seller note modifications true 0001108967 0001108967 2021-11-17 2021-11-17
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
AMENDMENT No. 2
 
TO
 
FORM 8-K/A
 
CURRENT REPORT
 
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported):
April 4, 2022 (November 17, 2021)
 
Commission File Number: 0-29923
 
Orbital Energy Group, Inc.
(Exact Name of registrant as specified in Its Charter)
 
Colorado
  
84-1463284
(State or jurisdiction of
  
(I.R.S. Employer
incorporation or organization)
  
Identification No.)
     
1924 Aldine Western, Houston, Texas
  
77038
(Address of Principal Executive Offices)
  
(zip code)
 
 
(832) 467-1420
 
(Registrant’s telephone number)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
 
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a- 12)
 
 
 
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.1 4d-2(b))
 
 
 
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
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. ☐
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, $0.001 par value
OEG
Nasdaq Capital Market
 
 
 
 
 
 
Item 1.01 Entry into a Material Definitive Agreement.
 
This Amendment No. 2 to Current Report on Form 8-K amends the Current Report on Form 8-K filed on November 23, 2021 and Amendment No. 1 to Current Report on Form 8-K filed on December 14, 2021 (the “Prior Filings”). The following is only a summary description and is qualified in its entirety by reference to the full text of such agreements filed as Exhibits hereto and in the Prior Filings. Capitalized terms used herein, but not otherwise defined, shall have the respective meanings ascribed thereto in the Exhibits hereto and in the Prior Filings. The terms of such Exhibits shall control in the event of any inconsistencies with the summary description set forth below.
 
On March 29, 2022 we entered into the following agreements and understandings with the FLP Sellers:
 
The Maturity Dates of the original FLP Seller Notes was extended from May 16, 2022 to May 31, 2023.
 
The Restriction Period under the FLP Sellers Lock Up Letters was reduced from two years to one year after the Closing.
 
In certain circumstances issue additional shares of our common stock to the FLP Sellers if the weighted average price of our common stock for the ten trading days immediately proceeding the expiration of the one year Restriction Period under the FLP Sellers Lock Up Letters is less than $4.00 per share.
 
Understandings regarding the order and priority of payments to the FLP Sellers under their promissory notes.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 9.01 Financial Statement and Exhibits.
 
 
Exhibit No. 
Description of Exhibit
104
Cover Page Interactive Data File (embedded in the cover page formatted in Inline XBRL).
 
 
 
 
 
 
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 thereunto duly authorized.
 
Signed and submitted this 4th day of April, 2022.
 
 
Orbital Energy Group, Inc.
(Registrant)
 
By:
/s/ William J. Clough
 
William J. Clough
 
Chief Legal Officer
 
 
 
 
MTC/ej/7795216v1
 
 
 

Exhibit 99.1

 

AMENDMENT TO $34,356,000.00 PROMISSORY NOTES

BETWEEN ORBITAL ENERGY GROUP, INC. AND

KURT A. JOHNSON, JR.

                                                                                                                     

 

WHERAS the Parties hereto, ORBITAL ENERGY GROUP, INC. (“OEG”), on the one hand, and KURT A. JOHNSON JR. (“JOHNSON”), on the other hand, entered into that certain Promissory Note in the original principal amount of $34,356,000.00 on November 16, 2021 (“the Note”);

 

WHEREAS the Parties wish to amend the Note to extend the Maturity Date from May 16, 2022 to May 31, 2023.

 

THE PARTIES therefore agree as follows:

 

 

1.

This Amendment is entered into pursuant to Paragraph No. 4 Amendment of the Note as of March 29, 2022 (the “Effective Date”) and is subject to the payment by OEG of all amounts payable to Johnson under that certain Modification Agreement of even date herewith.

 

 

2.

This Amendment modifies only the specific terms set forth herein and only to the extent specifically set forth herein and does not in any way effect the force and effect of other provisions within the Note.

 

 

 

3.

In exchange for the payment set forth in the Modification Agreement, the Maturity Date set forth in the Note shall be amended to be May 31, 2021 and any reference in the Note to the Maturity Date shall refer to May 31, 2023.

 

 

AGREED TO AND ACCEPTED:

 

KURT A. JOHNSON JR.

