DIAD HLDG Item 1.01. Entry into a Material Definitive Agreement.
Business Combination Agreement
On
Pursuant to the terms of the Business Combination Agreement, a business
combination between DHHC will be effected through the merger of Merger Sub with
and into GSH (the "Merger"), with GSH surviving the Merger as a wholly-owned
subsidiary of DHHC. Upon the consummation of the transactions contemplated by
the Business Combination Agreement (the "Transactions"), DHHC expects to be
renamed
Pre-Closing Recapitalization of GSH
Prior to the effective time of the Merger (the "Effective Time"), in order to
facilitate the consummation of the Transactions, GSH will effect a pre-closing
recapitalization (the "Pre-Closing Recapitalization"), including (i) authorizing
two new classes of GSH common stock, such that the capitalization of GSH will
consist of GSH Class A common stock, no par value, which will carry one vote per
share ("GSH Class A Shares") and GSH Class B common stock, no par value, which
will carry two votes per share ("GSH Class
Merger Consideration
Upon the terms and subject to the conditions set forth in the Business Combination Agreement, at the Effective Time:
(i) Each GSH Class A Share and each GSH Class
of immediately prior to the Effective Time (excluding shares owned by GSH as
treasury stock or dissenting shares) will be cancelled and converted into the
right to receive the number of shares of DHHC's Class A common stock, par
value $0.0001 per share ("DHHC Class A Shares"), and shares of DHHC's Class B
common stock, par value $0.0001 per share ("DHHC Class B Shares ", together
with the DHHC Class A Shares, the "DHHC Shares"), respectively, equal to the
Exchange Ratio (as defined in the Business Combination Agreement).
(ii) Each option to purchase GSH Shares ("GSH Option") that is outstanding and
unexercised immediately prior to the Effective Time will be cancelled in
exchange for an option to purchase a number of DHHC Class A Shares as set
forth on the Consideration Schedule (as defined in the Business Combination
Agreement) at an exercise price as set forth on such Consideration Schedule.
(iii) Each warrant to purchase GSH Shares ("GSH Warrant") outstanding and
unexercised immediately prior to the Effective Time shall automatically be
converted into a warrant to acquire a number of DHHC Class A Shares in an
amount and at an exercise price and subject to such terms and conditions,
in each case, as set forth on the Consideration Schedule. Subject to
certain exceptions, such terms and conditions will be the same terms and
conditions as were applicable to the GSH Warrant immediately prior to the
Effective Time.
Pursuant to the terms of the Business Combination Agreement, DHHC is required to cause the DHHC Class A Shares to be issued in connection with the Transactions to be listed on the NASDAQ Capital Market ("Nasdaq") prior to the closing of the Merger (the "Closing" and the date on which the Closing occurs, the "Closing Date").
Earn Out Consideration
The holders of GSH Shares, GSH Options and GSH Warrants, as of immediately prior
to the Effective Time, will also have the contingent right to receive up to an
aggregate of 20,000,000
The Sponsor has agreed not to transfer approximately 2.1 million Sponsor Earnout
Shares (as defined below) until such shares are released by DHHC upon the
achievement of the Earn-Out Milestones pursuant to the Sponsor Support Agreement
(as defined below). The Sponsor has also agreed that in the event that Closing
DHHC Cash is less than
Representations and Warranties
The Business Combination Agreement contains customary representations and warranties of the parties thereto with respect to, among other things, (a) organization and qualification, (b) capital structure, (c) authorization to enter into the Business Combination Agreement, (d) approvals and permits, (e) financial statements, (f) absence of certain changes, (g) absence of undisclosed liabilities, (h) material contracts, (i) litigation, (j) employee matters, (k) compliance with laws, (l) taxes, (m) real and personal property, (n) homeowners associations, (o) construction matters, (p) intellectual property, (q) environmental matters, (r) insurance matters, (s) transactions with affiliates, and (t) regulatory compliance.
