UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 24, 2021
BLUE STAR FOODS CORP.
(Exact name of registrant as specified in its charter)
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Delaware (State or other jurisdiction of incorporation) |
000-55903 (Commission File Number) |
82-4270040 (I.R.S. Employer Identification No.) |
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3000 NW 109th Avenue Miami, Florida (Address of principal executive offices) |
33172 (Zip Code) |
Registrant’s telephone number, including area code: (860) 633-5565
(Former name or former address, if changed since last report.)
N/A
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | N/A | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [X]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
| Item 1.01 | Entry into a Material Definitive Agreement. |
As previously reported on a Current Report on Form 8-K filed with the SEC on April 27, 2021, Blue Star Foods Corp., a Delaware corporation (the “Company”), entered into a stock purchase agreement (the “Purchase Agreement”) with Taste of BC Aquafarms Inc., a corporation formed under the laws of the Province of British Columbia, Canada (“Taste of BC”), and Steve Atkinson and Janet Atkinson (the “Sellers”), the owners of all of the capital stock of Taste of BC (the “TOBC Shares”), pursuant to which, upon satisfaction of certain closing conditions, the Company would acquire all of the TOBC Shares from the Sellers (the “Acquisition”) for an aggregate purchase price of CAD$4,000,000 (the “Purchase Price”) to be paid to the Sellers at closing (the “Closing”) as follows: (i) by payment of an aggregate of CAD$1,000,000 in cash; (ii) by issuance of promissory notes in the aggregate principal amount of CAD$200,000 (the “Notes”); and (iii) by issuance of an aggregate of CAD$2,800,000 of shares (the “Initial Shares”) of the Company’s common stock, par value $0.0001 per share (“Common Stock”), calculated based on the volume weighted average price of a share of the Company’s Common Stock on the OTC Markets from April 28, 2020 through the date of the Closing (provided the price used to determine the number of shares would not be less than USD$2.00 or more than USD$2.30).
On June 24, 2021 (the “Closing Date”), the Company, Taste of BC and the Sellers entered into a first amendment to the Purchase Agreement (the “Amendment”), pursuant to which the Purchase Price was increased to up to an aggregate of CAD$5,000,000. Pursuant to the Amendment, within 10 days of the Closing Date, an aggregate of CAD$1,000,000 of additional shares (the “Additional Shares”) of the Company’s Common Stock, calculated based on a price of USD$2.30 per share, will be placed in escrow, to be held until the 24-month anniversary of the Closing Date. If, within 24 months of the Closing, Taste of BC has cumulative revenue of at least CAD$1,300,000, the Sellers will receive all of the escrowed shares. If, as of the 24-month anniversary of the Closing, Taste of BC has cumulative revenue of less than CAD$1,300,000, the Sellers will receive a prorated number of the escrowed shares based on the actual cumulative revenue of Taste of BC as of such date.
Except as specifically amended by the Amendment, all of the other terms of the Purchase Agreement remained in full force and effect.
The foregoing description of the Amendment is not complete and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
Reference is made to the disclosure set forth under Item 1.01 above, which disclosure is incorporated herein by reference.
On June 24, 2021, the Company consummated the Acquisition of Taste of BC, a family-owned and operated land-based recirculating aquaculture systems (RAS) salmon farming operation, based in Nanaimo, British Columbia, Canada. As a result of the Acquisition, Taste of BC became a wholly owned subsidiary of the Company.
At the Closing, in exchange for all of the TOBC Shares, the Company:
| ● | paid the Sellers an aggregate of CAD$1,000,000 in cash, with each Seller receiving a pro rata amount based upon the total number of TOBC Shares held by such Seller; | |
| ● | issued Notes to the Sellers in the aggregate principal amount of CAD$200,000, with the principal amount of each Seller’s Note determined based upon such Seller’s pro rata portion of the TOBC Shares; and | |
| ● | issued an aggregate of 987,741 Initial Shares to the Sellers, with each Seller receiving a pro rata portion of the Initial Shares based upon the total number of TOBC Shares held by such Seller. |
Within 10 days of the Closing Date, the Additional Shares will be placed in escrow, to be held until the 24-month anniversary of the Closing Date (to be released as described in Item 1.01 above).
The Purchase Price is subject to adjustment based upon the amount of Taste of BC’s working capital on the Closing Date, as determined in accordance with the Purchase Agreement within 60 days after the Closing.
