|
Item
2.01.
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Completion
of Acquisition or Disposition of Assets.
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The
disclosure set forth in the “Introductory Note” above is incorporated by reference into this Item 2.01.
At
a special meeting of stockholders held on August 27, 2021 (the “Special Meeting”), Blue Water’s stockholders approved
the Business Combination. The Business Combination was completed on September 9, 2021.
As
of the Closing Date and following the completion of the Business Combination, the Company issued the following securities pursuant to
the Merger Agreement:
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●
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13,431,889 shares of Common Stock to the holders of the Legacy Clarus
Consideration-Receiving Preferred Stock, Legacy Clarus Consideration-Receiving Notes and Legacy Clarus Converting Warrants;
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●
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1,770,000
shares of Common Stock to the holders of certain Senior Secured Notes of Legacy Clarus in exchange for $10.0 million of the aggregate
principal amount of such notes and certain outstanding royalty rights and additional forbearance; and
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●
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2,558,705
shares of Common Stock to the holders of Senior Secured Notes and convertible promissory notes of Legacy Clarus that were issued between
the date of the Merger Agreement and the Closing Date.
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The
Clarus lenders also received an aggregate 135,000 shares from the Sponsor pursuant to a share allocation agreement.
FORM
10 INFORMATION
Prior
to the Closing, New Clarus was a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) with no operations, formed as a vehicle to effect a business combination with one or more operating businesses. After the
Closing, New Clarus became a holding company whose only assets consist of equity interests in Legacy Clarus.
The
material terms and conditions of the Merger Agreement are described in the Proxy Statement/Prospectus in the section titled “The
Business Combination Proposal (Proposal 1)” beginning on page 101 of the Proxy Statement/Prospectus.
Forward-Looking
Statements
This
Current Report on Form 8-K (including the documents incorporated by reference herein) contains forward-looking statements regarding,
among other things, the plans, strategies and prospects, both business and financial, of New Clarus. These statements are based on the
beliefs and assumptions of the management of New Clarus. Although New Clarus believes that its respective plans, intentions and expectations
reflected in or suggested by these forward-looking statements are reasonable, New Clarus cannot assure you that it will either achieve
or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and
assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions,
business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed
by or include the words “anticipate,” “believe,” “continue,” “could,” “estimate,”
“expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,”
“predict,” “project,” “should,” “would” or similar expressions, but the absence of these
words does not mean that a statement is not forward-looking. New Clarus cautions you that these forward-looking statements are subject
to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of New Clarus,
incident to its business.
These
forward-looking statements are based on information available as of the date of this Current Report on Form 8-K, and current expectations,
forecasts and assumptions, and involve a number of risks and uncertainties. Accordingly, forward-looking statements in this Current Report
on Form 8-K and in any document incorporated herein by reference should not be relied upon as representing New Clarus’ views as
of any subsequent date, and New Clarus does not undertake any obligation to update forward-looking statements to reflect events or circumstances
after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable
securities laws.
As
a result of a number of known and unknown risks and uncertainties, New Clarus’ actual results or performance may be materially
different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ
include:
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●
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the
ability of New Clarus to realize the benefits from the Business Combination;
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●
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the
ability to maintain the listing of New Clarus’ Common Stock on the Nasdaq Global Market
following the Business Combination;
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●
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future
financial performance following the Business Combination;
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●
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public
securities’ potential liquidity and trading;
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●
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the
impact from the outcome of any known and unknown litigation;
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●
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the
ability of New Clarus to forecast and maintain an adequate rate of revenue growth and appropriately
plan its expenses;
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●
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expectations
regarding future expenditures of New Clarus following the Business Combination;
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●
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the
future mix of revenue and effect on gross margins of New Clarus following the Business Combination;
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●
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the
attraction and retention of qualified directors, officers, employees and key personnel of
New Clarus following the Business Combination;
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●
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the
ability of New Clarus to compete effectively in a competitive industry;
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●
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the
ability to protect and enhance New Clarus’ corporate reputation and brand;
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●
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expectations
concerning New Clarus’ relationships and actions with third parties;
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●
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the
impact from future regulatory, judicial, and legislative changes in New Clarus’ industry;
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●
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the
ability to locate and acquire complementary products or product candidates and integrate
those into New Clarus’ business;
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●
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future
arrangements with, or investments in, other entities or associations;
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●
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intense
competition and competitive pressures from other companies in the industries in which the
Combined Entity will operate; and
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●
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other
economic, business and/or competitive factors, risks and uncertainties, including those set
forth in the Proxy Statement/Prospectus in the section entitled “Risk Factors”
beginning on page 45 of the Proxy Statement/Prospectus, which is incorporated herein by reference.
