Item 1.01 Entry into a Material Definitive Agreement.
Registration Rights Agreement
On the Closing Date, pursuant to the terms of the Merger Agreement, the Company
entered into that certain Amended and Restated Registration Rights Agreement
(the "Registration Rights Agreement") with BLS Investor Group LLC (the
"Sponsor") and the HydraFacial Stockholders.
Pursuant to the terms of the Registration Rights Agreement, (i) any outstanding
share of Class A Stock or any other equity security (including the warrants held
by the Sponsor that were issued to the Sponsor on October 2, 2020, each of which
is exercisable for one share of Class A Stock (the "Private Placement Warrants")
and including shares of Class A Stock issued or issuable upon the exercise of
any other equity security) of the Company held by a the Sponsor or the
HydraFacial Stockholders (together, the "Restricted Stockholders") as of the
date of the Registration Rights Agreement or thereafter acquired by a Restricted
Stockholder (including the shares of Class A Stock issued upon conversion of the
Class B Common Stock, par value $0.0001 per share, of the registrant (the
"Class B Stock" and, together with the Class A Stock, the "Common Stock") and
upon exercise of any Private Placement Warrants) and shares of Class A Stock
issued or issuable as earn-out shares to the HydraFacial Stockholders and
(ii) any other equity security of the Company issued or issuable with respect to
any such share of Common Stock by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise will be entitled to registration rights.
The Registration Rights Agreement provides that the Company will, within 60 days
after the consummation of the transactions contemplated by the Merger Agreement,
file with the Securities and Exchange Commission (the "SEC") a shelf
registration statement registering the resale of the shares of Common Stock held
by the Restricted Stockholders and will use its reasonable best efforts to have
such registration statement declared effective as soon as practicable after the
filing thereof, but in no event later than 60 days following the filing
deadline. The HydraFacial Stockholders are entitled to make up to an aggregate
of two demands for registration, excluding short form demands, that the Company
register shares of Common Stock held by these parties. In addition, the
Restricted Stockholders have certain "piggy-back" registration rights. The
Company will bear the expenses incurred in connection with the filing of any
registration statements filed pursuant to the terms of the Registration Rights
Agreement. The Company and the Restricted Stockholders agree in the Registration
Rights Agreement to provide customary indemnification in connection with any
offerings of Common Stock effected pursuant to the terms of the Registration
. . .
Item 2.01 Completion of Acquisition or Disposition of Assets.
The disclosure set forth in the "Introductory Note" above is incorporated into
this Item 2.01 by reference. On April 29, 2021, the Business Combination was
approved by the Company's stockholders at a special meeting thereof (the
"Special Meeting"), held in lieu of the 2021 annual meeting of the Company's
stockholders.
Pursuant to the terms of the Merger Agreement and customary adjustments set
forth therein, the aggregate merger consideration paid to the HydraFacial
Stockholders in connection with the Business Combination was approximately
$975,000,000 less HydraFacial's net indebtedness as of the Closing Date, and
subject to further adjustments for transaction expenses, and net working capital
relative to a target. The merger consideration included both cash consideration
and consideration in the form of newly issued Class A Stock. The aggregate cash
consideration paid to the HydraFacial Stockholders at the Closing was
approximately $368 million, consisting of the Company's cash and cash
equivalents as of the Closing (including proceeds of $350 million from the
Company's private placement of an aggregate of 35,000,000 shares of Class A
Stock (the "Private Placement") with a limited number of accredited investors
(as defined by Rule 501 of Regulation D) without any form of general
solicitation or general advertising pursuant to Section 4(a)(2) of the
Securities Act of 1933, as amended (the "Securities Act"), and approximately
$433 million of cash available to the Company from the trust account that held
the proceeds from the Company's initial public offering (the "Trust Account"))
after giving effect to income and franchise taxes payable in respect of interest
income earned in the Trust Account and redemptions that were elected by the
Company's public stockholders, minus approximately $224 million used to repay
HydraFacial's outstanding indebtedness at the Closing, minus approximately
$94 million of transaction expenses of HydraFacial and the Company, minus
$100 million. The remainder of the consideration paid to the HydraFacial
Stockholders consisted of 35,501,743 newly issued shares of Class A Stock (the
"Stock Consideration").
The foregoing consideration paid to the HydraFacial Stockholders may be further
increased by up to $75.0 million payable as earn-out shares of Class A Stock
upon the completion of certain acquisitions within one year of Closing pursuant
to the terms of the Merger Agreement.
All outstanding shares of Class B Stock were automatically converted into shares
of Class A Stock on a one-for-one basis at the Closing and will continue to be
subject to the transfer restrictions applicable to such shares of Class B Stock.