In addition to the foregoing consideration, at the time of the Closing, the Company provided CAD$488,334 to Taste of BC to be used to pay off certain of Taste of BC’s existing debt obligations.
All of the Initial Shares and Additional Shares received by the Sellers will be subject to a leak-out restriction commencing on the date of issuance, as follows: (i) up to 25% may be sold after 12 months; (ii) up to 50% may be sold after 18 months; (iii) up to 75% may be sold after 24 months; and (iv) up to 100% may be sold after 30 months. Notwithstanding the foregoing, the leak-out restriction may be waived by the Company under certain conditions.
The Notes bear no interest and have a maturity date of November 30, 2021. The Company has the right to prepay amounts due under the Notes in whole or in part at any time without penalty or premium. Repayment of the amounts due under the Notes is secured by a guarantee and a general security agreement creating a security interest over the assets of Taste of BC.
In connection with the Acquisition, the Sellers entered into four-year confidentiality, non-competition and non-solicitation agreements with the Company (the “Non-Compete Agreements”).
The foregoing descriptions of the Notes and the Non-Compete Agreements is not complete and is qualified in their entirety by reference to the full text of the form of Note and form of Non-Compete Agreement, copies of which are attached hereto as Exhibits 4.1 and 10.2, respectively, and 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. |
Reference is made to the disclosure set forth under Items 1.01 and 2.01 above, which disclosure is incorporated herein by reference.
| Item 3.02 | Unregistered Sale of Equity Securities. |
Reference is made to the disclosure set forth under Items 1.01 and 2.01 above, which disclosure is incorporated herein by reference.
The issuances of the Notes and Initial Shares were, and the issuance of any Additional Shares will be, exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), as transactions by an issuer not involving any public offering. At the time of their issuance, the Notes and the Initial Shares were deemed to be restricted securities for purpose of the Securities Act and will bear restrictive legends to that effect.
| Item 7.01 | Regulation FD Disclosure. |
On June 28, 2021, the Company issued a press release announcing the Acquisition of Taste of BC. The press release is attached to this Report as Exhibit 99.1 and is incorporated herein by reference.
The information in this Item 7.01 of this Report, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing of ours under the Securities Act, or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference to this Report in such filing.
Forward Looking Statements
This filing includes “forward-looking statements.” All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. The forward-looking statements involve risks and uncertainties that may affect our operations, financial performance, and other factors as discussed in our filings with SEC. Among the factors that could cause results to differ materially are those risks discussed in the periodic reports we file with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on April 15, 2021. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading “Risk Factors.” We do not undertake any duty to update any forward-looking statement except as required by law.
| Item 9.01 | Financial Statements and Exhibits. |
(a) Financial Statements of Businesses Acquired.
The Company intends to file the financial statements required by Item 9.01(a) as part of an amendment to this Report no later than 71 calendar days after the required filing date for this Report.
(b) Pro Forma Financial Information.
The Company intends to file the pro forma financial information required by Item 9.01(b) as part of an amendment to this Report no later than 71 days after the required filing date for this Report.
(d) Exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
| BLUE STAR FOODS CORP. | ||
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| Date: June 30, 2021 | By: | /s/ John Keeler |
| Name: | John Keeler | |
| Title: | Executive Chairman and Chief Executive Officer | |
Exhibit 4.1
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE MAKER THAT SUCH REGISTRATION IS NOT REQUIRED.
BLUE STAR FOODS CORP.
Promissory Note
| CAD$__________ | June 24, 2021 |
The Note has been issued in accordance with exemptions from registration under the Securities Act of 1933, as amended (the “Securities Act”) pursuant to a Stock Purchase Agreement, dated the date hereof (the “Purchase Agreement”), among Blue Star Foods Corp., a Delaware corporation (the “Maker”), the Holder (as defined below), and the other Seller signatory thereto, and Taste of BC Aquafarms Inc., a corporation formed pursuant to the laws of the Province of British Columbia, Canada (“TOBC”). Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Purchase Agreement.
Section 1. Principal. FOR VALUE RECEIVED, the Maker promises to pay to the order of _______________, an individual (the “Holder”), the principal sum of ____________________ CANADIAN DOLLARS (CAD$__________) on or before November 30, 2021. No interest will accrue under the Note.
Section 2. Prepayment. The Note may be prepaid by the Maker in whole or in part at any time without premium or penalty.
