Item 3.02. Unregistered Sales of Equity Securities.
On June 23, 2020, Houlihan Lokey, Inc. (the "Company") entered into an equity
purchase agreement with MVP Capital, LLC, an independent advisory firm that
provides a range of advisory services to clients in the telecom, internet
infrastructure, and broadcast sectors ("MVP Capital"), and the members thereof
(the "Sellers"), pursuant to which the Company agreed to purchase all of the
issued and outstanding membership interests of MVP Capital from the Sellers for
(i) cash, (ii) an aggregate of 192,247 shares of the Company's Class B Common
Stock, par value $0.001 per share ("Class B Common Stock"), that are fully
vested (the "Vested Class B Common Stock"), (iii) an aggregate of 104,862 shares
of Class B Common Stock (the "Restricted Class B Common Stock") that are subject
to certain repurchase rights in favor of the Company, and (iv) promissory notes
of which up to approximately $1.8 million is convertible into shares of Class B
Common Stock ("Convertible Notes"). The closing of the MVP Capital acquisition
(the "Closing") is subject to regulatory approval and other customary closing
conditions. In three equal installments, the holders of the Convertible Notes
will have the right to convert the original face value of the Convertible Notes
for (i) cash and (ii) shares of Class B Common Stock with an aggregate dollar
value referred to above based upon the trailing 10-day average closing price of
the Company's publicly-traded Class A Common Stock, par value $0.001 per share
("Class A Common Stock"), immediately prior to conversion.
Based upon the achievement of certain post-closing revenue performance measures
over three measurement periods following the Closing, the Company has agreed
(i) to pay additional cash consideration and (ii) to issue additional
fully-vested shares of Class B Common Stock with a maximum aggregate value of up
to approximately $10.3 million (the "Earn-Out Shares"), in each case, to be
calculated using the trailing 10-day average closing price for the Class A
Common Stock immediately prior to such issuance.
The issuances of shares of Class B Common Stock and Convertible Notes to the
Sellers in connection with the acquisition of MVP Capital will be made in
reliance upon the exemption from registration provided by Section 4(a)(2) of the
Securities Act of 1933, as amended (the "Securities Act"), and/or Regulation D
promulgated under the Securities Act, as transactions not involving a public
offering. The Company will enter into a registration rights agreement with the
Sellers, pursuant to which the Company has agreed to use commercially reasonable
efforts to register for resale under the Securities Act the Class A Common Stock
into which the Vested Class B Common Stock and Earn-Out Shares are convertible.
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