Attached files
| file | filename |
|---|---|
| EX-4.1 - PIONEER POWER SOLUTIONS, INC. | e606893_ex4-1.htm |
| EX-2.1 - PIONEER POWER SOLUTIONS, INC. | e606893_ex2-1.htm |
| EX-10.6 - PIONEER POWER SOLUTIONS, INC. | e606893_ex10-6.htm |
| EX-10.7 - PIONEER POWER SOLUTIONS, INC. | e606893_ex10-7.htm |
| EX-99.1 - PIONEER POWER SOLUTIONS, INC. | e606893_ex99-1.htm |
| EX-10.3 - PIONEER POWER SOLUTIONS, INC. | e606893_ex10-3.htm |
| EX-10.9 - PIONEER POWER SOLUTIONS, INC. | e606893_ex10-9.htm |
| EX-10.1 - PIONEER POWER SOLUTIONS, INC. | e606893_ex10-1.htm |
| EX-10.8 - PIONEER POWER SOLUTIONS, INC. | e606893_ex10-8.htm |
| EX-10.4 - PIONEER POWER SOLUTIONS, INC. | e606893_ex10-4.htm |
| EX-10.2 - PIONEER POWER SOLUTIONS, INC. | e606893_ex10-2.htm |
| EX-10.5 - PIONEER POWER SOLUTIONS, INC. | e606893_ex10-5.htm |
| EX-10.11 - PIONEER POWER SOLUTIONS, INC. | e606893_ex10-11.htm |
| EX-10.12 - PIONEER POWER SOLUTIONS, INC. | e606893_ex10-12.htm |
| EX-10.10 - PIONEER POWER SOLUTIONS, INC. | e606893_ex10-10.htm |
| EX-10.13 - PIONEER POWER SOLUTIONS, INC. | e606893_ex10-13.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
_________________
FORM
8-K
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 30, 2010
PIONEER
POWER SOLUTIONS, INC.
(Exact
Name of Registrant as Specified in Charter)
|
Delaware
|
333-155375
|
26-3387077
|
||
|
(State
or other jurisdiction
of incorporation) |
(Commission
File Number)
|
(IRS
Employer
Identification No.) |
|
One
Parker Plaza
400
Kelby Street, 9th Floor
Fort
Lee, New Jersey
|
07024
|
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code: (212) 867-0700
|
(Former
name or former address, if changed since last report)
|
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:
o Written communications
pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01. Entry
Into a Material Definitive Agreement.
Merger
Agreement
On April
30, 2010, Pioneer Power Solutions, Inc. (“Pioneer”) entered into an Agreement
and Plan of Merger (the “Merger Agreement”) with Jefferson Electric, Inc., a
Delaware corporation (“Jefferson”), Thomas Klink, the sole stockholder of
Jefferson, and JEI Acquisition, Inc., a Delaware corporation and wholly owned
subsidiary of Pioneer (“Merger Sub”), pursuant to which, on such date, Merger
Sub merged with and into Jefferson (the “Merger”), with Jefferson continuing as
the surviving corporation and becoming a wholly owned subsidiary of
Pioneer.
Upon consummation of the Merger, an
aggregate of 2,295 shares of Jefferson common stock, par value $1.00 per share,
issued and outstanding was cancelled and converted into the right to receive an
aggregate of 486,275 shares of Pioneer common stock, par value $0.001 per share
(the “Merger Shares”).
Each of Pioneer, Jefferson and Merger
Sub made customary representations, warranties and covenants and indemnities in
the Merger Agreement. The board of directors of each of Pioneer,
Jefferson and Merger Sub approved the Merger Agreement and the
Merger.
Jefferson is a manufacturer and
supplier of dry-type transformers and lighting ballasts for commercial,
industrial and original equipment manufacturer (OEM) customers.
In accordance with the Merger
Agreement, upon consummation of the merger, Pioneer advanced $3.0 million to
Jefferson (the “Bank Loan Advance”), which was utilized for the following
purposes: (i) $2.8 million to pay the principal amount of the revolving credit
facility under the Bank Loan Agreement (defined and described under “Bank Loan
Agreement” below) and (ii) $200,000 to pay the principal amount of the term loan
facility under the Bank Loan Agreement. The Bank Loan Advance
constitutes a loan made by Pioneer to Jefferson and is subordinated to the Bank
Loan Agreement.