Section 3. Events of Default. An Event of Default is will occur if the Maker files for relief under the United States Bankruptcy Code (the “Bankruptcy Code”) or under any other state or federal bankruptcy or insolvency law, or files an assignment for the benefit of creditors, or if an involuntary proceeding under the Bankruptcy Code or under any other federal or state bankruptcy or insolvency law is commenced against the Maker, and has not been resolved in a period of thirty (30) days after such commencement.
Upon the occurrence of an Event of Default, the entire indebtedness due under this Note shall, at the option of the Holder, become immediately due and payable.
Section 4. Representations of the Holder.
(a) The Holder is acquiring this Note for his own account as principal, not as a nominee or agent, for investment purposes only, and not with a view to, or for, resale, distribution or fractionalization thereof, in whole or in part, and no other Person has a direct or indirect beneficial interest in this Note or any portion thereof. The Holder does not have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participation rights to such Person or to any third party with respect to this Note.
(b) The Maker is under no obligation to register this Note under the Securities Act.
Section 6. Security. Maker’s obligations under the Note are secured by certain assets of TOBC as set forth in the GSA and registered with the British Columbia Personal Property Security Register.
Section 7. Governing Law. This Note shall be deemed to be made and governed, construed and enforced in accordance with the laws of the province of British Columbia, Canada without giving effect to principles of conflicts of law. The Maker and the Holder hereby consent to and irrevocably submit to personal jurisdiction over each of them in the Supreme Court of British Columbia or such other British Columbia court with appropriate jurisdiciton, in any action or proceeding, irrevocably waive trial by jury and personal service of any and all process and other documents and specifically consent that in any such action or proceeding, any service of process may be effectuated upon any of them by certified mail, return receipt requested.
Section 9. Severability. The invalidity of any of the provisions of this Note shall not invalidate or otherwise affect any of the other provisions of this Note, which shall remain in full force and effect.
Section 10. Successors and Assigns. This Note may not be assigned or transferred by the Holder without the prior written consent of the Maker. Subject to the preceding sentence, the rights and obligations of the Maker and the Holder shall be binding upon and benefit the successors, permitted assigns, heirs, administrators and permitted transferees of the Holder.
IN WITNESS WHEREOF, the Maker has executed this Note as of the date first written above by its duly authorized officer.
| Blue Star Foods Corp. | ||
| By: | ||
| John Keeler, Chief Executive Officer | ||
| 2 |
Exhibit 10.1
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT (this “Amendment”) is made and entered into as of June 24, 2021, by and among BLUE STAR FOODS CORP., a Delaware corporation (the “Purchaser”), TASTE OF BC AQUAFARMS INC., a corporation formed pursuant to the laws of the Province of British Columbia, Canada (the “Company”), and STEVE ATKINSON and JANET ATKINSON (each, a “Seller” and, together, the “Sellers”). Each of the Purchaser, the Company and the Sellers may be referred to herein collectively as the “Parties” and individually as a “Party.”
W I T N E S S E T H:
WHEREAS, the Purchaser, the Company and the Sellers are parties to a certain Stock Purchase Agreement, dated as of April 27, 2021 (as at any time amended, restated, supplemented or otherwise modified, the “Purchase Agreement”), pursuant to which Purchaser has agreed to acquire from the Sellers, and the Sellers have agreed to sell to the Purchaser, all of the issued and outstanding capital stock of the Company, on the terms and conditions set forth in the Purchase Agreement; and
WHEREAS, the Parties desire to amend the Purchase Agreement on the terms and subject to the conditions as hereinafter set forth.
NOW, THEREFORE, for TEN DOLLARS ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby severally acknowledged, the Parties hereto, intending to be legally bound hereby, agree as follows:
1. Capitalized Terms. All capitalized terms used in this Amendment, unless otherwise defined herein, shall have the meanings ascribed to such terms in the Purchase Agreement.
