Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.
below):
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of
the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this
chapter).
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act.
Item 1.01 Entry into a Material Definitive Agreement.
Merger Agreement
On January 30,
2023, Atlas Technical Consultants, Inc., a Delaware corporation (“Atlas” or the “Company”) entered into an Agreement
and Plan of Merger (the “Merger Agreement”) with GI Apple Midco LLC, a Delaware limited liability company (“Parent”)
and GI Apple Merger Sub LLC, a Delaware limited liability company and a wholly owned subsidiary of Parent (“Merger Sub”).
Pursuant to the Merger Agreement, Merger Sub will be merged with and into the Company (the “Merger”), with the Company continuing
as the surviving company in the Merger. Parent and Merger Sub are controlled by investment funds advised by GI Partners.
The Company’s
board of directors (the “Board”) has unanimously determined that the Merger Agreement is in the best interests of the Company
and its stockholders, and declared it advisable, to enter into the Merger Agreement and consummate the Merger, approved and declared advisable
the Merger Agreement and the transactions contemplated thereby, including the Merger, directed that the adoption of the Merger Agreement
be submitted for consideration by the Company’s stockholders at a meeting thereof and resolved to recommend that the Company’s
stockholders adopt the Merger Agreement.
Transaction Structure
Subject to the
terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share
of the Company’s Class A common stock, par value $0.0001 per share (the “Class A Common Stock”), including all shares
of Class A Common Stock issued upon the exchange of Atlas TC Holdings, LLC’s common units and the surrender of the Company’s
Class B common stock, par value $0.0001 per share (the “Class B Common Stock,” and, together with the Class A Common Stock,
the “Company Common Stock”), issued and outstanding immediately prior to the Effective Time (other than Class A Common Stock
owned or held in treasury by the Company or owned by Parent or any of its subsidiaries and Company Common Stock owned by stockholders
who have properly demanded appraisal rights pursuant to Delaware law) will be automatically converted into the right to receive an amount
in cash equal to $12.25, without interest (the “Per Share Price”). Each share of Class B Common Stock issued and outstanding
immediately prior to the Effective Time will be cancelled and extinguished without any conversion thereof or consideration paid therefore.
The Merger Agreement
provides for the following treatment of the Company’s equity awards as of the Effective Time:
| · | each restricted stock unit of the Company (each, a “Company RSU”) that is outstanding immediately
prior to the Effective Time, other than a Company RSU issued during the calendar year in which the Effective Time occurs, will automatically
be cancelled and converted into the right to receive an amount in cash, without interest thereon and subject to applicable withholding
taxes, equal to the product of (i) the Per Share Price and (ii) the total number of shares of Company Common Stock subject to such Company
RSU; |
| · | each award of performance-based restricted stock units of the Company (each, a “Company PSU”)
that is outstanding immediately prior to the Effective Time, other than a Company PSU issued during the calendar year in which the Effective
Time occurs, will automatically be cancelled and converted into the right to receive an amount in cash, without interest thereon and subject
to applicable withholding taxes, equal to the product of (i) the Per Share Price and (ii) the number of shares of Company Common Stock
subject to such Company PSU, with any performance vesting conditions deemed achieved at the greater of target and actual performance effective
as of Effective Time (up to a maximum of 137.5% of target), without any pro-ration; |
| · | each Company RSU and Company PSU issued during the calendar year in which the Effective Time occurs (each
a “Current Year Award”) will automatically be cancelled and converted into and will become the conditional right to receive
an amount in cash, without interest thereon and subject to applicable withholding taxes (each, a “Cash Replacement Award”),
equal to the product of (i) the Per Share Price and (ii) the total number of shares of Company Common Stock subject to such Current Year