The material terms and conditions of the Merger Agreement are described in
greater detail in the section of the Company's definitive proxy statement filed
. . .
Item 3.02 Unregistered Sales of Equity Securities.
The description of the Stock Consideration set forth in Item 2.01 of this
Current Report on Form 8-K is incorporated herein by reference. The issuances of
the shares of Class A Stock issued as Stock Consideration and in the Private
Placement were not 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 as a transaction by an issuer not
involving a public offering without any form of general solicitation or general
advertising.
Item 3.03 Material Modification to Rights of Security Holders.
On the Closing Date, the Company filed the Second Amended and Restated
Certificate of Incorporation of the Company (the "A&R Certificate") with the
Secretary of State of the State of Delaware. The material terms of the A&R
Certificate and the general effect upon the rights of holders of the Company's
capital stock are described in the sections of the Proxy Statement entitled
"Proposal No. 3 - Approval of the Second Amended and Restated Certificate of
Incorporation" and "Proposal No. 4 - Approval of Certain Governance Provisions
in the Second Amended and Restated Certificate of Incorporation" beginning on
pages 177 and 181, respectively, which information is incorporated herein by
reference. A copy of the A&R Certificate is filed as Exhibit 3.1 to this Current
Report on Form 8-K and is incorporated herein by reference.
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In addition, upon the Closing, pursuant to the terms of the Merger Agreement,
the Company amended and restated its bylaws. A copy of the Company's Amended and
Restated Bylaws is filed as Exhibit 3.2 to this Current Report on Form 8-K and
is incorporated herein by reference.
Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
On April 12, 2021, the Staff of the SEC released the Staff Statement on
Accounting and Reporting Considerations for Warrants Issued by Special Purpose
Acquisition Companies ("SPACs") (the "Staff Statement"). The Staff Statement
sets forth the conclusion of the SEC's Office of the Chief Accountant that
certain provisions included in the warrant agreements entered into by many
SPACs, including the Company, require such warrants to be accounted for as
liabilities measured at fair value, rather than as equity securities, with
changes in fair value during each financial reporting period reported in
earnings. The Company has previously classified its private placement warrants
and public warrants as equity (for a full description of the Company's private
placement warrants and public warrants (collectively, the "warrants"), refer to
the registration statement on Form S-1 (File No. 333-248717), filed in
connection with the Company's initial public offering, declared effective by the
SEC on September 30, 2020.
As previously disclosed in the Company's Current Report on Form 8-K filed with
the SEC on April 26, 2021, as amended on April 27, 2021, the Company undertook
an evaluation of the Staff Statement with respect to the Company's accounting
treatment of the warrants and determined on a preliminary basis that such
guidance would result in the warrants being classified as liabilities on the
balance sheet with the mark to market change in fair value reflected in the
statement of operations.
On May 9, 2021, the Company's management and the Audit Committee concluded that,
in light of the Staff Statement, it is appropriate to restate the Company's
previously issued audited financial statements as of December 31, 2020 and for
the period from July 8, 2020 (inception) through December 31, 2020 (the
"Affected Periods"). Considering such restatement, such audited financial
statements should no longer be relied upon. Similarly, any previously furnished
or filed reports including the audited balance sheet filed with the SEC on Form
8-K on October 8, 2020, related earnings releases, investor presentations or
similar communications of the Company describing the Company's financial results
for the Affected Periods should no longer be relied upon.
The Company intends to file an amendment to its Annual Report on Form 10-K for
the fiscal year ended December 31, 2020, which will include the restated
financials of the Company as of December 31, 2020 and for the period from
July 8, 2020 (inception) through December 31, 2020 (the "Amended 10-K").The
adjustments to the financial statement items for the Affected Periods will be
set forth in the financial statements included in the Amended 10-K, including
further describing the restatement and its impact on previously reported
amounts.
The Audit Committee and the Company's management have discussed the matters
disclosed pursuant to this Item 4.02 with Marcum LLP, the Company's independent
registered public accounting firm.
Item 5.01 Changes in Control of the Registrant.
The information set forth in the "Introductory Note" and in Item 2.01 of this
Current Report on Form 8-K is incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Directors and Executive Officers
Information with respect to the Company's directors and executive officers
before and after the consummation of the Business Combination is set forth in
the Proxy Statement in the sections entitled "Information About the Company -
Management - Directors and Officers" beginning on page 200 and "Management After
the Business Combination - Management and Board of Directors" beginning on page
250 and "Proposal No. 5 - Election of Directors to the Board of Directors"
beginning on page 184, which are incorporated herein by reference.
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The information regarding the Company's officers and directors set forth under
the headings "Directors and Executive Officers" and "Executive Compensation" in
Item 2.01 of this Current Report on Form 8-K is incorporated herein by
reference.