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Business
and Properties
The
business and properties of Blue Water and Legacy Clarus prior to the Business Combination are described in the Proxy Statement/Prospectus
in the sections entitled “Information about Blue Water” beginning on page 139 and “Information about Clarus”
beginning on page 152, respectively, of the Proxy Statement/Prospectus, which are incorporated herein by reference.
Risk
Factors
The
risks associated with New Clarus’ business are described in the Proxy Statement/Prospectus in the section entitled “Risk
Factors” beginning on page 45 of the Proxy Statement/Prospectus, which is incorporated herein by reference.
Financial
Information
Unaudited
Condensed Financial Statements
Reference
is made to the disclosure set forth in Item 9.01(a) of this Current Report on Form 8-K concerning the financial information of Legacy
Clarus. Reference is further made to the disclosure described in the Proxy Statement/Prospectus in the section entitled “Selected
Historical Consolidated Financial Information of Clarus” beginning on page 37 of the Proxy Statement/Prospectus.
Unaudited
Pro Forma Condensed Combined Financial Information
Reference
is made to the disclosure set forth in Item 9.01(b) of this Current Report on Form 8-K concerning the combined financial information
of Blue Water and Legacy Clarus. Reference is further made to the disclosure described in the Proxy Statement/Prospectus in the section
entitled “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 81, which is incorporated herein
by reference.
Management’s
Discussion and Analysis of Financial Condition and Results of Operations
Reference
is made to the disclosure contained in the Proxy Statement/Prospectus in the sections entitled “Management’s Discussion and
Analysis of Financial Condition and Results of Operations of Blue Water” beginning on page 147, and “Management’s Discussion
and Analysis of Financial Condition and Results of Operations of Clarus” beginning on page 182, each of which are incorporated
herein by reference, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations of
Clarus” with respect to the three and six months ended June 30, 2021, which is attached hereto as Exhibit 99.2, and incorporated
herein by reference.
Quantitative
and Qualitative Disclosures about Market Risk
Reference
is made to the disclosure contained in the Proxy Statement/Prospectus in the section entitled “Management’s Discussion and
Analysis of Financial Condition and Results of Operations of Clarus— Qualitative and Quantitative Disclosures About Market Risks,”
which is incorporated herein by reference. As of June 30, 2021, there had been no material changes to our market risks as disclosed in
such section.
Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth information regarding the beneficial ownership of Common Stock immediately following consummation of the Business
Combination by:
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●
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each
person known by New Clarus to be the beneficial owner of more than 5% of New Clarus’ outstanding Common Stock immediately following
the consummation of the Business Combination;
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●
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each
of New Clarus’ executive officers and directors; and
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all
of New Clarus’ executive officers and directors as a group after the consummation of the Business Combination.
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Beneficial
ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security
if he, she or it possesses sole or shared voting or investment power over that security. Under those rules, beneficial ownership includes
securities that the individual or entity has the right to acquire, such as through the exercise of warrants within 60 days of the Closing
Date. Shares subject to warrants that are currently exercisable or exercisable within 60 days of the Closing Date are considered outstanding
and beneficially owned by the person holding such warrants for the purpose of computing the percentage ownership of that person but are
not treated as outstanding for the purpose of computing the percentage ownership of any other person. Except as noted by footnote, and
subject to community property laws where applicable, based on the information provided to New Clarus, New Clarus believes that the persons
and entities named in the table below have sole voting and investment power with respect to all shares shown as beneficially owned by
them. Unless otherwise noted, the business address of each of the directors and executive officers of New Clarus is 555 Skokie Boulevard,
Suite 340, Northbrook, IL 60062. The percentage of beneficial ownership of New Clarus is calculated based on 21,725,817 shares of
Common Stock outstanding immediately after giving effect to the consummation of the Business Combination.
