Item 1.01 Entry into a Material Definitive Agreement.
On May
30, 2019, New Age Beverages Corporation (the “Company”)
entered into an agreement and plan of merger (the “Merger
Agreement”) with Brands Within Reach, LLC
(“BWR”), Olivier Sonnois, as sole owner, member and
manager of BWR (the “Seller”), and BWR Acquisition
Corp., a newly organized wholly owned subsidiary of the Company
(“Merger Sub”). For the year ended December 31, 2018
BWR had approximately $21.0 million in gross revenue on a
pre-adjustment un-audited basis.
Pursuant
to the Merger Agreement at Closing, BWR will become a wholly owned
subsidiary of the Company. The Seller’s membership
interests in BWR will be converted into the right to receive
700,000 shares of common stock of the Company (which could be
reduced based on a final working capital adjustment at Closing),
and $3,000,000, consisting of a $500,000 cash payment to the
Seller, and up to $2,500,000 to eliminate all BWR debt such that
BWR will be cash-free and debt-free at Closing. The
Merger and the transactions contemplated thereby are subject to a
number of customary closing conditions, including execution of an
employment agreement between the Company and the Seller, and
execution of a noncompetition agreement between the Company and the
Seller.
Pursuant
to the Merger Agreement, within two business days of the Closing,
the Company agreed to make a demand loan to BWR of no more than
$1,000,000, which BWR will use for working capital purposes. In the
event the Closing of the Merger Agreement does not materialize, the
loan will bear interest at the short term federal rate as May 30,
2019. The Company agreed not to demand payment of the loan until
December 31, 2019 without the prior written consent of BWR. Until
the loan is paid in full, BWR may not borrow funds from any other
lender or obtain funds from any line of credit without the prior
written consent of the Company.
Pursuant
to the Merger Agreement, Seller will prepare and deliver to the
Company, within 30 days of the closing date, a balance sheet of BWR
as of the closing date (the “Closing Balance Sheet”)
that will include a calculation of the working capital as of the
closing date (the “Closing Working Capital”). If the
Company disagrees with the Closing Working Capital, the Company
will provide to the Seller a notice of disagreement setting forth
its determination of the Closing Working Capital within 10 business
days of receipt of the Closing Balance Sheet. If the Closing
Working Capital that has been finally determined in accordance with
the Merger Agreement is less than zero, then the parties will
negotiate in good faith an adjustment to the number of shares of
common stock of the Company constituting the equity portion of the
Merger consideration.
The
foregoing description of the Merger Agreement does not purport to
be complete and is qualified in its entirety by reference to the
full text of the Merger Agreement, a copy of which is attached
hereto as Exhibit 2.1 and is incorporated herein by
reference.
In
connection with the foregoing, the Company relied upon the
exemption from registration provided by Section 4(a)(2) under the
Securities Act of 1933, as amended, for transactions not involving
a public offering.