Employment
Agreement and Election of Director
On April 30, 2010, in connection with
the Merger, Jefferson, entered into an Employment Agreement (the “Employment
Agreement”) with Mr. Klink pursuant to which Mr. Klink shall serve as
Jefferson’s President on a full time basis, subject to the authority of the
chief executive officer of Jefferson, for a term of three years following the
consummation of the Merger, unless Mr. Klink is terminated earlier in accordance
with the provisions of the Employment Agreement. Mr. Klink will receive an
annual base salary of $312,000. Mr. Klink’s employment may be terminated upon
his death or disability, upon the occurrence of certain events that constitute
“cause,” and without cause. If terminated without cause, Mr. Klink
shall be entitled to receive as severance an amount equal to his base salary for
the remainder of the three year employment period, conditioned upon his
execution of a release in form reasonably acceptable to counsel to
Jefferson.
In connection with the Merger, Mr.
Klink was appointed to the board of Pioneer effective upon the consummation of
the Merger. The Merger Agreement provides that, with certain exceptions,
including resignation, termination or removal as a director, Pioneer will cause
Mr. Klink to be nominated as a director of Pioneer during the three year term of
the Employment Agreement. In addition, on April 30, 2010, Mr. Klink entered into
a Voting Agreement with Provident Pioneer Partners, L.P. (“Provident”), which
beneficially owns 23.8 million, or 78.1%, of Pioneer’s outstanding common stock
after the issuances described herein, pursuant to which Provident agreed to vote
all of its shares to elect Mr. Klink as a director of Pioneer during the three
year term of the Employment Agreement, subject to certain exceptions, including
resignation, termination or removal as a director.
Lock-Up
Agreement
In accordance with the Merger
Agreement, Pioneer, Mr. Klink and Jefferson entered into a Lock-Up Agreement
(the “Lock-Up Agreement”) pursuant to which Mr. Klink may not, subject to
certain exemptions, sell or transfer any of the Merger Shares during the period
commencing as of the effective time of the Merger and ending 18 months
thereafter. The Klink Warrant (defined and described under “Warrant
Purchase Agreement” below) also provides for a concurrent 18 month lock-up
period that covers the Klink Warrant Shares.
JEM
Purchase Agreement
In
accordance with the Merger Agreement, JE Mexican Holdings, Inc, a Delaware
corporation and wholly owned subsidiary of Pioneer (“JEMH”) and Mr. Klink
entered into a Purchase Agreement (the “JEM Purchase Agreement”), providing for
the sale by Mr. Klink to JEMH of one hundred percent (100%) of the membership
interests in Jefferson Electric Mexico Holdings LLC, a Wisconsin limited
liability company (“JE Mexico”), for nominal consideration. JE Mexico is the
holder of a less than 0.1% minority equity interest in Nexus Magneticos de
Mexico, S. de R.L. de C.V. (“Nexus Mexico”), the principal manufacturing
subsidiary of Jefferson which is located in Reynosa, Mexico.
Warrant
Purchase Agreement
On April
30, 2010, Pioneer entered into a Warrant Purchase Agreement (the “Warrant
Purchase Agreement”) with Mr. Klink, pursuant to which, in exchange for $10,000,
Pioneer sold a five year warrant (the “Klink Warrant”) to Mr. Klink that is
exercisable for up to 1.0 million shares of Pioneer common stock (the “Klink
Warrant Shares”) at an initial exercise price of $3.25 per share, subject to
customary anti-dilution adjustments. Pursuant to the Klink Warrant,
the Klink Warrant Shares are subject to an 18-month lock-up period that is
concurrent with and contains similar terms as the Lock-Up
Agreement. See “Item 3.02 Unregistered Sales of Equity Securities”
hereto for more information on the issuance.
Bank
Loan Agreement
Prior to
the Merger, Jefferson was a party to a Loan and Security Agreement, dated as of
January 2, 2008, as amended, between Jefferson, as borrower, and Johnson Bank,
as lender (the “Bank Loan Agreement”). In accordance with the Merger Agreement,
concurrently with the Merger, Jefferson and Johnson Bank entered into a Fifth
Amendment to Loan and Security Agreement (the “Fifth Amendment”) providing for a
restructuring of the credit facilities provided in the Bank Loan Agreement,
waiving and releasing all prior defaults by Jefferson under the Bank Loan
Agreement, and any claims or rights relating thereto, and providing the consent
and approval of Johnson Bank to the Merger and other transactions contemplated
by the Merger Agreement.
