Cayman Islands*
|
|
6770
|
|
98-1584830
|
(State or other jurisdiction of incorporation or organization)
|
|
(Primary Standard Industrial Classification Code Number)
|
|
(I.R.S. Employer Identification No.)
|
Christian O. Nagler
Brooks W. Antweil
|
|
Albert Vanderlaan
Matthew Gemello
|
Kirkland & Ellis LLP
|
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Orrick Herrington & Sutcliffe LLP
|
601 Lexington Avenue
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222 Berkeley St., Suite 2000
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New York, New York 10022
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Boston, Massachusetts 02116
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Tel: (212)
446-4800
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Tel: (617)
880-1800
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Fax: (212)
446-4900
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Large accelerated filer
|
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☐
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Accelerated filer
|
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☐
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Non-accelerated filer
|
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☒
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Smaller reporting company
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☒
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Emerging growth company
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☒
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||||||||
Title of Each Class of
Securities to be Registered
|
|
Amount
to be
Registered
(4)
|
|
Proposed
Maximum
Offering Price
Per Unit
|
|
Proposed
Maximum
Aggregate
Offering Price
(1)
|
|
Amount of
Registration Fee |
New Local Bounti Common Stock
(1)
|
|
99,809,606
|
|
$9.90
(5)
|
|
$988,115,099
|
|
$107,803.40
(8)
|
New Local Bounti Common Stock issuable upon exercise of warrants
(2)
|
|
11,539,216
|
|
$11.50
(6)
|
|
$132,700,984
|
|
$14,477.70
(8)
|
Warrants to purchase New Local Bounti Common Stock
(3)
|
|
11,539,216
|
|
$1.17
(7)
|
|
$13,500,883
|
|
$—
(9)
|
Total
|
|
122,888,038
|
|
|
|
|
|
$122,281.10
(8)
(10)
|
|
||||||||
|
(1)
|
The number of shares of New Local Bounti Common Stock (as defined below) being registered represents (i) 27,500,000 Class A ordinary shares (as defined below) of Leo (as defined below), that were registered pursuant to the Registration Statements on Form
S-1
(SEC File Nos.
333-252294
and
333-253572)
and offered by Leo in its initial public offering, (ii) 6,875,000 Class B ordinary shares (as defined below) held by Leo’s initial shareholders, (iii) up to 62,244,117 shares of New Local Bounti Common Stock estimated to be issued to the equityholders (other than warrantholders) of Local Bounti in connection with the Business Combination described in the joint proxy statement/prospectus (as defined below), based on the sum of (a) the 59,744,117 shares of New Local Bounti Common Stock issuable upon the consummation of the Business Combination, without giving effect to downward adjustments, and (b) up to 2,500,000 shares of New Local Bounti Common Stock that may be issued after such date for certain equity holders of New Local Bounti pursuant to the earnout provisions of the Merger Agreement described herein, and (iv) up to 3,190,489 shares of New Local Bounti
|
(2)
|
Represents shares of New Local Bounti Common Stock to be issued upon the exercise of (i) 5,500,000 public warrants (as defined below), (ii) 5,333,333 private placement warrants (as defined below) and (iii) up to 705,883 warrants exercisable for up to 705,883 shares of New Local Bounti Common Stock that will be issued to the warrantholders of Local Bounti in connection with the Business Combination described in the joint proxy statement/prospectus. The warrants will convert into warrants to acquire shares of New Local Bounti Common Stock as a result of the Domestication.
|
(3)
|
The number of warrants to acquire shares of New Local Bounti Common Stock being registered represents (i) 5,500,000 public warrants, (ii) 5,333,333 private placement warrants and (iii) up to 705,883 warrants exercisable for up to 705,883 shares of New Local Bounti Common Stock that will be issued to the warrantholders of Local Bounti in connection with the Business Combination described in the joint proxy statement/prospectus.
|
(4)
|
Pursuant to Rule 416(a) of Securities Act of 1933, as amended (the “
Securities Act
”), there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions.
|
(5)
|
Estimated solely for the purpose of calculating the registration fee, based on the average of the high and low prices of the Class A ordinary shares of Leo on the New York Stock Exchange (“
NYSE
”) on July 13, 2021 ($9.90 per Class A ordinary share). This calculation is in accordance with Rule 457(f)(1) of the Securities Act.
|
(6)
|
Represents the exercise price of the warrants.
|
(7)
|
Estimated solely for the purpose of calculating the registration fee, based on the average of the high and low prices of the Leo public warrants on the NYSE on July 13, 2021 ($1.17 per warrant). This calculation is in accordance with Rule 457(f)(1) of the Securities Act.
|
(8)
|
Calculated by multiplying the proposed maximum aggregate offering price of securities to be registered by 0.0001091.
|
(9)
|
No registration fee is required pursuant to Rule 457(g) under the Securities Act.
|
(10)
|
Previously paid.
|
*
|
Immediately prior to the consummation of the Business Combination, Leo, intends to effect a deregistration under the Cayman Islands Companies Act (As Revised) and a domestication under Part XII of the Delaware General Corporation Law, pursuant to which Leo’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware (the “
Domestication
”). All securities being registered will be issued by the continuing entity following the Domestication, which will be renamed “Local Bounti Corporation” at the Effective Time (defined herein) and following the consummation of the Domestication. As used herein, “New Local Bounti” refers to Local Bounti Corporation or “Combined Company” after giving effect to the Domestication.
