Item 1.01 Entry into a Material Definitive Agreement.
As previously announced, Merida Merger Corp. I, a Delaware corporation
("Merida"), entered into an Agreement and Plan of Merger, dated as of August 9,
2021 and amended on September 8, 2021 (and as may be further amended from time
to time, the "Merger Agreement"), by and among Merida, Merida Merger Sub, Inc.,
a Washington corporation and wholly-owned subsidiary of Merida ("First Merger
Sub"), Merida Merger Sub II, LLC, a Washington limited liability company and
wholly-owned subsidiary of Merida ("Second Merger Sub"), and Leafly Holdings,
Inc., a Washington corporation ("Leafly"). Pursuant to the Merger Agreement,
among other things, the parties will undertake the following transactions
(collectively, the "Transactions"): (i) First Merger Sub will merge with and
into Leafly, with Leafly surviving such merger ("First Merger"), and (ii)
immediately following the First Merger and as part of the same overall
transaction as the First Merger, Leafly will merge with and into Second Merger
Sub, with Second Merger Sub surviving such merger and being a wholly-owned
subsidiary of Merida with the name "Leafly, LLC".
On January 11, 2022, Merida entered into a note purchase agreement ("Note
Purchase Agreement") with certain purchasers (the "Note Investors") pursuant to
which Merida will issue and sell to the Note Investors $30,000,000 in aggregate
principal amount of unsecured convertible senior notes due 2025 (the "New
Notes"), immediately prior to the closing of the Transactions. The New Notes
will also be guaranteed, after the closing of the Transactions, by Leafly, LLC.
The New Notes will bear interest at a rate of 8.00% per annum, paid in cash
semi-annually in arrears on July 31 and January 31 of each year, and will mature
on January 31, 2025 (the "Maturity Date"). The New Notes are convertible into
approximately 2,400,000 shares of common stock of Merida following the
consummation of the Transactions ("New Leafly Common Stock") at an initial
conversion rate of 80 shares of New Leafly Common Stock per $1,000 principal
amount of New Notes and 80 shares of New Leafly Common Stock per $1,000 amount
of accrued and unpaid interest, if any, thereon, subject to adjustment for
customary events prior to the Maturity Date (the "Conversion Rate"), which is
equivalent to an initial conversion price of $12.50 per share. Conversion of the
New Notes, together with any accrued and unpaid interest, if any, at the time of
conversion will be settled in shares of New Leafly Common Stock.
The New Notes will be convertible at the option of the holders at any time prior
to the close of business on the second scheduled trading day immediately before
the Maturity Date. In addition, Merida may, at its election, force the
conversion of the New Notes at the Conversion Rate on or after January 31, 2024,
if the volume-weighted average trading price of New Leafly Common Stock exceeds
$18.00 for at least 20 trading days (whether or not consecutive) during a period
of 30 consecutive trading days. Merida also has the option, on or after January
31, 2023 and prior to the 40th trading day immediately before the Maturity Date
and subject to the holders' ability to optionally convert, to redeem all or a
portion of the New Notes at a cash redemption price equal to 100% of the
principal amount of the New Notes, plus accrued and unpaid interest, if any.
The holders of the New Notes will have the right to cause Merida to repurchase
for cash all or a portion of the New Notes held by such holder upon the
occurrence of a "fundamental change" (as defined in the New Notes) or in
connection with certain asset sales, in each case at a price equal to 100% of
par plus accrued and unpaid interest, if any.
The New Notes include restrictive covenants that, among other things and subject
to the exceptions set forth in the New Notes, limit the ability of Merida to
incur additional debt, incur liens, make restricted payments, make certain
investments, enter into affiliate transactions, dispose of certain assets and
enter into certain merger or asset sale transactions. The New Notes also contain
customary events of default.
Pursuant to and as set forth in the Note Purchase Agreement, the Sponsor agreed
to transfer, for no additional consideration 37,500 sponsor shares and 300,000
private warrants of Merida to the Note Investors.
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Pursuant to the Note Purchase Agreement, and subject to the terms and conditions
thereof, Merida has also agreed to register the resale of the common stock
issuable upon conversion of the New Notes after the consummation of the
Transactions on terms similar to the terms contemplated by Merida's amended and
restated registration rights agreement.
