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Item 1.01.
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Entry into a Material Definitive Agreement
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On October 15, 2019, Better Choice Company Inc. (the “Company”) entered into a Stock Purchase Agreement (the “Agreement”), by and among the Company, Halo, Purely For Pets, Inc., a Delaware Corporation (“Halo”),
Thriving Paws, LLC, a Delaware limited liability company (“Thriving Paws”), HH-Halo LP, a Delaware limited partnership (“HH-Halo” and, together with Thriving Paws, the “Sellers”) and HH-Halo, in the capacity of the representative of the Sellers
(the “Sellers’ Representative”). Pursuant to the terms and subject to the conditions of the Agreement, among other things, the Company agreed to purchase from the Sellers one hundred percent (100%) of the issued and outstanding capital stock of
Halo (the “Acquisition”). The aggregate consideration payable by the Company under the Agreement is $40,000,000, subject to customary adjustments for Halo’s net working capital, cash, and indebtedness (the “Purchase Price”), and consisting of a
combination of (a) cash, (b) shares of the Company’s common stock, par value $0.001 per share, (c) convertible subordinated notes or other equity or debt security of the Company (as further described under Item 7.01 herein) and (d) a second lien
promissory note issued by Halo in favor of HH-Halo (the “Note”).
Each party’s obligation to consummate the transactions contemplated by the Acquisition (the “Closing”) is subject to customary conditions, including the absence of any statute, rule, regulation, executive order,
decree, temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other governmental entity or other legal restraint or prohibition preventing or making illegal the consummation
of the Acquisition. The Closing is also subject to the following conditions: (a) obtaining the consent of Siena Lending Group LLC (“Siena”) under the Loan and Security Agreement, dated as of May 5, 2017, by and among Halo, Thriving Paws and Siena
(the “Credit Facilities”) or delivery by Siena to Halo of a customary payoff letter for the Credit Facilities in a form reasonably satisfactory to the Company; (b) delivery by the Sellers to the Company and its subsidiaries of the Note and
ancillary documentation in form and substance consistent with the Agreement and otherwise reflecting reasonable terms; (c) execution and delivery by certain key employees of restrictive covenant agreements; and (d) entrance by the Sellers into
agreements with the Company to provide Sellers substantially equivalent rights with respect to the convertible subordinated notes or other equity or debt security of the Company (as further described under Item 7.01 herein) as the rights that shall
have been granted to the investors in the Company’s capital raise, each in form and substance acceptable to each party thereto.
The Agreement contains certain customary termination rights, including, among others, the right of the Company or Sellers to terminate the Agreement if the Closing does not occur by November 22, 2019 (the
“Termination Date”), unless the failure to consummate the Closing is primarily caused as a result of a breach by (a) the Company (in the case of the Company’s desire to terminate the Agreement following the Termination Date) or (b) Halo or any of
the Sellers (in the case of Halo’s or any of the Sellers’ desire to terminate the Agreement following the Termination Date) of their representations, warranties, obligations or covenants under the Agreement; provided that Sellers or the Company may
extend the Termination Date by ten days if any of the conditions to the obligations of all parties to consummate the Closing have not been satisfied. If all of the conditions to the obligations of the Company to consummate the Closing have been
satisfied and the Company does not consummate the Closing on or prior to the Termination Date, the Company shall pay a termination fee of $500,000 to HH-Halo in full satisfaction of its obligations under the Agreement, which shall be Halo’s and the
Sellers’ sole and exclusive remedy for the Company’s failure to consummate the transactions contemplated by the Agreement.
The Company, Halo and Sellers have made customary representations, warranties and covenants in the Agreement, including, among others, covenants relating to the conduct of the Halo’s and its subsidiaries’ businesses
in the ordinary course during the period between the execution of the Agreement and the Closing.
The foregoing description of the Agreement is qualified in its entirety by reference to the full text of the Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated
herein by reference. The Agreement has been included as an exhibit hereto solely to provide investors and securityholders with information regarding its terms. It is not intended to be a source of financial, business or operational information
about the Company or any co-investor in the Company or its respective subsidiaries or affiliates. In addition, such representations, warranties and covenants (a) have been made only for purposes of the Agreement, (b) have been qualified by matters
specifically described in a confidential disclosure letter delivered by Halo to the Company in connection with the Agreement, (c) are subject to materiality qualifications contained in the Agreement, which might differ from what is viewed as
material by an investor or a securityholder, and (d) have been included in the Agreement for the purpose of allocating risk between the contracting parties rather than establishing matters as fact. Investors and securityholders should not rely on
the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of
the representations and warranties may change after the date of the Agreement, which subsequent information may or may not be fully reflected in the Company’s public reports. The Agreement should not be read alone, but should instead be read in
conjunction with the other information regarding the Company that is or will be contained in, or incorporated by reference into, the documents that the Company files or has filed with the Securities and Exchange Commission (the “SEC”).