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
June
29, 2020
Date
of Report (Date of earliest event reported)
Opes
Acquisition Corporation
(Exact
Name of Registrant as Specified in its Charter)
Delaware
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001-38417
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82-2418815
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(State
or other jurisdiction
of incorporation)
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(Commission
File Number)
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(I.R.S.
Employer
Identification No.)
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4218
NE 2ND AVENUE, 2nd FLOOR
MIAMI,
FL
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33137
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (305) 573-3900
N/A
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(Former
name or former address, if changed since last report)
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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:
☐
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Written
communications pursuant to Rule 425 under the Securities Act
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☒
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act
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☐
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
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☐
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
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Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class
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Trading
Symbol(s)
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Name
of each exchange on
which
registered
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Units,
each consisting of one share of common stock and one redeemable warrant
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OPESU
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The
Nasdaq Stock Market LLC
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Common
stock, par value $0.0001 per share
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OPES
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The
Nasdaq Stock Market LLC
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Redeemable
warrants, each exercisable for one share of common stock at an exercise price of $11.50 per share
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OPESW
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The
Nasdaq Stock Market LLC
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Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR
§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging
growth company ☒
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. ☐
IMPORTANT
NOTICES
Opes
Acquisition Corp., a Delaware corporation (“OPES” or “Purchaser”), and BurgerFi International LLC, a Delaware
limited liability company (“BurgerFi”) and their respective directors, executive officers, members, managers, employees
and other persons may be deemed to be participants in the solicitation of proxies from the holders of Purchaser’s common
stock in respect of the proposed transaction described herein. Information about OPES’s directors and executive officers
and their ownership of OPES’s common stock is set forth in OPES’s Prospectus, dated March 13, 2018, Annual Report
on Form 10-K, dated March 30, 2020 and the proxy statement on Definitive Schedule 14A dated June 5, 2020, filed with the Securities
and Exchange Commission (the “SEC”), as modified or supplemented by any Form 4 filed with the SEC since the date of
such filings as modified or supplemented by any Form 3 or Form 4 filed with the SEC since the date of such filing. Other information
regarding the interests of the participants in the proxy solicitation will be included in the proxy statement pertaining to the
proposed transaction when it becomes available. These documents can be obtained free of charge from the sources indicated above.
In
connection with the transaction described herein, Purchaser will file relevant materials with the SEC, including a proxy statement
on Schedule 14A. Promptly after filing its definitive proxy statement with the SEC, Purchaser will mail the definitive proxy statement
and a proxy card to each stockholder entitled to vote at the special meeting relating to the transaction, and other proposals.
INVESTORS AND SECURITY HOLDERS OF PURCHASER ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO)
AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE TRANSACTION THAT PURCHASER WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT OPES, BURGERFI AND THE TRANSACTION. The definitive proxy statement, the
preliminary proxy statement and other relevant materials in connection with the transaction (when they become available), and
any other documents filed by Purchaser with the SEC, may be obtained free of charge at the SEC’s website (www.sec.gov) or
by writing to OPES at: 4218 NE 2nd Avenue, Miami, FL 33137
This
Current Report on Form 8-K contains certain “forward-looking statements” within the meaning of the Securities Act
of 1933 and the Securities Exchange Act of 1934, both as amended by the Private Securities Litigation Reform Act of 1995. Statements
that are not historical facts, including statements about the execution of definitive agreements relating to the Business Combination
by and among OPES and BurgerFi and the transactions contemplated thereby, and the parties’ perspectives and expectations,
are forward-looking statements. Such statements include, but are not limited to, statements regarding the proposed transaction.
The words “expect,” “believe,” “estimate,” “intend,” “plan,” and similar
expressions indicate forward-looking statements. These forward-looking statements are not guarantees of future performance and
are subject to various risks and uncertainties, assumptions (including assumptions about general economic, market, industry and
operational factors), known or unknown, which could cause the actual results to vary materially from those indicated or anticipated.