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Name and Address of Beneficial Owner
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Number of
Shares
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Percentage of
Outstanding Shares
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Directors and Executive Officers
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Kimberly Murphy
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—
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—
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Joseph Hernandez(4)
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1,302,500
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6.0
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%
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Robert E. Dudley
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4,566
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*
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Elizabeth A. Cermak
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—
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—
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Mark A. Prygocki, Sr
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—
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—
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Alex Zisson(1)
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5,692,381
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26.2
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%
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John Amory
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—
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—
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Richard Peterson
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—
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—
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Frank Jaeger
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—
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—
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Steve Bourne
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1,305
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*
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All directors and executive officers as a group (10 individuals)
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7,000,752
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32.2
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%
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Five Percent Holders:
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Entities affiliated with H.I.G. BioVentures(1)
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5,692,381
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26.2
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%
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Entities affiliated with Thomas, McNerney & Partners(2)
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5,498,571
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25.3
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%
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CBC SPVI Ltd.(3)
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3,602,287
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16.6
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%
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Blue Water Sponsor LLC (4)
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1,302,500
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6.0
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%
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Entities affiliated with Bracebridge Capital, LLC(5)
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2,229,855
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10.3
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%
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*
less than 1%
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(1)
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Consists
of (i) 2,731,094 shares of Common Stock directly held by H.I.G. Ventures — Clarus, LLC, (ii) (ii) 2,470,756 shares of
Common Stock directly held by H.I.G. Bio — Clarus II, L.P., and (iii) 490,531 shares of Common Stock directly held by H.I.G. Bio
— Clarus I, L.P. Alex Zisson is a managing director of H.I.G. Capital LLC, and may be deemed to share voting and investment power
with respect to the shares directly held by H.I.G. Ventures — Clarus, LLC, H.I.G. Bio — Clarus II, L.P., and H.I.G.
Bio — Clarus I, L.P. Bruce Robertson is also a managing director of H.I.G. Capital LLC and may be deemed to share voting and investment
power with respect to the shares directly held by H.I.G. Ventures — Clarus, LLC, H.I.G. BioVentures, H.I.G. Bio — Clarus
II, L.P., and H.I.G. Bio — Clarus I, L.P. Those three entities are owned by private funds advised by H.I.G. Capital, LLC, an SEC
registered investment advisor, and its affiliates. The address for all entities and individuals affiliated with H.I.G. BioVentures is
1450 Brickell Ave., Suite 3100, Miami, FL 33131.
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(2)
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Consists
of (i) 2,436,725 shares of Common Stock directly held by Thomas, McNerney & Partners, L.P., or TMP, (ii) 3,020,674 shares of
Common Stock directly held by Thomas, McNerney & Partners II, L.P., or TMP II, (iii) 8,383 shares of Common Stock directly held
by TMP Nominee, LLC, or TMP Nominee (iv) 19,970 shares of Common Stock held by TMP Nominee II, LLC or TMP Nominee II, (v) 1,706 shares
of Common Stock directly held by TMP Associates, L.P., or TMP Associates and (vi) 11,113 shares of Common Stock directly held by TMP
Associates II. L.P. or, TMP Associates II. TMP GP, the general partner of TMP, TMP II, TMP Associates and TMP Associates II, has voting
and dispositive power over the shares held by TMP, TMP II, TMP Associates and TMP Associates II. In addition, each of TMP Nominee
and TMP Nominee II has entered into an agreement that it shall vote and dispose of securities in the same manner as directed by TMP GP
with respect to the shares held by TMP and TMP Associates and as directed by TMP GP II with respect to shares held by TMP II and TMP
Associates II. James Thomas is manager of TMP GP and TMP GP II, and of TMP Nominee and TMP Nominee II. He disclaims beneficial
ownership of the shares owned by TMP, TMP II, TMP Nominee, TMP Nominee II, TMP Associates and TMP Associates II. The address for all
entities and individuals affiliated with Thomas, McNerney is c/o Thomas, McNerney & Partners, L.P., 12527 Central Avenue NE,
#297, Minneapolis, MN 55434.
