On April 23, 2020, Digital Media Solutions Holdings, LLC (DMS) and
Leo Holdings Corp. (Leo) announced that Leo and DMS entered into a definitive business combination agreement (the Business Combination Agreement). This Amendment No. 1 on Form
8-K/A is being filed to describe the material terms of the Business Combination Agreement and related agreements, which are filed as exhibits herewith.
Item 1.01
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Entry Into A Material Definitive Agreement.
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Business Combination Agreement
The Business Combination Agreement, dated April 23, 2020, was entered into by and among Leo, DMS, CEP V DMS US Blocker Company, a Delaware
corporation (Blocker Corp), Prism Data, LLC, a Delaware limited liability company (Prism), CEP V-A DMS AIV Limited Partnership, a Delaware limited partnership
(Clairvest Direct Seller), Clairvest Equity Partners V Limited Partnership, an Ontario, Canada limited partnership (Blocker Seller 1), CEP V Co-Investment Limited
Partnership, a Manitoba, Canada limited partnership (Blocker Seller 2, and together with Blocker Corp, Prism, Clairvest Direct Seller and Blocker Seller 1, the Sellers), Clairvest GP Manageco Inc., an Ontario
corporation (Clairvest) as a Seller Representative, and, solely for the limited purposes set forth therein, Leo Investors Limited Partnership, a Cayman limited partnership (Sponsor).
The Business Combination Agreement and the transactions contemplated thereby were unanimously approved by the boards of directors of each of
Leo and DMS.
The Business Combination
The Business Combination Agreement provides for the consummation of the following transactions in the following order (collectively, the
Business Combination), in each case conditional upon each prior transaction having been consummated: (a) pursuant to the Surrender Agreement (as defined below) Leo Sponsor will surrender to Leo 2,000,000 private placement
warrants (the Surrendered Warrants) and, together with certain other holders, an aggregate of 1,500,000 Class B ordinary shares of Leo (collectively, the Surrender); (b) Leo will change its
jurisdiction of incorporation by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the Domestication), upon which Leo
will change its name to Digital Media Solutions, Inc. (New DMS); (c) Leo will consummate the Private Placement (as defined below); and (d) Leo will purchase the equity interests of Blocker Corp and a portion of the
units of DMS from the Sellers, which units will be immediately contributed to the capital of Blocker Corp, in exchange for a combination of cash consideration, the Surrendered Warrants, shares of Class B common stock, par value $0.001 per
share, of New DMS, which will have no economic value but will entitle the holder thereof to one vote per share (the Class B Shares), and shares of Class C common stock, par value $0.001 per share, of New
DMS (the Class C Shares), which are convertible into shares of Class A common stock, par value $0.001 per share, of New DMS (the Class A Shares and, together with the
Class B Shares and Class C Shares, the New DMS Common Stock) pursuant to a conversion ratio to be determined at the closing of the transactions contemplated by the Business Combination (the Closing). Immediately
prior to the consummation of Closing, Leo will effect the foregoing transactions, Domestication and the Class A ordinary shares and Class B ordinary shares of Leo will be exchanged for Class A Shares and the outstanding warrants to purchase
Class A ordinary shares of Leo will automatically become exercisable for Class A Shares. Clairvest Direct Seller and Prism will continue to hold membership interests in DMS (DMS Units) subject to and in accordance with
the Amended Partnership Agreement (as defined below).
Following the Business Combination, the combined company will be organized in an
Up-C structure, in which substantially all of the assets and business of New DMS will be held by DMS and continue to operate through the subsidiaries of DMS and New DMSs sole direct asset will be equity interests of DMS held by it.
At the Closing, DMS and its current equity holders will amend and restate the limited liability company agreement of DMS (the Amended Partnership Agreement) in its entirety to, among other things, add Blocker Corp as member of DMS
and provide Clairvest Direct Seller and Prism the right to redeem their DMS Units for cash or, at New DMSs option, Class A Shares, in each case subject to certain restrictions set forth therein.
Concurrent with the closing of the transactions contemplated by the Business Combination Agreement, New DMS will enter into the tax receivable
agreement (the Tax Receivable Agreement) with the Sellers (the TRA Participants). Pursuant to the Tax Receivable Agreement, New DMS will be required to pay the TRA Participants 85% of the amount of savings, if
any, in U.S. federal, state and local income tax that New DMS actually realizes as a result of the increases in tax basis and certain other tax benefits related to the payment of the cash consideration pursuant to the Business Combination Agreement
and any exchanges of DMS Units for Class A Shares. All such payments to the TRA Participants will be New DMSs obligation, and not that of DMS.
In addition, in connection with the consummation of the transactions contemplated by the Business Combination Agreement, Leo will, among other
things, (a) amend and restate its certificate of incorporation and bylaws immediately following the Domestication and (b) enter into, at the Closing, with the applicable Sellers or other parties, (i) a director nomination agreement relating to the
composition of the board of directors of New DMS (the New DMS Board), (ii) an amended and restated registration rights agreement providing for certain registration rights with respect to the New DMS Common Stock and warrants, and
(iii) a lock-up agreement restricting the Sellers from certain transfers of New DMS Common Stock during the lock-up period described therein.
Representations and Warranties, Covenants
Under the Business Combination Agreement, parties to the agreement made customary representations and warranties for transactions of this type
regarding themselves. The representations and warranties made under the Business Combination Agreement shall not survive the Closing. In addition, the parties to the Business Combination Agreement made covenants that are customary for transactions
of this type.
Conditions to Each Partys Obligations
Consummation of the transactions contemplated by the Business Combination Agreement is subject to the satisfaction or waiver of certain
customary closing conditions of the respective parties, including, without limitation: (a) the approval and adoption by Leos shareholders of the Business Combination Agreement and transactions contemplated thereby; (b) the expiration or
termination of any applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (c) the consummation of each of the Surrender, Domestication and Private Placement; (d) the absence of a Material Adverse
Effect (as defined in the Business Combination Agreement); (e) Leo having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Securities Exchange Act of 1934) remaining after the Closing; (f) cash
proceeds from the trust account established for the purpose of holding the net proceeds of Leos initial public offering and certain of the proceeds from its concurrent private placement of warrants, together with the proceeds from the Private
Placement, net of any amounts paid to Leo shareholders that exercise their redemption rights in connection with the Business Combination, equaling no less than $200,000,000 at Closing; and (g) the approval for listing of the Class A Shares on the
New York Stock Exchange.