Such
risks and uncertainties include, but are not limited to: (i) risks related to the timing of the completion of the Business Combination,
(ii) the ability to satisfy the various conditions to the closing of the Business Combination set forth in the Membership Interest
Purchase Agreement, (iii) the occurrence of any event, change or other circumstances that could give rise to the termination of
the Membership Interest Purchase Agreement, (iv) the risk that there may be a material adverse effect on the business, properties,
assets, liabilities, results of operations or condition (financial or otherwise), of BurgerFi or its subsidiaries or franchisees,
taken as a whole; (v) risks related to disruption of management time from ongoing business operations due to the proposed Business
Combination; (vi) the risk that any announcements relating to the proposed Business Combination could have adverse effects on
the market price of OPES’s common stock; and (vii) other risks and uncertainties and other factors identified in OPES’s
prior and future filings with the SEC, available at www.sec.gov.
A
further list and description of risks and uncertainties can be found in the proxy statement on Schedule 14A that will be filed
with the SEC by Purchaser in connection with the proposed transaction, and other documents that the parties may file or furnish
with the SEC, which you are encouraged to read.
Should
one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may
vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to
place undue reliance on these forward-looking statements. Forward-looking statements relate only to the date they were made, and
OPES and BurgerFi, and their respective subsidiaries, if any, undertake no obligation to update forward-looking statements to
reflect events or circumstances after the date they were made except as required by law or applicable regulation.
Item
1.01. Entry Into a Material Definitive Agreement
On
June 29, 2020, Opes Acquisition Corp. (“OPES” or “Purchaser”) entered into a membership interest
purchase agreement (the “Agreement”), with BurgerFi International, LLC, a Delaware limited liability
company (“BurgerFi” or the “Company”), members of the Company (the
“Members”), and BurgerFi Holdings, LLC, a Delaware limited liability company (the “Members’
Representative”). Terms used herein as defined terms and not otherwise defined herein shall have the meanings
ascribed to them in the Agreement.
Acquisition
of BurgerFi; Acquisition Consideration
Upon
the closing of the transactions contemplated in the Agreement (the “Closing”), OPES will purchase 100% of the
membership interests of BurgerFi from the Members resulting in BurgerFi becoming a wholly owned subsidiary of OPES (the “Business
Combination”).
The
closing consideration for the Business Combination (the “Acquisition Consideration”) shall be payable as follows
(subject to reduction for indemnification claims and potential changes due to a working capital adjustment as described below):
(i)
a cash payment in the aggregate amount of $30,000,000 payable to the Members;
(ii)
$20,000,000 payable either in cash or in shares of Purchaser Common Stock valued at $10.60 per share (the “Stock Portion”),
in the sole and absolute discretion of the OPES Board of Directors; and
(iii)
the issuance in the aggregate of 4,716,981 shares of Purchaser Common Stock to the Members (the “Closing Payment Shares”)
Of
the Closing Payment Shares, 943,396 shares (the “Escrow Shares”) shall be deposited into an escrow account
with Continental Stock Transfer and Trust, to satisfy any potential indemnification claims brought pursuant to the Agreement.
The closing consideration
payable to the stockholders of BurgerFi is also subject to adjustment based on BurgerFi’s working capital as of the closing
date as contemplated in the Agreement.
Earnout
Share Consideration; Earnout Tranches
The
Members will be entitled to receive additional Acquisition Consideration in the form of shares of Purchaser Common Stock (“Earnout
Share Consideration”) on a pro-rata basis based on their ownership percentages in the Company, subject to Purchaser
achieving certain share price targets post-Closing as follows (each an “Earnout Tranche”):
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a.
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If
prior to the second anniversary of the Closing, the last reported closing price of Purchaser Common Stock in any 20 trading
days within any consecutive 30 trading day period is greater than or equal to $19.00 per share, Purchaser shall issue to Members
3,947,368 in Earn Out Share Consideration, based on a deemed price of $19.00 per share;
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b.
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If
prior to the third anniversary of the Closing, the last reported closing price of Purchaser Common Stock in any 20 trading
days within any consecutive 30 trading day period is greater than or equal to $22.00 per share, Purchaser shall issue to Members
3,409,091 in Earn Out Share Consideration, based on a deemed price of $22.00 per share; and
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c.
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If
prior to the third anniversary of the Closing, the last reported closing price of Purchaser Common Stock in any 20 trading
days within any consecutive 30 trading day prior is greater than or equal to $25.00 per share, Purchaser shall issue to Members
2,000,000 in Earn Out Share Consideration, based on a deemed price of $25.00 per share.