 

/s/ Kurt A. Johnson                                     

By: Kurt A. Johnson Jr.

Title: Individual

 

ORBITAL ENERGY GROUP, INC.,

a Colorado corporation

 

/s/ William J. Clough                                    

By: William J. Clough

Title: Executive Chairman & CLO

 

 

Amendment to $34,356,000 & 51,384,000 Promissory Notes

 

 

 

 

 

 

 

 

Exhibit 99.2

 

 

AMENDMENT TO $51,384,000.00 PROMISSORY NOTE BETWEEN ORBITAL ENERGY GROUP, INC. AND TIDAL POWER GROUP LLC

 

 

WHEREAS the Parties hereto, ORBITAL ENERGY GROUP, INC. (“OEG”), on the one hand, and TIDAL POWER GROUP LLC (“TIDAL”), on the other hand, entered into that certain Promissory Note in the original principal amount of $51,384,000.00 on November 16, 2021 (the “Note”);

 

WHEREAS the Parties wish to amend the Note to extend the Maturity Date from May 16, 2022 to May 31, 2023.

 

THE PARTIES therefore agree as follows:

 

 

1.

This Amendment is entered into pursuant to Paragraph No. 4 Amendment of the Note as of March 29 , 2022 (the “Effective Date”) and is subject to the payment by OEG of all amounts payable to Tidal under that certain Modification Agreement of even date herewith.

 

 

2.

This Amendment modifies only the specific terms set forth herein and only to the extent specifically set forth herein and does not in any way effect the force and effect of other provisions within the Note.

 

 

3.

In exchange for the payment set forth in the Modification Agreement, the Maturity Date set forth in the Note shall be amended to be May 31, 2023 and any reference in the Note to the Maturity Date shall refer to May 31, 2023.

 

AGREED TO AND ACCEPTED:

 

TIDAL POWER GROUP LLC,

A Texas limited liability company, in its capacity as Holder.

 

/s/              Monty Janak                                   

By:         Monty Janak Title: Manager

 

 

ORBITAL ENERGY GROUP, INC.,

a Colorado corporation

 

/s/             William J. Clough                         

By:         William J. Clough

Title: Executive Chairman & CLO

 

 

 

 

 

 

 

 

Amendment to $51,384,000 Promissory Note         Page 1 of 2

 

Exhibit 99.3

 

 

Promissory Notes & Lock-up Letter Agreement (the “Modification Agreement”)

 

 

March 29 , 2022

 

 

 

Orbital Energy Group, Inc.

1924 Aldine Western Road

Houston, Texas 77038

 

WHEREAS, pursuant to the Membership Purchase Agreement (the “Purchase Agreement”), dated November 16, 2021, by and among Kurt A. Johnson (“Johnson”), Tidal Power Group LLC (“Tidal”) and Orbital Energy Group, Inc., a Colorado corporation (“Orbital”), Orbital purchased all of the equity interests of Front Line Power Construction, LLC, a Texas limited liability company (the “Company”) in exchange for cash, 11,622,018 shares of Orbital common stock (the “Closing Stock Consideration”), and promissory notes payable to Johnson in the original principal amount of $34,356,000.00 (the “Johnson Original Note”), payable to Tidal in the original principal amount of

$51,384,000.00 (the “Tidal Original Note”) and payable to Johnson in the original principal amount of $1,090,000.00 (the “Johnson Supplemental Note”);

 

WHEREAS, as of the closing of the transactions described in the Purchase Agreement, the Closing Stock Consideration had an aggregate value of $31,670,000.00 based upon the weighted average transaction price for Orbital common stock on the Nasdaq Stock Market of $2.725 per share for the 10 trading days immediately preceding the Closing;

 

WHEREAS, as of the closing of the transactions described in the Purchase Agreement, Orbital and Johnson executed that certain Lockup Letter Agreement dated November 17 2021 (the “Johnson Lockup Letter”) and Orbital and Tidal executed that certain Lockup Letter Agreement dated as of November 17, 2021 (the “Tidal Lockup Letter”), under which Johnson and Tidal agreed not to, directly or indirectly, enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition, or result in a change to any of the economic consequences of ownership, of the Closing Stock Consideration for a period of two years after the Closing (the “Restriction Period”); and

 

WHEREAS, Johnson and Tidal have agreed to extend the maturity date of the Johnson Original Note and the Tidal Original Note and Orbital has agreed to reduce the Restriction Period under the Tidal Lockup Letter and to issue additional Closing Stock Consideration to Johnson and Tidal in certain circumstances;

 

NOW, THEREFORE, for value received, the receipt and sufficiency of which is hereby acknowledged, the undersigned, intending to be legally bound, hereby agree to the following:

 

 

1.

