Energy Services, Inc.
and Secured Party dated of even date herewith, that the following are and shall remain true and correct:


 


5.1
Title


 


Debtor
is the owner of all right, title, and interest in the Collateral free and clear of all liens, encumbrances, and security interests,
unless otherwise indicated in this Agreement or Exhibit A hereto and except the security interest created by this Agreement.


 






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5.2
Defenses


 


No
defenses, offsets, claims, or counterclaims exist against Debtor that may be asserted against Secured Party in any proceeding
to enforce Secured Party’s rights in the Collateral.


 


5.3
Conflict


 


The
execution, delivery, and performance of this Agreement by Debtor is not in violation of any applicable law or regulation or contractual
obligation of Debtor.


 


5.4
First Priority Lien


 


The
liens granted to Secured Party under this Agreement will constitute a first priority purchase money security interest and lien
on the Collateral subject only to the filing of a UCC-1 Financing Statement and any prior lien set forth in Exhibit A. The lien
to Secured Party does not constitute a fraudulent conveyance under any applicable law.


 


5.5
Survival of Representations and Warranties


 


All
of the Debtor’s representations and warranties contained in this Agreement shall survive the execution and delivery of this
Agreement.



6. Covenants of Debtor 


 


6.1
Protection of Security Interest



Contemporaneously with the execution of this Agreement, Debtor shall properly execute and deliver to Secured Party UCC-1 Financing
Statements to enable Secured Party to perfect Secured Party’s security interest in the Collateral. Debtor agrees also to
execute, file, and record such other statements, notices, and agreements, take such action and obtain such certificates and documents,
in accordance with all applicable laws, statutes, and regulations as may be necessary or advisable to perfect, evidence, and continue
Secured Party’s security interest in the Collateral.



6.2 Transactions Involving Collateral



Debtor shall not, without the prior written consent of Secured Party, (a) sell, offer to sell, or otherwise transfer the Collateral
except in the ordinary course of business, or (b) pledge, mortgage, encumber, or otherwise permit the Collateral to be subject
to any lien, security interest, or charge, other than the security interest created by this Agreement.


 


6.3
Compliance with Laws


 


Debtor
shall comply with all laws, statutes, and regulations pertaining to the Collateral.


 


6.4
Insurance


 


Debtor
will at all times keep the Collateral insured against loss, damage, theft, and such other risks as Secured Party may reasonably
require in such amounts and companies and under such policies and in such form, and for such periods, as shall be reasonably satisfactory
to Secured Party, and each such policy shall provide that loss thereunder and proceeds payable there-under shall be payable to
Secured Party as its interest may appear (and Secured Party may apply any proceeds of such insurance which may be received by
Secured Party toward payment of the Obligations, whether or not due, in such order of application as Secured Party may determine)
and each such policy shall provide for 10 days’ written minimum cancellation notice to Secured Party; and each such policy
shall, if Secured Party so requests, be deposited with Secured Party; and Secured Party may act as attorney for Debtor in obtaining,
settling, and cancelling such insurance and endorsing any drafts.


 






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6.5
Taxes, Assessments, and Liens



Debtor shall pay when due all taxes, assessments, and liens with regard to the Collateral. Debtor may withhold any such payment
or may elect to contest any lien if Debtor is conducting appropriate proceedings in good faith to contest the obligation to pay
and so long as Secured Party’s interest is not jeopardized.


 


6.6
Notification of Change in Name


 


The
Debtor shall notify the Secured Party in writing of a change in the Debtor’s names or identities within five days after
the change. The Debtor shall also cooperate with the Secured Party to enable the Secured Party to file either a new UCC-1 Financing
Statement or an amendment to the existing UCC-1 Financing Statement to reflect the change and to continue the Secured Party’s
security interest in the Collateral.


 


7.
Authorized Action by Secured Party


 


Debtor
irrevocably appoints Secured Party as Debtor’s attorney in fact to do any act that Debtor is obligated to do pursuant to
this Agreement to preserve or protect the Collateral and to preserve, protect, or establish Secured Party’s lien on the
Collateral. Debtor further irrevocably appoints Secured Party to exercise such rights and powers as Debtor might exercise with
respect to the Collateral following an Event of Default, as defined below. These powers shall include without limitation the right
to:


 


(a)
Collect by legal proceedings or otherwise, and endorse, receive, and receipt all dividends, interest, payments, proceeds, and
other sums and property now or after the date of this Agreement payable on account of the Collateral,


 


(b)
Transfer the Collateral to Secured Party’s own or Secured Party’s nominee’s name, and


 


(c)
Make any compromise or settlement and take any action Secured Party deems advisable with respect to the Collateral. Debtor agrees
to reimburse Secured Party on demand for any costs and expenses, including without limitation reasonable attorney fees, which
Secured Party may incur while acting as Debtor’s attorney in fact under this Agreement, all of which costs and expenses
are included in the Obligations secured by this Agreement. Secured Party shall have no obligation to act pursuant to this paragraph
and shall not be required to make any presentment, demand, or protest, or give any notice or take any action to preserve any rights
against any other person in connection with the Collateral.


 


8.
Defaults and Remedies


 


8.1
Event of Default


 


Any
of the following events or conditions shall constitute an Event of Default by Debtor under this Agreement:


 


(a)
Default in payment of the Obligations in accordance with the terms of the Note;


 


(b)
Default in the performance of any Obligations or breach of any agreement, representation, or warranty contained in this Agreement;


 






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(c)
Any levy or proceeding against the Collateral or Debtor’s interest in the Collateral, except if Debtor is conducting appropriate
proceedings in good faith to contest the levy or proceeding; or


 


(d)
The filing of a petition by or against Debtor under the provisions of the Bankruptcy Code.