|
(a) |
On the Closing Date, prior to the time at which the First Effective Time occurs, Leo will change its jurisdiction of incorporation by deregistering as a Cayman Islands exempted company and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “
Domestication
”), and at the Effective Time, Leo will change its name to “Local Bounti Corporation” (“
New Local Bounti
”) (for further details, see “
Proposal No. 2—The Domestication Proposal
|
(b) |
Merger Sub 1 will merge with and into Local Bounti (the “
First Merger
”), with Local Bounti as the surviving company in the First Merger, followed immediately by the merger of the resulting company
|
with and into Merger Sub 2 (the “
Second Merger
” and together with the First Merger, the “
Mergers
”), with Merger Sub 2 as the surviving company in the Second Merger and, after giving effect to such Mergers, Local Bounti shall be a wholly-owned subsidiary of Leo. In accordance with the terms and subject to the conditions of the Merger Agreement, at the Effective Time, based on the Transaction Value (i) each share of Local Bounti voting common stock will be cancelled and converted into the right to receive the applicable portion of the merger consideration comprised of New Local Bounti Common Stock, earnout shares (as described herein) and up to $37.5 million of cash consideration (subject to certain conditions specified in the Merger Agreement), each as determined in the Merger Agreement, (ii) each share of Local Bounti restricted stock will be cancelled and converted into the right to receive the applicable portion of the merger consideration comprised of New Local Bounti Common Stock and earnout shares (as described below), each as determined in the Merger Agreement, (iii) each Local Bounti restricted stock unit, whether or not then vested, will be assumed by Leo and convert into a Leo restricted stock unit, subject to the same terms and conditions as applied to such Local Bounti restricted stock unit immediately prior to the Closing with a value as if such Local Bounti restricted stock unit were settled prior to the closing of the Business Combination and shall be entitled to receive earnout shares (as described below), and (iv) each warrant of Local Bounti that is unexercised will be assumed by Leo and convert into a warrant to purchase New Local Bounti Common Stock and represent the right to receive the applicable portion of the merger consideration upon exercise of such warrant as if such warrant were exercised prior to the closing of the Business Combination. In addition, all convertible debt of Local Bounti will be fully converted into Local Bounti common stock as of immediately prior to the Closing and become eligible to receive New Local Bounti Common Stock (which amount, for the avoidance of doubt, is excluded from the implied pre-transaction equity value of Local Bounti) based on the number of shares of Local Bounti common stock issuable upon conversion of such convertible debt. Each Local Bounti equityholder entitled to receive a portion of the earnout consideration will receive its applicable portion of equal thirds of 2,500,000 earnout shares if the trading price of New Local Bounti Common Stock is greater than or equal to $13.00, $15.00 and $17.00 for any 20 trading days within any
30-trading
day period and will also accelerate and be fully issuable in connection with any Change of Control (as defined in the Merger Agreement) if the applicable thresholds are met in such Change of Control.
|
• |
Proposal No. 1—The Business Combination Proposal
Merger Agreement
”), by and among Leo, Merger Sub 1, Merger Sub 2, and Local Bounti, a copy of which is attached to the accompanying joint proxy statement/prospectus as Annex A, and the transactions contemplated thereby (collectively, the “
Business Combination
”). Pursuant to the Merger Agreement, among other things, following the
de-registration
of Leo as an exempted company in the Cayman Islands (and the continuation and domestication of Leo as a corporation in the State of Delaware with the name “Local Bounti Corporation” following the Mergers described below) (a) Merger Sub 1 will merge with and into Local Bounti (the “
First Merger
”), with Local Bounti as the surviving company in the First Merger, followed immediately by the merger of the resulting company with and into Merger Sub 2 (the “
Second Merger
” and together with the First Merger, the “
Mergers
”), with Merger Sub 2 as the surviving company in the Second Merger and, after giving effect to the Mergers, Local Bounti shall be a wholly-owned subsidiary of Leo and (b) at the Effective Time, based on the Transaction Value, (i) each share of Local Bounti voting common stock (other than shares held by Local Bounti as treasury stock (which shares will be cancelled for no consideration as part of the First Merger) and dissenting shares) will be cancelled and converted into the right to receive the applicable portion of the merger consideration comprised of New Local Bounti Common Stock, earnout shares (as described herein) and up to $37.5 million of cash consideration (subject to certain conditions specified in the Merger Agreement), each as determined in the Merger Agreement, (ii) each share of Local Bounti restricted stock will be cancelled and converted into the right to receive the applicable portion of the merger consideration comprised of New Local Bounti Common Stock and earnout shares (as described below), each as determined in the Merger Agreement, (iii) each Local Bounti restricted stock unit, whether or not then vested, will be assumed by Leo and convert into a Leo restricted stock unit, subject to the same terms and conditions as applied to such Local Bounti restricted stock unit immediately prior to the Closing with a value as if such Local Bounti restricted stock unit were settled prior to the closing of the Business Combination, and (iv) each warrant of Local Bounti that is unexercised will be assumed by Leo and convert into a warrant to purchase New Local Bounti Common Stock and represent the right to receive the applicable portion of the merger consideration upon exercise of such warrant as if such
|
warrant were exercised prior to the closing of the Business Combination; all convertible debt of Local Bounti will be fully converted into Local Bounti common stock as of immediately prior to the Closing and become eligible to receive New Local Bounti Common Stock (which amount, for the avoidance of doubt, is excluded from the implied pre-transaction equity value of Local Bounti and therefore will have a dilutive impact to both the public shareholders of Leo and the pre-transaction stockholders of Local Bounti) based on the number of shares of Local Bounti common stock issuable upon conversion of such convertible debt; each Local Bounti equityholder entitled to receive a portion of the earnout consideration will receive its applicable portion of equal thirds of 2,500,000 earnout shares if the trading price of New Local Bounti Common Stock is greater than or equal to $13.00, $15.00 and $17.00 for any 20 trading days within any
30-trading
day period and will also accelerate and be fully issuable in connection with any Change of Control (as defined in the Merger Agreement) if the applicable thresholds are met in such Change of Control, as described in more detail in the accompanying proxy statement/prospectus; certain related agreements (including the Sponsor Agreement, the Subscription Agreements, the Registration Rights Agreement, the Company Stockholder Support Agreements and the
Lock-Up
Agreements, each in the form attached to the joint proxy statement/prospectus as Annex E, Annex F, Annex G, Annex H and Annex I, respectively); and the transactions contemplated thereby. We refer to this proposal as the “
Business Combination Proposal
.”
