Item 1.01
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Entry into a Material Definitive Agreement
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On July 14, 2016, SharkReach,
Inc., a Nevada corporation (the “
Company
”), entered into an Agreement and Plan of Merger (the “
Agreement
”),
by and among MIM Acquisition Corp., a wholly owned, newly formed subsidiary of the Company, Mastermind Involvement Marketing, LLC,
a Georgia limited liability company (“MIM”), Mastermind Marketing, Inc., a Georgia corporation (“MMI”)
and Villanta Corporation, a Georgia Corporation (“VIC” and together with MMI, the “MIM Owners”). Pursuant
to the Agreement, at closing, MIM shall be merged with and into MIM Acquisition Corp. under the terms set forth in the Agreement.
Pursuant to the Agreement,
at and following closing, the shareholders of MIM will receive the following shares of the Company’s common stock and/or
cash in exchange for all of the issued and outstanding ownership interests of MIM, and MIM will merge with and into MIM Acquisition
Corp., so that MIM will become a wholly-owned subsidiary of the Company:
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(i)
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An aggregate of
$3,000,000 worth of the Company’s common stock, as determined
pursuant to the terms of the Agreement.
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(ii)
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An additional $4,400,000 worth of the Company’s
common stock, which shall be issued to MIM Owners in increments, as set forth in the Agreement as, follows: (a) $1,500,000 worth
shall be delivered six (6) months after closing; (b) an additional $1,500,000 worth of shall be delivered nine (9) months after
closing, and, (c) the remaining $1,400,000 worth shall be delivered twelve (12) months after closing.
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(iii)
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A cash payment of $3,000,000 payable by the Company to
the MIM Owners at closing.
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(iv)
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An additional, aggregate payment of $2,000,000, evidenced by a Note issued to the MIM Owners, which
shall be payable by the Company to the MIM Owners in installments commencing twelve (12) months after closing, due and payable
as follows: the first $1,000,000 due and payable 12 months after closing and the balance of $1,000,000 shall be due and payable
twenty-four (24) months after closing. The additional $2,000,000 payment shall be payable to the MIM Owners, in cash and/or the
Company’s Common Shares, at the Company’s option.
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(v)
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Following and during the initial two and one-half (2-½) years immediately following
the closing, an earn-out of an aggregate of $2,000,000 worth of the Company’s common stock will be issued and delivered
to the MIM Owners. In addition, commencing twelve months after closing, a second earn-out of an aggregate of $2,000,000 worth
of the Company’s common stock will be issued and delivered to the MIM Owners, which shares shall be issued as set forth
in the Agreement.
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The closing of the Agreement is
subject to the satisfaction or waiver of customary closing conditions, as well as the following closing conditions, among
others:
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·
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completion of audited and unaudited financial statements of MIM;
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·
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the execution of employment agreements with Dan Dodson and Michael Gelfond that shall include a
minimum term of three (3) years, incentive bonuses, health insurance and retirement benefits, stock option plan participation,
guaranteed annual increases in salary, non-compete and other terms to be agreed upon by the parties;
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·
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the execution of Lock-Up Agreements by the shareholders of MIM that will restrict them from selling
above a certain amount of the shares issued to them pursuant to the Agreement; and
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·
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raising of funds by the Company.
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In the event the Agreement has not been
closed by November 30, 2016 or any condition to closing has not been completed by November 30, 2016, either party may terminate
the Agreement by providing written notice to the other party.
Upon closing, all the rights, privileges,
immunities, powers and franchises, all property, real, personal and mixed, and all debts due on whatever account, including without
limitation subscriptions to ownership interests, and all other choses in action, and all and every other interest of or belonging
to or due to MIM or MIM Acquisition Corp., as a group, shall be taken and deemed to be transferred to, and vested in, MIM Acquisition
Corp.. In addition, all property, rights and privileges, immunities, powers and franchises and all and every other interest shall
be thereafter as effectually become the property of MIM Acquisition Corp., as they were of MIM and MIM Acquisition Corp., as a
group. Further, all debts, liabilities, duties and obligations of MIM and MIM Acquisition Corp., as a group, subject to the terms
of the Agreement, shall become the debts, liabilities and duties of MIM Acquisition Corp. and MIM Acquisition Corp. shall be responsible
and liable for all debts, liabilities, duties and obligations of MIM and MIM Acquisition Corp.
The Agreement also provides that after
closing, the parties thereto shall take steps to evidence and secure the rights and interest of the MIM Owners in and to the MIM
names and service-marks, the Website (collectively referred to as the “MM IP”) until twelve months following the date
that the Lock-Up restrictions under the Lock-Up Agreements have expired.
The Agreement also includes customary
representation and warranties of the parties as well as termination and closing conditions.
There can be no assurance that the conditions
to closing the transactions described herein can be obtained.
The foregoing descriptions of the
Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement,
which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.