Covenants
The Business Combination Agreement includes customary covenants of the parties with respect to the operation of their respective businesses prior to consummation of the Merger and their respective efforts to consummate the Merger. The Business Combination Agreement also contains additional covenants of the parties, including, among others, (a) covenants providing for DHHC, Merger Sub and GSH to cooperate in the preparation of the Registration Statement / Proxy Statement (as defined in the Business Combination Agreement) required to be filed in connection with the Transactions, (b) covenants for DHHC to hold a special meeting of its stockholders to vote on, among other things, the approval of the Business Combination Agreement and the Merger, (c) covenants for GSH to obtain all required consents from third parties and lenders under its financing arrangements, including the Lender Consents (as defined in the Business Combination Agreement) or obtaining Alternative Financing (as defined in the Business Combination Agreement), (d) covenants for GSH to obtain and deliver the Company Stockholder Written Consent (as defined in the Business Combination Agreement) within one (1) Business Day following the date of the Business Combination Agreement, (e) covenants for GSH to effect the Pre-Closing Recapitalization and (f) covenants for GSH to take all actions and execute documentation required to deconsolidate with certain affiliated entities.
DHHC Equity Incentive Plan
Prior to the Effective Time, DHHC will adopt the DHHC Incentive Equity Plan (as defined in the Business Combination Agreement) subject to the receipt of the requisite approval of DHHC's stockholders.
GSH Non-Solicitation Restrictions
During the period between the date of the Business Combination Agreement and the earlier of (x) the Closing or (y) the termination of the Business Combination Agreement in accordance with its terms, GSH has agreed not to, among other things, (i) solicit, initiate, knowingly encourage (including by means of furnishing or disclosing information), knowingly facilitate, discuss or negotiate, directly or indirectly, any inquiry, proposal or offer (written or oral) with respect to a Company Acquisition Proposal (as defined in the Business Combination Agreement), (ii) furnish or disclose any non-public information to any person in connection with, or that would reasonably be expected to lead to, a Company Acquisition Proposal, (iii) enter into any contract or other arrangement or understanding regarding a Company Acquisition Proposal, (iv) other than as contemplated by the Business Combination Agreement, prepare or . . .
Item 7.01. Regulation FD Disclosure.
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Furnished as Exhibit 99.2 hereto and incorporated into this Item 7.01 by reference is the investor presentation that DHHC and GSH have prepared for use in various meetings and conferences with investors in connection with the announcement of the Merger.
The foregoing (including Exhibits 99.1 and 99.2) is being furnished pursuant to Item 7.01 and will not be deemed to be filed for purposes of Section 18 of the Exchange Act, or otherwise be subject to the liabilities of that section, nor will it be deemed to be incorporated by reference in any filing under the Securities Act or the Exchange Act.
IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT
This Current Report on Form 8-K relates to a proposed transaction involving GSH
and DHHC. In connection with such proposed transaction, DHHC intends to file
relevant materials with the
PARTICIPANTS IN SOLICITATION
DHHC and GSH and certain of their respective directors and executive officers
may be deemed to be participants in the solicitation of proxies from DHHC's
stockholders in favor of the approval of the proposed transaction. Information
about DHHC's directors and executive officers and their ownership of DHHC's
securities is set forth in DHHC's filings with the
This Current Report on 8-K does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval nor shall there be any sale of any securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such other jurisdiction.
FORWARD-LOOKING STATEMENTS
Certain statements, estimates, targets and projections in this Current Report on Form 8-K may be considered forward-looking statements within the meaning of the federal securities laws with respect to the proposed transaction between DHHC and GSH. Forward looking statements generally relate to future events or involving, or future performance of, DHHC or GSH. For example, statements regarding anticipated growth in the industry in which GSH operates and anticipated growth in demand for GSH's products, projections of GSH's future financial results and other metrics, the satisfaction of closing conditions to the proposed transaction between DHHC and GSH and the timing of the completion of the proposed transaction are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "pro forma", "may", "should", "could", "might", "plan", "possible", "project", "strive", "budget", "forecast", "expect", "intend", "will", "estimate", "anticipate", "believe", "predict", "potential" or "continue", or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward looking statements.