In connection with and concurrently to the execution of the Note Purchase
Agreement, Merida and Leafly entered into Amendment No. 2 to the Merger
Agreement (the "Merger Agreement Amendment") to provide that the principal
amount of the Notes sold pursuant to the Note Purchase Agreement would be
included in determining whether the Minimum Cash Condition (as defined in the
Merger Agreement) is satisfied.
In addition, in connection with and concurrently to the execution of the Note
Purchase Agreement, Merida entered into a letter agreement (the "Side Letter")
with Merida Holdings, LLC (the "Sponsor") and Leafly, pursuant to which the
Sponsor has agreed to: (i) at the closing of the Transactions, deliver and
surrender for cancellation to Merida an aggregate of 13,000 shares of common
stock of Merida held by the Sponsor at no cost and (ii) on the date that is
three months following such closing date, deliver and surrender for cancellation
to Merida up to an aggregate of 26,000 shares of New Leafly Common Stock at no
cost, with the exact number of shares to be delivered and surrendered for
cancellation to be determined based on the final amount of the cash fees to be
paid by Merida pursuant to those certain Share Transfer, Non-Redemption and
Forward Purchase Agreements by and between Merida and certain of its
stockholders, dated as of December 22, 2021, at such date (i.e., one share
contributed for each $10.00 of cash paid pursuant to such agreements, up to a
maximum of 26,000 shares).
The foregoing summary of the Note Purchase Agreement and terms of the Notes, the
Merger Agreement Amendment and the Side Letter is qualified in its entirety by
the text of the Note Purchase Agreement, form of Note (which is attached to the
Note Purchase Agreement), the Merger Agreement Amendment and the Side Letter,
copies of which are attached hereto as Exhibit 10.1, 2.1 and 10.2, respectively,
and are incorporated herein by reference.
Additionally, on January 10, 2022, Merida entered into an agreement with a
public stockholder, pursuant to which the public stockholder agreed not to seek
redemption of up to 800,000 shares of Merida common stock sold in its initial
public offering. The agreement provides that the stockholder shall have the
right, but not the obligation, to have Merida repurchase any of such shares held
by them as of the closing of the Transactions and not later sold into the open
market at a price of $10.16 per share on the three-month anniversary of the
. . .
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Standard.
On January 6, 2022, Merida received a notice from the Listing Qualifications
Department of The Nasdaq Stock Market ("Nasdaq") stating that Merida failed to
hold an annual meeting of stockholders within 12 months after its fiscal year
ended December 31, 2020, as required by Nasdaq Listing Rule 5620(a). In
accordance with Nasdaq Listing Rule 5810(c)(2)(G), Merida has 45 calendar days
(or until February 20, 2022) to submit a plan to regain compliance and, if
Nasdaq accepts the plan, Nasdaq may grant Merida up to 180 calendar days from
its fiscal year end, or until June 29, 2022, to regain compliance. Merida
expects to hold its previously announced special meeting in lieu of an annual
meeting (described below) in January 2022 at which a director election proposal
will be voted on and expects that following such meeting, Merida will be back in
compliance with Nasdaq's listing rules. However, if it appears that the meeting
will be delayed for any reason beyond the February 20, 2022 deadline, Merida
intends to submit a compliance plan by such date. While any plan is pending,
Merida's securities will continue to trade on Nasdaq.
Item 8.01 Other Events.
On January 11, 2022, Merida announced that it intends to adjourn the special
meeting in lieu of annual meeting originally scheduled for January 14, 2022 to a
later date to be announced, at which stockholders of Merida will be asked to
consider and vote on the Transactions.