Neither
Pioneer nor any of its affiliates, other than Jefferson, are responsible for, or
guarantors of, or have otherwise assumed, any debts, liabilities or obligations
under the Bank Loan Agreement, as amended. In addition, under the Fifth
Amendment, Mr. Klink and Nexus Mexico are guarantors under the Bank Loan
Agreement, as amended. Borrowings under the Bank Loan Agreement, as
amended, are collateralized by substantially all assets of Jefferson as well as
by the Merger Shares and the Klink Warrant.
The Bank
Loan Agreement, as amended, includes a revolving credit facility with a
borrowing base of $5.0 million and a term credit facility. Monthly
payments of accrued interest must be made under the revolving credit facility
and monthly payments of principal and accrued interest must be made under the
term credit facility, with a final payment of all outstanding amounts under both
on October 31, 2011. Following certain payments in connection with
the Merger, approximately $1.4 million is currently outstanding under the
revolving credit facility and approximately $3.3 million is currently
outstanding under the term credit facility.
The
interest rate under the revolving credit facility is equal to the greater of (a)
the rate of interest announced from time to time by Johnson Bank as its
reference rate for interest rate determinations (currently 3.25% annually) or
(b) 6.5% annually. The interest rate under the term credit facility
is 7.27% annually. The unpaid balances on the credit facilities will
bear interest after default or maturity at five percentage points annually in
excess of the otherwise applicable rate.
The Bank
Loan Agreement, as amended, contains certain financial covenants, including a
requirement that Jefferson achieve minimum tangible net worth targets over the
next six fiscal quarters and maintain a minimum debt service coverage ratio,
each as defined and set forth in the Bank Loan Agreement, as
amended.
The Bank
Loan Agreement, as amended, restricts Jefferson’s ability to pay dividends or
make distributions, advances or other transfers of assets to
Pioneer.
Repayment
of amounts outstanding under the Bank Loan Agreement may be accelerated upon an
event of default. Events of default include, on the part of Jefferson
or the guarantor, as applicable, certain bankruptcy proceedings, failure to pay
certain amounts due, failure to perform any warranty undertaking or covenant
under the Bank Loan Agreement, failure to perform under or breach pursuant to
any other agreement with Johnson Bank, termination, revocation or repudiation by
guarantor of his obligations, certain failures of a creditor of Jefferson to
honor a subordination or intercreditor agreement with Johnson Bank, Jefferson or
guarantor dies, ceases to exist or becomes insolvent, certain misrepresentations
by Jefferson to Johnson Bank, certain injunctions or attachments, and
acceleration of other obligations of Jefferson.
The
foregoing descriptions of the Merger, the Merger Agreement, the Employment
Agreement, the Voting Agreement, the Lock-Up Agreement, the JEM Purchase
Agreement, the Warrant Purchase Agreement, the Klink Warrant, the Bank Loan
Agreement, as amended, and the Fifth Amendment do not purport to be complete and
are qualified in their entirety by reference to the Merger Agreement, the
Employment Agreement, the Voting Agreement, the Lock-Up Agreement, the JEM
Purchase Agreement, the Warrant Purchase Agreement, the Klink Warrant, the Bank
Loan Agreement, the Amendment to Loan and Security Agreement dated January 29,
2008, the Second Amendment to Loan and Security Agreement dated May 2, 2008, the
Third Amendment to Loan and Security Agreement dated December 3, 2008, the
Forbearance Agreement and Fourth Amendment to Loan Agreement dated August 28,
2009, the First Amended and Restated Forbearance Agreement and Fourth Amendment
to Loan Agreement dated December 8, 2009, the First Amendment to First Amended
and Restated Forbearance Agreement and Fourth Amendment to Loan Agreement dated
March 31, 2010 and the Fifth Amendment, which are filed as Exhibits 2.1, 4.1 and
10.1 through 10.13 hereto and incorporated by reference herein.
The
Merger Agreement has been included to provide investors and security holders
with information regarding its terms and conditions. It is not intended to
provide any other factual information about Pioneer. The representations,
warranties and covenants contained in the Merger Agreement were made only for
purposes of such agreement and as of specific dates, were for the benefit of the
parties to such agreement, and may be subject to limitations agreed upon by the
contracting parties, including being qualified by confidential disclosures
exchanged between the parties in connection with the execution of the Merger
Agreement. The representations, warranties and covenants therein may have been
made for the purposes of allocating contractual risk between the parties to the
agreement instead of establishing these matters as facts, and may be subject to
standards of materiality applicable to the contracting parties that differ from
those applicable to investors. Investors should not rely on the representations,
warranties and covenants or any descriptions thereof as characterizations of the
actual state of facts or condition of Pioneer or its respective subsidiaries or
affiliates. Moreover, information concerning the subject matter of the
representations, warranties and covenants may change after the date of the
Merger Agreement, which subsequent information may or may not be fully reflected
in Pioneer’s public disclosures.
