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) : September 1, 2005
ACORN HOLDING CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
FILE NUMBER 000-11454
(Commission File Number)
- -------------------------------------------------- ------------------------------------
DELAWARE 59-2332857
- -------------------------------------------------- ------------------------------------
(State or other Jurisdiction of (I.R.S. Employer Identification)
Incorporation or Organization)
- -------------------------------------------------- ------------------------------------
2618 York Avenue
Minden, LA 71055
(Address of Principal Executive Offices)
(318) 382-4574
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2 below):
|_| Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
|_| 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.
On September 1, 2005, Acorn Holding Corp ("Acorn"), together with its
wholly owned subsidiary, Valentec Systems, Inc.("Valentec Systems") entered into
a master factoring agreement, as amended by addendum number 1 to that agreement
and a $7,500,000 revolving credit promissory note, with Rockland Credit Finance
LLC ("Rockland") whereby Rockland agreed, subject to its prior review, to accept
and purchase certain accounts receivable in connection with contracts that
Valentec Systems has with the U.S. government and the Israeli government for the
production primarily of ammunition and light weapons for military use. Acorn and
Valentec Systems cannot enter into alternative credit financing arrangements
without Rockland's prior approval, unless Rockland rejects any particular
account for sale and assignment, in which case that rejected account may be sold
and assigned or pledged without restriction. Rockland will pay Acorn and
Valentec Systems 85% of the aggregate net face value of any assigned account
less a discount fee of 1% of the assigned account, a processing fee of 2% plus
the Wall Street Journal prime rate with respect to each assigned account and
certain administrative fees. Acorn and Valentec Systems have granted a security
interest to Rockland in all assets of both companies. The master factoring
agreement has a term of one year and automatically renews for successive
one-year periods without the necessity of any further notice or action by any of
the parties unless earlier terminated by written notice not less than 60 days
prior to the effective date of termination. Acorn Holding and Valentec Systems
are jointly liable and severable for all obligations under the master factoring
agreement.
Under addendum number 1 to the master factoring agreement, Rockland has
extended a revolving line of credit in the maximum principal amount of
$7,500,000 to be used for working capital in the ordinary course of the business
operations of Acorn and Valentec Systems. The amount that can be borrowed under
the line of credit is subject to borrowing limitations set forth in addendum
number 1. The revolving credit promissory note issued by Acorn Holding and
Valentec Systems to Rockland bears interest at 12% per annum plus an
administrative services fee at a fluctuating rate per annum equal to 2% plus the
Wall Street Journal prime rate. All payment of principal and accrued interest
and fees are due and payable on the earlier of the last day of the 12-month
initial term or following the occurrence of an event of default under the master
factoring agreement, including a material breach of the master factoring
agreement, addendum number 1 and the revolving credit promissory note, a
material adverse change in management, financial condition or business prospects
of Acorn or Valentec Systems, the discontinuance or suspension of any business
operation currently being conducted by Acorn or Valentec Systems or Acorn or
Valentec Systems becoming insolvent or unable to meet their debts as they
mature.
A copy of the master factoring agreement, addendum number 1 and the
revolving credit promissory note are attached to this report as exhibits 10.1,
10.2 and 10.3 respectively, and are incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation
under and Off-Balance Sheet Arrangement of a Registrant.
The disclosure provided in Item 1.01 above is incorporated by reference
into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits Furnished
10.1 Master Factoring Agreement, dated September 1, 2005 among Acorn Holding
Corp., Valentec Systems, Inc. and Rockland Credit Finance LLC
10.2 Addendum Number 1 to MFA dated September 1, 2005, among Acorn Holding
Corp., Valentec Systems, Inc. and Rockland Credit Finance LLC
10.3 Revolving Credit Promissory Note, dated September 1, 2005, among Acorn
Holding Corp., Valentec Systems, Inc. and Rockland Credit Finance LLC
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 thereunto duly authorized.
By: /s/ Robert A. Zummo
------------------------------------
Robert A. Zummo
President and Chief Executive Officer
ACORN HOLDING CORP.
Date: September 8, 2005