2. Amendment to Purchase Agreement. The Purchase Agreement is hereby amended as follows:
(a) Section 2.2 of the Purchase Agreement is amended by deleting such Section and substituting the following in lieu thereof:
“Section 2.2 Purchase Price. Subject to the adjustments described in Section 2.6 hereof, the purchase price for the TOBC Shares (the “Purchase Price”) shall be an aggregate of up to CAD$5,000,000, payable by the Purchaser to the Sellers, as follows:
(a) At the Closing (as defined below), an aggregate of CAD$1,000,000 of the Purchase Price shall be paid in cash by the Purchaser to the Sellers’ solicitors, in trust for the Sellers (the “Cash Amount”), by bank wire transfer of immediately available funds to an account, or accounts, specified by the Sellers’ solicitors, with each Seller to receive a pro rata portion of the Cash Amount based upon the total number of TOBC Shares held by such Seller;
(b) At the Closing (as defined below), an aggregate of CAD$200,000 of the Purchase Price shall be paid by the Purchaser’s issuance and delivery to each of the Sellers of a promissory note, without interest, with a maturity date of November 30, 2021, in form and substance to be approved by the Sellers, such approval not to be unreasonably withheld (each, a “Note” and collectively, the “Notes”), with the principal amount of each Seller’s Note to be determined based upon such Seller’s pro rata portion of the TOBC Shares, and be secured by way of a Guarantee given by the Company (the “Guarantee”) and a General Security Agreement creating a security interest over certain of the assets of the Company (the “GSA”), to be registered with the British Columbia Personal Property Security Register, each in form and substance to be approved by the Sellers, such approval not to be unreasonably withheld; and
(c) At the Closing (as defined below), an aggregate of CAD$2,800,000 of the Purchase Price shall be paid by the Purchaser’s issuance and delivery to the Sellers of such number of shares (the “Initial Blue Star Shares”) of the Purchaser’s common stock, par value $0.0001 per share (“Common Stock”), as is calculated based on the volume weighted average price of a share of the Purchaser’s Common Stock on the OTC Markets for the period commencing on April 28, 2020, the date the Purchaser’s Common Stock started trading on the OTC Markets, and continuing through the Closing Date (as defined below), with each Seller receiving a pro rata portion of the Initial Blue Star Shares based upon the total number of TOBC Shares held by such Seller; provided, however, that the price used to determine the number of Initial Blue Star Shares to be issued to the Sellers shall not be less than USD$2.00 or more than USD$2.30.
(d) If within twenty-four (24) months of the Closing (as defined below), the Company has cumulative revenue of at least CAD$1,300,000, the Sellers shall receive an aggregate of CAD$1,000,000 of additional shares (the “Additional Blue Star Shares” and together with the Initial Blue Star Shares, the “Blue Star Shares”) of the Purchaser’s Common Stock, calculated based on a price of USD$2.30 per share, with each Seller receiving a pro rata portion of the Additional Blue Star Shares based upon the total number of TOBC Shares held by such Seller at the time of the Closing. If, at the twenty-four (24) month anniversary of the Closing Date (as defined below), the Company’s cumulative revenue has not reached CAD$1,300,000, the Sellers shall receive a prorated number of Additional Blue Star Shares, based on the actual cumulative revenue of the Company as of such date. The full CAD$1,000,000 of Additional Blue Star Shares will be held in escrow from the Closing Date through the twenty-four (24) month anniversary of the Closing Date, at which time the appropriate number of Additional Blue Star Shares will be released to the Sellers, with the remainder, if any, being returned to the Purchaser’s number of authorized but unissued shares.”
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(b) Section 3.1 of the Purchase Agreement is amended by deleting such Section and substituting the following in lieu thereof:
“Section 3.1 Blue Star Shares. The aggregate number of Initial Blue Star Shares to be issued to the Sellers by the Purchaser shall be calculated based on the volume weighted average price of a share of the Purchaser’s Common Stock on the OTC Markets for the period commencing on April 28, 2020, the date the Purchaser’s Common Stock started trading on the OTC Markets, and continuing through the Closing Date, with each Seller receiving a pro rata portion of the Initial Blue Star Shares based upon the total number of TOBC Shares held by such Seller; provided, however, that the price used to determine the number of Initial Blue Star Shares to be issued to the Sellers shall not be less than USD$2.00 or more than USD$2.30. The Initial Blue Star Shares issued upon the Closing shall be deemed to have been issued in full satisfaction of all rights of each of the respective security holders of the Company pertaining to their rights in and to their respective TOBC Shares. The holders of certificates formerly representing shares TOBC Shares shall cease to have any rights as shareholders of the Company.
(c) Section 4.4 of the Purchase Agreement is amended by deleting such Section and substituting the following in lieu thereof:
“Section 4.4 Blue Star Shares. As of the Closing, all of the Initial Blue Star Shares shall be duly authorized, validly issued, fully paid and nonassessable, and not issued in violation of any preemptive or similar rights. Upon delivery to the Sellers of the certificates representing the Initial Blue Star Shares, the Sellers will acquire good and valid title to such Initial Blue Star Shares, free and clear of any Encumbrances, other than restrictions under applicable securities laws. As of the twenty-four (24) month anniversary of the Closing Date, all of the Additional Blue Star Shares to be issued, if any, shall be duly authorized, validly issued, fully paid and nonassessable, and not issued in violation of any preemptive or similar rights. Upon delivery to the Sellers of the certificates representing any Additional Blue Star Shares, the Sellers will acquire good and valid title to such Additional Blue Star Shares, free and clear of any Encumbrances, other than restrictions under applicable securities laws.