Item
2.01. Completion
of Acquisition or Disposition of Assets.
The
information set forth in Item 1.01 of this report is incorporated herein by
reference.
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
of this report is incorporated herein by reference.
Item
3.02 Unregistered
Sales of Equity Securities.
The
information set forth in Item 1.01 of this report is incorporated herein by
reference.
The
Merger Shares were issued in an offering exempt from registration under the
Securities Act of 1933, as amended (the “Securities Act”) under Section 4(2) of
the Securities Act. Mr. Klink represented to Pioneer that he was an “accredited
investor” as defined in Regulation D under the Securities Act and signed
the Lock-Up Agreement restricting the resale of the Merger Shares.
The Klink
Warrant was issued in an offering exempt from registration under the Securities
Act under Section 4(2) of the Securities Act. Mr. Klink represented to Pioneer
that he was an “accredited investor” as defined in Regulation D under the
Securities Act and was acquiring the Klink Warrant and will acquire the
Klink Warrant Shares for investment for his own account, with no present
intention of dividing his participation with others or reselling or otherwise
distributing the same.
The
foregoing descriptions of the Merger, the Merger Agreement and the Klink Warrant
do not purport to be complete and are qualified in their entirety by reference
to the Merger Agreement, the Warrant Purchase Agreement and the Klink Warrant,
which are filed as Exhibits 2.1, 4.1 and 10.5 hereto and incorporated by
reference herein.
Item
5.02 Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
The information set forth in Item 1.01
of this report is incorporated herein by reference.
Item
7.01 Regulation
FD Disclosure.
On May 3, 2010, Pioneer issued a press
release announcing the execution of the Merger Agreement and consummation of the
Merger, a copy of which is furnished as Exhibit 99.1 hereto.
In
accordance with general instruction B.2 to Form 8-K, the information contained
in Exhibit 99.1 is being “furnished” and not “filed” with the Securities and
Exchange Commission for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”) and such information shall not be
deemed incorporated by reference in any filing under the Securities Act or the
Exchange Act, whether made before or after the date hereof, regardless of any
general incorporation language in such filing.
The
information furnished pursuant to this Item 7.01 shall not be deemed to
constitute an admission that such information is required to be furnished
pursuant to Regulation FD or that such information or exhibit contains material
information that is not otherwise publicly available. In addition,
Pioneer does not assume any obligation to update such information in the
future.
Item
9.01. Financial
Statements and Exhibits.
(a)
Financial statements of businesses acquired.
The required financial statements of
Jefferson will be filed by amendment pursuant to Item 9.01(a)(4) within 71
calendar days after the date on which this Current Report on Form 8-K is
required to be filed.
(b) Pro
forma financial information.
The
required pro forma information with respect to Jefferson will be filed by
amendment pursuant to Item 9.01(b)(2) within 71 calendar days after the date on
which this Current Report on Form 8-K is required to be filed.
(d)
Exhibits.
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Exhibit No.
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Description
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2.1
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Agreement
and Plan of Merger, dated April 30, 2010, by and among Pioneer Power
Solutions, Inc., Jefferson Electric, Inc., Thomas Klink, and JEI
Acquisition, Inc.
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4.1
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Warrant
to Purchase Common Stock, dated April 30, 2010, issued to Thomas
Klink.
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10.1
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Employment
Agreement, dated April 30, 2010, by and between Jefferson Electric, Inc.
and Thomas Klink.
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10.2
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Voting
Agreement, dated April 30, 2010, by and between Provident Pioneer
Partners, L.P. and Thomas Klink.
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10.3
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Lock-Up
Agreement, dated April 30, 2010, by and among Thomas Klink, Pioneer Power
Solutions, Inc. and Jefferson Electric, Inc.
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10.4
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Purchase
Agreement, dated April 30, 2010, by and between Thomas Klink and JE
Mexican Holdings, Inc.
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10.5
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Warrant
Purchase Agreement, dated April 30, 2010, by and between Pioneer Power
Solutions, Inc. and Thomas Klink.
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10.6
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Loan
and Security Agreement, dated January 2, 2008, by and between Jefferson
Electric, Inc. and Johnson Bank.