Award. Each Cash Replacement Award will be subject to the same terms and conditions (including vesting terms and terms providing for the
acceleration of vesting) that apply to the Current Year Award that it has replaced, other than the right to receive equity rather than
cash upon vesting, and provided that, with respect to any Current Year that is a Company PSU, performance metrics will be deemed achieved
at target performance as of the Effective Time, without any pro-ration (such that only time-based vesting conditions remain applicable);
and |
| · | each award of a price-vested stock option to purchase shares of Company Common Stock (each, a “Company
PSO”) that is outstanding and unexercised immediately prior to the Effective Time, with an exercise price per share less than the
Per Share Price, whether vested or unvested, but with respect to which the performance-based vesting conditions would be achieved if the
Per Share Price was equal to or greater than the “threshold stock price” under such Company PSO, will automatically be cancelled
and converted into the right to receive an amount in cash, without interest thereon and subject to applicable withholding taxes, equal
to the product of (i) the number of shares of Company Common Stock subject to such Company PSO and (ii) the excess, if any, of the Per
Share Price over the exercise price per share of such Company PSO. Each Company PSO with an exercise price per share equal to or greater
than the Per Share Price will automatically be cancelled without any cash payment being made in respect thereof. |
Conditions to the Merger and Closing
The
consummation of the Merger is subject to customary conditions, including the adoption of the Merger Agreement by the holders of a
majority of the outstanding shares of Company Common Stock entitled to vote on the Merger Agreement; absence of any order or injunction
having the effect of prohibiting, restricting, enjoining or otherwise making illegal the consummation of the Merger; expiration
of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976; and receipt of specified
government authorizations including nuclear materials consents under applicable state and federal law. The obligation of each party
to consummate the Merger is also conditioned upon the other party’s representations and warranties being true and correct
(subject to certain materiality exceptions) and the other party having performed in all material respects its obligations under the
Merger Agreement. Parent’s obligations are condition on receipt of
certain letters evidencing the repayment of certain of the Company’s indebtedness and the absence of a material adverse effect on the Company.
In addition,
the Merger Agreement provides that the closing of the Merger (the “Closing”) may not occur earlier than March 31, 2023.
Solicitation
From and after
January 30, 2023, the Company must comply with customary non-solicitation restrictions, except that the Company may engage in discussions,
negotiations and other otherwise prohibited activities with any party from which the Company receives an unsolicited competing acquisition
proposal that the Board determines constitutes, or would reasonably likely lead to, a Superior Proposal (as defined in the Merger Agreement)
and if the failure to take such action would reasonably be expected to be inconsistent with the directors’ fiduciary duties.
Subject to certain
exceptions, the Board is required to recommend that the Company’s stockholders adopt the Merger Agreement and may not withhold,
withdraw, amend, qualify or modify in a manner adverse to Parent such recommendation or take certain similar actions that are referred
to in the Merger Agreement as a “Company Board Recommendation Change”. However, the Board may, before the adoption of the
Merger Agreement by the Company’s stockholders, make a Company Board Recommendation Change in connection with a Superior Proposal
or Intervening Event (each, as defined in the Merger Agreement) if the Company complies with certain notice and other requirements set
forth in the Merger Agreement.
Other Terms of the Merger Agreement
The Merger Agreement
contains customary representations and warranties of the Company relating to its business and public filings, generally subject to qualifications
as to materiality. Additionally, the Merger Agreement contains customary pre-closing covenants of the Company, including covenants relating
to conducting its business in the ordinary course consistent with past practice and to refrain from taking certain actions without Parent’s
consent.