(d) Section 7.14 is added to the Purchase Agreement, as follows:
“Section 7.14 Additional Blue Star Shares. Within ten (10) days of the Closing Date, the Additional Blue Star Shares shall be placed in escrow with The Crone Law Group, P.C., as escrow agent, to be held until the twenty-four (24) month anniversary of the Closing Date, at which time they will be released from escrow as anticipated by Section 2.2(d) hereof.”
3. Ratification and Reaffirmation. Except as otherwise expressly provided in this Amendment, the Purchase Agreement shall remain in full force and effect and is hereby ratified and reaffirmed in all respects.
4. Reference to Purchase Agreement. Upon the effectiveness of this Amendment, each reference in the Purchase Agreement to “this Agreement,” “hereunder,” or words of like import shall mean and be a reference to the Purchase Agreement, as amended by this Amendment.
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5. Further Assurances. Each Party agrees to take such further actions as the other Parties shall reasonably request from time to time in connection herewith to evidence or give effect to the amendments set forth herein or any of the transactions contemplated hereby.
6. Counterparts; Facsimile Signatures. This Amendment may be executed in any number of counterparts and by different Parties to this Amendment on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. Any signature delivered by a Party by facsimile or other electronic transmission shall be deemed to be an original signature hereto.
7. Headings. The section headings herein are for convenience only and shall not affect the construction hereof.
8. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the Province of British Columbia, Canada, without regard to the principles of conflicts of laws. Any disputes arising from this Amendment shall be resolved pursuant to the provisions of the Purchase Agreement.
9. Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and assigns.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF, the Parties hereto have caused this First Amendment to Stock Purchase Agreement to be duly executed as of the day and year first above written.
| BLUE STAR FOOD CORP. | ||
| By: | /s/ John Keeler | |
| Name: | John Keeler | |
| Title: | Chief Executive Officer | |
| TASTE OF BC AQUAFARMS INC. | ||
| By: | /s/ Steve Atkinson | |
| Name: | Steve Atkinson | |
| Title: | Director | |
| SELLERS: | ||
| /s/ Steve Atkinson | ||
| Steve Atkinson | ||
| /s/ Janet Atkinson | ||
| Janet Atkinson | ||
| 5 |
Exhibit 10.2
CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION AGREEMENT
This Confidentiality, Non-Competition and Non-Solicitation Agreement (the “Agreement”), dated as of June 24, 2021, between BLUE STAR FOODS CORP., a Delaware corporation, (the “Company”), and _______________, an individual, with an address at ______________________________ (“Atkinson”).
W I T N E S S E T H
WHEREAS, the Company, Taste of BC Aquafarms Inc., a corporation formed under the laws of the Province of British Columbia, Canada (“TOBC”), Janet Atkinson and Steve Atkinson (constituting all of the shareholders of TOBC) are entering into a stock purchase agreement of even dated herewith (the “Purchase Agreement”); capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in the Purchase Agreement.
WHEREAS, Atkinson is the _______________ and holds _____% of the issued and outstanding shares of capital stock of TOBC;
WHEREAS, Atkinson has access to confidential information about TOBC and its customers, distributers, suppliers, employees, and other information about TOBC’s business;
WHEREAS, as a condition to and as further consideration for the Company entering into the Purchase Agreement, Atkinson agrees to enter into this Agreement to protect the assets TOBC has developed and that the Company is acquiring pursuant to the Purchase Agreement, including TOBC’s confidential information, and its business relationships;
NOW, THEREFORE, in consideration of the mutual promises, representations and warranties set forth herein, and for other good and valuable consideration, it is hereby agreed as follows:
1. Confidentiality.
(i) Atkinson acknowledges that TOBC has devoted substantial time and effort and resources to developing its business and clients, and that Atkinson is acquainted with confidential information relating to the customers or potential customers of TOBC, and TOBC’s trade secrets, processes, methods of operation and other proprietary information relating to TOBC’s business, which TOBC regards as confidential (collectively, “Confidential Information”). Atkinson acknowledges and agrees that the Confidential Information is of incalculable value to the Company and TOBC and that the Company and TOBC would suffer damage if any of the Confidential Information was improperly disclosed.