|
• |
Proposal No. 2—Domestication Proposal
Domestication
”). Upon the effectiveness of the Domestication, Leo will become a Delaware corporation and will change its corporate name to “Local Bounti Corporation” (together with Local Bounti following the Domestication and the Business Combination, the “
Combined Company
”) and all outstanding securities of Leo will convert to outstanding securities of the Combined Company, as described in more detail in the accompanying proxy statement/prospectus. We refer to this proposal as the “
Domestication Proposal
.”
|
• |
Proposal No. 3—Charter Proposal
Proposed Certificate of Incorporation
”) of the Combined Company (a corporation incorporated in the State of Delaware, assuming the Domestication Proposal is approved and adopted, and the filing with and acceptance by the Secretary of State of Delaware of the Certificate of Corporate Domestication in accordance with Section 388 of the Delaware General Corporation Law (the “
DGCL
”)), including authorization of the change in authorized share capital as indicated therein and the change of name of Leo to “Local Bounti Corporation” in connection with the Business Combination. A copy of the Proposed Certificate of Incorporation is attached to the accompanying joint proxy statement/prospectus as Annex C. We refer to this proposal as the “
Charter Proposal
.”
|
• |
Governing Documents Proposals
a non-binding advisory
basis, certain governance provisions in the Proposed Certificate of Incorporation (such proposals, collectively, the “
Governing Documents Proposals
”) to approve the following material differences between the current amended and restated memorandum and articles of association of Leo (the “
Existing Governing Documents
”) and the Proposed Certificate of Incorporation and the proposed new bylaws (the “
Proposed Bylaws
” and, together with the Proposed Certificate of Incorporation, the “
Proposed Governing Documents
”) of the Combined Company:
|
• |
Proposal No. 4—Governing Documents Proposal A
|
$0.0001 per share, of New Local Bounti (the “
Preferred Stock
”). We refer to this proposal as “
Governing Documents Proposal A
.”
|
• |
Proposal No. 5—Governing Documents Proposal B—
Governing Documents Proposal B
.”
|
• |
Proposal No. 6—Governing Documents Proposal C—
Governing Documents Proposal C
.”
|
• |
Proposal No. 7—Governing Documents Proposal D—
Governing Documents Proposal D
.”
|
• |
Proposal No. 8—The NYSE Proposal
NYSE Proposal
.”
|
• |
Proposal No. 9—The Incentive Award Plan Proposal
Incentive Award Plan Proposal
.”
|
• |
Proposal No. 10—The Employee Stock Purchase Plan
Proposal
Employee Stock Purchase Plan Proposal
.”
|
• |
Proposal No. 11—Director Election Proposal
Director Election Proposal
.”
|
• |
Proposal No. 12—The Adjournment Proposal
|
Business Combination, together with aggregate gross proceeds from the PIPE Financing, equal no less than $150,000,000 after deducting Leo’s unpaid expenses, liabilities, and any amounts paid to Leo shareholders that exercise their redemption rights in connection with the Business Combination would not be satisfied, at the extraordinary general meeting. We refer to this proposal as the “
Adjournment Proposal
.”
|
(i) |
(a) hold public shares, or (b) if you hold public shares through units, you elect to separate your units into the underlying public shares and warrants prior to exercising your redemption rights with respect to the public shares;
|
(ii) |
submit a written request to Continental, Leo’s transfer agent, in which you (i) request that New Local Bounti redeem all or a portion of your public shares for cash, and (ii) identify yourself as the beneficial holder of the public shares and provide your legal name, phone number and address; and
|
(iii) |
deliver your public shares to Continental, Leo’s transfer agent, physically or electronically through The Depository Trust Company.
|
• |
Proposal No. 1—The Warrant Amendment Proposal
Warrant Amendment
”) to the warrant agreement that governs all of Leo’s outstanding warrants. The Warrant Amendment proposes to amend and restate the Warrant Agreement (as defined in the accompanying joint proxy statement/prospectus) to implement certain changes that are intended to result in the warrants of Leo being accounted for as equity within the balance sheet of New Local Bounti, instead of as a liability measured at fair value with non-cash fair value adjustments recorded in earning at each reporting period (the “
Warrant Amendment Proposal
”), the substantive text of which is included as Annex L to the accompanying joint proxy statement/prospectus; and
|
• |
Proposal No. 2—The Warrant Holders Adjournment Proposal
Warrant Holders Adjournment Proposal
” and, together with the Warrant Amendment Proposal, the “
Warrant Holders Proposals
”).
