Item
1.01
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Entry
Into A Material Definitive Agreement.
|
On
April 10, 2017, Conyers Park Acquisition Corp. (“
Parent
”), entered into an Agreement and Plan of Merger (the
“
Agreement
”), to effect an initial business combination, by and among Parent, The Simply Good Foods Company,
a Delaware corporation (“
PubCo
”), Atkins Intermediate Holdings, LLC, a Delaware limited liability company (“
IntermediateLLC
”),
Conyers Park Parent Merger Sub, Inc., a Delaware corporation (“
Parent Merger Sub
”), Conyers Park Merger Sub
1, Inc., a Delaware corporation (“
Company Merger Sub 1
”), Conyers Park Merger Sub 2, Inc., a Delaware corporation
(“
Company Merger Sub 2
”), Conyers Park Merger Sub 3, Inc., a Delaware corporation (“
Company Merger
Sub 3
”), Conyers Park Merger Sub 4, Inc., a Delaware corporation (“
Company Merger Sub 4
”, together
with, Company Merger Sub 1, Company Merger Sub 2, and Company Merger Sub 3, Parent Merger Sub, PubCo, Parent and Parent Merger
Sub, the “
Parent Parties
”), NCP-ATK Holdings, Inc., a Delaware corporation (the “
Company
”),
solely in its capacity as the Majority Stockholder, Atkins Holdings LLC, a Georgia limited liability company (the “
Majority
Stockholder
”) and, solely in its capacity as the Stockholders’ Representative pursuant to
Section 9.15
of the Agreement, Roark Capital Acquisition, LLC, a Georgia limited liability company (the “
Stockholders’
Representative
”).
The
Mergers
The
Agreement provides for (a) the merger of Parent Merger Sub with and into Parent, with Parent continuing as the surviving corporation
(the “
Parent Surviving Subsidiary
”) and as a wholly-owned subsidiary of IntermediateLLC (the “
Parent
Merger
”), and (b) immediately after the Parent Merger, simultaneously (i) the merger of Company Merger Sub 1 with and
into the Company, with the Company continuing as the surviving company (the “
Company Surviving Subsidiary
”)
and as a wholly-owned subsidiary of IntermediateLLC, (ii) the merger of Company Merger Sub 2 with and into Atkins Nutritionals
Holdings, Inc., a Delaware corporation, with Atkins Nutritionals Holdings, Inc. continuing as the surviving company and as a wholly-owned
subsidiary of Company Surviving Subsidiary, (iii) the merger of Company Merger Sub 3 with and into Atkins Nutritionals Holdings
II, Inc., a Delaware corporation, with Atkins Nutritionals Holdings II, Inc. continuing as the surviving company and as a wholly-owned
subsidiary of Atkins Nutritionals Holdings, Inc., and (iv) the merger of Company Merger Sub 4 with and into Atkins Nutritionals,
Inc., a New York corporation, with Atkins Nutritionals, Inc. continuing as the surviving company and as a wholly-owned subsidiary
of Atkins Nutritionals Holdings II, Inc. (collectively, the “
Company Merger
,” and together with the Parent
Merger, the “
Mergers
”), as a result of which Parent and the Company will become wholly-owned, indirect subsidiaries
of PubCo, and PubCo will become a publicly traded company.
Consideration
Pursuant
to the Agreement, PubCo will pay, or cause to be paid, at the Closing (as defined in the Agreement) with respect to the shares
of common stock, par value $0.01 per share, of the Company (which does not include any shares issuable pursuant to Exercised Option
Shares (as defined in the Agreement), the “
Company Common Stock
”), and the Exercised Option Shares, an aggregate
amount of $730,125,000, subject to customary purchase price adjustments (the “
Merger Consideration
”). The Merger
Consideration will consist of, and be allocated between, 10,250,000 shares of common stock (at a reference price of $10.00 per
share), par value $0.0001 per share of PubCo (the “
PubCo Common Stock
”) and an amount of cash equal to the
Merger Consideration minus $102,500,000.00.
The
shares of Class A common stock, par value $0.0001 per share, of Parent (the “
Parent Common Stock
”) issued and
outstanding at the Effective Time (as defined in the Agreement), excluding shares of Parent Common Stock to be canceled pursuant
to Section 2.5(c) of the Agreement and any Parent Redeemed Shares (as defined below), will be canceled and convert automatically
into the right to receive one share of PubCo Common Stock. Each share of Parent Common Stock held in the treasury of Parent and
any shares of Parent Common Stock owned by any subsidiary of Parent will be canceled automatically without conversion thereof
and no payment or distribution will be made with respect thereto.
Each
Parent Warrant (as defined in the Agreement) or portion thereof issued and outstanding immediately prior to the Effective Time
will be converted into a warrant to purchase common stock of PubCo.
