Item 1.01
|
Entry Into A Material Definitive Agreement.
|
Business Combination Agreement
The Business Combination Agreement, dated
June 5, 2020 (the “Effective Date”), was entered into by and among PubCo, Utz, Series U of UM Partners, LLC,
a series of a Delaware limited liability company (“Series U”) and Series R of UM Partners, LLC, a series of
a Delaware limited liability company (“Series R” and, collectively with Series U, the “Sellers”).
The Business Combination Agreement and the
transactions contemplated thereby were unanimously approved by the board of directors of PubCo and by the board of managers of
Utz.
The Business Combination
The Business Combination Agreement
provides for the consummation of the following transactions (collectively, the “Business Combination”):
(a) PubCo will change its jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and
continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the
“Domestication”), upon which PubCo will change its name to “Utz Brands, Inc.”; (b) the Sellers
will amend and restate Utz’s limited liability company agreement (the “Company A&R LLCA”) to,
among other things, increase the capitalization of Utz to permit the issuance and ownership of interests in Utz as
contemplated by the Business Combination Agreement and admit PubCo as the managing member of Utz; (c) PubCo will acquire
certain equity interests of Utz (i) Utz, which proceeds will be used to pay transaction expenses and reduce existing
indebtedness and (ii) from the Sellers as well as certain equity interests of equityholders of the Sellers (which will be
immediately redeemed at the Closing by the Sellers for additional equity interests of Utz), in exchange for a combination of
cash consideration and shares of newly issued Class V common stock, par value $0.0001 per share, of PubCo, which will have no
economic value, but will entitle the Sellers to one vote per issued share and will be issued on a one-for-one basis for each
membership unit in Utz (each, an “Utz Unit”) retained by the Sellers following the Business Combination.
The Company A&R LLCA will provide the Sellers the right to exchange their retained Utz Units, together with the
cancelation of an equal number of shares of Class V common stock, for Class A common stock of PubCo, subject to certain
restrictions set forth therein. Certain of the Utz Units retained by the Sellers will, subject to performance based vesting
conditions set forth in the Company A&R LLCA, (i) be restricted, (ii) not be exchangeable for Class A common stock of
PubCo until vested, and (iii) will accrue the right to distributions on Utz Units from Utz, such distributions to be payable
upon vesting. Any such restricted Utz Units that have not vested by the tenth anniversary of the Closing shall be
automatically cancelled.
Immediately prior to the consummation of
the Business Combination (the “Closing”), PubCo will effect the Domestication pursuant to which (a) each Class
A ordinary share and each Class B ordinary share of PubCo will automatically convert into one share of Class A common stock of
PubCo (excluding, however, an aggregate of 2,000,000 Class B ordinary shares held by Collier Creek Partners, LLC (the “Sponsor”)
and PubCo’s independent directors, which will instead automatically be converted into 2,000,000 shares of Class B common
stock of PubCo pursuant to the Sponsor Side Letter Agreement (as defined below)) and (b) the outstanding warrants to purchase Class
A ordinary shares of PubCo will automatically become exercisable for Class A common stock of PubCo.
Following the consummation of the Business
Combination, the combined company will be organized in an “Up-C” structure, in which substantially all of the assets
and business of PubCo will be held by Utz. The combined company’s business will continue to operate through the subsidiaries
of Utz and PubCo’s sole direct asset will be the equity interests of Utz held by it.
Concurrent with the
Closing, PubCo will enter into a tax receivable agreement (the “Tax Receivable Agreement”) with the Sellers.
Pursuant to the Tax Receivable Agreement, PubCo will be required to pay the Sellers 85% of the amount of savings, if any, in U.S.
federal, state and local income tax that PubCo actually realizes as a result of the increases in tax basis and certain other tax
benefits related to the payment of the cash consideration pursuant to the Business Combination Agreement and any exchanges of Utz
Units for Class A common stock of PubCo.
In addition, in connection with the consummation
of the Business Combination, PubCo will, among other things, enter into at Closing with the applicable Sellers, the Sponsor and
certain other parties, (i) an investor rights agreement relating to, among other things, the composition of the board of directors
of PubCo following the Business Combination, certain customary registration rights and lockup restrictions and (ii) a standstill
agreement relating to certain prohibited actions regarding acquisition of additional common stock of PubCo and certain governance
matters for a specified period of time after the Closing.
Representations and Warranties, Covenants
Under the Business Combination Agreement,
the parties to the agreement made customary representations and warranties for transactions of this type regarding themselves.
The representations and warranties made under the Business Combination Agreement generally will not survive the Closing, subject
to certain exceptions, including, among others, representations and warranties relating to certain prohibited affiliate transactions.
