Item 1.01 Entry into a Material Definitive Agreement
Business Combination Agreement
On
The Business Combination Agreement provides for the consummation of the
following transactions (collectively, the "Business Combination"): (a) the
Company will amend and restate its limited liability company agreement (the
"
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 the Company will be controlled by SGAC. The combined company's business will continue to operate through the subsidiaries of the Company and SGAC's sole direct asset will be the equity interests of the Company held by it.
Concurrent with the Closing, SGAC will enter into a tax receivable agreement
(the "Tax Receivable Agreement") with the Parent. Pursuant to the Tax Receivable
Agreement, SGAC will be required to pay to the Parent 85% of the amount of
savings, if any, in
In addition, in connection with the execution of the Business Combination Agreement, SGAC will, among other things, enter into at Closing (a) an agreement with Parent, certain holders of equity interests of Parent, and certain holders of SGAC common stock, relating to certain customary registration rights, (b) agreements with certain holders of SGAC common stock and Parent relating to, among other things, certain customary lockup restrictions, and (c) a stockholders agreement with certain holders of SGAC common stock and Parent relating to, among other things, composition of the SGAC board of directors.
Representations and Warranties
The Business Combination Agreement contains customary representations and warranties of the parties thereto with respect to, among other things, (a) entity organization, formation and authority, (b) capital structure, (c) authorization to enter into the Business Combination Agreement, (d) licenses and permits, (e) taxes, (f) financial statements, (g) real property, (h) material contracts, (i) title to assets, (j) absence of changes, (k) employee matters, (l) compliance with laws, (m) litigation, (n) transactions with affiliates and (o) regulatory matters.
Covenants
The Business Combination Agreement includes customary covenants of the parties with respect to operation of the business prior to consummation of the Transactions and efforts to satisfy conditions to consummation of the Transactions. The Business Combination Agreement also contains additional covenants of the parties, including, among others, (a) covenants providing for SGAC and the Company to use reasonable best efforts to obtain all necessary regulatory approvals and (b) covenants providing for SGAC, Merger Sub and the Company to cooperate in the preparation of the Proxy Statement (as such term is defined in the Business Combination Agreement) required to be filed in connection with the Transactions.
SGAC Omnibus Incentive Plan
Prior to the Closing, SGAC will adopt an Omnibus Incentive Plan (as defined in the Business Combination Agreement) subject to the receipt of the SGAC stockholder approval.
Exclusivity Restrictions
From the date of the Business Combination Agreement to the Effective Time or, if earlier, the termination of the Business Combination Agreement in accordance with its terms, each of SGAC, Parent and the Company have agreed not to, among other things, solicit, initiate, continue or engage in discussions or negotiations with, or enter into any agreement with, or encourage, respond, provide information to or commence due diligence with respect to, any person (other than the parties to the Business Combination Agreement or their respective representatives), concerning, relating to or which is intended or is reasonably likely to give rise to or result in any Alternative Transaction (as defined in the Business Combination Agreement) other than (a) with SGAC, the Company and Parent or (b) to the extent that SGAC's board of directors determines, in good faith, that the failure to take any such action would be inconsistent with its fiduciary duties under applicable law.
SGAC Change in Recommendation
SGAC is required to include in the Proxy Statement the recommendation of SGAC's board of directors to SGAC's stockholders that they approve the transaction proposals (the "SGAC Board Recommendation"). SGAC is not permitted to change the SGAC Board Recommendation (such change, a "change in recommendation") unless it determines, in good faith, after consultation with its outside legal counsel, that the failure to make such a change in recommendation would be inconsistent with its fiduciary duties under applicable law.
Conditions to Closing General Conditions
Consummation of the proposed transactions is conditioned on SGAC having at least
In addition, the consummation of the Merger is conditioned upon, among other things, (i) the expiration or termination of all applicable waiting periods . . .
Item 3.02 Unregistered Sales of
The information set forth above in Item 1.01 of this Report is incorporated by reference herein. The shares of Common Stock to be issued in connection with the Subscriptions and the transactions contemplated thereby will not be registered under the Securities Act, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.
Item 7.01 Regulation FD Disclosure.
On
Furnished as Exhibit 99.3 to this Current Report on Form 8-K is the form of investor presentation that will be used by SGAC with respect to the business combination.
Also on
The information in this Item 7.01, including Exhibits 99.1, 99.2, 99.3, 99.4, 99.5, 99.6, 99.7 and 99.8, is furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to liabilities under that section, and shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filings.
IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed business combination, SGAC intends to file
preliminary and definitive proxy statements with the
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of any securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such other jurisdiction.