Each
issued and outstanding share of Company Common Stock, excluding shares of Company Common Stock to be canceled pursuant to the
Agreement, Exercised Option Shares and any Company Dissenting Shares (as defined in the Agreement), will be canceled and convert
automatically into the right to receive the following: (i) an amount in cash equal to the Cash Amount (as defined in the Agreement)
rounded up to the nearest whole cent; (ii) a number of shares of PubCo Common Stock equal to the Stock Amount (as defined in the
Agreement); and (iii) a contingent right to a portion of the Escrow Amount (as defined in the Agreement), Administrative Expense
Amount (as defined in the Agreement), any additional consideration received pursuant to the purchase price adjustment in Section
2.12 of the Agreement, any Bonus Repayment Amount (as defined in the Agreement) and any amounts payable pursuant to a tax receivables
agreement, to be entered into at Closing (the “
Tax Receivables Agreement
”) (clauses (i) through (iii) collectively,
the “
Stock Consideration
”), in each case, payable, without interest, to the applicable Company Stockholder
(as defined in the Agreement) in accordance with the Agreement. Each share of Company Common Stock held in the treasury of the
Company (including, if applicable, the Contingent Stock Purchase Shares (as defined in the Agreement)) and any shares of Company
Common Stock owned by PubCo or any subsidiary of the Company will be canceled automatically without conversion thereof and no
payment or distribution will be made with respect thereto.
Prior
to the closing, holders of options to purchase Company Common Stock will have the opportunity to exercise their vested options.
Such exercised vested options will be cancelled and terminated at the Effective Time and the holders of such options will be entitled
to the Exercised Option Shares Consideration (as defined in the Agreement). All options that are either unvested or unexercised
will be cancelled at the Effective Time.
Any
outstanding warrants to purchase Company Common Stock will be sold to the Company pursuant to the terms of the Warrant Agreement
(as defined in the Agreement) and cancelled at the Effective Time and the holder of the warrant will be entitled to receive the
consideration set forth in the Warrant Agreement (as defined in the Agreement).
Any
share of Parent Common Stock held by any Parent Stockholder (as defined in the Agreement) that exercises redemption rights pursuant
to the Offer (as defined in the Agreement) (a “
Parent Redeemed Share
”) will be canceled and converted into
the right to receive the consideration as set forth in the Offer.
Under
the terms of the Agreement, any Company Dissenting Share (as defined in the Agreement) will not be converted into the right to
receive its applicable portion of the Merger Consideration but will instead be converted into the right to receive such consideration
as may be determined to be due with respect to any such Company Dissenting Share pursuant to the Delaware General Corporation
Law (the “
DGCL
”). Each holder of Company Dissenting Shares who, pursuant to the DGCL, becomes entitled to payment
thereunder for such shares will receive payment therefor in accordance with the DGCL (but only after the value therefor will have
been agreed upon or finally determined pursuant to the DGCL). If, after the Effective Time, any Company Dissenting Share will
lose its status as a Company Dissenting Share, then any such share will immediately be converted into the right to receive its
applicable portion of the Merger Consideration as if such share never had been a Company Dissenting Share, and PubCo will deliver,
or cause to be delivered in accordance with the terms of this Agreement, to the holder thereof, following the satisfaction of
the applicable conditions set forth in Section 2.10 of the Agreement, its applicable portion of the Merger Consideration as if
such share had never been a Company Dissenting Share.
Representations
and Warranties
Under
the Agreement, each of the Group Companies (as defined in the Agreement) and the Parent Parties made customary representations
and warranties for transactions of this type. The representations and warranties made by the Group Companies under the Agreement
do not survive after the Closing. The representations and warranties made by the Parent Parties under the Agreement survive for
one year following the Closing.
Conditions
to Consummation of the Mergers
Consummation
of the transactions contemplated by the Agreement is subject to customary conditions of the respective parties, and conditions
customary to special purpose acquisition companies, including the approval of Parent’s stockholders in accordance with the
Parent Organizational Documents (as defined in the Agreement) and minimum proceeds (including debt financing proceeds) available
to Parent at the Closing.
In
addition, consummation of the transactions contemplated by the Agreement is subject to other closing conditions, including, among
others: (i) all applicable waiting periods under the HSR Act (as defined in the Agreement) have expired or been terminated; (ii)
there has been no material adverse effect to the business, assets, liabilities, financial condition or results of operations of
the Group Companies, taken as a whole; (iii) the completion of the Offer in accordance with the terms of the Agreement and Parent’s
proxy statement related to the initial business combination; (iv) the registration statement to be filed by PubCo has become effective;
(v) execution and delivery by both the Company and the Parent Parties of an officer’s certificate certifying compliance
with certain obligations under the Agreement; (vi) consent of the majority stockholder of the Company; and (vii) Parent stockholder
redemptions not exceeding the amounts identified in the Agreement.