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10.7
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Amendment
to Loan and Security Agreement, dated January 29, 2008, by and between
Jefferson Electric, Inc. and Johnson Bank.
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10.8
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Second
Amendment to Loan and Security Agreement, dated May 2, 2008, by and
between Jefferson Electric, Inc. and Johnson Bank.
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10.9
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Third
Amendment to Loan and Security Agreement, dated December 3, 2008, by and
between Jefferson Electric, Inc. and Johnson Bank.
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10.10
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Forbearance
Agreement and Fourth Amendment to Loan Agreement, dated August 28, 2009,
by and among Johnson Bank, Jefferson Electric, Inc. Thomas Klink and Diane
Klink.
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10.11
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First
Amended and Restated Forbearance Agreement and Fourth Amendment to Loan
Agreement, dated December 8, 2009, by and among Johnson Bank, Jefferson
Electric, Inc. Thomas Klink and Diane Klink.
|
|
10.12
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First
Amendment to First Amended and Restated Forbearance Agreement and Fourth
Amendment to Loan Agreement, dated March 31, 2010, by and among Johnson
Bank, Jefferson Electric, Inc. Thomas Klink and Diane
Klink.
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10.13
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Fifth
Amendment to Loan and Security Agreement, dated April 30, 2010, by and
between Jefferson Electric, Inc. and Johnson Bank.
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99.1
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Press
Release, dated May 3, 2010.
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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 hereunto
duly authorized.
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PIONEER
POWER SOLUTIONS, INC.
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||||
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Dated:
May 3, 2010
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By:
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/s/ Nathan J. Mazurek | ||
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Name:
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Nathan
J. Mazurek
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|||
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Title:
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Chief
Executive Officer
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|||
EXHIBIT
INDEX
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Exhibit No.
|
Description
|
|
2.1
|
Agreement
and Plan of Merger, dated April 30, 2010, by and among Pioneer Power
Solutions, Inc., Jefferson Electric, Inc., Thomas Klink, and JEI
Acquisition, Inc.
|
|
4.1
|
Warrant
to Purchase Common Stock, dated April 30, 2010, issued to Thomas
Klink.
|
|
10.1
|
Employment
Agreement, dated April 30, 2010, by and between Jefferson Electric, Inc.
and Thomas Klink.
|
|
10.2
|
Voting
Agreement, dated April 30, 2010, by and between Provident Pioneer
Partners, L.P. and Thomas Klink.
|
|
10.3
|
Lock-Up
Agreement, dated April 30, 2010, by and among Thomas Klink, Pioneer Power
Solutions, Inc. and Jefferson Electric, Inc.
|
|
10.4
|
Purchase
Agreement, dated April 30, 2010, by and between Thomas Klink and JE
Mexican Holdings, Inc.
|
|
10.5
|
Warrant
Purchase Agreement, dated April 30, 2010, by and between Pioneer Power
Solutions, Inc. and Thomas Klink.
|
|
10.6
|
Loan
and Security Agreement, dated January 2, 2008, by and between Jefferson
Electric, Inc. and Johnson Bank.
|
|
10.7
|
Amendment
to Loan and Security Agreement, dated January 29, 2008, by and between
Jefferson Electric, Inc. and Johnson Bank.
|
|
10.8
|
Second
Amendment to Loan and Security Agreement, dated May 2, 2008, by and
between Jefferson Electric, Inc. and Johnson Bank.
|
|
10.9
|
Third
Amendment to Loan and Security Agreement, dated December 3, 2008, by and
between Jefferson Electric, Inc. and Johnson Bank.
|
|
10.10
|
Forbearance
Agreement and Fourth Amendment to Loan Agreement, dated August 28, 2009,
by and among Johnson Bank, Jefferson Electric, Inc. Thomas Klink and Diane
Klink.
|
|
10.11
|
First
Amended and Restated Forbearance Agreement and Fourth Amendment to Loan
Agreement, dated December 8, 2009, by and among Johnson Bank, Jefferson
Electric, Inc. Thomas Klink and Diane Klink.
|
|
10.12
|
First
Amendment to First Amended and Restated Forbearance Agreement and Fourth
Amendment to Loan Agreement, dated March 31, 2010, by and among Johnson
Bank, Jefferson Electric, Inc. Thomas Klink and Diane
Klink.
|
|
10.13
|
Fifth
Amendment to Loan and Security Agreement, dated April 30, 2010, by and
between Jefferson Electric, Inc. and Johnson Bank.
|
| 99.1 |
Press
Release, dated May 3, 2010.
|