FORWARD-LOOKING STATEMENTS
This Current Report on Form 8-K includes certain statements that are not
historical facts but are forward-looking statements for purposes of the safe
harbor provisions under the United States Private Securities Litigation Reform
Act of 1995. Forward-looking statements generally are accompanied by words such
as "believe," "may," "will," "estimate," "continue," "anticipate," "intend,"
"expect," "should," "would," "plan," "predict," "potential," "seem," "seek,"
"future," "outlook," and similar expressions that predict or indicate future
events or trends or that are not statements of historical matters. All
statements, other than statements of present or historical fact included in this
Current Report on Form 8-K, regarding SGAC's proposed business combination with
the Company, SGAC's ability to consummate the transaction, the benefits of the
transaction and the combined company's future financial performance, as well as
the combined company's strategy, future operations, estimated financial
position, estimated revenues and losses, projected costs, prospects, plans and
objectives of management are forward-looking statements. These statements are
based on various assumptions, whether or not identified in this Current Report
on Form 8-K, and on the current expectations of the respective management of
SGAC and the Company and are not predictions of actual performance. These
forward-looking statements are provided for illustrative purposes only and are
not intended to serve as, and must not be relied on as, a guarantee, an
assurance, a prediction or a definitive statement of fact or probability. Actual
events and circumstances are difficult or impossible to predict and will differ
from assumptions. Many actual events and circumstances are beyond the control of
SGAC or the Company. Potential risks and uncertainties that could cause the
actual results to differ materially from those expressed or implied by
forward-looking statements include, but are not limited to, changes in domestic
and foreign business, market, financial, political and legal conditions; the
inability of the parties to successfully or timely consummate the business
combination, including the risk that any regulatory approvals are not obtained,
are delayed or are subject to unanticipated conditions that could adversely
affect the combined company or the expected benefits of the business combination
or that the approval of the stockholders of SGAC or the Company is not obtained;
failure to realize the anticipated benefits of business combination; risk
relating to the uncertainty of the projected financial information with respect
to the Company; the amount of redemption requests made by SGAC's stockholders;
the overall level of consumer demand for the Company's products; general
economic conditions and other factors affecting consumer confidence,
preferences, and behavior; disruption and volatility in the global currency,
capital, and credit markets; the financial strength of the Company's customers;
the Company's ability to implement its business and growth strategy; changes in
governmental regulation, the Company's exposure to litigation claims and other
loss contingencies; disruptions and other impacts to the Company's business, as
a result of the COVID-19 pandemic and government actions and restrictive
measures implemented in response, and as a result of the proposed transaction;
the Company's ability to retain and expand customer relationships; competitive
pressures from many sources, including those using other distribution channels,
having more experience, larger or more appealing inventory, better financing,
and better relationships with those in the physical and streaming movie and
television industries; developments in the home video distribution market as
newer technologies and distribution channels compete for market share, and the
Company experiences a secular decline in the physical rental market; the impact
of decreased quantity and quality of movie content availability for physical and
digital distribution due to changes in quantity of new releases by studios,
movie content failing to appeal to consumers' tastes, increased focus on digital
sales and rentals, and other general industry-related factors; the termination,
non-renewal or renegotiation on materially adverse terms of the Company's
contracts or relationships with one or more of its significant retailers or
studios; the Company's inability to obtain licenses to digital movie or
television content for home entertainment viewing; the Company's reliance upon a
number of partners to make its digital service available on their devices;
unforeseen costs and potential liability in connection with content the Company
acquires, produces, licenses and/or distributes through its service; the impact
of the COVID-19 pandemic on the Company's business, results of operations and
financial condition, its suppliers and customers and on the global economy; the
impact that global climate change trends may have on the Company and its
suppliers and customers; the Company's ability to protect patents, trademarks
and other intellectual property rights; any breaches of, or interruptions in,
SGAC's information systems; fluctuations in the price, availability and quality
of electricity and other raw materials and contracted products as well as
foreign currency fluctuations; changes in tax laws and liabilities, tariffs,
legal, regulatory, political and economic risks. More information on potential
factors that could affect SGAC's or the Company's financial results is included
from time to time in SGAC's public reports filed with the
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits: Exhibit Description 2.1 Business Combination Agreement, dated as ofMay 16, 2021 , by and amongSeaport Global Acquisition Corp. ,Seaport Merger Sub, LLC ,Redwood Holdco, LP , andRedwood Intermediate, LLC . 10.1 Sponsor Support Agreement, datedMay 16, 2021 , by and amongSeaport Global Acquisition Corp. ,Seaport Global SPAC, LLC , andRedwood Intermediate, LLC . 10.2 Sponsor Lock-up Agreement, datedMay 16, 2021 , by and amongSeaport Global Acquisition Corp. andSeaport Global SPAC, LLC . 10.3 Parent Lock-up Agreement, datedMay 16, 2021 , by and amongSeaport Global Acquisition Corp. andRedwood Holdco, LP . 10.4 Form of Subscription Agreement 99.1 Press Release issued bySeaport Global Acquisition Corp. and RedwoodIntermediate, LLC onMay 17, 2021 . 99.2 Conference Call Transcript. 99.3 Investor Presentation, datedMay 17, 2021 . 99.4 Letter to Employees of the Company 99.5 Employee Q&A 99.6 Letter to Business Partners of the Company 99.7 Email to Customers of the Company 99.8 Customer Q&A
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