Hickok Incorporated (OTCMKTS:HICKA) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement
On June 1, 2017, Hickok Acquisition A LLC (Hickok Acquisition
Sub), a wholly owned subsidiary of Hickok Incorporated (the
Company), entered into an Asset Purchase Agreement (the Purchase
Agreement) with Air Enterprises Acquisition LLC, a Delaware
limited liability company (Air Enterprises), and Mr. A. Malachi
Mixon, III and Mr. William M. Weber, each of whom are the
principal members of Air Enterprises (each, a Member and
collectively with Air Enterprises, the Sellers).
to the Purchase Agreement, Hickok Acquisition Sub has agreed to
purchase certain assets and assume certain specified liabilities
and obligations of Air Enterprises custom air handling solutions
business (the Air Enterprises Division) for $10,250,000.
Hickok Acquisition Sub and Sellers have made customary
representations, warranties, covenants and indemnities in the
Purchase Agreement. Subject to certain limitations, each of
Hickok Acquisition Sub, on the one hand, and Sellers, on the
other hand, have agreed to indemnify the other party for certain
matters, including breaches of representations, warranties and
covenants. The assertions embodied in those representations and
warranties were made solely for purposes of the contract by and
among the parties thereto and are not intended to provide
factual, business, or financial information about Hickok
Acquisition Sub, the Sellers or the Air Enterprises Division.
Moreover, some of those representations and warranties may not be
accurate or complete as of any specified date, may be subject to
a contractual standard of materiality different from those
generally applicable to shareholders or different from what a
shareholder might view as material, may have been used for
purposes of allocating risk between Hickok Acquisition Sub and
Sellers rather than establishing matters as facts, may have been
qualified by certain disclosures not reflected in the Purchase
Agreement that were made to the other parties in connection with
the negotiation of the Purchase Agreement and generally were
solely for the benefit of the parties to that agreement.
The Company, and its subsidiaries as borrowers, funded a portion
of the purchase price with borrowings under a Credit Agreement
entered into on June 1, 2017 with JPMorgan Chase Bank, N.A. as
lender (the Credit Agreement). The Credit Agreement is comprised
of a revolving facility in the amount of $8,000,000, subject to a
borrowing base (determined based on 80% of Eligible Accounts,
plus 50% of Eligible Progress Billing Accounts, plus 50% of
Eligible Inventory, minus Reserves as defined in the Credit
Agreement) and a term A loan in the amount of $2,000,000, payable
in consecutive monthly installments of $41,667 commencing on July
1, 2017. The revolving facility includes a $3 million sublimit
for the issuance of letters of credit. Interest for borrowings
under the revolving facility accrues at a per annum rate equal to
Prime Rate or LIBOR plus applicable margins of (i) 0.00% for
Prime Rate loans and (ii) 2.00% for LIBOR loans. The maturity
date of the revolving facility is June 1, 2020. Interest for
borrowings under the term A loan accrues at a per annum rate
equal to Prime Rate or LIBOR plus applicable margins of (i) 0.25%
for Prime Rate loans and (ii) 2.25% for LIBOR loans. The maturity
date of the term A loan is June 1, 2021. The Credit Agreement
includes a commitment fee on the unused portion of the revolving
facility of 0.25% per annum payable quarterly. The obligations of
the Company and other borrowers under the Credit Agreement are
secured by a blanket lien on all of the assets of the Company and
its subsidiaries. The Credit Agreement also includes customary
representations and warranties and applicable reporting
requirements and covenants, including fixed charge coverage ratio
and senior funded indebtedness to EBITDA ratio financial
covenants.
In connection with entering into the Credit Agreement, the
Company made a onetime prepayment of a portion of the
outstanding principal under outstanding promissory notes held
by First Francis Company Inc. (First Francis), in the amount of
$500,000. The Company will not be required to make any of the
scheduled
quarterly payments due under these notes for the remainder of
calendar 2017. First Francis is owned by Edward Crawford and
Matthew Crawford, who serve on the Board of Directors of the
Company.
The foregoing descriptions of the Purchase Agreement and Credit
Agreement are qualified in their entirety by the copies of such
documents which are attached as Exhibit 2.1 and Exhibit 10.1,
respectively, and incorporated herein by reference.
Item2.01 Completion of Acquisition or Disposition of
Assets
The information set forth in Item 1.01 above is hereby
incorporated by reference into this Item 2.01.
Item 2.03 Creation of a Direct Financial Obligation or
an Obligation under an Off-Balance Sheet Arrangement of a
Registrant
The information set forth in Item 1.01 above is hereby
incorporated by reference into this Item 2.03.
Item9.01 Financial Statements and Exhibits
(a) Financial statements of businesses
acquired.
The Company will file the financial statements required by Item
9.01 (a) of Form 8-K by an amendment to this Current Report on
Form 8-K no later than 71 days from the date this Current
Report on Form 8-K is required to be filed.
(b)Pro Forma Financial Information.
The Company will file the financial statements required by Item
9.01 (b) of Form 8-K by an amendment to this Current Report on
Form 8-K no later than 71 days from the date this Current
Report on Form 8-K is required to be filed.
(d)Exhibits
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Exhibit No. |
Description of Exhibits |
| 2.1 |
Asset Purchase Agreement, dated June 1, 2017, by and among Hickok Acquisition A LLC, Air Enterprises Acquisition LLC, A. Malachi Mixon, III and William M. Weber* |
| 10.1 |
Credit Agreement, dated June 1, 2017, among Hickok Incorporated, Hickok Acquisition A LLC, Supreme Electronics Corp., Federal Hose Manufacturing LLC, Waekon Corporation, Hickok Operating LLC and JPMorgan Chase Bank, N.A. |
| * |
Schedules have been omitted to Item601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC; provided, however, that the Company may request confidential treatment to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedule so furnished. |
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 hereunto duly authorized.
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HICKOK INCORPORATED |
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Date: June 5, 2017 |
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/s/ Brian E. Powers |
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Name: Brian E. Powers |
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Its:Chairman, President and Chief Executive Officer |
Exhibit Index
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Exhibit No. |
Description of Exhibits |
| 2.1 |
Asset Purchase Agreement, dated June 1, 2017, by and among Hickok Acquisition A LLC, Air Enterprises Acquisition LLC, A. Malachi Mixon, III and William M. Weber* |
| 10.1 |
Credit Agreement, dated June 1, 2017, among Hickok Incorporated, Hickok Acquisition A LLC, Supreme Electronics Corp., Federal Hose Manufacturing LLC, Waekon Corporation, Hickok Operating LLC and JPMorgan Chase Bank, N.A. |
| * |
Schedules have been omitted to Item601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC; provided, however, that the Company may request confidential treatment |
About Hickok Incorporated (OTCMKTS:HICKA)
Hickok Incorporated develops and manufactures diagnostic equipment used by technicians to test the various electronic systems in automobiles and trucks, and emissions testing equipment specified by various states for testing vehicle emissions. It operates in two segments: indicators and gauges, and automotive diagnostic tools and equipment. Under the Indicators and Gauges segment, the Company develops and manufactures precision indicating instruments used in aircraft, locomotives and other applications. Its Automotive Diagnostic Tools and Equipment segment consists of products designed and manufactured to support the testing or servicing of automotive systems using electronic means to measure vehicle parameters. The Company offers products under various categories, such as brakes/Antilock Braking System (ABS), circuit testers, cooling system, diesel/heavy duty, emissions, engine/drivability, New Generation Star (NGS) products and test/jumper leads.