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The
Earnout Share Consideration payable with respect to each Earnout Tranche, when issued, shall be subject to a lockup for a period
of six months from the date such Earnout Tranche is earned (provided that the Members shall be permitted to undertake block trades
during each such lockup period). The Members shall only be entitled to receive the Earnout Share Consideration from one Earnout
Tranche in any twelve month period and if the Members qualify to receive two or more Earnout Tranches in any such twelve-month
period, the Members’ Representative can elect which such Earnout Tranche the Members will receive. No more than one Earnout
Tranche shall be payable in any twelve-month period.
Lock-Up
on Closing Payment Shares
The
Closing Payment Shares shall be subject to a lock-up agreement until six months after the Closing Date, or earlier if, subsequent
to the Closing Date, Purchaser consummates a liquidation, merger, stock exchange or other similar transaction which results in
all of Purchaser’s stockholders having the right to exchange their shares of common stock for cash, securities or other
property. If the Stock Portion of the Acquisition Consideration is paid in shares of Purchaser Common Stock, in lieu of cash,
such shares will not be subject to a lock-up.
Post-Closing
Board of Directors
Immediately
following the Closing, the Post-Closing Board of directors of Purchaser will consist of no more than five directors, consisting
of Ophir Sternberg, as Executive Chairman, AJ Acker and three independent directors to be selected by Mr. Sternberg, in his reasonable
discretion and approved by Members’ Representative, such approval not to be unreasonably withheld..
Stockholder
Approval
Prior
to the consummation of the Business Combination, the holders of a majority of Purchaser’s common stock attending a stockholder’s
meeting (at which there is a quorum) must approve the Business Combination (the “Stockholder Approval”). In
connection with obtaining the Stockholder Approval, OPES must call a special meeting of its stockholders and must prepare and
file with the SEC a Proxy Statement on Schedule 14A, which will be mailed to all stockholders entitled to vote at the meeting.
The Proxy Statement will set forth proposals, including but not limited to: (a) approval of the Agreement and the Business
Combination, (b) approval of the change of the name of Purchaser with effect from the Closing to “BurgerFi International,
Inc.,” (c) adoption and approval of the Amended and Restated Certificate of Incorporation and the Amended and Restated By-laws
of Purchaser with effect from the Closing, (d) election of five members to Purchaser’s Board of Directors with effect from
and after the Effective Time, (e) adoption of an Equity Incentive Plan, and (f) approval to obtain any and all other approvals
necessary or advisable to effect the consummation of the Business Combination (the “Purchaser Proposals”).
Representations
and Warranties
BurgerFi
and the Members make certain representations and warranties (with certain exceptions set forth in the disclosure schedules to
the Agreement) relating to, the following: (a) corporate existence and power; (b) authorization, execution, delivery and enforceability
of the Agreement and other transaction documents; (c) governmental authorization (d) non-contravention; (e) capitalization; (f)
certificate of formation; operating agreement; (g) corporate records; (h) subsidiaries; (i) consents; (j) financial statements;
(k) books and records; (l) absence of certain changes; (m) properties, title to the Company’s assets; (n) litigation; (o)
contracts, (p) insurance, (q) licenses and permits; (r) compliance with laws; (s) intellectual property; (t) customers, suppliers
and franchisees; (u) accounts receivable and payable loans; (v) employees; (w) employment matters, employee benefits and compensation;
(z) real property; (aa) tax matters; (bb) environmental laws; and (cc) certain business practices.
OPES
makes certain representations and warranties relating to, among other things: (a) corporate existence and power; (b) authorization,
execution, delivery and enforceability of the Agreement and other transaction documents; (c) governmental authorization (d) non-contravention;
(e) capitalization; (f) trust fund; (g) listing; (h) reporting company; (i) undisclosed liabilities; (j) interested party transactions;
(k) board approval; (l) SEC documents and financial statements; (m) absence of certain changes; (n) certain business practices;
(o) money laundering laws; (p) business activities; (q) purpose; (r) purchaser contracts; (s) vote required; (t) investment company;
(u) minute books; and (v) application of takeover provisions..
