Item 1.01. Entry into a Material Definitive Agreement.
The Peck Company Holdings, Inc., a Delaware corporation (the "Company"), entered
into an Exchange and Subscription Agreement (the "Exchange Agreement") dated
April 22, 2020 with GreenSeed Investors, LLC, a Delaware limited liability
company ("GSI"), and Solar Project Partners, LLC, a Delaware limited liability
company ("SPP"). A copy of the Exchange Agreement is attached hereto as Exhibit
2.4 and is incorporated herein by reference.
Pursuant to the Exchange Agreement, the Company subscribed for 500,000 Units of
Class B Preferred Membership units of GSI in exchange for 200,000 shares of the
Company's Series A Preferred Stock (the "Preferred Shares"). In addition, the
Company subscribed for and purchased 100,000 Units of SPP in exchange for the
issuance by the Company of a Warrant to acquire 275,000 shares of the Company's
Common Stock at an exercise price of $15.00 per share. A copy of the Certificate
of Designation with respect to the Company's Series A Preferred Stock and the
form of Warrant are attached hereto as Exhibits 3.1 (e) and 4.9, respectively.
The Exchange Agreement provides that as long as the dividend payment on the
Preferred Shares in each calendar quarter is equal to the aggregate distribution
with respect to the GSI Units, such payments and distributions shall be offset
and neither GSI nor the Company need to make any cash payments to the other.
The Company granted to GSI the right to repurchase up to 400,000 (in tranches of
50,000) of the Units at a valuation of $4,000,000.
The Company granted to GSI registration rights with respect to the Preferred
Shares, the Warrant, and the Common Stock underlying the Warrant.
The foregoing is a summary of the Exchange Agreement and is qualified in its
entirety by reference to the Exchange Agreement.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
Peck Electric Co., a Vermont corporation and a wholly-owned subsidiary of the
Company (the "Borrower"), entered into a Business Loan Agreement dated January
13, 2020 (the "Loan Agreement") with NBT Bank, National Association (the
"Lender;). The Loan Agreement replaced the Business Loan Agreement between the
Borrower and the Lender dated September 17, 2019 in the amount of $3,000,000 as
well as the Business Loan Agreement dated August 13, 2019 between the Lender and
Borrower in the amount of $2,000,000. The outstanding amounts under each of the
prior loan agreements were paid in full with proceeds from the Loan Agreement.
The Loan Agreement provides a credit facility not to exceed $6,000,000 and is
payable upon demand of the Lender. In connection with the Loan Agreement, the
Borrower executed and delivered a Promissory Note (the "Note") dated January 13,
2020 in the aggregate amount of $6,000,000. Any amount due under the Note are
payable upon demand of the Lender. If no demand is made, the Borrower is
obligated to make monthly payments of accrued interest. Pursuant to the Loan
Agreement, Jeffrey Peck, President of the Company, executed and delivered a
Commercial Guaranty dated January 13, 2020 of the obligations of the Borrower
under the Note and the Loan Agreement.
Peck Electric Co., a Vermont corporation and a wholly-owned subsidiary of the
Company (the "Borrower"), applied for and received a loan (the "PPP Loan") from
NBT Bank, N.A. (the "Lender") in the principal amount of $1,487,624 pursuant to
the Paycheck Protection Program (the "PPP") under the Coronavirus Aid, Relief,
and Economic Security Act (the "CARES Act"), which was enacted March 27, 2020.
The Loan is evidenced by a promissory note (the "PPP Note"), dated April 24,
2020, issued by the Borrower to the Lender. The PPP Note matures on April 24,
2022 and bears interest at a rate of 1.00% per annum, payable monthly commencing
on November 24, 2020, following an initial deferral period as specified under
the PPP. The PPP Note may be prepaid by the Borrower at any time prior to
maturity with no prepayment penalties. Proceeds from the PPP Loan will be
available to the Borrower to fund designated expenses, including certain payroll
costs, group health care benefits and other permitted expenses, in accordance
with the PPP. Under the terms of the PPP, up to the entire amount of principal
and accrued interest may be forgiven to the extent PPP Loan proceeds are used
for qualifying expenses as described in the CARES Act and applicable
implementing guidance issued by the U.S. Small Business Administration under the
PPP. The Company intends that the Borrower will use the entire PPP Loan amount
for designated qualifying expenses and to apply for forgiveness of the PPP Loan
in accordance with the terms of the PPP. No assurance can be given that the
Borrower will obtain forgiveness of the PPP Loan in whole or in part.
