Item
1.01 Entry into a Material Definitive Agreement.
On
September 30, 2020, NewAge, Inc.(the “Company”) entered into an Amended and Restated Agreement and Plan of Merger
(the “Merger Agreement”) by and among the Company, Ariel Merger Sub, LLC (“Merger Sub”), Ariel Merger
Sub 2, LLC (“Merger Sub 2”) Ariix, LLC (“Ariix”), certain members of Ariix (the “Sellers”)
and Frederick Cooper, as Sellers Agent (the “Sellers Agent”), pursuant to which the Company agreed to acquire Ariix,
which owns five brands in the e-commerce and direct selling channels, including Arrix, Zennoa, Limu, MaVie, and Shannen, subject
to the conditions and terms set forth therein (the “Acquisition”). Pursuant to the Merger Agreement, on the closing
date (the “Closing Date”), Ariix will merge with Merger Sub, with Ariix as the surviving entity and be a wholly-owned
subsidiary of the Company. Subsequently, Merger Sub will merge with and into Merger Sub 2and remain a wholly-owned subsidiary
of the Company.
The
consideration for the Acquisition will be paid in a combination of cash and Company stock. On the Closing Date, the Company will
pay the Sellers $20.0 million in cash and will issue 19 million shares of the Company’s common stock, par value $0.001 per
share (the “Common Stock”). Thirty days after shareholder approval of the issuance of the post-closing Common Stock,
the Company will issue 7 million shares of Common Stock to Frederick Cooper and up to 1.67 million shares of Common Stock in as
severance payments. On the six-month anniversary of the Closing Date, the Company will, at its option, pay $10 million in cash
or issue shares of Common Stock with a 5-Day VWAP value of $10 million. On the first anniversary of the Closing Date, subject
to shareholder approval, the company will issue 25.5 million shares of Common Stock. On the 14-month anniversary of the Closing
Date, subject to shareholder approval, the Company will issue 2.9 million shares of Common Stock If the Company fails to receive
shareholder approval for the issuance of the shares at three shareholders meetings held for the purpose of obtaining such approval,
the Company will pay, within 90 days of the third shareholders meeting, $141,015,000 to the members of Ariix,$12,250,000 to Frederick
Cooper, and up to $10,000,000 as severance payments. The number of shares of Common Stock issuable is subject to adjustment based
on the working capital of Ariix at the Closing Date.
The
Merger Agreement contains customary representations, warranties, covenants and indemnities by the parties to such agreement and
is subject to customary closing conditions, including, among other things, (i) the receipt of regulatory approvals, including
applicable antitrust approvals, (ii) the accuracy of the respective parties’ representations and warranties, subject to
customary qualifications, and (iii) material compliance by the parties with their respective covenants and obligations. In addition,
the Merger Agreement contains certain termination rights, including by the Company or the Sellers Agent in the event the closing
has not occurred by November 30, 2020 (the “Outside Date”).
The
summary of the Merger Agreement in this Current Report on Form 8-K is qualified by reference to the full text of the Merger Agreement,
which is included as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference.
The
Merger Agreement has been attached as an exhibit to this report to provide investors and security holders with information regarding
its terms. It is not intended to provide any other information about the Company, Ariix or their respective subsidiaries and affiliates.
The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of such agreements
and as of specific dates, are solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed
upon by the parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk
between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of
materiality applicable to the parties that differ from those applicable to investors. Investors should not rely on the representations,
warranties or covenants or any description thereof as characterizations of the actual state of facts or condition of the Company,
Ariix or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations,
warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully
reflected in public disclosures by the Company, Ariix or their subsidiaries or affiliates.
Forward-Looking
Statements
This
communication may contain certain “forward-looking statements” within the meaning of Section 27A of the Securities
Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation
Reform Act of 1995. Forward-looking statements may be identified by words such as “expect,” “anticipate,”
“believe,” “intend,” “estimate,” “plan,” “target,” “goal,”
or similar expressions, or future or conditional verbs such as “will,” “may,” “might,” “should,”
“would,” “could,” or similar variations. These statements are based on the beliefs and assumptions of
the management of the Company based on information currently available to management. Such forward-looking statements include,
but are not limited to, certain plans, expectations, goals, projections, and statements about the benefits of the transaction.
Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ
materially from future results expressed or implied by such forward-looking statements. While there is no assurance that any list
of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially
from those contained or implied in the forward-looking statements including: risks related to the Acquisition and the integration
of the businesses and assets acquired; the financial performance of the acquired businesses; the possibility that the transaction
does not close when expected or at all because required regulatory or other approvals are not received or other conditions to
closing are not satisfied on a timely basis or at all; potential adverse reactions or changes to business or employee relationships,
including those resulting from the completion of the Acquisition; the possibility that the anticipated operating results and other
benefits of the Acquisition are not realized when expected or at all; risks associated with increased leverage from the transaction;
and other risks described in the section entitled “Risk Factors” under Item 1A in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2019, as amended, and in subsequent periodic and current SEC filings the Company
may make. The Company disclaims any obligation to revise or update any forward-looking statement that may be made from time to
time by it or on its behalf.