Item 1.01. Entry into a Material Definitive Agreement
Stock Purchase Agreement.
On February 8, 2021, A-Mark Precious Metals, Inc., a Delaware corporation (the
"Company"), entered into a Stock Purchase Agreement (the "Purchase Agreement")
with the other stockholders (each, a "Selling Stockholder" and collectively, the
"Selling Stockholders") of JM Bullion, Inc. a Delaware corporation ("JMB") for
the acquisition of the 79.47% interest in JMB that is not currently owned by the
Company. JMB is an e-commerce retailer of gold, silver, copper, platinum and
palladium products. The purchase price is approximately $138.3 million,
consisting of $103.7 million in cash and $34.6 million in common stock of the
Company, valued at $28.96 per share, which represents the volume-weighted
average trading price of the Company's common stock for the 30 consecutive
trading days immediately preceding the date of the Purchase Agreement. The cash
portion of the purchase price will be reduced by an amount equal to 20.53%
(which is the Company's percentage ownership interest in JMB) of the amount of a
cash redemption to be made by JMB to its stockholders, other than the Company,
prior to the acquisition. (See "Certain Other Agreements-Redemption Agreement,"
below.) In addition, the common stock portion of the purchase price will be
reduced such that no single stockholder of JMB will own more than 4.8% of the
Company's common stock immediately following the acquisition. If the common
stock consideration of a Selling Stockholder is reduced, the cash consideration
payable to such Selling Stockholder will be increased by an amount equal to 65%
of the value of the decrease in the common stock consideration. The acquisition
is subject to customary closing conditions, including, among others, the
expiration or early termination of the waiting period under the
Hart-Scott-Rodino Act of 1976. While the Purchase Agreement refers to a public
offering of equity as a means to finance the cash portion of the purchase price,
the Company intends to raise the funds through any available means, including a
public or private offering of equity or convertible debt. The Company's decision
on the type of offering will be made based on investor interest, pricing and
other market factors.
The Purchase Agreement includes customary representations and warranties of the
parties, and customary covenants of the Selling Stockholders, including
customary covenants restricting the operation of the business of JMB and its
subsidiaries prior to the closing without the consent of the Company and
customary provisions regarding the non-solicitation of an alternative
transaction.
The Purchase Agreement provides that $4,205,300 of the cash portion of the
purchase price will be placed in escrow to satisfy indemnification obligations
of the Selling Stockholders, other than in respect of certain identified tax
matters, and $794,700 will be placed in escrow to satisfy the indemnification
obligations of the Selling Stockholders in respect of certain identified tax
matters. Other than with respect to the breach of certain fundamental
representations and fraud, willful misconduct or willful concealment, the
Company's recourse for the breach by the Selling Stockholders of their
representations and warranties in the Purchase Agreement will be limited to
$5,000,000.
The Purchase Agreement contains certain termination rights for the parties,
including termination by either party if the closing has not occurred on or
before June 7, 2021, unless the failure of the party seeking to terminate the
Purchase Agreement to fulfill any obligation is the cause of the failure of the
closing to occur by such date. In certain specified events of termination, the
Company will be required to pay a $1.2 million termination fee to the Selling
Stockholders.
The foregoing summary of the principal terms of the Purchase Agreement does not
purport to be complete and is qualified in its entirety by reference to the full
copy of the Purchase Agreement filed as Exhibit 2.1 hereto and incorporated
herein by reference. This summary and the copy of the Purchase Agreement are
intended to provide information regarding the terms of the Purchase Agreement
and are not intended to modify or supplement any factual disclosures about the
Company in public reports filed with the Securities and Exchange Commission (the
"SEC"). In particular, the Purchase Agreement and this summary are not intended
to be, and should not be relied upon as, disclosures regarding any facts and
circumstances relating to any party to the Purchase Agreement. The Purchase
Agreement includes representations, warranties and covenants of the Company and
the Selling Stockholders made solely for the benefit of the parties to the
Purchase Agreement. The assertions embodied in those representations and
warranties were made solely for purposes of the Purchase Agreement and may be
subject to important qualifications and limitations agreed to by the parties to
the Purchase Agreement in connection with the negotiated terms. Moreover, some
of those representations and warranties may not be accurate or complete as of
any specified date, may be subject to a contractual standard of materiality
different from those generally applicable to the Company's filings with the SEC
or may have been used for purposes of allocating risk among the parties to the
Purchase Agreement rather than establishing matters as facts. Investors should
not rely on the representations, warranties and covenants or any description
thereof as characterizations of the actual state of facts of the parties to the
Purchase Agreement.
