Item 1.01. |
Entry into a Material Definitive Agreement.
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Merger Agreement
Amendment
On December 23, 2021, Blue Owl Capital Inc. (“Blue
Owl”) entered into the First Amendment (the
“Merger Agreement Amendment”) to
the Agreement and Plan of Merger, dated as of October 17, 2021
(the “Merger Agreement”), by and among
Blue Owl, Blue Owl Capital GP LLC (“Blue Owl
GP”), Blue Owl Capital Holdings LP (“Blue Owl
Holdings LP”), Blue Owl Capital Carry LP
(“Blue Owl Carry LP”), Flyer Merger
Sub I, LLC, Flyer Merger Sub II, LP, OSREC GP Holdings, LP, Oak
Street Real Estate Capital, LLC (“Oak
Street”), SASC Feeder, LP and Augustus, LLC, an
Illinois limited liability company wholly owned by Marc Zahr (the
“Seller Representative” or
“Augustus”), attached hereto as
Exhibit 2.1 and incorporated herein by reference.
The Merger Agreement Amendment contemplates, among other things,
that a $50 million termination fee shall be payable by Blue
Owl to Oak Street in the event that the Merger Agreement is
terminated if (i) all merger conditions are satisfied,
(ii) the Seller Representative has confirmed in writing that
it and Oak Street are ready, willing and able to consummate the
transactions contemplated by the Merger Agreement on such date, and
(iii) Blue Owl has not completed the closing of the
transactions (the “Closing”) within twenty
(20) business days after the later of (x) the date the
Closing is required to occur pursuant to the Merger Agreement and
(y) delivery of the confirmation set forth in clause (ii).
Upon the Closing on December 29, 2021, the termination fee was
no longer payable by Blue Owl to Oak Street, in accordance with the
terms of the Merger Agreement Amendment.
Investor Rights
Agreement
Effective upon the consummation of the previously announced
transactions (the “Transactions”) pursuant to the
terms of the Merger Agreement, Blue Owl, Blue Owl GP, Blue Owl
Holdings LP, Blue Owl Carry LP, each of Douglas Ostrover, Marc
Lipschultz and Michael Rees (the “Principals”) and Marc Zahr
entered into an Investor Rights Agreement (the “Investor Rights
Agreement”). The Investor Rights Agreement provides,
among other things, that Blue Owl, each of the Principals and Marc
Zahr shall take all Necessary Action (as defined under the Investor
Rights Agreement) to elect Marc Zahr as a member of the Board of
Directors of Blue Owl (the “Board”) and executive committee
of Blue Owl, and Mr. Zahr will enter into a contractual
lock-up with respect to
Blue Owl common stock or Common Units held by Mr. Zahr and his
affiliated entities.
Registration Rights
Agreement
Upon consummation of the Transactions, pursuant to the Merger
Agreement, Blue Owl, the holders party thereto, including
Mr. Zahr and Augustus, entered into a Registration Rights
Agreement (the “Registration Rights Agreement”),
that provides each of the holder parties, including Mr. Zahr
and Augustus, with certain registration rights. The Registration
Rights Agreement will, among other things, require Blue Owl to use
its reasonable best efforts to file a resale shelf registration
statement in the future registering each Holder’s (as defined under
Registration Rights Agreement) resale of the shares of Blue Owl’s
common stock and will provide each Holder with certain customary
piggyback registration rights with respect to such shares of common
stock, subject to the limitations set forth therein.
Employment Agreement and
Restrictive Covenant Agreement
Simultaneously with the execution of the Merger Agreement, Blue Owl
entered into an employment and restrictive covenant agreement with
Marc Zahr to be effective as of the Closing (as amended and
restated on December 29, 2021, the “Employment
Agreement”). The term of the Employment Agreement is
perpetual until terminated in accordance with its terms.
Mr. Zahr is entitled during his employment to an annual base
salary of $500,000, additional compensation, paid quarterly, in an
amount equal to a specified percentage of the management fee
(depending on the applicable termination date and achievement of
first and second earnouts set forth in the Merger Agreement) and
certain other revenues of Blue Owl less Mr. Zahr’s base salary
(subject to a 10% holdback and an annual true-up following receipt of audited
Blue Owl financials) (the “Additional
Compensation”), and to participate in Blue Owl’s
employee benefit plans, as in effect from time to time.