Item 1.01 Entry into a Material Definitive Agreement.
On July
3, 2018 (the “Closing Date”), Issuer Direct
Corporation, a Delaware corporation (the “Company”) and
the Company’s wholly-owned subsidiary ACCESSWIRE Canada,
Ltd., a body corporate incorporated under the
Business Corporation Act
(Alberta)
(“ACCESSWIRE Canada”), entered into a Stock Purchase
Agreement (the “Purchase Agreement”) with Fred Gautreau
(the “Seller”) whereby ACCESSWIRE purchased all of the
outstanding equity securities of Filing Services Canada Inc., a
body corporate incorporated under the
Business Corporation Act
(Alberta),
which does business under the tradename FSCwire
(“FSCwire”). FSCwire is located in Calgary, Canada and
is focused on the Canadian press release distribution market.
Subsequent to the Closing Date, FSCwire will be a wholly-owned
subsidiary of ACCESSWIRE Canada, which was formed as a wholly-owned
subsidiary of the Company for the purposes of the
acquisition.
Under
the terms of the Purchase Agreement, ACCESSWIRE Canada and the
Company will pay to the Seller as follows: (i) a cash payment of
USD$1,140,000 paid as of the Closing Date (the “Cash
Payment”) and (ii) issue as of the Closing Date the number of
shares of “restricted” common stock of the Company (the
“Shares”) equal to USD$60,000 divided by the average
per share closing price of the Company’s common stock for the
90 calendar days prior to the Closing Date, or 3,402 shares (the
“Shares”). Of the Cash Payment, USD$180,000 shall be
retained in escrow for a period of eighteen months subject and
pursuant to the terms of the Escrow Agreement dated as of the
Effective Date between the Company, ACCESSWIRE Canada, the Seller
and the escrow agent (the “Escrow
Agreement”).
The
Purchase Agreement and the FSCwire acquisition are not subject to
approval by the shareholders of the Company. The Purchase Agreement
contains standard representations and warranties regarding FSCwire
and the Seller and certain limited representations and warranties
regarding the Company and ACCESSWIRE Canada. The Purchase Agreement
contains indemnification provisions for the benefit of the Company,
ACCESSWIRE Canada and the Seller. The Company and ACCESSWIRE Canada
have the right to offset any claims of indemnification each might
have against the funds held in the Escrow Agreement. The Seller
agreed to a 2-year non-compete subject as part of the Purchase
Agreement.
In
connection with the Purchase Agreement, ACCESSWIRE Canada and the
Seller entered into an Employment Agreement dated as of the
Effective Date whereby the Seller shall serve as ACCESSWIRE
Canada’s Director of Corporate Development for a period of
two years unless otherwise terminated as described below (the
“Employment Agreement”). Under the Employment
Agreement, the Seller is entitled to an annual base salary of
CDN$130,000. The Seller is also eligible to receive an annual bonus
of 15% of his annual base salary upon the achievement of quarterly
milestones to be mutually agreed upon by the Seller and ACCESSWIRE
Canada.
Pursuant
to the Employment Agreement, if the Seller’s employment is
terminated upon his disability, by the Seller for good reason (as
such term is defined in Employment Agreement), or by us without
cause (as such term is defined in Employment Agreement), the Seller
will be entitled to receive three months of severance benefits as
described in the Employment Agreement. The Employment Agreement
also contains certain noncompetition, non-solicitation and
confidentiality requirements for the Seller.
This
summary of certain terms of the Purchase Agreement, the Escrow
Agreement and the Employment Agreement do not purport to be
complete and is subject to, and qualified in its entirety by, the
full text of the Purchase Agreement, the Escrow Agreement and the
Employment Agreement, copies of which are attached hereto as
Exhibits 10.1, 10.2 and 10.3, respectively, and are hereby
incorporated into this Current Report on Form 8-K (this “Form
8-K”) by reference.
The
Purchase Agreement has been included solely to provide investors
and security holders with information regarding its terms. It is
not intended to be a source of financial, business or operational
information, or to provide any other factual information, about the
Company, ACCESSWIRE Canada, the Seller, FSCwire or their respective
subsidiaries or affiliates. The representations, warranties and
covenants contained in the Purchase Agreement are made only for
purposes of the Purchase Agreement and are made as of specific
dates; are solely for the benefit of the parties (except as
specifically set forth therein); may be subject to qualifications
and limitations agreed upon by the parties in connection with
negotiating the terms of the Purchase Agreement; and may be subject
to standards of materiality and knowledge applicable to the
contracting parties that differ from those applicable to investors
or security holders. Investors and security holders should not rely
on the representations, warranties and covenants or any description
thereof as characterizations of the actual state of facts or
condition of the Company, ACCESSWIRE Canada, FSCwire or any of
their respective subsidiaries or affiliates. Moreover, information
concerning the subject matter of the representations, warranties
and covenants may change after the date of the Purchase Agreement,
as applicable, which subsequent information may or may not be fully
reflected in public disclosures.