Item 1.01. Entry into a Material Definitive Agreement.
On September 17, 2020, SG Blocks, Inc., a Delaware corporation (the "Company"),
through its wholly owned subsidiary SG Echo LLC ("SG Echo"), entered into an
Asset Purchase Agreement ("Asset Purchase Agreement") with Echo DCL, LLC, a
Texas limited liability company ("Echo"), to acquire substantially all the
assets of Echo, except for Echo's real estate holdings, for which SG Echo has
obtained a right of first refusal to acquire same.
The Asset Purchase Agreement is subject to customary closing conditions and
expected to close on or before September 23, 2020. Terms of the acquisition
provide for the payment to Echo of $1,059,600 in cash at closing, subject to the
escrow of certain of the purchase price funds, and the payment of certain of
Echo's indebtedness by SG Echo, including the obligation to (i) satisfy a
Guidance Line of Credit loan ("GLOC Loan") in the principal amount of
approximately $616,000 ($316,432 of which payoff proceeds was delivered by Echo
to SG Echo at closing), (ii) pay the debt service on certain of Echo's
indebtedness in the approximate principal amount of $1.7 million for 12 months
following the closing, (iii) payoff at maturity a certain line of credit of Echo
with BTH Bank in the principal amount of $500,000, and (iv) the payment of earn
out payments equal to the net income received from the acquired business during
the 3-month period beginning on the first day of the first full month that is 3
months after the closing date, the 3-month period following the first earn out
period and the 3-month period following the second earn out period, payable in
50% in cash and 50% in shares of the Company's common stock to be valued a $2.50
per share; provided, that up to approximately $300,000 of any amounts paid in
respect of the GLOC Loan, and any amounts paid in respect of the debt service on
Echo's indebtedness and line of credit with BTH Bank, as described in
subparagraphs (i), (ii) or (iii) above, shall be offset against and reduce the
earnout payments due to Echo. In no event may the number of shares of common
stock to be issued to Echo exceed 19.99% of the Company's outstanding shares on
the date of the agreement.
The foregoing description of the terms of the Asset Purchase Agreement does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to the provisions of the Asset Purchase Agreement, a copy of which is
filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated
herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The disclosure provided under Item 1.01 of this Current Report on Form 8-K is
hereby incorporated by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit 10.1 Asset Purchase Agreement by and between SG Echo, LLC and Echo DCL,
LLC, dated September 17, 2020.
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