Item 1.01 Entry into a Material Definitive Agreement
On January 24, 2020, Tilray, Inc. ("Tilray") entered into (i) an Amended and
Restated Profit Participation Agreement (the "A&R Profit Participation
Agreement") with ABG Intermediate Holdings 2, LLC ("ABG"), which amended and
restated in its entirety the Profit Participation Agreement, dated January 14,
2019, by and between Tilray and ABG (the "Original Profit Participation
Agreement") and (ii) the First Amendment to Payment Agreement with ABG (the
"Payment Agreement Amendment"), which amends the Payment Agreement, dated
January 14, 2019, by and between Tilray and ABG (the "Original Payment
Agreement"). The Original Profit Participation Agreement and the Original
Payment Agreement were previously disclosed on Tilray's Form 8-K filed on
January 14, 2019 with the U.S. Securities and Exchange Commission.
Pursuant to the A&R Profit Participation Agreement and the Payment Agreement
Amendment, Tilray and ABG agreed that Tilray will no longer have any obligation
to pay the additional consideration with an aggregate value of $83,333,333 in
cash or in shares of Tilray's Class 2 Common Stock, which were previously
subject to certain triggers pertaining to the regulatory status of
tetrahydrocannibinol in the United States or the receipt of $5,000,000 in
distributions to Tilray from the Original Profit Participation Agreement derived
from cannabis products that contain tetrahydrocannibinol outside of the United
States, in accordance with the terms and conditions set forth in, the Original
Payment Agreement.
In addition, as previously disclosed, under the Original Profit Participation
Agreement, Tilray purchased from ABG participation rights in up to 49% of the
net (i.e., post-expense) royalties from cannabis products bearing certain brands
within the ABG portfolio (ratably based on the portion of the aggregate amount
of consideration received by ABG) that ABG receives from the exploitation of
certain ABG brands in connection with the development, marketing and sale of
cannabis-related products. Pursuant to the A&R Profit Participation Agreement,
beginning January 1, 2020 through December 31, 2028, Tilray agreed that it will
not be entitled to any participation rights unless and until such participation
rights payable to Tilray with respect to each contract year exceeds $10,000,000
(the "Participation Rights Threshold"), and in the event the Participation
Rights Threshold is achieved, Tilray will be entitled to its 49% participation
right for the contract year for all amounts in excess of the Participation
Rights Threshold. In addition, pursuant to the A&R Profit Participation
Agreement, Tilray agreed, beginning January 1, 2020 through December 31, 2028,
Tilray will not be entitled to any guaranteed minimum participation rights with
respect to each contract year, other than amounts payable by ABG for 2019 in the
amount of $1,666,667, which is payable by ABG on or before February 15, 2020.
The foregoing descriptions of the transactions contemplated by the A&R Profit
Participation Agreement and the Payment Agreement Amendment do not purport to be
complete and are subject to, and are qualified in their entirety by, the full
text of the A&R Profit Participation Agreement and the Payment Agreement
Amendment, which will be filed as exhibits to Tilray's Annual Report on Form
10-K for the year ended December 31, 2019.
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