(ii) Atkinson recognizes that because of his access to TOBC’s Confidential Information, he would be in a unique position to divert business from TOBC and the Company and to commit irreparable damage to the Company and TOBC were Atkinson to be allowed to divulge any of the Confidential Information.
(iii) Atkinson covenants and agrees that he will not, at any time, directly or indirectly, individually or through another entity or affiliate, reveal, divulge, or make known to any person or entity, any Confidential Information made known to him or of which he has become aware, regardless of whether developed, prepared, devised or otherwise created in whole or in part by his efforts. Atkinson further covenants and agrees that he will retain all Confidential Information in trust for the sole benefit of TOBC and the Company, and will not, directly or indirectly, individually or through another entity or affiliate, divulge or deliver or show any Confidential Information to any unauthorized person and will not, directly or indirectly, individually or through another entity or affiliate, make use of any Confidential Information; provided, however, that Atkinson has no obligation, to refrain from using or disclosing to others any such information which:
| (a) | was already in the public domain at the time of the Agreement or becomes in the public domain without any breach of the Agreement by Atkinson; | |
| (b) | is of a general nature with respect to the business of salmon farming; | |
| (c) | is required to be disclosed pursuant to requirement of a government or regulatory agency or of a law through no voluntary action or inaction by Atkinson; | |
| (d) | is required to be disclosed in any arbitration, administrative or legal proceeding through no voluntary action or inaction by Atkinson; or | |
| (e) | has been authorized for release (without confidentiality restrictions) by written authorization of the Company. |
(iv) Atkinson represents and warrants to the Company that as of the date hereof, Atkinson is no longer employed by or provides services to, TOBC or the Company, he will return to the Company all papers, documents and other property of TOBC or the Company in Atkinson’s custody or obtained by Atkinson, individually or through another entity or affiliate, which relate to Confidential Information, and Atkinson will not retain copies of any such papers, documents or other property for any purpose whatsoever.
2. Non-Competition. TOBC operates a land-based salmon farming business and distributes and sells salmon products (the “Business”).
Atkinson acknowledges that he is familiar with trade secrets and other information relating to the TOBC and its business. Atkinson agrees that so long as he is employed by or provides consulting or other services to TOBC or the Company and for a period of four years thereafter (the “Non-Compete Period”), not to, directly or indirectly, individually or through another entity, own, manage, control, participate in, consult with, render services for, or in any other manner engage in any business, or as an investor in or lender to any business (in each case including, without limitation, on Atkinson’s own behalf or on behalf of another person or entity) which competes either directly or indirectly with the Company, TOBC or its affiliates in the Business (or any line of business now conducted or to be conducted in the future) conducted by the Company, TOBC or its affiliates, in any market in which the Company, TOBC or its affiliates is operating, or is considering operating at any time during the Non-Compete Period or as of the end of the Non-Compete Period. Nothing in this Section 2 will be deemed to prohibit Atkinson from being a passive owner of less than 5% of the outstanding stock of a corporation engaged in a competing business as described above of any class which is publicly traded, so long as Atkinson has no direct or indirect participation in the business of such corporation.
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3. Non-Solicitation of Business. Atkinson will not during the Non-Compete Period, solicit or assist any other person or entity to solicit, whether directly or indirectly, individually or through another entity or affiliate, any business (other than for the Company or TOBC) from any entity, engage in any business with, or provide advice or services to, any person or entity which directly or indirectly competes with the Business of the Company, TOBC or its affiliates or any other line of business of the Company, TOBC or its affiliates.
4. Non-Solicitation and Independent Contractors. Atkinson will not, during the Non-Compete Period, directly or indirectly, individually or through another entity or affiliate, (i) induce or attempt to induce any employee, consultant or independent contractor of the Company, TOBC or its affiliates to leave the employ or consulting or contracting relationship with, or in any way interfere with the relationship between the Company, TOBC or its affiliates and any employee, consultant or independent contractor thereof, (ii) solicit for employment or as a consultant or an independent contractor any person who was an employee, consultant or independent contractor of the Company, TOBC or its affiliates at any time during the Non-Compete Period, or (iii) induce or attempt to induce any customer, supplier, distributor or other business relation of the Company, TOBC or its affiliates to cease doing business with the Company, TOBC or its affiliates or in any way interfere with the relationship between any such customer, supplier, distributor or other business relation and the Company, TOBC and its affiliates.