|
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J-1 | ||||
K-1 | ||||
L-1 |
• |
“
Aggregate Transaction Proceeds Condition
|
• |
“
Articles of Association
|
• |
“
Business Combination
|
• |
“
Merger Agreement
|
• |
“
Cayman Islands Companies Act
|
• |
“
Charter Proposal
|
• |
“
Class
A ordinary shares
one-for-one
|
• |
“
Class
B ordinary shares
founder shares
one-for-one
|
• |
“
Closing
|
• |
“
Closing Date
Business Combination Proposal—Conditions to Closing of the Business Combination
|
• |
“
Condition Precedent Proposals
|
• |
“
Continental
|
• |
“
Convertible Notes
|
• |
“
Domestication
|
• |
“
Effective Time
|
• |
“
Equity Incentive Plan
|
• |
“
ESPP
|
• |
“
extraordinary general meeting
|
coronavirus
or COVID-19, we
are planning for the possibility that the meeting may be held virtually over the Internet. If we take this step, we will announce the decision to do so via a press release and posting details on our website that will also be filed with the SEC as proxy material;
|
• |
“
Existing Governing Documents
|
• |
“
initial public offering
|
• |
“
initial shareholders
|
• |
“
Leo,
we
us
our
|
• |
“
Leo Board
|
• |
“
private placement warrants
|
• |
“
public warrants
|
• |
“
Leo warrants
|
• |
“
Leo warrant holders
|
• |
“
Local Bounti
|
• |
“
Local Bounti restricted common stock
|
• |
“
Local Bounti restricted stock units
|
• |
“
Local Bounti Securityholders
|
• |
“
Local Bounti Stockholders
|
• |
“
Local Bounti voting common stock
|
• |
“
Local Bounti Warrants
|
• |
“
Memorandum of Association
|
• |
“
Mergers
|
• |
“
First Merger
|
• |
“
Merger Sub 1
|
• |
“
Merger Sub 2
|
• |
“
New Local Bounti
Combined Company
|
• |
“
New Local Bounti Board
|
• |
“
New Local Bounti Common Stock
|
• |
“
NYSE
|
• |
“
ordinary shares
|
• |
“
PIPE Financing
|
• |
“
PIPE Investors
|
• |
“
pro forma
|
• |
“
Proposed Bylaws
|
• |
“
Proposed Certificate of Incorporation
|
• |
“
Proposed Governing Documents
|
• |
“
public shareholders
|
• |
“
public shares
|
• |
“
redemption
|
• |
“
SEC
|
• |
“
Second Merger
|
• |
“
Securities Act
|
• |
“
Sponsor
|
• |
“
Subscription Agreements
|
• |
“
transfer agent
|
• |
“
trust account
|
• |
“
units
one-fifth
of one warrant to acquire one Class A ordinary share, that were offered and sold by Leo in its initial public offering and in its concurrent private placement;
|
• |
“
Warrant Agreement
|
• |
“
Warrant Amendment
|
• |
“
Warrant Amendment Proposal
|
• |
“
Warrant Holders Adjournment Proposal
|
• |
“
Warrant Holders Meeting
|
• |
“
Warrant Holders Proposals
|
Q:
|
Why am I receiving this joint proxy statement/prospectus?
|
A: |
Leo shareholders are being asked to consider and vote upon, among other proposals, a proposal to approve and adopt the Merger Agreement and approve the transactions contemplated thereby, including the Business Combination. In accordance with the terms and subject to the conditions of the Merger Agreement, among other things, in connection with the Domestication, on the Closing Date prior to the Effective Time, based on the Transaction Value, (i) each share of Local Bounti voting common stock (other than shares held by Local Bounti as treasury stock (which shares will be cancelled for no consideration as part of the First Merger) and dissenting shares) will be cancelled and converted into the right to receive the applicable portion of the merger consideration comprised of New Local Bounti Common Stock, earnout shares (as described herein) and up to $37.5 million of cash consideration (subject to certain conditions specified in the Merger Agreement), each as determined in the Merger Agreement, (ii) each share of Local Bounti restricted stock will be cancelled and converted into the right to receive the applicable portion of the merger consideration comprised of New Local Bounti Common Stock and earnout shares (as described below), each as determined in the Merger Agreement, (iii) each Local Bounti restricted stock unit, whether or not then vested, will be assumed by Leo and convert into a Leo restricted stock unit, subject to the same terms and conditions as applied to such Local Bounti restricted stock unit immediately prior to the Closing with a value as if such Local Bounti restricted stock unit were settled prior to the Closing, and (iv) each warrant of Local Bounti that is unexercised will be assumed by Leo and convert into a warrant to purchase New Local Bounti Common Stock and represent the right to receive the applicable portion of the merger consideration upon exercise of such warrant as if such warrant were exercised prior to the Closing. In addition, all convertible debt of Local Bounti will be fully converted into Local Bounti common stock as of immediately prior to the Closing and become eligible to receive New Local Bounti Common Stock (which amount, for the avoidance of doubt, is excluded from the implied pre-transaction equity value of Local Bounti) based on the number of shares of Local Bounti common stock issuable upon conversion of such convertible debt. Each Local Bounti equityholder entitled to receive a portion of the earnout shares will receive its applicable portion of equal thirds of 2,500,000 earnout shares if the trading price of New Local Bounti Common Stock is greater than or equal to $13.00, $15.00 and $17.00 for any 20 trading days within any
30-trading
day period and will also accelerate and be fully issuable in connection with any Change of Control (as defined in the Merger Agreement) if the applicable thresholds are met in such Change of Control. See “
Business Combination Proposal
|
Q:
|
What proposals are shareholders of Leo being asked to vote upon?