Covenants
of the Company
The
Agreement contains certain customary covenants of BurgerFi prior to the Closing, including, among other things, the following:
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BurgerFi
agrees to operate its business in the ordinary course (with certain exceptions and with it being agreed that entering into
new franchise agreements, forming new subsidiaries to open new restaurants, signing and guaranteeing new leases in connection
therewith are ordinary course actions) and not to take certain specified actions without the prior written consent of OPES;
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BurgerFi
shall give OPES and its representatives full access to the offices, properties and books and records, and provide such information
relating to the business as requested and shall cause its employees, legal counsel, accountants and representatives of the
Company to reasonably cooperate with OPES in its investigation of the business;
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BurgerFi
shall provide notice of certain events, including the occurrence of any fact or circumstance that constitutes or results,
or is reasonably expected to constitute or result in a material adverse effect on either party or on the completion of the
Transaction, including, without limitation, notice of any action commenced or threatened against either party and notice of
or other communication from any governmental authority in connection with the transaction;
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Timely
filing of tax returns by the Members and the Company;
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BurgerFi
shall deliver to OPES, no event later than July 18, 2020, audited financial statements for the twelve month periods on and
ended December 31, 2018 and 2019, interim reviewed financial statements for the three month periods on and ended March 31,
2020 and 2019, all prepared under U.S. GAAP in accordance with requirements of the Public Company Accounting Oversight Board
for public companies. The failure to timely provide such financial statements will give OPES the right to terminate the Agreement. BurgerFi
shall provide OPES with further consolidated interim financial information of the Company and each of its Subsidiaries no
later than forty (40) calendar days following the end of each three-month quarterly period, and consolidated annual information
of the Company and each of its Subsidiaries not later than seventy-five calendar days following the end of the fiscal year,
as applicable, all prepared under U.S. GAAP in accordance with requirements of the Public Company Accounting Oversight Board
for public companies;
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BurgerFi
shall use its commercially reasonable efforts to transfer its revolving line of credit to OPES and to remove Mr. Rosatti as
a guarantor on the Company’s revolving line of credit, and if it is unable to do so, the Company, shall repay in full
all amounts outstanding under the line of credit, and terminate the line of credit;
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The
Company shall use its commercially reasonable efforts to obtain each third-party consent required under the Agreement as promptly
as practicable hereafter;
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The
Company and Members shall each execute and deliver a non-solicitation, non-service and confidentiality agreements
covering a period of at least three years post-Closing, and shall use its commercially reasonable efforts to enter into employment
agreements with each of its Key Employees prior to the Closing and to satisfy all accrued obligations of the Company applicable
to its employees;
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Mr.
Rosatti shall irrevocably convey, assign and transfer, all of his rights, title and interests in certain entities
that own and operate certain Business locations and own the Intellectual Property of the Business (the “JR Trust
Entities”); and
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The
Company will disclose in writing to Purchaser if it becomes aware of any fact or condition that constitutes a breach of any
representation, warranty or any covenant that would cause certain of the closing conditions set forth in the Agreement,
not to be satisfied as of the Closing Date.
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Covenants
of OPES
The
Agreement contains the following covenants of OPES prior to the Closing:
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OPES
agrees that it will not contact or communicate with the employees, customers, franchisees, providers, licensors, collaborators,
service providers or suppliers of the Company or its subsidiaries without the prior consultation with and prior written approval
(which approval shall not be unreasonably withheld or delayed) of an executive officer of the Company or the Members’
Representative; and
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OPES
will disclose in writing to the Company if it becomes aware of any fact or condition that constitutes a breach of any representation,
warranty or any covenant that would cause certain of the closing conditions set forth in the Agreement, not to be satisfied
as of the Closing Date.
