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):
January 2, 2007
GALES INDUSTRIES INCORPORATED
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(Exact Name of Registrant as Specified in its Charter)
Delaware 000-29245 20-4458244
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State of Commission IRS Employer
Incorporation File Number I.D. Number
1479 North Clinton Avenue, Bay Shore, NY 11706
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Address of principal executive offices
Registrant's telephone number: (631) 968-5000
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(Former Name or Former Address, if Changed Since Last Report)
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))
Item 1.01. Entry into a Material Definitive Agreement.
On January 2, 2007, Gales Industries Incorporated (the "Company") entered into a
Stock Purchase Agreement (the "Purchase Agreement") with Sigma Metals, Inc., a
New York corporation ("Sigma Metals"), and George Elkins, Carole Tate and Joseph
Coonan, the shareholders of Sigma Metals (the "Shareholders"). Pursuant to the
Purchase Agreement, on the Closing Date, subject to the satisfaction of various
terms and conditions, the Company will acquire from the Shareholders all of the
issued and outstanding capital stock of Sigma Metals.
The closing of the Purchase Agreement (the "Closing") is scheduled to occur in
April 2007 or on such other date as the Company and the Shareholders may agree
(the "Closing Date"). The purchase price for all of the shares is $5,008,204
plus an amount equal to Sigma Metals' earnings for the period from January 1,
2006, until the Closing Date, subject to certain adjustments as set forth in the
Purchase Agreement. The purchase price is payable in a combination of cash,
promissory notes (the "Notes") and shares of the Company's common stock (the
"Purchase Price Shares").
The Notes shall have a term of three years commencing on the Closing Date,
accrue interest at a rate of seven percent (7%) per annum and contain other
customary terms and conditions. The amount of Purchase Price Shares to be issued
to the Shareholders is equal to $1,900,000 divided by 90% of the average closing
price of the Company's common Stock during the 20 trading days immediately
preceding the Closing Date; provided, however, that such price shall be in no
event less than $0.22 nor greater than $1.00.
Concurrent with the Closing, the Company will enter into employment agreements
with each of the Shareholders. The Employment Agreements provide for annual base
salaries aggregating initially to $600,000, together with certain bonuses based
upon performance and customary increases. The employment agreements will contain
customary terms and provisions relating to severance, benefits and vacation.
Each of the employments will have an initial term of five (5) years, except that
the employment agreement for Mr. George Elkins shall be for an initial term of
two (2) years.
The foregoing summary is subject to, and qualified in its entirety by, the terms
of the Stock Purchase Agreement, attached hereto as Exhibit 10.1. The terms of
the Stock Purchase Agreement are incorporated herein by reference. A copy of the
press release announcing the execution of the Stock Purchase Agreement is
attached as Exhibit 99.1.
EXHIBITS
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10.1 Stock Purchase Agreement, dated January 2, 2007, between Gales
Industries Incorporated, Sigma Metals, Inc. ("Sigma Metals"), and
George Elkins, Carole Tate and Joseph Coonan, the Shareholders of
Sigma Metals.
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99.1 Press Release, dated January 2, 2007, of Gales Industries
Incorporated announcing the execution of the Stock Purchase
Agreement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this Current Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: January 2, 2007
GALES INDUSTRIES INCORPORATED
By: /s/ Michael A. Gales
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Michael A. Gales, Executive Chairman
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EXHIBIT INDEX
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10.1 Stock Purchase Agreement, dated January 2, 2007, between Gales
Industries Incorporated, Sigma Metals, Inc. ("Sigma Metals"), and
George Elkins, Carole Tate and Joseph Coonan, the Shareholders of
Sigma Metals.
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99.1 Press Release, dated January 2, 2007, of Gales Industries
Incorporated announcing the execution of the Stock Purchase
Agreement.
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