|
A:
|
At the extraordinary general meeting, Leo is asking holders of its ordinary shares to consider and vote upon separate proposals, as follows:
|
• |
a proposal to approve by ordinary resolution and adopt the Merger Agreement, including the Merger, and the transactions contemplated thereby;
|
• |
a proposal to approve by special resolution the Domestication;
|
• |
a proposal to approve by special resolution the Proposed Certificate of Incorporation;
|
• |
a proposal to approve, on
a non-binding advisory
basis, each of the Governing Documents Proposals and thereby (i) authorize change to authorized capital stock, (ii) authorize the Leo Board to make issuances of preferred stock, (iii) adopt Delaware as the exclusive forum for certain stockholder litigation and the federal district courts of the United States as the exclusive forum for litigation arising out of the Securities Act, and (iv) approve other changes to be made in connection with the adoption of the Proposed Governing Documents. A copy of the Proposed Certificate of Incorporation and Proposed Bylaws is attached to this joint proxy statement/prospectus as Annex C and D, respectively;
|
• |
to authorize by way of ordinary resolution the change in the authorized capital stock of Leo from (i) 500,000,000 Class A ordinary shares, par value $0.0001 per share, (ii) 50,000,000 Class B ordinary shares, par value $0.0001 per share and (iii) 5,000,000 preference shares, par value $0.0001 per share, to (a) 400,000,000 shares of common stock, par value $0.0001 per share, of New Local Bounti and (b) 100,000,000 shares of preferred stock, par value $0.0001 per share, of New Local Bounti;
|
• |
to authorize the New Local Bounti Board to issue any or all shares of New Local Bounti Preferred Stock in one or more classes or series, with such terms and conditions as may be expressly determined by the New Local Bounti Board and as may be permitted by the DGCL;
|
• |
to authorize the removal of the ability of New Local Bounti stockholders to take action by written consent in lieu of a meeting; and
|
• |
to amend and restate the Existing Governing Documents and authorize all other changes necessary or, as mutually agreed in good faith by Leo and Local Bounti, desirable in connection with the replacement of Existing Governing Documents with the Proposed Governing Documents as part of the Domestication;
|
• |
a proposal to approve by ordinary resolution shares of New Local Bounti Common Stock in connection with the Business Combination and the PIPE Financing in compliance with the NYSE listing requirements;
|
• |
a proposal to approve and adopt by ordinary resolution the Equity Incentive Plan;
|
• |
a proposal to approve and adopt by ordinary resolution the ESPP;
|
• |
a proposal to approve and adopt by ordinary resolution the election of seven (7) members of the board of directors of New Local Bounti following Closing; and
|
• |
a proposal to approve by ordinary resolution the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to, among other things, permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting.
|
Q:
|
Why is Leo proposing the Business Combination?
|
A: |
Leo is a blank check company incorporated on January 8, 2021 as a Cayman Islands exempted company and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase,
|
reorganization or similar business combination with one or more businesses. Leo intends to focus its search for a target business in the consumer sector and believes its management team is well suited to identify opportunities that have the potential to generate attractive risk-adjusted returns for its shareholders, although it may pursue a business combination opportunity in any business or industry. |
Q:
|
Did the Leo Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?
|
A: |
No. The Leo Board did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. However, Leo’s management, the members of the Leo Board and the other representatives of Leo have substantial experience in evaluating the operating and financial merits of companies similar to Local Bounti and reviewed certain financial information of Local Bounti and compared it to certain publicly traded companies, selected based on the experience and the professional judgment of Leo’s management team, which enabled them to make the necessary analyses and determinations regarding the Business Combination. Accordingly, investors will be relying solely on the judgment of the Leo Board in valuing Local Bounti’s business and assuming the risk that the Leo Board may not have properly valued such business.
|
Q:
|
What will Local Bounti’s equityholders receive in return for the Business Combination with Leo?
|
A: |
On the date of Closing, promptly following the consummation of the Domestication, Merger Sub 1 will merge with and into Local Bounti, with Local Bounti as the surviving company in the First Merger, followed immediately by the merger of the surviving company with and into Merger Sub 2, with Merger Sub 2 as the surviving company in the Second Merger and, after giving effect to such Merger, Local Bounti shall be a wholly-owned subsidiary of Leo. At the Effective Time, based on the Transaction Value, (i) each share of Local Bounti voting common stock (other than shares held by Local Bounti as treasury stock (which shares will be cancelled for no consideration as part of the First Merger) and dissenting shares) will be cancelled and converted into the right to receive the applicable portion of the merger consideration comprised of New Local Bounti Common Stock, earnout shares (as described herein) and up to $37.5 million of cash consideration (subject to certain conditions specified in the Merger Agreement), each as determined in the Merger Agreement, (ii) each share of Local Bounti restricted stock will be cancelled and converted into the right to receive the applicable portion of the merger consideration comprised of New Local Bounti Common Stock and earnout shares (as described below), each as determined in the Merger Agreement, (iii) each Local Bounti restricted stock unit, whether or not then vested, will be assumed by Leo and convert into a Leo restricted stock unit, subject to the same terms and conditions as applied to such Local Bounti restricted stock unit immediately prior to the Closing with a value as if such Local Bounti restricted stock unit were settled prior to the Closing, and (iv) each warrant of Local Bounti that is unexercised will be assumed by Leo and convert into a warrant to purchase New Local Bounti Common Stock and represent the right to receive the applicable portion of the merger consideration upon exercise of
|
such warrant as if such warrant were exercised prior to the Closing. In addition, all convertible debt of Local Bounti will be fully converted into Local Bounti common stock as of immediately prior to the Closing and become eligible to receive New Local Bounti Common Stock (which amount, for the avoidance of doubt, is excluded from the implied pre-transaction equity value of Local Bounti) based on the number of shares of Local Bounti common stock issuable upon conversion of such convertible debt. Each Local Bounti equityholder entitled to receive a portion of the earnout consideration will receive its applicable portion of equal thirds of 2,500,000 earnout shares if the trading price of New Local Bounti Common Stock is greater than or equal to $13.00, $15.00 and $17.00 for any 20 trading days within any
30-trading
day period and will also accelerate and be fully issuable in connection with any Change of Control (as defined in the Merger Agreement) if the applicable thresholds are met in such Change of Control.