Capitalized terms used but not defined in this Modification Agreement have the meanings given to such terms in the Purchase Agreement, the Johnson Original Note, the Tidal Original Note or the Tidal Lockup Letter, as applicable.

 

 

2.

Johnson agrees to extend the Maturity Date of the Johnson Original Note and Tidal agrees to extend the Maturity Date of the Tidal Original Note from May 16, 2022 to May 31, 2023.

 

 

3.

In consideration for the extension of the Maturity Date under the Johnson Original Note and the Tidal Original Note, Orbital agrees to:

 

(i)    pay the sum of $35,000,000 to Johnson and Tidal, to be applied as follows: (a) first, to Johnson for the payment in full of the Johnson Supplemental Note including all interest accrued thereon, (b) the balance, to Johnson and Tidal for payment of the principal of and accrued interest on the Johnson Original Note and the Tidal Original Note, pro rata based upon the original principal amount the Johnson Original Note and the Tidal Original Note and to be applied first to accrued and unpaid interest and the balance to the payment of principal;

 

(ii)    reduce the Restriction Period under the Tidal Lockup Letter from two years after the Closing to one year after the Closing;

 

(iii)    upon the expiration of the Restriction Period under the Johnson Lockup Letter to issue additional shares of Orbital common stock to Johnson as Closing Stock Consideration so that the aggregate value of the Closing Stock Consideration then owned by Johnson shall be equal to not less than

$17,635,228.00 ($4.00 x 4,408,807 shares), based upon the weighted average transaction price for Orbital common stock on the Nasdaq Stock Market for the 10 trading days immediately preceding the expiration of the Restriction Period under the Johnson Lockup Letter; and

 

(iv)    upon the expiration of the Restriction Period under the Tidal Lockup Letter to issue additional shares of Orbital common stock to Tidal as Closing Stock Consideration to Tidal so that the aggregate value of the Closing Stock Consideration then owned by Tidal shall be equal to not less than $28,852,844 ($4.00 x 7,213,211 shares), based upon the weighted average transaction price for Orbital common stock on the Nasdaq Stock Market for the 10 trading days immediately preceding the expiration of the Restriction Period under the Tidal Lockup Letter.

 

 
 

 

 

 

4.

Except as set forth in Section 2 and 3 of this Modification Agreement, the remaining terms, conditions, and provisions set forth in the Purchase Agreement, the Johnson Original Note, the Tidal Original Note, the Tidal Lockup Letter, and the other agreements contemplated by the Purchase Agreement shall remain the same.

 

 

5.

This letter agreement shall be governed by and construed in accordance with the laws of the State of Texas. This letter agreement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. No amendment or waiver of any provision of this letter agreement shall in any event be effective unless the same shall be in writing and signed by each of the parties hereto. The provisions of this letter agreement are binding solely upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. The parties hereby agree to keep this Letter Agreement confidential and further agree not to share this Letter Agreement or the contents hereof with anyone other than such party’s employees, legal and financial advisors (who must keep this Letter Agreement confidential), or as permitted or required by applicable law.

 

 

[Signature Page Follows]

 

 
 

 

 

 

AGREED TO AND ACCEPTED: KURT A. JOHNSON JR.

 

                         /s/           Kurt A. Johnson Jr.                                                 

By:         Kurt A. Johnson Jr.

Title: Individual

 

TIDAL POWER GROUP LLC,

a Texas limited liability company, in its capacity as Holder.

 

 

                         /s/         Monty Janak                                                        

By:         Monty Janak

Title: Manager

 

 

ORBITAL ENERGY GROUP, INC.,

a Colorado corporation

 

 

                         /s/           William J. Clough                                             

By:         William J. Clough

Title: Executive Chairman & CLO