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Actions
Prior to Closing
In
addition, the parties agreed to take the following actions, among others, before the completion of the Business Combination:
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use
their commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things
reasonably necessary, proper or advisable to consummate the transactions contemplated by the Agreement;
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except
for a portion of the interest earned on the amounts held in the Trust Account, Purchaser
shall disburse monies from the Trust Account only: (a) for Purchaser Stock Redemptions;
(b) to Purchaser’s stockholders for failure to consummate a Business Combination
by September 16, 2020; (c) for any amounts necessary to pay any taxes; (d) to third-parties
for expenses owed by Purchaser to such third parties; (e) for the Business Combination
Fees to the underwriter in the IPO; or (f) to, or on behalf of, Purchaser after
or concurrently with the consummation of a Business Combination;
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Purchaser,
with the cooperation of the Company, shall promptly prepare and file a proxy statement on Schedule 14A with the Commission;
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Purchaser
shall take all action necessary, in consultation with the Company, to establish a record date for, call, give notice of and
hold a special meeting of the holders of Purchaser Common Stock to consider and vote on the Purchaser Proposals, and Purchaser’s
Board shall recommend that Purchaser’s stockholders vote in favor of adopting and approving the Purchaser Proposals
in the proxy statement, and Purchaser shall include such recommendation in the proxy statement;
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Purchaser
agrees to operate its business in the ordinary course (with certain exceptions) and not to take certain specified actions
without the prior written consent of BurgerFi;
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Purchaser
shall use all reasonable efforts that are necessary or desirable for Purchaser to remain listed as a public company on, and
for Purchaser Common Stock to be tradable over, the applicable NASDAQ market;
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Purchaser,
at its sole cost and expense, shall purchase a directors’ and officers’ liability insurance policy for a period
of six (6) years after the Closing Date, which policy shall cover the officers and directors of Purchaser and BurgerFi after
the Business Combination, as well as the current and former directors and officers of Purchaser and BurgerFi prior to the
Business Combination;
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until
the earlier of the Closing Date or the date that the Agreement is properly terminated, neither the Company, nor the Members,
on the one hand, nor Purchaser, on the other hand, shall, directly or indirectly, (i) encourage, solicit, initiate, engage,
participate, enter into discussions or negotiations with any person concerning any Alternative Transactions, (ii) take any
other action intended or designed to facilitate the efforts of any person relating to a possible Alternative Transaction,
or (iii) ) approve, recommend or enter into any Alternative Transaction or any contract related to any alternative transaction
(the “Exclusivity Provision”);
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the
Post-Closing Board of Directors shall be selected, and the executive officers of Purchaser, immediately after the Closing, shall
be the Key Employees ; and
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Purchaser
and the Company shall prepare a mutually agreeable long-term incentive plan for employees of Purchaser and its Subsidiaries
following the closing of the Business Combination to be included as a Purchaser Proposal in the Proxy Statement for approval
by Purchaser’s Stockholders at Purchaser Stockholders’ Meeting.
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Conditions
to Closing
General
Conditions
The
obligation of OPES and BurgerFi to consummate the Acquisition is conditioned on, among other things, (a) no court, arbitrator
or other authority shall have issued any judgment, injunction, decree or order, or have pending before it a proceeding for the
issuance of any thereof, and there shall not be any provision of any applicable law restraining or prohibiting the consummation
of the Closing, the ownership by Purchaser of the membership interests of the Members, or the effective operation of the Business
by the Company after the Closing Date; (b) no action brought by a third-party non-affiliate to enjoin or otherwise restrict the
consummation of the Closing; (c) the requisite majority of Purchaser’s stockholders shall have approved the Business Combination;
(d) the Closing Payment Shares and additional shares to be issued as part of the consideration shall have been approved for listing
on Nasdaq; (e) after giving effect to any Purchaser Stock Redemptions, Purchaser shall have net tangible assets of at least $5,000,001
upon consummation of the Business Combination; (f) the Purchaser Stock Redemptions shall have been completed in accordance with
the terms hereof and the proxy statement; (g) the D&O Policy shall be in force and full effect; and (h) there shall have been
no event, change or occurrence which individually or together with any other event, change or occurrence, could reasonably be
expected to have a Material Adverse Effect on either Purchaser or the Company, regardless of whether it involved a known risk.
BurgerFi’s Conditions to Closing
The obligations of
the Company and the Members to consummate the Closing is subject to the satisfaction, or the waiver at Members’ Representative’s
discretion, of all of the following further conditions.
(a) OPES performing
in all material respects all of its obligations under the Agreement required to be performed by it at or prior to the Closing
Date;
(b) The representations
and warranties of OPES in the Agreement, shall be true and correct in all material respects at and as of the Closing Date, as
if made at and as of such date except where the failure of such representations and warranties to be so true and correct, has
not had, and would not have, a Material Adverse Effect;
(c) The Company shall
have received a certificate signed by an authorized officer of Purchaser stating that the closing conditions have been satisfied;
(d) Purchaser shall
have delivered to the Company (i) certified copies of the resolutions duly adopted by Purchaser’s Board of Directors authorizing
the execution, delivery and performance of the Agreement; and (ii) written resignations, in forms satisfactory to the Company,
dated as of the Closing Date and effective as of the Closing, executed by (X) all officers of Purchaser and (Y) all persons serving
as directors of Purchaser immediately prior to the Closing who are not selected as directors post-closing;
(e) Purchaser shall
have cash in the Trust Account at Closing, in addition to the cash portion of the Acquisition Consideration being paid to Members
at Closing, in the amount of at least $15,000,000, inclusive of the balance of the funds in the Trust Account after Purchaser
Stock Redemptions and repayment of the Promissory Notes;
(f) Purchaser shall
have executed and delivered to the Company a copy of each Additional Agreement (as described in more detail below) to which it
is a party;
(g) The Post-Closing
Board of Directors shall have been appointed effective as of the Closing; and
(h) Mr. Sternberg shall
have executed and delivered to Purchaser the Standstill Letter.