Chief Executive Officer and Chief Financial Officer Employment Agreements
The Company has entered into an employment agreement with Clinton E. Carnell to
serve as the Chief Executive Officer of the Company (the "CEO Agreement") and
with Liyuan Woo to serve as the Chief Financial Officer of the Company (the "CFO
Agreement" and, together with the CEO Agreement, the "Executive Agreements"),
both effective as of and contingent upon the consummation of the Business
Combination. The Executive Agreements provide for an annual compensation package
consisting of a base salary of $675,000 and $415,000 for Mr. Carnell and
Ms. Woo, respectively, a target bonus opportunity of 100% and 60% of base salary
for Mr. Carnell and Ms. Woo, respectively, and eligibility for annual long-term
incentive awards pursuant to the 2021 Plan beginning in 2022, with the form of
such award and the value of such award determined by the compensation committee
of the Company's board of directors.
Pursuant to the Executive Agreements, Mr. Carnell and Ms. Woo will receive the
following one-time equity awards, pursuant to the 2021 Plan: (1) an award of
stock options to purchase 3,100,000 shares of Company common stock and 744,000
shares of Company common stock, for Mr. Carnell and Ms. Woo, respectively,
vesting over four years, with 25% of the shares vesting on each of the first
four anniversaries of the Closing Date, subject to Mr. Carnell and Ms. Woo's
continued employment with the Company through the applicable vesting date (the
"Executive Option Awards") and (2) an award of performance-based restricted
stock units covering 100,000 shares of Company common stock and 50,000 shares of
Company common stock for Mr. Carnell and Ms. Woo, respectively, to be effective
upon the filing of the Registration Statement on Form S-8 with respect to shares
reserved under the 2021 Plan, which may be earned over a four-year performance
period based on achievement of performance goals related to the Company's stock
price and Mr. Carnell and Ms. Woo's continued employment with the Company
through the end of the performance period (the "PBRSU Awards").
If Mr. Carnell or Ms. Woo's employment is terminated without cause (as defined
in the Executive Agreements) or if Mr. Carnell or Ms. Woo resign for good reason
(as defined in the Executive Agreements), Mr. Carnell and Ms. Woo will be
entitled to the following: (1) cash severance equal to 18 months base salary,
(2) a prorated target bonus, and (3) reimbursement of the employer portion of
COBRA premium payments for 18 months (the "Executive Severance Benefits"), in
each case subject to Mr. Carnell and Ms. Woo's timely execution of an
irrevocable release of claims against the Company (the "Release Requirement").
If Mr. Carnell or Ms. Woo's employment is terminated without cause or if
Mr. Carnell or Ms. Woo resign for good reason in connection with a change in
control (as defined in the Executive Agreements), Mr. Carnell and Ms. Woo will
be entitled to the Executive Severance Benefits, along with a cash payment equal
to one and one-half(1.5) times Mr. Carnell's or Ms. Woo's target bonus,
respectively, in each case, subject to the Release Requirement. The Executive
Agreements also contain standard restrictive covenants and confidentiality and
invention assignment provisions, in an agreement attached thereto.
The foregoing summary description of the Executive Agreements does not purport
. . .
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
The information set forth in Item 3.03 of this Current Report on Form 8-K is
incorporated herein by reference.
Item 5.06 Change in Shell Company Status.
As a result of the Business Combination, which fulfilled the definition of an
"initial business combination" as required by the Company's Amended and Restated
Certificate of Incorporation, the Company ceased to be a shell company upon the
Closing. The material terms of the Business Combination are described in the
section of the Proxy Statement entitled "Proposal No. 1 - Approval of the
Business Combination" beginning on page 132, which information is incorporated
herein by reference.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of businesses acquired
1. The audited consolidated financial statements of LCP Edge Intermediate, Inc.
as of December 31, 2020 and 2019, and for the years ended December 31, 2020,
2019 and 2018 will be filed as Exhibit 99.3 to an amendment to this Current
Report on Form 8-K as described in the Introductory Note to this Current Report
on Form 8-K.
2. The audited consolidated financial statements of The Beauty Health Company as
of December 31, 2020 and for the year ended December 31, 2020 will be filed as
Exhibit 99.1 to an amendment to this Current Report on Form 8-K as described in
the Introductory Note to this Current Report on Form 8-K.
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(b) Pro Forma Financial Information
1. The unaudited pro forma condensed combined balance sheet and statements of
operations as of December 31, 2020 and for the year ended December 31, 2020 will
be filed as Exhibit 99.4 to an amendment to this Current Report on Form 8-K as
described in the Introductory Note to this Current Report on Form 8-K.
(c) Exhibits
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