In addition, the parties to the Business Combination Agreement agreed to be bound by certain covenants that are customary for transactions
of this type. The covenants made under the Business Combination generally will not survive the Closing, subject to certain exceptions,
including, among others, certain covenants and agreements that by their terms are to be performed in whole or in part after the
Closing.
Conditions to Each Party’s Obligations
The consummation of the Business Combination
is subject to the satisfaction or waiver of certain customary closing conditions of the respective parties, including, without
limitation: (a) the approval and adoption by PubCo’s shareholders of the Business Combination Agreement and transactions
contemplated thereby; (b) if required, the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended; (c) the absence of a Material Adverse Effect (as defined in the Business Combination
Agreement) since the Effective Date; and (d) the cash proceeds from the trust account established for the purpose of holding
the net proceeds of Collier Creek’s initial public offering, net of any amounts paid to PubCo’s shareholders that exercise
their redemption rights in connection with the Business Combination, plus the aggregate proceeds of any permitted equity financing
under the Business Combination Agreement and aggregate gross proceeds of the forward purchase agreements by and among the Sponsor,
PubCo and PubCo’s independent directors, equaling no less than $300,000,000 at the Closing.
Termination
The Business Combination Agreement may be
terminated under certain customary and limited circumstances at any time prior to the Closing, including (i) by written notice
from the Sellers or PubCo to the other party or parties, if the Closing has not occurred by October 11, 2020, which date shall
be automatically extended to no later than the six month anniversary of the Effective Date upon the occurrence of certain events
(the “Outside Date”), provided that such right to terminate is not available to either the Sellers or PubCo
if such party exercising the right is in material breach of its representations, warranties, covenants or agreements under the
Business Combination Agreement (including, with respect to the Sellers, any breach by Utz).
A copy of the Business
Combination Agreement is attached as Exhibit 2.1 hereto and is incorporated herein by reference, and the foregoing description
of the Business Combination Agreement is qualified in its entirety by reference thereto.
Sponsor Side Letter Agreement
Concurrent with
the execution of the Business Combination Agreement, the Sponsor, certain equityholders of the Sponsor and PubCo’s independent
directors entered into a Sponsor Side Letter Agreement (the “Sponsor Side Letter Agreement”), pursuant to which,
at Closing, an aggregate of 2,000,000 Class B ordinary shares of PubCo held by the Sponsor and PubCo’s independent directors
will automatically convert into 2,000,000 shares of Class B common stock of PubCo, comprised of 1,000,000 shares of Series B-1
non-voting common stock, par value $0.0001 per share, and 1,000,000 shares of Series B-2 non-voting common stock, par value $0.0001
per share. All such shares of Class B common stock are restricted shares that are subject to certain performance-based conversion
events and upon the occurrence of which such Class B common stock would convert on a one-for-one basis into Class A common stock
of PubCo. The shares of Class B common stock will accrue and be entitled to dividends paid on the Class A common stock, with such
dividends payable upon the conversion of the shares of Class B common stock into shares of Class A common stock. Any shares of
Class B common stock that have not converted into shares of Class A common stock by the tenth anniversary of the Closing shall
be automatically cancelled.
A copy of the Sponsor
Side Letter Agreement is attached as Exhibit 10.1 hereto and is incorporated herein by reference, and the foregoing description
of the Sponsor Side Letter Agreement is qualified in its entirety by reference thereto.
Unit Purchase Agreement
Concurrent with
the execution of the Business Combination Agreement, PubCo, the Sellers and BSOF SN LLC, a Delaware limited liability company (“UPA
Seller”) entered into a Unit Purchase Agreement (the “Unit Purchase Agreement”), pursuant to which,
substantially simultaneously with Closing, PubCo will purchase an aggregate of 125,000 Series A Preferred Units of the Sellers
and 102,060.14 Common Units of the Sellers from UPA Seller (the “Unit Purchase”). Under the Unit Purchase Agreement,
the parties to the agreement made customary representations and warranties for transactions of this type regarding themselves.
The representations and warranties made under the Unit Purchase Agreement will not survive the consummation of the Unit Purchase.
The consummation of the Unit Purchase is subject to the satisfaction or waiver of certain customary closing conditions of the respective
parties, including, without limitation, the Closing of the Business Combination, and shall be consummated substantially simultaneously
with the Business Combination. The Unit Purchase Agreement will terminate automatically upon the termination of the Business Combination
Agreement or otherwise in accordance with its terms.
A copy of the Unit
Purchase Agreement is attached as Exhibit 10.2 hereto and is incorporated herein by reference, and the foregoing description of
the Unit Purchase Agreement is qualified in its entirety by reference thereto.