Termination
The
Agreement may be terminated under certain customary and limited circumstances at any time prior to the Closing, including (i)
if the Closing has not occurred by August 21, 2017 (the “
Outside Date
”), unless because of the delay and/or
nonperformance of the party seeking such termination, (ii) if the Parent’s board of directors changes its recommendation
with respect to the transactions contemplated by the Agreement and (iii) if the approval of the Transaction Proposals (as defined
in the Agreement) is not obtained at the Parent Common Stockholders Meeting (as defined in the Agreement). If the Agreement is
validly terminated, none of the Parent Parties or the Company will have any liability or any further obligation under the Agreement
with certain limited exceptions, including liability arising out of a party’s willful or intentional breach of any provision
contained in the Agreement.
A
copy of the Agreement is filed with this Current Report on Form 8-K as Exhibit 2.1 and is incorporated herein by reference, and
the foregoing description of the Agreement is qualified in its entirety by reference thereto. The Agreement contains representations,
warranties and covenants that the respective parties made to each other as of the date of the Agreement or other specific dates.
The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective
parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating such
agreement. The representations, warranties and covenants in the Agreement are also modified in important part by the underlying
disclosure schedules which are not filed publicly and which are subject to a contractual standard of materiality different from
that generally applicable to stockholders and were used for the purpose of allocating risk among the parties rather than establishing
matters as facts. We do not believe that these schedules contain information that is material to an investment decision.
Tax
Receivables Agreement
The
Tax Receivables Agreement will generally provide for the payment by PubCo to the holders of equity interests in the Company as
of the time immediately before the transactions contemplated by the Agreement for certain federal, state, local and non-U.S. tax
benefits deemed realized in post-closing taxable periods by PubCo, Parent, the Company and the Company’s eligible subsidiaries
from the use of up to $100 million of the following tax attributes: (i) net operating losses available to be carried forward as
of the closing of the transactions contemplated by the Agreement; (ii) certain deductions generated by the consummation of the
transactions contemplated by the Agreement; and (iii) remaining depreciable tax basis from the 2003 acquisition of Atkins Nutritionals,
Inc. In addition, PubCo will pay the Stockholders’ Representative (on behalf of holders of equity interests in the
Company as of the time immediately before the transactions contemplated by the Agreement) for the use of certain alternative minimum
tax credit carryforwards.
Investor
Rights Agreement
At
the closing of the Business Combination, PubCo, Sponsor and Atkins Holdings LLC will enter into an Investor Rights Agreement,
providing for, among other things, subject to the terms thereof, customary registration rights, including demand
and piggy-back rights subject to cut-back provisions, and information rights in favor of Atkins Holdings LLC. PubCo
has agreed to use its commercially reasonable efforts to file a shelf registration statement to register Atkins Holdings
LLC’s shares at any time that PubCo is eligible to do so. Pursuant to the Investor Rights Agreement, Atkins Holdings
LLC will agree not to sell, transfer, pledge or otherwise dispose of shares of common stock in PubCo it receives in
connection with the Business Combination for 180 days from the closing of the Business Combination, as well as to certain
other lock-up provisions set forth therein. In addition, pursuant to the Investor Rights Agreement, for so long as Atkins
Holdings LLC holds approximately 50% of the shares of PubCo common stock that it holds as of the date of the closing of the
merger, it will have the right to nominate one director to serve on the Board of Directors of PubCo as a Class III Director
or, if it chooses not to do so or its nominated director resigns or is removed and is not replaced or nominated in accordance
with the Investor Rights Agreement, to select one non-voting observer to participate in any meeting of the Board of
Directors. Sponsor and its affiliates have agreed to vote their respective shares of common stock then beneficially owned in
favor of the election or appointment of Atkins Holdings LLC’s director. Atkins Holdings LLC’s director will also
serve on a standing committee of the Board of Directors chosen by Atkins Holdings LLC.
Private
Placement
Parent
entered into subscription agreements with the investors named therein (the “
Private Placement Investors
”),
pursuant to which Parent agreed to issue and sell to the Private Placement Investors approximately $100 million of the Parent’s
Class A Shares at $10.00 per share immediately prior to closing of the initial business combination, which will become shares
in PubCo upon consummation of the Mergers (the “
Private Placement
”). The Private Placement is conditioned on
the substantially concurrent closing of the initial business combination and other customary closing conditions. The proceeds
from the Private Placement will be used to fund a portion of the cash consideration for the initial business combination. The
form of subscription agreement is attached as Exhibit 10.1 hereto.