|
Q:
|
How will the combined company be managed following the business combination?
|
A: |
Following the Closing, it is expected that the current management of Local Bounti will become the management of New Local Bounti, and the New Local Bounti Board will consist of up to seven (7) directors, which will be divided into three classes (Class I, II and III) with Class I consisting of three (3) directors, Class II consisting of two (2) directors and Class III consisting of two (2) directors. Pursuant to the Merger Agreement, the New Local Bounti Board will consist of (i) two (2) individuals designated by Leo, (ii) four (4) individuals designated by Local Bounti, and (iii) one (1) individual mutually agreed upon by Local Bounti and Leo, who will serve as an independent director. Please see the section entitled “
Management of New Local Bounti Following the Business Combination
|
Q:
|
What equity stake will current Leo shareholders and current equityholders of Local Bounti hold in New Local Bounti immediately after the consummation of the Business Combination?
|
A: |
As of , 2021, there are (i) 27,500,000 Class A ordinary shares outstanding underlying units issued in Leo’s initial public offering and (ii) 6,875,000 Class B ordinary shares outstanding held by Leo’s initial shareholders. As of the date of this joint proxy statement/prospectus, there are outstanding 5,333,333 private placement warrants held by Sponsor and 5,500,000 public warrants. Each whole warrant entitles the holder thereof to purchase one Class A ordinary share and, following the Domestication, will entitle the holder thereof to purchase one share of New Local Bounti Common Stock. Therefore, as of the date of this joint proxy statement/prospectus (without giving effect to the Business Combination and assuming that none of Leo’s outstanding public shares are redeemed in connection with the Business Combination), Leo’s fully-diluted share capital, giving effect to the exercise of all of the private placement warrants and public warrants, would be 45,208,333 ordinary shares.
|
Share Ownership in New Local Bounti
|
||||||||
No redemptions
Percentage of Outstanding Shares |
Maximum redemptions
(1)
Percentage of Outstanding Shares |
|||||||
Leo public shareholders
|
25.1 | % | — | % | ||||
PIPE Investors
|
11.4 | % | 15.2 | % | ||||
Sponsor and our initial shareholders
(2)
|
6.3 | % | 8.4 | % | ||||
Existing Local Bounti Stockholders
(3)
|
57.2 | % | 76.4 | % |
(1) |
Assumes that all of Leo’s outstanding public shares are redeemed in connection with the Business Combination.
|
(2) |
Includes 6,875,000 shares held by the Initial Shareholders originally acquired prior to or in connection with Leo’s initial public offering.
|
(3) |
Represents shares of common stock of Local Bounti that will be converted to shares of New Local Bounti Common Stock in connection with the Business Combination. Includes 2.9% of shares of New Local Bounti Common Stock to be issued to holders of Local Bounti Convertible Notes).
|
Q:
|
Why is Leo proposing the Domestication?
|
A: |
Our board of directors believes that there are significant advantages to us that will arise as a result of a change of our domicile to Delaware. Further, our board of directors believes that any direct benefit that the Delaware General Corporation Law (the “
DGCL
”) provides to a corporation also indirectly benefits its stockholders, who are the owners of the corporation. The board of directors believes that there are several reasons why transfer by way of continuation to Delaware is in the best interests of Leo and its shareholders, including, (i) the prominence, predictability and flexibility of the DGCL, (ii) Delaware’s well-established principles of corporate governance and (iii) the increased ability for Delaware corporations to attract and retain qualified directors, each of the foregoing are discussed in greater detail in the section entitled “
Domestication Proposal—Reasons for the Domestication
|
Q:
|
What amendments will be made to the current constitutional documents of Leo?
|
A: |
The consummation of the Business Combination is conditional, among other things, on the Domestication. Accordingly, in addition to voting on the Business Combination, Leo’s shareholders also are being asked to consider and vote upon a proposal to approve the Domestication, and replace Leo’s Existing Governing Documents, in each case, under Cayman Islands law with the Proposed Governing Documents, in each case, under the DGCL, which differ from the Existing Governing Documents in the following material respects:
|
Q:
|
How will the Domestication affect my ordinary shares, warrants and units?
|
A: |
In connection with the Domestication, on the Closing Date prior to the Effective Time, (i) each issued and outstanding Class A ordinary share and each issued and outstanding Class B ordinary share of Leo will
|
convert automatically by operation of law, on a
one-for-one
one-fifth
of one warrant to acquire one share of New Local Bounti Common Stock. See “
Domestication Proposal.
|
Q:
|
What are the U.S. federal income tax consequences of the Domestication?
|
A: |
As discussed more fully under the section entitled “
Material U.S. Federal Income Tax Consequences of the Domestication to Leo Shareholders
|
• |
a U.S. Holder of Leo public shares whose Leo public shares have a fair market value of less than $50,000 on the date of the Domestication, and who on the date of the Domestication owns (actually and constructively) less than 10% of the total combined voting power of all classes of Leo public shares entitled to vote and less than 10% of the total value of all classes of Leo public shares, will generally not recognize any gain or loss and will generally not be required to include any part of Leo’s earnings in income pursuant to the Domestication;
|
• |
a U.S. Holder of Leo public shares whose Leo public shares have a fair market value of $50,000 or more on the date of the Domestication, but who on the date of the Domestication owns (actually and constructively) less than 10% of the total combined voting power of all classes of Leo public shares entitled to vote and less than 10% of the total value of all classes of Leo public shares will generally recognize gain (but not loss) on the exchange of Leo public shares for shares in New Local Bounti (a Delaware corporation) pursuant to the Domestication. As an alternative to recognizing gain, any such U.S. Holder may file an election to include in income as a dividend the “all earnings and profits amount” (as defined in Treasury Regulation
Section 1.367(b)-2(d))
attributable to such holder’s Leo public shares, provided certain other requirements are satisfied. Leo does not expect to have significant cumulative earnings and profits on the date of the Domestication; and
|
• |
a U.S. Holder of Leo public shares who on the date of the Domestication owns (actually and constructively) 10% or more of the total combined voting power of all classes of Leo public shares entitled to vote or 10% or more of the total value of all classes of Leo public shares will generally be required to include in income as a dividend the “all earnings and profits amount” (as defined in Treasury Regulation
Section 1.367(b)-2(d))
attributable to its Leo public shares, provided certain other requirements are satisfied. Any such U.S. Holder that is a corporation may, under certain circumstances, effectively be exempt from taxation on a portion or all of the deemed dividend pursuant to Section 245A of the Code. Leo does not expect to have significant cumulative earnings and profits on the date of the Domestication.
