Item
2.01. Completion of Acquisition or Disposition of Assets.
On
December 30, 2016, Tarsier Ltd., a Delaware corporation (“we,” “us” or “our”), completed the
acquisition of all of the outstanding capital stock of 1-800 NY Bulbs Limited, a New York corporation (“Bulbs”), pursuant
to a Stock Purchase Agreement dated as of December 30, 2016 (the “Purchase Agreement”) among Randall D. Satin, a former
director of our company (“Satin”), Lawrence Merson (“Merson” and, together with Satin, the “Sellers”)
and our company. Bulbs is a 28-year-old, New York-based bulb supply and lighting maintenance services company.
Pursuant
to the Purchase Agreement, at the closing of the acquisition, we paid to the Sellers an aggregate of $695,000 in cash, issued
to the Sellers an aggregate of 420,000 shares of our common stock, par value $0.001 per share, and deposited an additional 600,000
shares of our common stock in escrow to be released to the Sellers pursuant to, and subject to the terms of, the Escrow Agreement
dated as of December 30, 2016 (the “Escrow Agreement”) among the Sellers, our company and Westerman Ball Ederer Miller
Zucker & Sharfstein, LLP, as escrow agent. At the closing, we also contributed $505,000 to the capital of Bulbs, of which
$204,439 was applied by Bulbs at the closing to repay certain outstanding indebtedness, and the balance was retained by Bulbs
for working capital. If the total liabilities of Bulbs on the closing date exceeded the total assets of Bulbs on such date, determined
in accordance with generally accepted accounting principles pursuant to a post-closing audit of the financial statements of Bulbs,
the Sellers have agreed to repay to us the amount of such deficit and the costs of such audit, which amounts shall be repaid out
of the shares of our common stock being held pursuant to the Escrow Agreement with such shares being valued at $1.50 per share.
Pursuant
to the Purchase Agreement, each of the Sellers will receive up to 100,000 shares per year of the 600,000 shares of our common
stock that are held pursuant to the Escrow Agreement depending on the revenues and earnings of Bulbs each year for the three years
ended December 31, 2019, with the maximum of 100,000 shares to be released if Bulbs has at least $2.5 million of revenues with
a 15% profit margin in any such year. With respect to such shares, the Sellers may elect to have us purchase such shares from
the Sellers at the time of release if the then-current market price of our common stock is less than $1.50 per share, subject
to adjustment. However, our purchase obligation will be subordinate to our outstanding indebtedness to TCA Global Credit Master
Fund, LP (“TCA”), pursuant to the terms of the Senior Secured Revolving Credit Facility Agreement dated as of January
29, 2016 (the “Credit Agreement”) between TCA and our company.
In
the Purchase Agreement, the Sellers have agreed that they will not sell any of the shares of our common stock received pursuant
to the Purchase Agreement, including any additional shares released to them pursuant to the Escrow Agreement, except pursuant
to a licensed broker reasonably acceptable to us and in an amount on any day not in excess of 5% of the average daily volume of
our common stock during the immediately preceding 15 calendar days.
Concurrently
with the closing of the purchase of Bulbs, we drew down an aggregate of $1,200,000 under our credit line from TCA under the Credit
Agreement. In connection with our acquisition of Bulbs and such borrowing, all of the assets of Bulbs was pledged to TCA pursuant
to the Security Agreement dated as of January 29, 2016 between TCA and our company, and all of the capital stock of Bulbs was
pledged to TCA pursuant to the Pledge Agreement dated as of January 29, 2016 between TCA and our company.
In
connection with our acquisition of Bulbs, we agreed that, for a period of three years from the closing date, the board of directors
of Bulbs will consist solely of two representatives of the Sellers (which initially shall be the Sellers) and one representative
of our company, who initially shall be Isaac H. Sutton, our sole officer and director. Bulbs also entered into a Management Agreement
dated as of December 30, 2016 (the “Management Agreement”) with a newly-formed entity created by the Sellers (the
“Manager”), pursuant to which the Sellers, on behalf of the Manager, will provide certain management services to Bulbs
for a period of three years from the closing date. In consideration for such management services, Bulbs will pay to the Manager
$30,000 per month. The Management Agreement contains provisions for its termination for “cause” and “good reason”,
as well as confidentiality and non-compete provisions that are binding on the Manager and the Sellers, as are generally contained
in employment agreements.
The
foregoing description of such acquisition is qualified in its entirety by reference to the Purchase Agreement, the Escrow Agreement
and the Management Agreement, copies of which are filed as Exhibits 10.1, 10.2 and 10.3, respectively, to this Report.
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Item
2.03
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Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
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On
January 29, 2016, we entered into the Credit Agreement with TCA. Pursuant to the Credit Agreement, TCA agreed to lend us up to
a maximum of $15 million for working capital purposes, and provided an initial credit line in the amount of $5,000,000, which
is subject to funding in the discretion of TCA. In connection with the closing of our acquisition of Bulbs, an additional take
down of $1,200,000 was funded by TCA. In connection with such advance, we entered into the First Amendment to Credit Agreement
dated effective as of December 30, 2016 (the “Credit Amendment”), pursuant to which we amended the Credit Agreement
to extend the term of the our revolving loan under the Credit Agreement to the earlier of (i) August 30, 2018 and (ii) the date
of our prepayment of all amounts owed by us under the Credit Agreement or (ii) the occurrence of an Event of Default (as
defined in the Credit Agreement) and the acceleration by TCA of all obligations under the Credit Agreement and related security
agreements. In consideration of such advance and amendments, we paid to TCA a transaction advisory fee and certain other fees
in the aggregate amount of approximately $31,000 and increased the Advisory Fee payable to TCA under the Credit Agreement from
$5 million to $6 million, which fee shall be payable in the manner set forth in the Credit Agreement.
The
foregoing description of the Credit Amendment is qualified in its entirety by reference to that agreement, a copy of which is
filed as Exhibit 10.4 to this Report.