5. Work Product. Atkinson agrees that all innovations, inventions, improvements, developments, methods, designs, analyses, drawings, reports, and all similar or related information which relate to the Business, or any business which TOBC or its affiliates have taken action to pursue, and which were conceived, developed or made by Atkinson, individually or through another entity or affiliate, during the course of Atkinson’s ownership or other involvement with TOBC (any of the foregoing, hereinafter “Work Product”), belong to TOBC. Atkinson will promptly disclose all such Work Product to the Company and perform all actions reasonably requested by the Board of Directors of the Company to establish and confirm such ownership (including, without limitation, assignments, consents, powers of attorney and other instruments).
6. No Conflict. Atkinson represents and warrants to the Company that he is not a party to or bound by agreement, understanding or arrangement with any other person or entity or any other agreement which would prevent or limit his ability to enter into this Agreement or perform his obligations hereunder.
7. Non-Disparagement. Atkinson agrees that he will not at any time disparage the Company, TOBC, or any of their respective directors, officers, employees, or agents or affiliates.
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8. Enforcement.
(i) Atkinson acknowledges that the Company and TOBC will suffer substantial and irreparable damages not readily ascertainable or compensable in the event of the breach of any of Atkinson’s obligations under Sections 1 through 4 hereof. Atkinson therefore agrees that the provisions of Sections 1 through 4 shall be construed as an agreement independent of the other provisions of this Agreement and any other agreement and that the Company, in addition to any other remedies (including damages) provided by law, shall have the right and remedy to have such provisions specifically enforced by any court having equity jurisdiction thereof. Accordingly, in addition to all of the Company’s rights and remedies under this Agreement, including but not limited to, the right to the recovery of monetary damages from Atkinson, the Company shall be entitled, and Atkinson hereby consents, to the issuance by any court of competent jurisdiction of temporary, preliminary and permanent injunctions, without bond, enjoining any such breach or threatened breach by Atkinson.
The rights and remedies set forth in this Section 8 shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or equity.
If at any time any of the provisions of this Agreement shall be determined to be invalid or unenforceable, by reason of being vague or unreasonable as to area, duration or scope of activity, the provisions hereof shall be considered divisible and shall become and be immediately amended to only such area, duration and scope of activity as shall be determined to be reasonable and enforceable by the court or other body having jurisdiction over the matter, and Atkinson agrees that such provisions, as so amended, shall be valid and binding as though any invalid or unenforceable provision had not been included herein.
9. Severability. Should any provision of this Agreement be held, by a court of competent jurisdiction, to be invalid or unenforceable, such invalidity or unenforceability shall not render the entire Agreement invalid or unenforceable, and this Agreement and each other provision hereof shall be enforceable and valid to the fullest extent permitted by law.
10. Successors and Assigns.
(a) This Agreement is personal in nature and the parties hereto shall not, without the consent of the other, assign or transfer this Agreement or any rights or obligations hereunder.
(b) This Agreement shall be binding upon, and inure to the benefit of, the respective heirs, legal representatives, successors and assigns of the parties hereto.
11. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the Province of British Columbia without regard to the conflicts of laws rules thereof.
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12. Exclusive Jurisdiction. All actions and proceedings arising out of, or relating to, this Agreement shall be heard and determined in a court of competent jurisdiction in British Columbia. Each of the Company and Atkinson, by execution and delivery of this Agreement (i) expressly and irrevocably consent and submit to the personal jurisdiction of any of such courts in any such action or proceeding, (ii) consent to the service of any process relating to any such action or proceeding by delivery thereof to such party by hand or by certified mail without return receipt requested, delivered or addressed as set forth in Section 15 of this Agreement, and (iii) waive any claim or defense in any action or proceeding based on any alleged lack of personal jurisdiction, improper venue or forum non-conveniens or any similar basis.
13. Notices. All notices, requests and demands given to or made upon the respective parties hereto shall be deemed to have been given or made three business days after the date of mailing when mailed by registered or certified mail, postage prepaid, or on the date of delivery if delivered by hand, or one business day after the date of delivery by Federal Express or other reputable overnight delivery service, addressed to the parties at their addresses first set forth above, or to such other addresses furnished by notice given in accordance with this Section 13.
14. Entire Agreement. Except as provided in the Purchase Agreement, this Agreement supersedes any prior contracts, understandings, discussions and agreements and constitutes the complete understanding between the parties with respect to the subject matter hereof. No statement, representation, warranty or covenant has been made by either party with respect to the subject matter hereof except as expressly set forth herein.