The Merger
Agreement also provides for certain termination rights of Parent and the Company, including the right of either party to terminate
the Merger Agreement if the Merger has not been consummated by July 31, 2023 (the “Termination Date”). Either Parent or
the Company may also terminate the Merger Agreement if the Merger is not approved by the Company stockholders, or if a governmental
entity issues a final, non-appealable order that permanently prohibits or enjoins the Merger or if any law or order has been
enacted, entered, enforced or deemed applicable to the Merger that prohibits, makes illegal or enjoins the consummation of the
Merger. Further, each of Parent or the Company may terminate the Merger Agreement in the event of an uncured material breach by the
other party of its representations, warranties, covenants or agreements set forth in the Merger Agreement where such breach would
result in such other party's (i) representations and warranties failing to be true and correct as of the Closing (subject to certain
materiality exceptions), (ii) failure to perform in all material respects its obligations under the Merger Agreement or (iii) in the
case of the Company's breach, have a material adverse effect on the Company. The Merger Agreement may be terminated by Parent if the
Board changes its recommendation of the Merger before the Merger is approved by the Company’s stockholders.
In the
event the Merger Agreement is terminated (i) by the Company or Parent because the Merger is not consummated by the Termination Date,
(ii) by the Company or Parent because the Company stockholder approval is not obtained or (iii) by Parent due to an uncured material
breach by the Company of its representations, warranties, covenants or agreements set forth in the Merger Agreement and, in each
case prior to such termination but after the date of the Merger Agreement, an acquisition proposal has been publicly disclosed or
communicated to the Company stockholders and not withdrawn or otherwise abandoned prior to such termination, and within 12 months
after the date of such termination the Company consummates an acquisition proposal or enters into an agreement providing for an
acquisition proposal, then the Company will be obligated to pay Parent a termination fee (the
“Company Termination Fee”) of $20,300,000 upon the earlier of entry into such definitive agreement or consummation of such acquisition proposal. Further, if the
Merger Agreement is terminated by Parent due to a change in recommendation by the Board, or pursuant to clauses (i) and (ii) of the
preceding sentence at a time when Parent had the right to terminate the Merger Agreement due to a change in its recommendation of
the Merger by the Board before the Merger is approved by the Company’s stockholders, the Company will be obligated to pay
Parent the Company Termination Fee.
The Company
is entitled to terminate the Merger Agreement and receive a termination fee of $45,750,000 from Parent (the “Parent Termination
Fee”), due to an uncured material breach by the Parent of its representations, warranties, covenants or agreements set forth in
the Merger Agreement or if all the conditions to Closing are satisfied or waived and Parent fails to consummate the Merger.
Financing
Funds advised by GI Partners each committed to provide capital to Parent with an equity contribution of $1,068,000,000, subject to the terms and conditions
set forth in the equity commitment letter, and have each agreed to fund certain other obligations of Parent and Merger Sub in connection
with the Merger, including payment of the Parent Termination Fee, subject to the terms and conditions set forth in that certain limited
guarantee agreement in favor of the Company. The net proceeds contemplated by the equity commitment letter will in the aggregate be sufficient
for Parent and Merger Sub to pay the aggregate Per Share Price, the equity award consideration and any other amount (including fees or
expenses) required to be paid by Parent or Merger Sub in connection with the consummation of the Merger and the transactions contemplated
by the Merger Agreement.
The foregoing
description of the Merger Agreement does not purport to be complete and is subject to, and is qualified in its entirety by, the full text
of the Merger Agreement, a copy of which is attached hereto as Exhibit 2.1 to this Current Report on Form 8-K and which is incorporated
into this Item 1.01 by reference.
The Merger Agreement
has been included to provide investors with information regarding its terms. It is not intended to provide any other factual information
about the Company, Parent or their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the
Merger Agreement were made only for purposes of the Merger Agreement and as of specific dates, were solely for the benefit of the parties
to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential
disclosures made for the purposes of allocating contractual risk between the parties instead of establishing these matters as facts, and
may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors
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 parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the
subject matter of representations and warranties may change after the date of the Merger Agreement, which subsequent information may or
may not be fully reflected in the Company’s public disclosures.