Purchaser’s Conditions to Closing
The obligation of
Purchaser to consummate the Closing is subject to the satisfaction, or the waiver at Purchaser’s sole and absolute discretion,
of all the following further conditions:
(a) BurgerFi performing
in all material respects all of its obligations under the Agreement required to be performed by it at or prior to the Closing
Date;
(b) The representations
and warranties of BurgerFi in the Agreement, shall be true and correct in all material respects at and as of the Closing Date,
as if made at and as of such date except where the failure of such representations and warranties to be so true and correct, has
not had, and would not have, a Material Adverse Effect;
(c) The Company, the
Members and the Members’ Representative, as applicable, shall have executed and delivered to Purchaser a copy of each Additional
Agreement to which it is a party;
(d) The Members shall
have executed and delivered to Purchaser the Standstill Letter;
(e) Counsel to the Company
shall have delivered an opinion in form and substance satisfactory to Purchaser’s counsel;
(f) There shall have
been no event, change or occurrence which individually or together with any other event, change or occurrence, could reasonably
be expected to have a Material Adverse Effect, regardless of whether it involved a known risk;
(g) Mr. Rosatti shall
have executed and delivered to Purchaser an Assignment Agreement for all of the JR Trust Entities;
(h) Purchaser shall
have received copies of all required third party consents, if any, in form and substance reasonably satisfactory to Purchaser,
and no such third-party consents shall have been revoked;
(i) Purchaser shall
have received copies of all Governmental Approvals, if any, in form and substance reasonably satisfactory to Purchaser, and no
such Governmental Approval shall have been revoked;
(j) Purchaser shall
have received Schedules updated as of the Closing Date, which shall not be materially different than the Schedules provided as
of the date hereof; and
(k) Company shall have
provided to Purchaser estoppel certificates from the top ten (10)_franchisees for the Company’s December 31, 2018 and 2019
fiscal years
Indemnification
From and after the
Closing, the Company and the Members, severally but not jointly or jointly and severally, agree to indemnify and hold harmless
Purchaser against, among other things, and in respect of specified actual out-of- pocket losses, damages, liabilities, costs or
expenses, including reasonable attorneys’ fees (“Losses”), incurred or sustained by Purchaser as a result
of: (a) any breach or inaccuracy in any of the representations or warranties of the Company or the Members contained in the Agreement;
or (b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by the Company or the Members contained
in the Agreement or to be performed prior to or at the Closing. The total payments made by the Company and the Members to Purchaser
with respect to Losses shall not exceed the Escrow Shares in the Escrow Fund. Any liability incurred by the Members pursuant to
the terms of this indemnification shall be paid by the return for cancellation of the Escrow Shares in accordance with the terms
of the Escrow Agreement. The Escrow Shares shall serve as Purchaser’s sole and exclusive remedy for the Company and the
Members’ obligation to indemnify Purchaser under Agreement. The Company and the Members shall not be liable to Purchaser
for indemnification until the aggregate amount of all Losses exceeds 0.40% of the Consideration (the “Deductible”),
in which event the Members shall only be required to pay or be liable for Losses in excess of the Deductible.
Except for representations
and warranties on corporate existence and power, authorization, governmental authorization, capitalization, Certificate of Formation
and Operating Agreement, Properties, Title to the Company’s Assets, Employment Matters, Employee Benefits and Compensation,
Tax Matters and Finder’s Fees, which shall survive until sixty (60) days after the expiration of the statute of limitations
with respect thereto, the representations and warranties of the Company and the Members shall survive until eighteen months (the
“Survival Period”) following the Closing.