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(3)
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Shares
of Common Stock are directly held by CBC SPVI Ltd. The address for CBC SPVI Ltd. is Suites 3306-3307, Two Exchange Square, 8 Connaught
Place, Central, Hong Kong.
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(4)
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Joseph
Hernandez, a member of New Clarus’ Board, is the managing member of Blue Water Sponsor LLC, and as such may be deemed to have sole
voting and investment discretion with respect to the securities held by Blue Water Sponsor LLC.
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(5)
|
Represents shares of Common Stock held by FFI Fund Ltd., FYI Ltd. and Olifant Fund, Ltd. (collectively, the “Bracebridge Funds”).
Bracebridge Capital, LLC (the “Bracebridge Investment Manager”) is the investment manager of each of the Bracebridge Funds,
and has the authority to vote and dispose of all of the shares reflected herein. The business address
of the Bracebridge Funds and the Bracebridge Investment Manager is 888 Boylston St., Suite 1500, Boston, MA 02199.
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Directors
and Executive Officers
New
Clarus’ directors and executive officers after the consummation of the Business Combination are described in the Proxy Statement/Prospectus
in the section titled “Management After Business Combination” beginning on page 226 and that information is incorporated
herein by reference.
Directors
As
of the Effective Time, in connection with the Business Combination, the size of Board was increased from six to seven members. Jon Garfield,
James Sapirstein, Michael Lerner and Yvonne McBurney resigned as directors of the effective as of the Effective Time. Effective as of
the Effective Time, Dr. Robert Dudley, Elizabeth Cermak, Mark Prygocki, Alex Zisson and John Amory were appointed to serve as directors
on the Board.
Alex
Zisson and John Amory were appointed to serve as Class I directors, with terms expiring at New Clarus’ 2022 annual meeting of stockholders;
Elizabeth Cermak and Mark Prygocki were appointed to serve as Class II directors, with terms expiring at New Clarus’ 2023 annual
meeting of stockholders; and Dr. Robert Dudley, Joseph Hernandez and Kimberly Murphy were appointed to serve as Class III directors,
with terms expiring at New Clarus’ 2024 annual meeting of stockholders. Biographical information for these individuals is set forth
in the Proxy Statement/Prospectus in the section entitled “Management After the Business Combination” beginning on
page 226 of the Proxy Statement/Prospectus, which is incorporated herein by reference.
Independence
of our Board of Directors
Information
with respect to the independence of New Clarus’ directors is set forth in the Proxy Statement/Prospectus in the section titled
“Management After the Business Combination – Director Independence” beginning on page 229 and that information
is incorporated herein by reference.
Committees
of the Board of Directors
Information
with respect to the composition of the committees of the board of directors immediately after the Closing is set forth in the Proxy Statement/Prospectus
in the section titled “Management After the Business Combination – Committees of the Board of Directors” beginning
on page 229 and that information is incorporated herein by reference.
Executive
Compensation
A
description of the compensation of the named executive officers of Legacy Clarus is set forth in the Proxy Statement/Prospectus in the
section titled “Executive Compensation of Clarus” beginning on page 232, and that information is incorporated herein
by reference.
Employment
Agreements
In
connection with the Business Combination, Legacy Clarus entered into new employment agreements with our executive officers effective
as of September 9, 2021 (which superseded each executive officer’s prior employment or offer letter agreement with Legacy Clarus):
Robert E. Dudley, Ph.D. (Chief Executive Officer and President), Richard Peterson (Chief Financial Officer), Steven A. Bourne, CPA (Chief
Administrative Officer) and Frank A. Jaeger (Chief Commercial Officer). Each employment agreement provides for an indefinite employment
term that may be terminated in accordance with the terms and conditions of the employment agreement, and sets forth the executive officer’s
annual base salary and annual cash performance-based bonus with a target of a certain percentage of base salary based on the achievement
of certain performance objectives as determined by the compensation committee of the board of directors of New Clarus. Each employment
agreement also provides for severance benefits upon a termination of employment without “cause” or by the executive officer
for “good reason” (each as defined in the employment agreements), including (i) a pro-rata annual bonus for the year of termination
(based on actual performance), (ii) a certain number of months of base salary (18 months for Dr. Dudley and 12 months for each of Messrs.
