The Joint Corp. (NASDAQ:JYNT) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
| Entry Into a Material Definitive Agreement |
The information set forth below under Item 2.03 is hereby
incorporated by reference into this Item 1.01.
| Item 2.03 |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant |
On January 3, 2017, The Joint Corp. (the Company) entered into a
Credit and Security Agreement (the Credit Agreement) with Tower 7
Partnership LLC, an Ohio limited liability company (Lender), and
signed a revolving credit note payable to Lender (the Revolving
Credit Note).
Under the Credit Agreement, the Company is able to borrow up to
an aggregate of $5,000,000 under revolving loans. Interest on the
unpaid outstanding principal amount of any revolving loans is at
a rate equal to 10% per annum, provided, however, that the
minimum amount of interest paid in the aggregate on all revolving
loans granted over the term of the Credit Agreement is $200,000.
Interest is due and payable on the last day of each fiscal
quarter in an amount determined by the Company, but not less than
$25,000. Any amount of interest due and payable at the end of
each fiscal quarter that is not paid in full at that time will be
added to the outstanding principal amount of the revolving loans.
The Credit Agreement contains customary events of default,
including a failure to pay any principal, interest or other
amounts when due, a violation of certain affirmative covenants or
any of the negative covenants (which covenants include
limitations on borrowing, payment of dividends, the creation of
liens and holding of investments and prohibitions on mergers,
acquisitions and disposal of substantially all assets), a breach
of the Companys representations and warranties, and a change of
control. Upon the occurrence of an event of default, payment of
the Companys indebtedness may be accelerated, and the lending
commitments under the credit agreement may be terminated.
Under the Credit Agreement, the Company granted a security
interest to the Lender in the following assets, now owned or
later acquired, of the Company: accounts, chattel paper, deposit
accounts, documents, equipment, fixtures, general intangibles,
instruments, inventory, investment property, letters of credit
and letter of credit rights, receivables, supporting obligations,
commercial tort claims, all tangible and intangible property, and
the proceeds and products of each of the foregoing.
Lenders lending commitments under the Credit Agreement terminate
in December 2019, unless sooner terminated in accordance with the
provisions of the Credit Agreement.
The Company intends to use the credit facility for general
working capital needs. The Company shortly will draw down
$1,000,000 of the $5,000,000 available under the Credit
Agreement.
The foregoing descriptions of the Credit Agreement and Revolving
Credit Note do not purport to be complete and are qualified in
their entirety by reference to the full texts of the Credit
Agreement and Revolving Credit Note, copies of which are filed as
Exhibits 10.1 and 10.2, respectively, to this Current Report on
Form 8-K and incorporated herein by reference.
| Item 5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
(e) Compensatory Arrangements of Certain
Officers
On January 3, 2017, the Company entered into an amended and
restated employment agreement (the restated agreement) with Peter
D. Holt. The restated agreement amends the original employment
agreement dated April 27, 2016 (the original agreement)
agreement, as follows: (i) Mr. Holt is now employed as the
Companys President, in addition to serving as the Companys Chief
Executive Officer since August 9, 2016, (ii) the term of Mr.
Holts original agreement is extended by one year (now ending on
December 31, 2018), (iii) the increase in Mr. Holts base salary
to $375,000, retroactive to August 9, 2016, from $325,000, (iv)
beginning with 2017, Mr. Holts annual cash bonus is increased to
50% from 40% of his then-current base salary, still dependent
upon the attainment of certain corporate and individual
performance goals, (v) for service in 2016 only, his bonus is at
the discretion of the Companys compensation committee but will
not be less than $46,875, and (vi) in the event of a Change of
Control (as defined in the restated agreement) in which the
Companys successor does not elect to assume Mr. Holts employment
agreement, the Company will continue to pay Mr. Holts base salary
for a period of 12 months and will pay him any bonus payments he
earned prior to the date of the Change of Control. Additionally,
he will be entitled to COBRA continuation coverage following his
termination, the first three months of which will be paid for by
the Company.
The other terms and conditions of the restated agreement are
materially consistent with the terms and conditions of Mr. Holts
original agreement.
The preceding description of Mr. Holt’s restated agreement is
qualified in its entirety by reference to the restated agreement,
which is attached hereto as Exhibit 10.3.
| Item 8.01 | Other Events. |
On January 6, 2017, the Company sold the assets of 6 of its 11
clinics in the Chicago area for a nominal amount to a partnership
that includes existing Company franchisees. The partnership will
continue to operate the clinics as The Joint Chiropractic
franchised locations to a franchise agreement. The regional
developer rights were sold to the partnership for $300,000, and
to the regional developer agreement, the partnership has agreed
to open a minimum of 30 Chicago area clinics over the next 10
years, with plans to open 5 to 10 clinics over the next 18
months. The Company has consolidated and will close the remaining
5 Chicago-area clinics, as well as 3 Company-managed clinics in
upstate New York.
On January 9, 2017, the Company issued a press release, attached
hereto as Exhibit 99.1 and incorporated by reference herein,
announcing the sale of the 6 Chicago-area clinics and the
Chicago-area regional developer rights, the consolidation and
closing of the remaining 5 Chicago-area clinics and 3
Company-managed upstate New York clinics, and the Companys new
$5,000,000 line of credit. The preceding description of the press
release is qualified in its entirety by reference to the press
release, which is attached hereto as Exhibit 99.1.
| Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
|
Exhibit Number |
Description | |
| 10.1 |
Credit and Security Agreement dated as of January 3, 2017 by and between The Joint Corp., a Delaware corporation, and Tower 7 Partnership LLC, an Ohio limited liability company |
|
| 10.2 |
Revolving Credit Note, dated January 3, 2017, by The Joint Corp. in favor of Tower 7 Partnership LLC |
|
| 10.3 |
Amended and Restated Employment Agreement dated January 3, 2017 between The Joint Corp., a Delaware corporation, and Peter Holt |
|
| 99.1 | Press release dated January 9, 2017 |
About The Joint Corp. (NASDAQ:JYNT)
The Joint Corp. develops, owns, operates, supports and manages chiropractic clinics through direct ownership, management arrangements, franchising and the sale of regional developer rights throughout the United States. The Company is franchisor and operator of chiropractic clinics. The Company offers its patients the opportunity to visit its clinics without an appointment and receive prompt attention. The Company has approximately 310 franchised, company-owned, or managed clinics in operation in over 30 states. In addition to its approximately 310 operating clinics, the Company has granted franchises either directly or through its regional developers for an additional over 170 clinics. The Company offers a range of membership and wellness packages. Each patient’s records are digitally updated for ready retrieval in its data storage system by its chiropractors in compliance with various applicable medical records security and privacy regulations. The Joint Corp. (NASDAQ:JYNT) Recent Trading Information
The Joint Corp. (NASDAQ:JYNT) closed its last trading session up +0.13 at 2.91 with 3,546 shares trading hands.