Item 1.01 Entry into a Material Definitive Agreement.
Summit Acquisition
On August 31, 2018, L.A.R.K. Industries, Inc. (“LARK”), a subsidiary of Select Interior Concepts, Inc. (the “Company”), entered into an Asset Purchase Agreement (the “Summit Purchase Agreement”) with Summit Stoneworks, LLC (“Summit”) and certain equityholders of Summit party thereto. Pursuant to the Summit Purchase Agreement, LARK acquired substantially all of the assets of Summit (the “Summit Acquisition”) for a purchase price of approximately $16 million in cash (subject to post-closing purchase pricetrue-up adjustments), and up to an aggregate amount of $3.5 million inearn-out consideration (subject to the terms and conditions of theearn-out provisions in the Summit Purchase Agreement).
The foregoing summary of the Summit Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the complete terms of the Summit Purchase Agreement, which is filed as Exhibit 10.1 to this Current Report on Form8-K and incorporated herein by reference.
Fourth Amendment to Financing Agreement with Cerberus Business Finance, LLC
On August 31, 2018, Architectural Granite & Marble, LLC and Pental Granite and Marble, LLC (together, the “Borrowers”), each a subsidiary of the Company, entered into that certain Fourth Amendment to Financing Agreement (the “Fourth Amendment”) with the financial institutions party thereto, as lenders, and Cerberus Business Finance, LLC (“Cerberus”), as agent for the lenders. The Fourth Amendment further amends the Financing Agreement, dated as of February 28, 2017, by and among the Borrowers, the financial institutions party thereto, as lenders, and Cerberus, as agent for the lenders, as amended by (i) the First Amendment to Financing Agreement, dated as of November 22, 2017, (ii) the Second Amendment to Financing Agreement, dated as of December 29, 2017, and (iii) the Third Amendment to Financing Agreement, dated as of June 28, 2018, each by and among the Borrowers, the lenders party thereto, and Cerberus, as agent for the lenders (as amended, the “Financing Agreement”).
The Fourth Amendment, among other things, (i) increases the total Term Loan Commitment (as such term is defined in the Fourth Amendment) to approximately $101.4 million, (ii) provides the Borrowers with additional restricted payments capacity to fund potential earn-out payments that may be made pursuant to the Summit Purchase Agreement (subject to the satisfaction of certain financial conditions), (iii) revises the “Permitted Investments” provisions to expressly include the Summit Acquisition, and (iv) expands the “Use of Proceeds” provisions to expressly allow for the payment of the purchase price in connection with the Summit Acquisition, as well as the fees and expenses related to the Summit Acquisition and the Fourth Amendment.
The foregoing summary of the Fourth Amendment does not purport to be complete and is qualified in its entirety by reference to the complete terms of the Fourth Amendment, which is filed as Exhibit 10.2 to this Current Report onForm 8-K and incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On August 31, 2018, pursuant to the Summit Purchase Agreement, LARK acquired substantially all of the assets of Summit, a company specializing in design center selections and the installation of countertops, flooring and other products for residential and commercial applications in central Texas, for a purchase price of approximately $16 million in cash (subject to post-closing purchase pricetrue-up adjustments), and up to an aggregate amount of $3.5 million inearn-out consideration (subject to the terms and conditions of theearn-out provisions in the Summit Purchase Agreement). As part of the Summit Acquisition, LARK acquired certain tangible and intangible assets of Summit, including certain inventory, equipment and intellectual property, and all of the issued and outstanding equity of Designer Floors of Texas, Inc., a subsidiary of Summit, and also assumed certain contracts of Summit.
The foregoing summary of the Summit Acquisition does not purport to be complete and is qualified in its entirety by reference to the complete terms of the Summit Purchase Agreement, which is filed as Exhibit 10.1 to this Current Report on Form8-K and incorporated herein by reference.
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