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Item 2.03
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
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On March 24, 2017, certain subsidiaries
of Progressive Green Solution’s Inc. (the “Company”) including Speyside Holdings LLC, Speyside Holdings II LLC and CEM
III LLC, along with BCM Speyside, LLC (collectively the “Borrowers”) entered into a Loan Agreement (defined
infra
)
with Broadfield Special Financing II, LLC (the “Lender”), providing for a loan in an aggregate principal amount of
$8,000,000.00 (the “Loan”).
The purpose of the Loan was to (i) payoff
the four million dollar purchase money mortgage amongst Speyside Holdings LLC, Speyside Holdings II LLC, CEM III LLC, BCM Speyside,
LLC, and Highland Sand & Gravel, Inc.; (ii) payoff a seven hundred fifty thousand dollar purchase money mortgage between CEM
III LLC and the Grace E. Wolf Family Limited Partnership; (iii) repay $1,194,801.00 of accrued interest and/or short term loans
from the members of Speyside Holdings LLC; (iv) to acquire capital equipment; and (v) for general corporate purposes.
The Loan has a maturity date of April 1,
2019 (the “Maturity Date”), is interest only until the Maturity Date, bears an interest rate of 3-month LIBOR plus
six percent, per annum, with a floor of seven percent per annum. The Loan is pre-payable subject to a yield maintenance fee, and
is subject to annual loan and administration fees. The Loan is secured by,
inter alia
, a first priority mortgage encumbering
that certain land and improvements owned by the Borrowers and located at 911 State Route 32, Highland Mills, New York 10930, a
security agreement, pledge agreements, Guaranties (defined
infra
), financing statements, assignments, and other ancillary
agreements usual and customary to a secured financing transaction (collectively, the “Loan Agreement”). The Loan is
guaranteed by the Company, all directors of the Company, Anthony Williams, Eugene Fernandez, Michael Cox, Duncan Goldie-Morrison,
Stonehenge Holdings, LLC, and Canyon Bound LLC (collectively, the “Guaranties”).
To induce the Lender to issue the Loan,
the Lender required,
inter alia
, the Company to guarantee the Loan and to pledge its membership interests in Speyside Holdings
LLC, Speyside Holdings II LLC, and CEM III LLC to the Lender. Additionally, to further induce the Lender to enter into the Loan
Agreement, the Lender required,
inter alia
, that certain significant stockholders of the Company, and certain members of
Speyside Holdings LLC, Speyside Holdings II LLC, and CEM III LLC provide credit support to the Company by providing joint and several
personal and company guarantees to the Lender as well as subordinating their loans to the Borrowers to the Lender.
To induce 1) Anthony Williams, Eugene Fernandez,
Duncan Goldie-Morrision, and Stonehenge Holdings LLC to provide joint and several guarantees to the Lender for the Loan, and 2)
Bradden Capital Management LLC, BCM Speyside, LLC, DGS Group LLC, and FLS 3, Inc. to subordinate their loans to the Borrowers to
the Lender and to agree to accrue any principal and/or interest payments due to them during the term of the Loan, the Company deemed
it appropriate and in its best interest to issue shares of its common stock, par value $0.001 per share (the “Common Stock”)
as compensation for the aforementioned obligations. For their credit support of the Loan, 1) Anthony Williams and Stonehenge Holdings
were collectively issued 853,374 shares of Common Stock, 2) Eugene Fernandez, DGS Group LLC, and FLS 3, Inc. were collectively
issued 739,556 shares of Common stock, and 3) Duncan Goldie-Morrison, Bradden Capital Management LLC, and BCM Speyside, LLC were
collectively issued 3,982,240 shares of Common Stock.