|
Q:
|
Do I have redemption rights?
|
A: |
If you are a holder of public shares, you have the right to request that we redeem all or a portion of your public shares for cash provided that you follow the procedures and deadlines described elsewhere in this joint proxy statement/prospectus.
Public shareholders (other than those who have agreed not to do so by executing a Transaction Support Agreement) may elect to redeem all or a portion of the public shares held by them regardless of if or how they vote in respect of the Business Combination Proposal
How do I exercise my redemption rights?
|
Q:
|
How do I exercise my redemption rights?
|
A: |
In connection with the proposed Business Combination, pursuant to the Existing Governing Documents, Leo’s public shareholders (other than those who have agreed not to do so by executing a Transaction Support Agreement) may request that Leo redeem all or a portion of such public shares for cash if the Business Combination is consummated. If you are a public shareholder and wish to exercise your right to redeem the public shares, you must:
|
(i) |
(a) hold public shares, or (b) if you hold public shares through units, you elect to separate your units into the underlying public shares and public warrants prior to exercising your redemption rights with respect to the public shares;
|
(ii) |
submit a written request to Continental, Leo’s transfer agent, in which you (i) request that we redeem all or a portion of your public shares for cash, and (ii) identify yourself as the beneficial holder of the public shares and provide your legal name, phone number and address; and
|
(iii) |
deliver your public shares to Continental, our transfer agent, physically or electronically through The Depository Trust Company (“
DTC
”).
|
Q:
|
If I am a holder of units, can I exercise redemption rights with respect to my units?
|
A: |
No. Holders of issued and outstanding units must elect to separate the units into the underlying public shares and public warrants prior to exercising redemption rights with respect to the public shares. If you hold your
|
units in an account at a brokerage firm or bank, you must notify your broker or bank that you elect to separate the units into the underlying public shares and public warrants, or if you hold units registered in your own name, you must contact Continental, our transfer agent, directly and instruct them to do so. The redemption rights include the requirement that a holder must identify itself in writing as a beneficial holder and provide its legal name, phone number and address to Continental in order to validly redeem its shares. You are requested to cause your public shares to be separated and delivered to Continental, our transfer agent, by 5:00 p.m., Eastern Time, , 2021 (two business days before the extraordinary general meeting) in order to exercise your redemption rights with respect to your public shares. |
Q:
|
What are the U.S. federal income tax consequences of exercising my redemption rights?
|
A: |
We expect that a U.S. Holder (as defined in “
U.S. Federal Income Tax Considerations—U.S. Holders
U.S. Federal Income Tax Considerations.
|
Q:
|
What happens to the funds deposited in the trust account after consummation of the Business Combination?
|
A: |
Following the closing of our initial public offering, an amount equal to $275,000,000 ($10.00 per unit) of the net proceeds from our initial public offering and the sale of the private placement warrants was placed in the trust account. As of , 2021, funds in the trust account totaled approximately $ and were held in U.S. treasury securities. These funds will remain in the trust account, except for the withdrawal of interest to pay taxes, if any, until the earliest of (i) the completion of a business combination (including the Closing) or (ii) the redemption of all of the public shares if we are unable to complete a business combination by March 2, 2023 (unless such date is extended in accordance with the Existing Governing Documents), subject to applicable law.
|
Q:
|
What happens if a substantial number of the public shareholders vote in favor of the Business Combination Proposal and exercise their redemption rights?
|
A: |
Our public shareholders are not required to vote “AGAINST” the Business Combination in order to exercise their redemption rights, although redemption is only available if the Business Combination is consummated.
|
Accordingly, the Business Combination may be consummated even though the funds available from the trust account and the number of public shareholders are reduced as a result of redemptions by public shareholders. In no event will Leo redeem public shares in an amount that would cause our net tangible assets (as determined in accordance with Rule
3a51-1(g)(1)
of the Exchange Act) to be less than $5,000,001 after giving effect to the transactions contemplated by the Merger Agreement, the PIPE Financing and all of the Leo shareholder redemptions.
|
Q:
|
What conditions must be satisfied to complete the Business Combination?
|
A: |
The consummation of the Business Combination is conditioned upon, among other things, (i) the approval by our shareholders of the Condition Precedent Proposals being obtained; (ii) the applicable waiting period under the HSR Act relating to the Merger Agreement having expired or been terminated; (iii) Leo having at least $5,000,001 of net tangible assets (as determined in accordance with Rule
3a51-1(g)(1)
of the Exchange Act) after giving effect to the transactions contemplated by the Merger Agreement, the PIPE Financing and all of the Leo shareholder redemptions; (iv) the Aggregate Transaction Proceeds Condition; (v) the approval by the NYSE of our initial listing application in connection with the Business Combination; (vi) the consent of the holders of a majority of voting common stock of Local Bounti and the conversion of all Local Bounti equity interests other than Convertible Debt, and (vii) the consummation of the Domestication. For more information about conditions to the consummation of the Business Combination, see “
Business Combination Proposal—Conditions to Closing of the Business Combination
|
Q:
|
When do you expect the Business Combination to be completed?