Peterson, Jaeger and Bourne), payable in installments over the applicable severance period (or in the event such termination occurs on
or following a “change in control” (as defined in the employment agreements), payable in a lump sum following such termination),
and (iii) payment of the employer-portion of COBRA premiums during the applicable severance prior (or until the executive officer becomes
eligible to receive health benefits as a result of subsequent employment or service during the severance period, if earlier). Each employment
agreement also contains certain restrictive covenants, including non-competition, non-solicitation, and confidentiality covenants.
The
foregoing description of the new employment agreements with each of Dr. Dudley, Mr. Peterson, Mr. Bourne and Mr. Jaeger is qualified
in its entirety by the full text of the employment agreements, copies of which are filed as Exhibits 10.4, 10.5, 10.6 and 10.7 hereto,
respectively, and incorporated herein by reference.
Director
Compensation
A
description of the compensation of the directors of Legacy Clarus before the consummation of the Business Combination is set forth in
the Proxy Statement/Prospectus in the section titled “Director Compensation” beginning on page 236 and that information
is incorporated herein by reference.
Certain
Relationships and Related Person Transactions
Certain
relationships and related person transactions are described in the Proxy Statement/Prospectus in the section titled “Certain
Relationships and Related Person Transactions” beginning on page 238 and that information is incorporated herein by reference.
Legal
Proceedings
Reference
is made to the disclosure regarding legal proceedings in the section of the Proxy Statement/Prospectus titled “Information about
Blue Water – Legal Proceedings” on page 140 and “Information about Clarus – Legal on Proceedings”
on page 177 and that information is incorporated herein by reference.
Market
Price of and Dividends on Common Equity and Related Stockholder Matters
Market
Information and Holders
The
Common Stock, and the warrants issued to the public (the “Public Warrants”) and units issued in Blue Water’s initial
public offering were historically traded on The Nasdaq Capital Market under the symbols “BLUW,” “BLUWW” and “BLUWU,”
respectively. At the Effective Time, the Blue Water units automatically separated into the
component securities and, as a result, no longer trade as a separate security. On September
10, 2021, the Common Stock and Public Warrants began trading on The Nasdaq Global Market under the new trading symbols “CRXT”
and “CRXTW,” respectively.
As
of the Closing Date and immediately following completion of the Business Combination, New Clarus had approximately 21,725,817 shares
of Common Stock issued and outstanding held of record by 23 registered holders and approximately 9,195,000 Public Warrants and private
warrants outstanding held of record by two registered holders. The actual number of holders of these securities is greater than this
number of record holders, as the actual number includes holders who are beneficial owners whose securities are held in street name by
brokers and other nominees. This number of holders of record also does not include holders whose securities may be held in trust by other
entities.
Dividends
New
Clarus has not paid any cash dividends on shares of its Common Stock. Any decision to declare and pay dividends in the future will be
made at the sole discretion of the Board and will depend on, among other things, New Clarus’ results of operations, cash requirements,
financial condition, contractual restrictions and other factors that the Board may deem relevant.
Description
of Company’s Securities
The
description of New Clarus’ securities is contained in the Proxy Statement/Prospectus in the section titled “Description
of Securities of Blue Water” beginning on page 202 and that information is incorporated herein by reference.
Changes
in and Disagreements with Accountants on Accounting and Financial Disclosure
The
information set forth in Item 4.01 of this Current Report on Form 8-K is incorporated herein by reference.
Indemnification
of Directors and Officers
Information
about indemnification of New Clarus’ directors and officers is set forth in the Proxy Statement/Prospectus in the section entitled
“Management After the Business Combination” beginning on page 226 of the Proxy Statement/Prospectus, which is incorporated
herein by reference. The disclosure set forth in Item 1.01 of this Current Report on Form 8-K under the section entitled “Indemnification
Agreements” is incorporated by reference into this Item 2.01.