Item 1.01 – Entry into a Material Definitive Agreement.
Stock Purchase Agreement
On February 21, 2017, LSI Industries Inc., an Ohio corporation (“
LSI
” or the “
Company
”), Atlas Lighting Products, Inc., a North Carolina corporation (“
Atlas
”), James Hewes Bennett and Rector Samuel Hunt III (Mr. Bennett and Mr. Hunt are collectively referred to as “
Sellers
”), entered into a Stock Purchase Agreement (the “
Purchase A
greement
”). Pursuant to the Purchase Agreement LSI acquired all of the outstanding shares of capital stock of Atlas from Sellers and Atlas became a direct wholly owned subsidiary of LSI. The Purchase Agreement provides for an aggregate purchase price of approximately $97.5 million, including $96,893,000 in cash and warrants valued at approximately $0.6 million as described below. The purchase price nets certain Seller expenses. In connection with the Purchase Agreement the Company secured a buyer-side representation and warranty insurance policy and a portion of the purchase price was placed in an escrow account for the purpose of securing the indemnification obligations of Sellers under the Purchase Agreement. Also on February 21, 2017, Atlas entered into a Lease Agreement with Atlas Mebane Street Properties, LLC a North Carolina limited liability company owned by Sellers which holds the property located at 1406 South Mebane Street, Burlington, North Carolina.
The Purchase Agreement contains representations and warranties, covenants, conditions and indemnification provisions. The foregoing description of the Purchase Agreement and the transactions contemplated thereby does not purport to be complete and is subject to and qualified in its entirety by reference to the Purchase Agreement, a copy of which is attached hereto as Exhibit 2.1 and the terms of which are incorporated herein by reference.
The Purchase Agreement has been included to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about the Company or Atlas. The representations, warranties and covenants contained in the Purchase Agreement were made only for purposes of that agreement and as of specific dates, were solely for the benefit of the parties to the Purchase Agreement and may be subject to limitations agreed upon by the contracting parties, including qualification by confidential disclosures exchanged between the parties in connection with the execution of the Purchase Agreement. The representations and warranties may have been made for the purposes of allocating contractual risk between the parties to the Purchase Agreement instead of establishing these matters as facts, and may be subject to contractual standards of “materiality” and “material adverse effect” applicable to the contracting parties that differ from those applicable to investors or under applicable securities laws. Investors are not third party beneficiaries under the Purchase Agreement and should not rely on the representations, warranties and covenants, or any descriptions thereof, as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
A copy of the press release issued by the Company on February 21, 2017 related to the Purchase Agreement is filed herewith and incorporated herein by reference.
Warrant Agreement
s
In connection with the transactions contemplated by the Purchase Agreement, the Company issued to Sellers warrants to purchase an aggregate of 200,000 shares of the Company’s Common Stock at an exercise price of $9.95 per share expiring February 2022. The form of Warrant Agreement entered into by Sellers and the Company is attached hereto and incorporated herein by reference as Exhibit 4.1
Amended Loan Documents
On February 21, 2017, LSI entered into a Third Amendment to Loan Documents with PNC Bank, National Association (the “
Bank
”). The Third Amendment to Loan Documents amends LSI’s Amended and Restated Loan Agreement with the Bank to provide that the loans under the facility provided by the Bank shall include a revolving credit loan (“
Revolving Credit Loan
”) in the principal amount of up to $100 million. Under the Third Amendment to Loan Documents LSI also may request that the Bank issue trade or standby letters of credit in the aggregate amount of $10 million under the Revolving Credit Loan. LSI borrowed approximately $66 million under the Revolving Credit Loan to finance the acquisition of Atlas. The Revolving Credit Loan is secured by certain of the assets of LSI.
The foregoing description of the Third Amendment to Loan Documents does not purport to be complete and is subject to and qualified in its entirety by reference to the Third Amendment to Loan Documents, a copy of which is attached hereto as Exhibit 4.2 and the terms of which are incorporated herein by reference.