These forward-looking statements are based upon estimates and assumptions that,
while considered reasonable by DHHC and its management, and GSH and its
management, as the case may be, are inherently uncertain. Factors that may cause
actual results to differ materially from current expectations include, but are
not limited to: (i) the risk that the proposed transaction may not be completed
in a timely manner or at all, which may adversely affect the price of DHHC's
securities; (ii) the risk that the proposed transaction may not be completed by
DHHC's business combination deadline and the potential failure to obtain an
extension of the business combination deadline if sought by DHHC; (iii) the lack
of a third party valuation in determining whether or not to pursue the proposed
transaction; (iv) the amount of the costs, fees, expenses and other charges
related to the proposed transaction; (v) the outcome of any legal proceedings
that may be instituted against DHHC, GSH, the combined company or others
following the announcement of the business combination agreement relating to the
proposed transaction, the ancillary agreements contemplated thereby and the
transactions contemplated thereby; (vi) the inability to complete the proposed
transaction due to the failure to obtain approval of the stockholders of DHHC or
GSH or DHHC's failure to satisfy other conditions to closing; (vii) the risk
that DHHC will not be able to raise third-party financing to meet the Minimum
Cash Condition if redemptions of DHHC public shares cause the DHHC trust account
to have insufficient funds (after giving effect to redemptions) to achieve the
Minimum Cash Condition; (viii) changes to the proposed structure of the proposed
transaction that may be required or appropriate as a result of applicable laws
or regulations; (ix) the ability to meet stock exchange listing standards
following the consummation of the proposed transaction; (x) the risk that the
proposed transaction disrupts current plans and operations of GSH or diverts
management's attention from GSH's ongoing business; (xi) the ability to
recognize the anticipated benefits of the proposed transaction, which may be
affected by, among other things, competition, the ability of the combined
company to grow and manage growth profitably, and maintain relationships with
customers and suppliers; (xii) costs related to the proposed transaction; (xiii)
changes in applicable laws or regulations; (xiv) the possibility that GSH or the
combined company may be adversely affected by other economic, business,
regulatory, and/or competitive factors such as rising interest rates or an
economic downturn; (xv) GSH's estimates of expenses and profitability; (xvi) the
evolution of the markets in which GSH competes; (xvii) the ability of GSH to
implement its strategic initiatives; and (xviii) other risks and uncertainties
set forth in the section entitled "Risk Factors" and "Cautionary Note Regarding
Forward-Looking Statements" in DHHC's Annual Report on Form 10-K for the year
ended
Readers are cautioned not to put undue reliance on forward-looking statements, and DHHC and GSH assume no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Neither DHHC nor GSH gives any assurance that either DHHC or GSH will achieve its expectations. The inclusion of any statement in this communication does not constitute an admission by DHHC or GSH or any other person that the events or circumstances described in such statement are material.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits: Exhibit Description 2.1* Business Combination Agreement, dated as ofSeptember 10, 2022 , by and amongDiamondHead Holdings Corp. ,Hestia Merger Sub, Inc. andGreat Southern Homes, Inc. 10.1* Sponsor Support Agreement, dated as ofSeptember 10, 2022 , by and amongDHP SPAC-II Sponsor LLC ,DiamondHead Holdings Corp. ,Great Southern Homes, Inc. and certain other parties thereto. 10.2* Form of Amended and Restated Registration Rights and Lock-Up Agreement 99.1 Press Release issued by DHHC and GSH onSeptember 12, 2022 . 99.2 Investor Presentation, datedSeptember 12, 2022 . 104 Cover Page Interactive Date File (embedded within the Inline XBRL document).
* Certain exhibits and schedules to this Exhibit have been omitted in accordance
with Regulation S-K Item 601(b)(2). DHHC agrees to furnish supplementally a
copy of all omitted exhibits and schedules to the Securities and Exchange
Commission upon its request.
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