15. Modification; Waiver.
(a) This Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Company and Atkinson or in the case of a waiver, by the party against whom the waiver is to be effective. Any such waiver shall be effective only to the extent specifically set forth in such writing.
(b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
17. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
18. No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.
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BLUE STAR FOODS CORP. |
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| By: | ||
| Name: | John Keeler | |
| Title: | Chief Executive Officer | |
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Exhibit 99.1
Blue Star Foods Corp. Completes Acquisition of Taste of BC Aquafarms, Inc.
Strategic Entry into the Recirculating Aquaculture Systems (RAS) Industry
Miami, Florida, June 28, 2021 (GLOBE NEWSWIRE) — Blue Star Foods Corp., (OTC: BSFC) (“Blue Star”), an integrated Environmental, Social, and Governance (ESG) seafood company, announced today that it has completed the acquisition of Taste of BC Aquafarms, Inc. (“Taste of BC Aquafarms”), a family-owned and operated land-based Recirculating Aquaculture Systems (RAS) salmon farming operation, based in Nanaimo, British Columbia, Canada.
“We believe that RAS is the future of our industry and win-win for all the stakeholders involved in a seafood supply chain that is sustainable over the long-term,” said John Keeler, Chief Executive Officer of Blue Star Foods Corp. He further continued, “we are excited to complete the acquisition of Taste of BC Aquafarms and to partner with the Atkinson family, who are pioneers in RAS farming for over a decade. They’ve built a proven and scalable model and we are excited to strategically fund their next level of growth and use our sales platform to market their delicious, sashimi-grade, Steelhead Salmon.”
Mr. Keeler further added, “we have as an internal company goal to be producing 21,000 metric tons of product by 2028. Our job is to get the resources for Ben Atkinson and his team to scale their existing technology and proven methodology to get to those numbers. One of the things you are going to be hearing from us in the future, is that Taste of BC is producing more RAS steel-head salmon that is being consumed in the marketplace than many of our publicly traded peers. We believe that when properly resourced, we are more likely to hit our production goals than other folks.”
“The Atkinson Family is delighted to be joining forces with Blue Star through this acquisition. Almost 10 years ago I set out to create a Salmon RAS model that could be replicated in multiple locations with predicable and dependable results. Our staff, family, and various partners have helped us achieve that original goal, and now Blue Star will help us implement the large scale roll out,” said Steve Atkinson, President and Co-Founder of Taste of BC Aquafarms. He added, “we took a different approach than others developing RAS for salmon production. Ours is a more modular strategy that can be launched with confidence and we believe will be highly scalable.”
Blue Star’s acquisition of Taste of BC Aquafarms is being done through a combination of cash, equity and assumption of debt. Newbridge Securities Corporation is acting as the Exclusive M&A Advisor to Blue Star Foods Corp. and The Crone Law Group is acting as the Company’s Legal Counsel.
About Taste of BC Aquafarms Inc.
Taste of BC Aquafarms Inc. is a family operated company located in Nanaimo, British Columbia, Canada. Incorporated in 2010, the company operates the oldest continuously operating Recirculating Aquaculture System (RAS) full grow-out salmon farm in North America. As pioneers in the RAS industry, Taste of BC has proven their technology. Their “Little Cedar Falls” brand Steelhead Salmon has been on the market since 2013, and now is known as a premium land grown, sustainable Salmon. The Company is a member of Ocean Wise. Its corporate website is: www.littlecedarfalls.com
About Blue Star Foods Corp.
Blue Star Foods Corp. is an integrated ESG seafood company that processes, packages and sells high-value seafood products. The Company believes it utilizes best-in-class technology, in both resource sustainability management and traceability, and ecological packaging. The Company also owns and operates the oldest continuously operating Recirculating Aquaculture System (RAS) full grow-out salmon farm in North America. The company is based in Miami, Florida, and its corporate website is: www.bluestarfoods.com.
Contacts
Brett Maas of Hayden IR
Email: brett@haydenir.com
Office: (646) 536-7331
Safe Harbor
This press release contains statements, which may constitute “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Those statements include statements regarding the intent, belief, or current expectations of Purebase Corporation and members of its management team as well as the assumptions on which such statements are based. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that may cause actual results to differ from those anticipated are discussed throughout the Company’s reports filed with Securities and Exchange Commission which are available at www.sec.gov as well as the Company’s web site at http://www.bluestarfoods.com. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.