 


8.2
Remedies



On the occurrence of an Event of Default, Secured Party:


 


(a)
Shall have and may exercise all rights and remedies accorded to Secured Party by the Missouri Uniform Commercial Code;


 


(b)
May declare all unperformed Obligations, in whole or in part, of Debtor immediately due and payable without demand or notice;
and


 


(c)
May require Debtor to take any and all action necessary to make the Collateral available to Secured Party.



 8.3
Remedies Cumulative



All of Secured Party’s rights and remedies, whether
evidenced by this Agreement or by any other writing, shall be cumulative and may be exercised singularly or concurrently. Election
by Secured Party to pursue any remedy shall not exclude pursuit of any other remedy.


 


9.
Waiver of Hearing



Debtor expressly waives any constitutional or other right to a judicial hearing prior to the time Secured Party takes possession
or disposes of the Collateral on an Event of Default as provided in Paragraph 8 above.


 


10.
Waiver


 


Secured
Party shall not be deemed to have waived any rights under this Agreement unless such waiver is in writing and signed by Secured
Party. No delay or omission on the part of Secured Party in exercising any right shall operate as a waiver of such right or any
other right.


 


11.
Additional Documentation; Cooperation


 


Each
party shall, on the request of the other, execute, acknowledge, and deliver to the other any instrument that may be required to
accomplish the intent of this Agreement. Each party agrees to cooperate to effectuate the intent of this Agreement and shall take
all appropriate action necessary or useful in doing so.


 


12.
Miscellaneous


 


12.1
Successors and Assigns


 


Subject
to the provisions otherwise contained in this Agreement, this Agreement shall inure to the benefit of and be binding on the successors
and assigns of the respective parties.


 






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12.2
Notices


 


Any
notice under this Agreement shall be in writing, and any written notice or other document shall be deemed to have been duly given


 


(a)
on the date of personal service on the parties,


 


(b)
on the third business day after mailing, if the document is mailed by registered or certified mail,


 


(c)
one day after being sent by professional or overnight courier or messenger service guaranteeing one day delivery, with receipt
confirmed by the courier, or


 


(d)
on the date of transmission if sent by facsimile, email, or other means of electronic transmission resulting in written copies,
with receipt confirmed. Any such notice shall be delivered or addressed to the parties at the addresses set forth below or at
the most recent address specified by the addressee through written notice under this provision. Failure to conform to the requirement
that mailings be done by registered or certified mail shall not defeat the effectiveness of notice actually received by the addressee.


 


12.3
Amendment



The provisions of this Agreement may be modified at any time by written agreement of the parties. Any such agreement made after
the date of this Agreement shall be ineffective to modify this Agreement in any respect unless in writing and signed by Debtor
and Secured Party.



12.4 Attorney Fees; Prejudgment Interest



 If
the services of an attorney are required by Secured Party to secure the performance of this Agreement or otherwise on the breach
or default of this Agreement, or if any judicial remedy or arbitration is necessary to enforce or interpret any provision of this
Agreement or the rights and duties of any person in relation to this Agreement, Secured Party shall be entitled to reasonable
attorney fees, costs, and other expenses, in addition to any other relief to which Secured Party may be entitled. Any award of
damages following judicial remedy or arbitration as a result of the breach of this Agreement or any of its provisions shall include
an award of prejudgment interest from the date of the breach at the maximum amount of interest allowed by law.


 


12.5
Post-Judgment Attorney Fees


 


If
the services of an attorney are required by any party to enforce a judgment rendered in connection with this Agreement, the judgment
creditor shall be entitled to reasonable attorney fees, costs, and other expenses, and such fees, costs, and expenses shall be
recoverable as a separate item. This provision shall be severable from all other provisions of this Agreement, shall survive any
judgment, and shall not be deemed merged into the judgment.


 


12.6
Captions


 


All
paragraph captions are for reference only and shall not be considered in construing this Agreement.


 


12.7
Severability


 


If
any provision of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of
the Agreement that can be given effect without the invalid provision shall continue in full force and effect and shall in no way
be impaired or invalidated.


 






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12.8
Governing Law


 


The
rights and obligations of the parties and the interpretation and performance of this Agreement shall be governed by the law of
the State of Missouri, excluding its conflict of laws rules.


 


12.9
Venue


 


Debtor
agrees that any actions arising under this Agreement shall be heard and resolved in and be subject to the exclusive jurisdiction
of the courts in Missouri, County of Greene.


 


12.10
Entire Agreement


 


This
document and its exhibits constitute the entire agreement between the parties, all oral agreements being merged in this Agreement,
and supersede all prior representations. There are no representations, agreements, arrangements, or understandings, oral or written,
between or among the parties relating to the subject matter of this Agreement that are not fully expressed in this Agreement or
its exhibits.


  


(SIGNATURE
PAGE FOLLOWS)


 






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	DEBTOR:	 
	 	 
	/s/ John
    P. Yeros	 
	EVO Transportation
    & Energy Services, Inc.	 
	By: John
    P. Yeros	 
	Title: Chief
    Executive Officer	 
	 	 
	/s/ Billy
    (Trey) Peck Jr.	 
	Thunder Ridge
    Transport, Inc.	 
	By: Billy
    (Trey) Peck Jr.	 
	Title: President
    and CEO	 


  


	SECURED PARTY:	 
	 	 
	/s/ Billy
    L. Peck, Jr.	 
	Billy L.
    Peck, Jr.	 


 






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Exhibit
A


 


 


 


 


9