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Additional Information and Where to Find It
In connection with the Transactions, Merida has filed with the Securities and
Exchange Commission ("SEC") a Registration Statement on Form S-4 ("Registration
Statement") that includes a proxy statement of Merida, a prospectus of Merida
and a consent solicitation statement of Leafly. The Registration Statement was
declared effective by the SEC on December 20, 2021. Merida has mailed the
definitive proxy statement/prospectus/consent solicitation statement included in
the Registration Statement to its stockholders in connection with the
Transactions. INVESTORS AND SECURITYHOLDERS OF MERIDA ARE URGED TO READ THE
REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS/CONSENT SOLICITATION
STATEMENT (AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND OTHER RELEVANT
DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT LEAFLY, MERIDA, THE
TRANSACTIONS AND RELATED MATTERS. Investors and securityholders will be able to
obtain free copies of the Registration Statement (when available) and other
documents filed with the SEC by Merida through the website maintained by the SEC
at www.sec.gov.
Participants in the Solicitation
Merida and Leafly and their respective directors and officers may be deemed to
be participants in the solicitation of proxies from Merida's stockholders in
connection with the proposed business combination. Information about Merida's
directors and executive officers and their ownership of Merida's securities is
set forth in Merida's filings with the SEC. Additional information regarding the
interests of those persons and other persons who may be deemed participants in
the proposed business combination may be obtained by reading the proxy
statement/prospectus/consent solicitation statement regarding the proposed
business combination. You may obtain free copies of these documents as described
in the preceding paragraph.
Cautionary Note Regarding Forward Looking Statements
This Current Report on Form 8-K and the exhibits filed herewith include
"forward-looking statements" (as defined in the Private Securities Litigation
Reform Act of 1995). Merida's and Leafly's actual results may differ from its
expectations, estimates and projections and consequently, you should not place
undue reliance on these forward-looking statements as predictions of future
events. These forward-looking statements generally are identified by the words
"aspire," "expect," "estimate," "project," "budget," "forecast," "anticipate,"
"intend," "plan," "may," "will," "will be," "will continue," "will likely
result," "could," "should," "believe(s)," "predicts," "potential," "continue,"
"future," "opportunity," "strategy," and similar expressions are intended to
identify such forward-looking statements.
These forward-looking statements are not guarantees of future performance,
conditions or results, and involve a number of known and unknown risks,
uncertainties, assumptions and other important factors, many of which are
outside Merida or Leafly management's control, that could cause actual results
to differ materially from the results discussed in the forward-looking
statements. Factors that may cause such differences include, but are not limited
to: (a) the risk that the benefits of the Transactions may not be realized; (b)
the risk that the Transactions may not be completed in a timely manner or at
all, which may adversely affect the price of Merida's securities; (c) the
failure to satisfy the conditions to the consummation of the Transactions,
including the failure of Merida's stockholders to approve and adopt the Merger
Agreement or the failure of Merida to satisfy the Minimum Cash Condition (as
defined in the Merger Agreement) following redemptions by its stockholders; (d)
the occurrence of any event, change or other circumstance that could give rise
to the termination of the Merger Agreement; (e) the outcome of any legal
proceedings that may be initiated following announcement of the Transactions;
(f) the combined company's continued listing on Nasdaq; (g) the risk that the
proposed transaction disrupts current plans and operations of Leafly as a result
of the announcement and consummation of the Transactions; (h) costs related to
the Transactions; changes in applicable laws or regulations; (i) the possibility
that the combined company may be adversely affected by other economic, business,
and/or competitive factors; (j) the impact of COVID-19 or other adverse public
health developments; and (k) other risks and uncertainties that will be detailed
in the Registration Statement and as indicated from time to time in Merida's
filings with the SEC. These filings identify and address other important risks
and uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking statements.
Merida and Leafly caution that the foregoing list of factors is not exclusive.
Merida and Leafly caution readers not to place undue reliance upon any
forward-looking statements, which speak only as of the date made. Neither Merida
nor Leafly undertake or accept any obligation or undertaking to release publicly
any updates or revisions to any forward-looking statements to reflect any change
in its expectations or any change in events, conditions or circumstances on
which any such statement is based.
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Disclaimer
This document does not constitute an offer to sell or exchange, or the
solicitation of an offer to buy or exchange, any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer, sale or exchange
would be unlawful prior to registration or qualification under the securities
laws of any such jurisdiction.law.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Description
2.1 Amendment No. 2 to Merger Agreement
10.1 Note Purchase Agreement
10.2 Side Letter Agreement
99.1 Press Release
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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