Termination Without Default
The Agreement may be terminated and/or abandoned at any time
prior to the closing by:
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●
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by
the Company by written notice to Purchaser if (i) the Board of Directors withdraws (or modifies in any manner adverse
to the Company), or proposes to withdraw (or modify in any manner adverse to the Company), its recommendation in favor of
the Purchaser Proposals, or fails to reaffirm such recommendation as promptly as practicable after receipt of any written
request to do so by the Company or (ii) if the Stockholder Approval shall not have been obtained.
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by Purchaser or the Company, if
the closing has not occurred on or prior to October 31, 2020 (the “Outside Closing Date”); provided, that
such party seeking termination is not in material breach of any of its obligations under the Agreement.
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●
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by Purchaser, if within twenty
business days after the date of the Agreement, Purchaser is not satisfied with its continuing legal due diligence review
and the Members are unable in good faith to resolve such issues.
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by the Members’ Representative, if within twenty business days after the date of the
Agreement, the Company is not satisfied with its continuing legal due diligence review and Purchaser is unable in good faith
to resolve such issues.
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Termination Upon
Default
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by
Purchaser, if the Company or the Members shall have materially breached any representation, warranty, agreement or covenant
contained in the Purchase Agreement or in any Additional Agreement and such breach shall not be cured by the earlier of the
Outside Closing Date and fifteen (15) days (the “Cure Period”) following receipt by the Company or the
Members’ Representative, as the case may be, of a notice describing in reasonable detail the nature of such breach.
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by the Company, if Purchaser shall
have materially breached any of its covenants, agreements, representations, and warranties contained in the Purchase Agreement
and such breach shall not be cured by the earlier of the Outside Closing Date and the expiration of the Cure Period following
receipt by Purchaser of a notice describing in reasonable detail the nature of such breach.
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by
Purchaser, the Company or the Members or their Affiliates, in the event of a breach of the Exclusivity Provision, if the non-breaching
party elects to terminate the Agreement, and the non-breaching party shall be entitled to a termination fee in the aggregate
amount of $1,000,000.
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The foregoing summary of the Agreement
does not purport to be complete and is qualified in its entirety by reference to the actual Agreement, which is filed as Exhibit
2.1 hereto, and which is incorporated by reference in this report. Terms used herein as defined terms and not otherwise defined
herein shall have the meanings ascribed to them in the Agreement.
Additional Agreements
In addition to the Agreement, at the Closing, the parties shall
enter into the following additional agreements:
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1.
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The
Members and Mr. Sternberg shall each enter into a Standstill Agreement, whereby the Members as a group, and Mr. Sternberg
individually, each agree to beneficially own no more than forty-nine percent (49%) of the Purchaser Common Stock, at any time
before or after the Closing.
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2.
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OPES
shall enter into voting agreements with certain holders of its Common Stock pursuant to which such stockholders agree to vote
all securities of OPES that such stockholder owns from time to time and may vote in the election of the Company’s
directors for a period of two years after the Closing Date.
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3.
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OPES
shall enter into a registration rights agreement covering the registration of shares of Purchaser
Common Stock held by the persons set forth therein, whereby OPES agrees to file a registration
statement with the Commission within thirty (30) days after Closing to register such shares
for resale.
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4.
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OPES
and the Members shall enter into a lock-up agreement pursuant to which (i) Closing Payment
Shares (but not the Stock Portion of the Acquisition Consideration) shall be locked up until
the earlier of six months after the Closing Date or if, subsequent to the Closing Date, Purchaser
consummates a liquidation, merger, stock exchange or other similar transaction which results
in all of Purchaser’s stockholders having the right to exchange their shares of common
stock for cash, securities or other property; and (ii) the Earnout Share Consideration shall
be subject to a lock-up for a period of six months from the date the applicable Earnout Tranche
is earned (provided that the Members shall be permitted to undertake block trades during each
such lockup period).
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5.
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OPES will enter into employment agreements
with the Key Employees on mutually acceptable terms.
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6.
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OPES will enter into a consulting
agreement with a company owned by Mr. Rosatti on mutually acceptable terms.
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7.
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OPES will enter into an employment
agreement with Mr. Sternberg to serve as Executive Chairman.
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8.
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OPES, the Members and Continental
Stock Transfer and Trust, will enter into a Stock Escrow Agreement for the escrow of the Escrow Shares.