Voting and Support Agreement
As an
inducement to Parent and the Company entering into the Merger Agreement, on January 30, 2023, AS&M SPV, LLC, a Delaware limited
liability company, and Arrow Environmental SPV, LLC, a Delaware limited liability company (together, the "Holders"), which
collectively beneficially own, in the aggregate, approximately 43% of the outstanding Company Common Stock entered into a Voting and
Support Agreement with the Company (the “Voting Agreement”), by and among the Company, Parent, Merger Sub and the
Holders, pursuant to which each Holder has agreed to vote its shares in favor of the matters to be submitted to the Company’s
stockholders in connection with the Merger, subject to the terms and conditions set forth in the Voting Agreement.
The Voting
Agreement provides that if the Board changes its recommendation with regard to the Company’s stockholders’ approval of
the Merger Agreement, then the number of the Holders’ shares of Company Common Stock subject to the obligations under the
Voting Agreement will be reduced such that the aggregate number of shares required to vote in favor of the Merger will be equal to
at least the percentage of aggregate voting power with respect to all outstanding shares of Company Common Stock held by
stockholders of the Company (excluding the Holder) voting in favor of approving the Merger Agreement, and transactions contemplated
thereby, multiplied by such Holder’s shares of Company Common Stock subject to the obligations under the Voting Agreement.
The foregoing
description of the Voting Agreement does not purport to be complete is subject to, and is qualified in its entirety by, the full text
of the Voting Agreement, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and which is incorporated into
this Item 1.01 by reference.
Cautionary Note Regarding Forward-Looking Statements
Information
set forth in this Current Report on Form 8-K, including statements as to the expected timing,
completion, and effects of the proposed transactions contemplated by the Merger Agreement, constitute forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements may be identified by the fact that they use words such as “may,” “will,”
“could,” “should,” “would,” “expect,” “anticipate,”
“intend,” “estimate,” “believe” or similar expressions. Any forward-looking statements contained
herein are based on current plans and expectations and involve risks and uncertainties that could cause actual outcomes and results
to differ materially from current expectations. These forward-looking statements are subject to risks and uncertainties, and actual
results might differ materially from those discussed in, or implied by, the forward-looking statements. Such forward-looking
statements may include, but are not limited to, statements about the anticipated benefits of the Merger, including future financial
and operating results, expected synergies and cost savings related to the Merger, the plans, objectives, expectations and intentions
of Atlas, Parent and the combined company, the expected timing of the completion of the Merger, the effect, impact, potential
duration or other implications of the COVID-19 pandemic and any expectations we may have with respect thereto, the ability to
recognize the anticipated benefits of our past acquisitions, which may be affected by, among other things, competition, the ability
of Atlas to grow and manage growth profitably, maintain relationships with customers and suppliers and retain management and key
employees, changes adversely affecting the business in which we are engaged, changes in applicable laws or regulations, the
possibility that Atlas may be adversely affected by other economic, business, and/or competitive factors and other statements that
are not historical facts. Such statements are based upon the current beliefs and expectations of the management of Atlas or Parent, as applicable, and are qualified by the inherent risks and uncertainties surrounding future expectations generally, and
actual results could differ materially from those currently anticipated due to a number of risks and uncertainties. Neither Atlas
nor Parent, nor any of their respective directors, executive officers or advisors, provide any representation, assurance or
guarantee that the occurrence of the events expressed or implied in any forward-looking statements will actually occur. Among the
risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements are the
following: the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger
Agreement, the risk that Atlas’s stockholders may not adopt the Merger Agreement, the risk that the necessary regulatory
approvals may not be obtained or may be obtained subject to conditions that are not anticipated, risks that any of the closing
conditions to the Merger may not be satisfied or waived in a timely manner, risks related to disruption of management time from
ongoing business operations due to the Merger, the effect of the announcement of the Merger on the ability of Atlas to retain
customers and retain and hire key personnel and maintain relationships with its suppliers and other business partners, and on their
operating results and businesses generally, the risk that potential litigation in connection with the Merger may affect the timing
or occurrence of the Merger or result in significant costs of defense, indemnification and liability and transaction costs.
