Global Digital Solutions Inc (GDSI)

[srm4u]

Item 1.01 Entry into a Material Definitive Agreement

Effective October 13, 2015, Global Digital Solutions, Inc., (“GDSI”) a New Jersey corporation (as “Purchaser”) entered into a Share Purchase and Sale Agreement (the “SPSA”) dated October 8, 2015 with Joao Alberto Bolzan and Jose Carlos Bolzan, both Brazilian residents (collectively, the “Sellers”) and Grupo Rontan Electro Metalurgica, S.A., a limited liability company duly organized and existing under the laws of Federative Republic of Brazil (“Rontan”) (collectively, the “Parties’), pursuant to which the Sellers agreed to sell 100% of the issued and outstanding shares of Rontan to the Purchaser on the closing date.

Rontan is engaged in the manufacture and distribution of specialty vehicles and acoustic/visual signaling equipment for the industrial and automotive markets.


The purchase price shall consist of a cash amount, a stock amount and an earn-out amount as follows: (i) Brazilian Real (“R”) $100 million (approximately US$26 million) to be paid by the Purchaser in equal monthly installments over a period of forty eight (48) months following the closing date; (ii) an aggregate of R$100 million (approximately US$26 million) in shares of the Purchaser’s common stock, valued at US$1.00 per share; and (iii) an earn-out payable within ten business days following receipt by the Purchaser of Rontan’s audited financial statements for the 12-months ended December 31, 2017, 2018 and 2019. The earn-out shall be equal to the product of (i) Rontan’s earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the last 12 months, and (ii) twenty percent and is contingent upon Rontan’s EBITDA results for any earn-out period being at least 125% of Rontan’s EBITDA for the 12-months ended December 31, 2015. It is the intention of the parties that the stock amount will be used by Rontan to repay institutional debt outstanding as of the closing date.

Specific Conditions to Closing

Specific conditions to closing consist of:

a.) Purchaser’s receipt of written limited assurance of an unqualified opinion with respect to Rontan’s audited financial statements for the years ended December 31, 2013 and 2014 (the “Opinion”);

b.) The commitment of sufficient investment by General American Capital Partners LLC, (the “Institutional Investor”), in the Purchaser following receipt of the Opinion;

c.) The accuracy of each Parties’ representations and warranties contained in the SPSA;

d.) The continued operation of Rontan’s business in the ordinary course;

e.) The maintenance of all of Rontan’s bank credit lines in the maximum amount of R$200 million (approximately US$52 million) under the same terms and conditions originally agreed with any such financial institutions, and the maintenance of all other types of funding arrangements. As of the date of the SPSA, Rontan’s financial institution debt consists of not more than R$200 million (approximately US$52 million), trade debt of not more than R$50 million (approximately US$13 million) and other fiscal contingencies of not more that R$95 million (approximately US$24.7 million);


f.) Rontan shall enter into employment or consulting service agreements with key employees and advisors identified by the Purchaser, including Rontan’s Chief Executive Officer; and


g.) The Sellers continued guarantee of Rontan’s bank debt for a period of 90 days following issuance of the Opinion, among other items.

The Institutional Investor has committed to invest sufficient capital to facilitate the transaction, subject to receipt of the Opinion.

Subject to satisfaction or waiver of the conditions precedent provided for in the SPSA, the closing date of the transaction shall take place within 10 business days from the date of issuance of the Opinion.

A copy of the SPSA is attached hereto as Exhibit 2.1. The description of certain terms of the SPSA set forth herein does not purport to be complete and is qualified in its entirety by the provisions of the SPSA.
http://www.sec.gov/Archives/edgar/data/1011662/000121390015007777/f8k101315_globaldigital.htm

i believe the bod hire's and fire's right?

"This is a momentous milestone in Rontan's 45-year history," said Edigimar Maximilliano ("Max"), expected to be named GDSI's new CEO. "The combination of Rontan and GDSI – with GDSI's experienced management team and board of directors headed by Richard Sullivan – will help us expand our capabilities while continuing to provide our worldwide customers with world-class products and services. I'm looking forward to leveraging Rontan's extensive experience and international reach to enable the new GDSI to team seize the many profitable growth opportunities envisioned by GDSI's global strategy."
http://www.prnewswire.com/news-releases/global-digital-solutions-inc-gdsi-acquires-privately-held-rontan-group-of-brazil-300163506.html