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Except as described above, no consideration
was paid by OPES in connection with the agreements described above.
Item 3.02 Unregistered Sales of Equity
Securities
The disclosure set forth above in Item
1.01 of this Current Report on Form 8-K is incorporated by reference herein. The securities of OPES to be issued in connection
with the Business Combination will not be registered under the Securities Act in reliance upon the exemption provided in Section
4(a)(2) of the Securities Act.
Item 5.02 Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On June 29, 2020, Mr. David M. Brain, the Chief Executive Officer
of OPES advised the OPES’s Board of Directors (the “Board”), that he is resigning, effective immediately, from
his position as Chief Executive Officer, but would continue as a Class 3 director on the Board. On the same date, Mr. Paul H. Rapisarda,
a director of OPES, advised OPES that he is resigning from the Board immediately after his replacement was appointed. The foregoing
resignations were not due to any disagreement with the Company or its management on any matter relating to OPES’s operations,
policies or practices (financial or otherwise).
On the same date, members of the Board appointed Mr. Ophir Sternberg
to serve as Chief Executive Officer of OPES. Mr. Sternberg will continue in his role as Chairman of the Board and as a Class 3
Director. The Board appointed Ms. Allison Greenfield to replace Mr. Rapisarda as a Class 2 director. Ms. Greenfield was also appointed
to the audit committee, compensation committee and nominating committee of the Board of Directors.
Ophir Sternberg has served as a member of OPES’s
board of directors since October 2019. Mr. Sternberg has over 26 years of experience investing in all segments of the real estate
industry, including land acquisitions, luxury residential, hospitality, commercial and retail. He is the Founder of Lionheart Capital,
an investment firm, and has served as its Chief Executive Officer since its formation in 2009. From 1993 to 2009, Mr. Sternberg
was the Founder and Managing Partner of Oz Holdings, LLC, a private real estate investment and management company. Once a member
of an elite Israeli Defense Force unit, Mr. Sternberg studied finance at Sy Syms School of Business at Yeshiva University. We believe
Mr. Sternberg is well-qualified to serve on our board of directors due to his business experience and contacts and relationships.
Allison Greenfield has over
two decades of experience in real estate development. Ms. Greenfield has been a partner of Lionheart Capital since it was
founded in 2009 and has over 25 years of experience in the entitlement, design, construction and management of projects in
all segments of the real estate industry, including industrial, retail, hospitality, and ultra-luxury residential
condominiums. At Lionheart Capital she has been responsible for the successful acquisition, development and
repositioning of real estate assets around the world. Prior to her tenure at Lionheart, Ms. Greenfield ran the development
and construction arm of Oz Holdings, LLC as a partner from 2001-2010. Ms. Greenfield studied Architecture at The New School
University, Parsons School of Design and holds a B.A. in History from Barnard College/Columbia University.
There was no arrangement or understanding
between Ms. Greenfield and any other persons, pursuant to which Ms. Greenfield was selected as a director. There are no family
relationships between or among Ms. Greenfield and any executive officers or directors of OPES. There have been no transactions
to which OPES was or is to be a party, in which Ms. Greenfield had, or will have a direct or indirect material interest.
Ms. Greenfield will receive 10,000 founders shares.
Item 7.01 Regulation FD Disclosure
Attached as Exhibit 99.1 to this Current Report on Form 8-K
and incorporated into this Item 7.01 by reference is a copy of the press release issued June 30, 2020 announcing the proposed
transaction.
Attached as Exhibit 99.2 to this Current Report on Form 8-K
and incorporated into this Item 7.01 by reference is the investor presentation dated June 30, 2020 that will be used by OPES in
making presentations to certain existing and potential stockholders of OPES with respect to the proposed transaction.
Exhibits 99.1 and 99.2 are being furnished pursuant to Item
7.01 and shall not be deemed to be filed for purposes of Section 18 of the Exchange Act or otherwise be subject to the liabilities
of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act or the Exchange
Act.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
*
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Schedules and
exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant hereby undertakes
to furnish copies of any of the omitted schedules and exhibits upon request by the U.S. Securities
and Exchange Commission.
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**
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Furnished
but not filed.
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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.
Dated: June 30,2020
OPES ACQUISITION CORP.
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By:
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/s/
Ophir Sternberg
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Name:
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Ophir Sternberg
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Title:
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Chairman and Chief Executive Officer
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