Item 1.01 Entry into a Material Definitive Agreement.
On
Founded in 2006 by Piraino and headquartered in
The aggregate purchase price for the Business will consist of: (a)
The Closing Cash Payment portion of the purchase price is subject to certain
adjustments. The Closing Cash Payment will be decreased by the amount of any
outstanding indebtedness of the Seller or the Business for borrowed money
existing as of the Closing Date, other than any indebtedness constituting an
Assumed Liability (as defined in the Purchase Agreement), and the deducted
amount will be utilized to pay off such outstanding indebtedness. In addition,
the Closing Cash Payment is subject to customary estimated and final working
capital adjustment provisions with a target working capital of
The Seller is also entitled to receive the following payments (each, an "Earn Out Payment" and together, the "Earn Out Payments") to the extent the Business achieves the applicable Gross Profit targets:
1. An
2. An
In the event that any Inventory included in the Purchased Assets (as defined in the Purchase Agreement) is not purchased during the Initial Earn Out Period, or any Accounts Receivables (as defined in the Purchase Agreement) included in the Purchased Assets are not paid during the Initial Earn Out Period (the "Unpurchased/Unpaid Amount"), then such Unpurchased/Unpaid Amount will be deducted from the Earn Out Payment due following the Initial Earn Out Period, or if such Unpurchased/Unpaid Amount exceeds the Earn Out Payment due following the Initial Earn Out Period, then such amounts will be deducted from the Earn Out Payment due following the Second Earn Out Period. If any Unpurchased/Unpaid Amounts are subsequently sold or paid, the Seller will be entitled to receive such amounts in full.
To the extent the Seller is entitled to all or a portion of an
1
During the period between the execution of the Purchase Agreement and the
Closing Date, the Seller will operate the Business in the ordinary course of
business substantially consistent with past practices; provide reasonable access
to the Business's books, records, sales representatives and support staff; and
both the Company and the Seller will give notice of any events adversely
relating to the consummation of the transactions contemplated by the Purchase
Agreement. Until the earlier of the Closing Date or
"Gross Profit" means (i) the amount invoiced to customers less (ii) expenses charged by any third party (except the Company and its affiliates) directly related to that job or account. Such expenses shall include but not be limited to cost of goods sold, decoration, setup fees, third-party warehousing and fulfillment charges, inbound and outbound shipping, duties/taxes and credit card fees.
The Purchase Agreement contains customary representations, warranties and covenants, including a covenant that the Seller and Piraino will not compete with the Business for a period of three (3) years following closing.
The Purchase Agreement also contains mutual indemnification for breaches of representations or warranties and failure to perform covenants or obligations contained in the Purchase Agreement. The Seller and the Members also indemnified the Company for (i) any Excluded Liability (as defined in the Purchase Agreement) and (ii) any liability of the Seller which is not an Assumed Liability (as defined in the Purchase Agreement) and which is imposed upon the Company under any bulk transfer law of any jurisdiction or under any common law doctrine of de facto merger or successor liability so long as such liability arises out of the ownership, use or operation of the assets of the Seller, or the operation or conduct of the Business prior to the closing. The Company also indemnified the Seller and the Members for (i) any Assumed Liability and (ii) any liability (other than any Excluded Liability) asserted by a third party against any of the Seller or the Members which arises out of the ownership of the Purchased Assets after the Closing Date or the operation by the Company of the Business conducted with the Purchased Assets after the Closing Date.
In the case of the indemnification provided with respect to breaches of certain
non-fundamental representations and warranties, the party will only become
liable for indemnified losses if the amount exceeds an aggregate of
The closing of the Purchase Agreement is subject to customary closing
conditions, including, without limitation, the completion of due diligence
investigations; the receipt of any required consents of any third parties or
governmental agencies; and the release of any security interests. In addition,
(i) the Company shall have entered into an employment agreement with Piraino
that is in form and substance satisfactory to the Company and Piraino, which
will provide for a two-year term with compensation of
Item 8.01 Other Events.
On
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits Exhibit No. Description of Exhibit 2.1 Asset Purchase Agreement, dated as ofJanuary 21, 2022 , by and amongStran & Company, Inc. ,G.A.P. Promotions, LLC , andGayle Piraino andStephen Piraino 99.1 Press Release datedJanuary 26, 2022 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) 3
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