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Item 1.01.
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Entry into a Material Definitive Agreement.
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On August 13, 2018, Truett-Hurst, Inc.,
a Delaware corporation (“Truett-Hurst”), and H.D.D. LLC, a California limited liability company and Truett-Hurst’s
consolidated subsidiary (“HDD” and, together with Truett-Hurst, the “Company”), entered into an Asset Purchase
Agreement (the “Purchase Agreement”) with Precept Brands LLC, a Washington limited liability company (“Precept”)
pursuant to which the Company has agreed to sell certain assets comprising its wholesale wine business (the “Business”)
to Precept (the “Transaction”).
Under the terms of the Purchase Agreement,
the parties have made customary representations and warranties and agreed to various customary covenants, including, among others,
post-closing non-solicitation and non-competition covenants, as well as indemnification provisions for breaches of such representations
and warranties or covenants. In connection with the Transaction, Precept has entered into an employment agreement with Phillip
Hurst, effective November 1, 2018, the continued effectiveness of which is a condition to closing the Transaction.
The foregoing description of the Purchase
Agreement and the transactions contemplated thereby is qualified in its entirety by the full text of the Purchase Agreement, a
copy of which is attached hereto as Exhibit 2.1 and incorporated herein by reference.
In connection with and effective upon the
closing of the Transaction, the Company and Precept entered into a Royalty Payment Agreement (the “Royalty Payment Agreement”)
and a Transition Services Agreement (the “Transition Services Agreement”). Under the terms of the Royalty Payment Agreement,
Precept will pay the Company a percentage of Precept’s gross profit from the sale of certain Company brands purchased by
Precept in the Transaction. Under the terms of the Transition Services Agreement, the Company will provide Precept with certain
services relating to the Business for a period of time following closing, at the rates set forth therein.
The foregoing description of the Royalty
Payment Agreement and Transition Services Agreement and the transactions contemplated thereby is qualified in its entirety by the
full text of the Royalty Payment Agreement and Transition Services Agreement, copies of which are attached hereto as Exhibit 10.1
and 10.2, respectively, and incorporated herein by reference.
The Purchase Agreement has been included
to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual
information about the Company, the Business or Precept or any of their respective businesses, subsidiaries or affiliates. The representations,
warranties and covenants contained in the Purchase Agreement (a) were made by the parties thereto only for purposes of that agreement
and as of specific dates; (b) were made solely for the benefit of the parties to the Purchase Agreement; (c) may be subject to
limitations agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged between the
parties in connection with the execution of the Purchase Agreement (such disclosures include information that has been included
in public disclosures, as well as additional non-public information); (d) may have been made for the purposes of allocating contractual
risk between the parties to the Purchase Agreement instead of establishing these matters as facts; and (e) may be subject to standards
of materiality applicable to the contracting parties that differ from those applicable to investors.
Investors should not rely on the representations,
warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company,
the Business or Precept or any of their respective subsidiaries or affiliates. Additionally, the representations, warranties, covenants,
conditions and other terms of the Purchase Agreement may be subject to subsequent waiver or modification. Moreover, information
concerning the subject matter of the representations, warranties and covenants may change after the date of the Purchase Agreement,
which subsequent information may or may not be fully reflected in the Company’s public disclosures.
The Purchase Agreement should not be read
alone, but should instead be read in conjunction with the other information regarding the Company that is or will be contained
in, or incorporated by reference into, the Forms 10-K, Forms 10-Q and other documents that are filed with the Securities and Exchange
Commission.