The forward-looking
statements are based on the beliefs and assumptions of Atlas’s management and the information available to Atlas’s management
as of the date of this Current Report on Form 8-K. Atlas cautions investors not to place undue reliance on expectations regarding future
results, levels of activity, performance, achievements or other forward-looking statements. The information contained in this document
is provided by Atlas as of the date hereof, and, unless required by law, Atlas does not undertake and specifically disclaims any obligation
to update these forward-looking statements contained in this document as a result of new information, future events or otherwise.
Discussions
of additional risks and uncertainties are and will be contained in Atlas’s filings with the U.S. Securities and Exchange Commission
(“SEC”), including but not limited to the “Risk Factors” and “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” sections of Atlas’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2021 and in its subsequently-filed Quarterly Reports on Form 10-Q. You can obtain copies of Atlas’s filings with the
SEC for free at the SEC’s website (www.sec.gov).
Certain Information Regarding Participants
Atlas and certain
of its directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation
of proxies from Atlas’s stockholders in connection with the Merger. Information regarding the persons who may, under the rules of
the SEC, be considered to be participants in the solicitation of Atlas’s stockholders in connection with the Merger will be set
forth in Atlas’s definitive proxy statement for its stockholder meeting. Additional information regarding these individuals and
any direct or indirect interests they may have in the Merger will be set forth in the definitive proxy statement when it is filed with
the SEC in connection with the Merger. Information relating to the foregoing can also be found in Atlas’s Annual Report on Form
10-K for the year ended December 31, 2021, which was filed with the SEC on March 16, 2022, and in its proxy statement for the 2022 Annual
Meeting, which was filed with the SEC on April 26, 2022. To the extent holdings of Atlas’s securities have changed since the amounts
printed in the proxy statement for the 2022 Annual Meeting, such changes have been or will be reflected on Statements of Change in Ownership
on Form 4 and Form 5 filed with the SEC. Other information regarding the participants in the proxy solicitation and a description of their
direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement and other relevant materials
to be filed with the SEC when they become available. These documents will be available free of charge from the sources indicated below..
Important Information and Where to Find It
A meeting of
the stockholders of Atlas will be announced as promptly as practicable to seek stockholder approval in connection with the proposed Merger.
In connection with the proposed Merger, Atlas expects to file with the SEC a proxy statement and other relevant documents with respect
to a special meeting of Atlas’s stockholders to approve the Merger. The definitive proxy statement will be mailed or given to the
stockholders of Atlas and will contain important information about the proposed Merger and related matters. INVESTORS AND STOCKHOLDERS
OF ATLAS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT MATERIALS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT ATLAS, THE GI PARTNERS PRIVATE EQUITY FUNDS ACQUIRING ATLAS AND THE MERGER.
Investors and
security holders will be able to obtain these materials, when they are available, and other relevant documents filed with the SEC free
of charge at the SEC’s website, www.sec.gov. In addition, copies of the proxy statement, when they become available, may be obtained
free of charge by accessing Atlas’s website at www.oneatlas.com or by contacting Atlas’s investor relations department by
email at ir@oneatlas.com.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit No. |
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Description of Exhibit |
2.1* |
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Agreement and Plan of Merger, dated January 30, 2023, by and among the Company, GI Apple Midco LLC, and GI Apple Merger Sub LLC. |
10.1 |
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Voting Agreement, dated January 30, 2023, by and among Parent, AS&M SPV, LLC, Arrow Environmental SPV LLC, and, for the purposes specified therein, the Company. |
104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
*Schedules have been omitted pursuant to Item 601(a)(5)
of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the U.S.
Securities and Exchange Commission.
SIGNATURE
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
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ATLAS TECHNICAL CONSULTANTS, INC. |
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By: |
/s/ L. Joe Boyer |
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Name: |
L. Joe Boyer |
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Title:
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Chief Executive Officer |
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Dated: January 31, 2023