This Current Report on Form 8-K shall not constitute an offer to sell or the
solicitation of an offer to buy any shares of common stock of the Company. Any
offer will be made only by means of a prospectus supplement and accompanying
prospectus forming a part of an effective registration statement of the Company.
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Certain Other Agreements
Under the terms of the Purchase Agreement, upon the closing of the JMB
acquisition, the Company or JMB will enter into certain other agreements. Forms
of these agreements are attached as exhibits to the Purchase Agreement, and the
following descriptions of certain of these agreements are qualified by reference
to the corresponding exhibits to the Purchase Agreement.
Michael Wittmeyer Employment Agreement
Michael R. Wittmeyer, the chief executive officer of JMB, will enter into a new
employment agreement with JMB pursuant to which he will continue to serve as its
chief executive officer through June 30, 2024. Under the terms of the employment
agreement, Mr. Wittmeyer will be nominated to serve as a member of the Company's
Board of Directors for so long as he continues to service under the employment
agreement or holds at least 75% of the common stock he receives in the JMB
acquisition. Immediately following the closing of the acquisition, Mr. Wittmeyer
will be granted non-qualified stock options to acquire 60,000 shares of the
Company's common stock, which will vest on June 30, 2024 and will have a term of
10 years from date of grant.
Lock-Up Agreements
Each Selling Stockholder will enter into a lock-up agreement with the Company
with respect to the shares of common stock of the Company received in the JMB
acquisition by such Selling Stockholder. The lock-up agreements will provide
that, subject to certain limited and customary exceptions, the Selling
Stockholder may not sell or transfer any such shares for 270 days following the
closing of the JMB acquisition.
Registration Rights Agreement
The Company will enter into a registration rights agreement with certain of the
Selling Stockholders, pursuant to which the Company will agree to file a
registration statement with the SEC, registering for resale the shares of common
stock of the Company to be received in the JMB acquisition by these Selling
Stockholders, no later than 60 days prior to the expiration of the transfer
restrictions under the lock-up agreements. The Company will agree to use
commercially reasonable efforts to cause the registration statement to become
effective as soon as practicable following the expiration of the transfer
restrictions, and to keep the registration statement continuously effective
until all shares registered under the registration statement have been sold or
are otherwise able to be sold pursuant to Rule 144.
Redemption Agreement
The Selling Stockholders and JMB will enter into a redemption agreement,
pursuant to which JMB will agree to pay a cash dividend to the Selling
Stockholders immediately prior to the closing of the JMB acquisition in partial
redemption of their shares in JMB.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Upon the closing of the JMB acquisition referred to in Item 1.01, Mr. Wittmeyer
and Kendell J. Saville, a significant current stockholder of JMB, will be
appointed to the Company's Board of Directors.
Item 9.01. Exhibits
(d) Exhibits:
Exhibit Description
2.1 Stock Purchase Agreement, dated as of February 8, 2021, by and among
A-Mark Precious Metals, Inc., the other stockholders of JM Bullion, Inc.
signatory thereto, and Michael R. Wittmeyer, an individual, in his
capacity as the Representative.
99.1 Press Release of A-Mark Precious Metals, Inc., dated February 9, 2021.
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