With respect to any portion of the PPP Loan that is not forgiven, the PPP Loan
will be subject to customary provisions for a loan of this type, including
customary events of default relating to, among other things, payment defaults,
breaches of the provisions of the PPP Note and cross-defaults on any other loan
with the Lender or other creditors.
As of April 27, 2020, and including the proceeds of the above-referenced PPP
Loan, the Company will have approximately $61,323 cash on hand, $3,854,137 of
outstanding indebtedness under the Loan Agreement described above and $1,487,624
of outstanding indebtedness under the PPP Loan. As of April 27, 2020, the
Borrower has unused credit availability under the Loan Agreement of $2,145,863.
Item 3.02 Unregistered Sales of Equity Securities
As described in Item 1.01 above, on April 22, 2020 the Company issued 200,000
shares of its Series A Preferred Stock and a Warrant to acquire 275,000 shares
of its Common Stock and received 100,000 Units of Solar Project Partners, LLC, a
Delaware limited liability company. The transaction was exempt from registration
under the Securities Act of 1933, as amended, pursuant to Rule 506 (b) of
Regulation D promulgated thereunder. The Series A Preferred Stock is convertible
on a mandatory basis into shares of the Company's Common Stock as soon as
practicable after the date on which the closing price of the Company's Common
Stock is equal to or greater than $15.00 per share for any twenty (20) days
within a thirty (30) days trading window. The Series A Applicable Conversion
Value is $25 divided by the Series A Applicable Conversion Value which is an
amount equal to the ten-day average of the closing price as reported by Nasdaq
of the Company's Common Stock for the ten trading day preceding the Company's
notice of redemption less ten percent (10%). The Warrant is exercisable for a
period of five (5) years after the issue date at an exercise price of $15.00 per
share. The foregoing summary of the Preferred Shares and the Warrant are
qualified in its entirety by reference to the Certificate of Designation and
Warrant, respectively.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements, which
include all statements that do not relate solely to historical or current facts,
such as statements concerning the Company's expectations, anticipations,
intentions, or beliefs regarding the PPP Loan. These forward-looking statements
are based on management's beliefs, as well as assumptions made by, and
information currently available to, management. Because such statements are
based on expectations and are not statements of fact, actual results may differ
materially from those projected and are subject to a number of known and unknown
risks and uncertainties, including financial market conditions; actions by the
Loan parties; changes by the Small Business Association or other governmental
authorities regarding the CARES Act, the Payroll Protection Program or related
administrative matters; the Company's and Borrower's ability to comply with the
terms of the PPP Loan and the CARES Act, including to use the proceeds of the
PPP Loan as described herein; and other risks and uncertainties described under
the headings "Forward-Looking Statements," "Risk Factors" and other sections of
the Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission on April 14, 2020, and subsequent filings. The Company undertakes no
obligation to update any forward-looking statements, whether as a result of new
information, future events or otherwise.
In accordance with General Instruction B.2 of Form 8-K, the information in this
Form 8-K (including Exhibits) is being "furnished," and shall not be deemed
"filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or otherwise subject to the liabilities of that
Section, nor shall it be deemed incorporated by reference in any filing made by
the Company under the Securities Act of 1933, as amended, or the Exchange Act,
except as expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
2.4 Exchange and Subscription Agreement dated as of April 22, 2020 among The
Peck Company Holdings, Inc., GreenSeed Investors, LLC and Solar Project
Partners, LLC
3.1 (e) Certificate of Designation, Preferences and Rights of Preferred Stock of
The Peck Company Holdings, Inc.
4.9 Warrant dated April 22, 2020 issued by The Peck Company Holdings, Inc.
to GreenSeed Investors, LLC
4.10 Promissory Noted dated January 13, 2020 issued by Peck Electric Co. to
NBT Bank, National Association
4.11 Paycheck Protection Program Note and Disbursement Authorization dated
April 24, 2020 issued by Peck Electric Co. to NBT Bank, N.A
10.22 Business Loan Agreement dated January 13, 2020 between Peck Electric Co.
and NBT Bank, National Association
10.33 Commercial Guaranty dated January 13, 2020 issued by Jeffrey Peck to NBT
Bank, National Association.
© Edgar Online, source Glimpses