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Item 1.01
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Entry into a Material Definitive Agreement
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On October 4, 2021, SunPower Corporation (the “Company”) acquired all of the issued and outstanding membership interests (the “Blue Raven Interests”) of Blue Raven Solar Holdings, LLC, a Delaware limited liability company (“Blue Raven”), and thirty-five percent (35%) of the issued and outstanding membership interests in Albatross Software LLC, a Delaware limited liability company (“Albatross”) (such interests, the “Albatross Interests” and together with the Blue Raven Interests, the “Interests”) pursuant to that certain Securities Purchase Agreement, dated as of October 4, 2021 (the “Purchase Agreement”), by and among the Company, Falcon Acquisition HoldCo, Inc., a Delaware corporation and wholly owned subsidiary of the Company (together with its successors, “AcquisitionCo,” and collectively with the Company, “Purchaser”), Peterson Partners VII, L.P., a Delaware limited partnership, Jenny Lynn Lee, as Trustee of The Keyhole Canyon Trust, dated July 28, 2021, Michael R. Cahill, as Trustee of The Skein Trust, dated July 13, 2021, Michael R. Cahill, as Trustee of The Gosling Trust, dated July 13, 2021, Jeffrey Lee, Benjamin Peterson (“Peterson”) and Michael Rands (“Rands” and collectively, “Principal Sellers”), The Church of Jesus Christ of Latter-day Saints, a Utah corporation sole (the “Charitable Seller,” and collectively with Principal Sellers, “Sellers”), and Peterson Partners VII, L.P., a Delaware limited partnership, solely in its capacity as Sellers’ representative (“Seller Representative”).
Consideration
Pursuant to the Purchase Agreement, the Company agreed to pay to the Sellers up to $145 million in initial cash consideration, which amount is subject to a customary working capital adjustment. The Purchase Agreement also provides that the Company will make certain cash payments to Blue Raven employees and service providers, which are included in the aggregate purchase price, in accordance with retention agreements entered into between such individuals and Blue Raven. Additionally, Peterson and Rands have agreed to defer portions of the amounts to be paid to them at closing, which amounts shall be paid on the 18-month anniversary of the closing, subject to certain conditions, including that each of Peterson and Rands continue to be employed by Blue Raven on the 18-month anniversary of the closing.
The Company has also agreed to make an additional cash payment of up to $20 million (the “Contingent Payment”) based on Blue Raven’s revenue for the period beginning on September 13, 2021 and ending June 19, 2022. The Contingent Payment will increase linearly from $0 up to a maximum of $20 million upon Blue Raven’s achievement of a minimum of 75% of the aggregate revenue amounts agreed to among the parties.
Representations, Warranties and Covenants
The Purchase Agreement contains customary representations, warranties and covenants from each of Purchaser and Sellers relating to Blue Raven, Albatross and matters related to the sale of the Interests. The Company has obtained a representation and warranty insurance policy to insure against certain losses arising from breaches of, or inaccuracies in, the representations and warranties of the Sellers. The policy is subject to a retention amount, exclusions, policy limits and certain other terms and conditions.
The Purchase Agreement contains representations and warranties that Purchaser and Sellers made to and solely for the benefit of each other. These representations and warranties are subject to materiality standards which may differ from what may be viewed as material by investors and shareholders, and, in certain cases, were used for the purpose of allocating risk among the parties rather than establishing matters as facts. The assertions embodied in those representations and warranties are qualified by information in disclosure schedules to the Purchase Agreement, which contain information that modifies and creates exceptions to the representations and warranties in the Purchase Agreement.
Other Agreements
Additional agreements were entered into simultaneously with the Purchase Agreement, including an Amended and Restated Software License and Services Agreement, dated October 4, 2021, by and between Albatross and Blue Raven (the “License Agreement”), pursuant to which Albatross has granted Blue Raven an exclusive, worldwide, perpetual, royalty-free, irrevocable, non-transferable (except as permitted by the License Agreement) license for Albatross’s customer relationship management software platform. The License Agreement contains customary representations, warranties and covenants from each of Albatross and Blue Raven. The License Agreement is terminable by either party, provided, however, that the license granted to Blue Raven shall survive termination of the License Agreement.