|
A: |
It is currently expected that the Business Combination will be consummated in the second half of 2021. This date depends, among other things, on the approval of the proposals to be put to Leo shareholders at the extraordinary general meeting. However, such extraordinary general meeting could be adjourned if the Adjournment Proposal is adopted by our shareholders at the extraordinary general meeting and we elect to adjourn the extraordinary general meeting to a later date or dates to consider and vote upon a proposal to approve by ordinary resolution the adjournment of the extraordinary general meeting to a later date or dates (A) to the extent necessary to ensure that any required supplement or amendment to the accompanying joint proxy statement/prospectus is provided to Leo shareholders or, if as of the time for which the extraordinary general meeting is scheduled, there are insufficient Leo ordinary shares represented (either in person or by proxy) to constitute a quorum necessary to conduct business at the extraordinary general meeting, (B) in order to solicit additional proxies from Leo shareholders in favor of one or more of the proposals at the extraordinary general meeting or (C) if Leo shareholders redeem an amount of public shares such that the Aggregate Transaction Proceeds Condition would not be satisfied. For a description of the conditions for the completion of the Business Combination, see “
Business Combination Proposal—Conditions to Closing of the Business Combination
|
Q:
|
What happens if the Business Combination is not consummated?
|
A: |
Leo will not complete the Domestication to Delaware unless all other conditions to the consummation of the Business Combination have been satisfied or waived by the parties in accordance with the terms of the Merger Agreement. If Leo is not able to consummate the Business Combination with Local Bounti nor able to complete another business combination by March 2, 2023, in each case, as such date may be extended pursuant to our Existing Governing Documents, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a
per-share
price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable, and less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to
|
receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable laws. |
Q:
|
Do I have appraisal rights in connection with the proposed Business Combination and the proposed Domestication?
|
A: |
Neither our shareholders nor our warrant holders have appraisal rights in connection with the Business Combination or the Domestication under the Cayman Islands Companies Act or under the DGCL.
|
Q:
|
What do I need to do now?
|
A: |
We urge you to read this joint proxy statement/prospectus, including the Annexes and the documents referred to herein, carefully and in their entirety and to consider how the Business Combination will affect you as a shareholder and/or warrant holder. Our shareholders should then vote as soon as possible in accordance with the instructions provided in this joint proxy statement/prospectus and on the enclosed extraordinary general meeting proxy card.
|
Q:
|
How do I vote?
|
A: |
If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, and were a holder of record of ordinary shares on , 2021, the record date for the extraordinary general meeting, you may vote with respect to the proposals in person or virtually at the extraordinary general meeting, or by completing, signing, dating and returning the enclosed extraordinary general meeting proxy card in the postage-paid envelope provided. For the avoidance of doubt, the record date does not apply to Leo shareholders that hold their shares in registered form and are registered as shareholders in Leo’s register of members. All holders of shares in registered form on the day of the extraordinary general meeting are entitled to vote at the extraordinary general meeting.
|
Q:
|
If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?
|
A: |
No. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” If this is the case, this joint proxy statement/prospectus may have been forwarded to you by your brokerage firm, bank or other nominee, or its agent. As the beneficial holder, you have the right to direct your broker, bank or other nominee as to how to vote your shares. If you do not provide voting instructions to your broker on a particular proposal on which your broker does not have discretionary authority to vote, your shares will not be voted on that proposal. This is called a “broker
non-vote.”
Broker non-votes will not be counted for the purposes of determining the existence of a quorum or for purposes of determining the number of votes cast at the extraordinary general meeting. If you decide to vote, you should provide instructions to your broker, bank or other nominee on how to vote in accordance with the information and procedures provided to you by your broker, bank or other nominee.
|
Q:
|
When and where will the extraordinary general meeting be held?
|
A: |
The extraordinary general meeting will be held at a.m., Eastern Time, on , 2021, at the offices of Kirkland & Ellis LLP located at 601 Lexington Avenue, 50 Floor, New York, New York 10022, or via a virtual meeting, or at such other time, on such other date and at such other place to which the meeting may be adjourned.. As part of our precautions
regarding COVID-19, we
are planning for the possibility that the meeting may be held virtually over the Internet. If we take this step, we will announce the decision to do so via a press release and posting details on our website that will also be filed with the SEC as proxy material. Only shareholders who held ordinary shares of Leo at the close of business on the Record Date will be entitled to vote at the extraordinary general meeting.
|
Q:
|
What impact will the
COVID-19
Pandemic have on the Business Combination?
|
A: |
Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of the coronavirus outbreak on the business of Leo and Local Bounti, and there is no guarantee that efforts by Leo and Local Bounti to address the adverse impacts of the coronavirus will be effective. The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and actions taken to contain the coronavirus or its impact, among others. If Leo or Local Bounti are unable to recover from a business disruption on a timely basis, the Business Combination and New Local Bounti’s business, financial condition and results of operations following the completion of the Business Combination would be adversely affected. The Business Combination may also be delayed and adversely affected by the coronavirus outbreak and become more costly. Each of Leo and Local Bounti may also incur additional costs to remedy damages caused by any such disruptions, which could adversely affect its financial condition and results of operations.
|
Q:
|
Who is entitled to vote at the extraordinary general meeting?
|
A: |
We have fixed , 2021 as the record date for the extraordinary general meeting. If you were a shareholder of Leo at the close of business on the record date, you are entitled to vote on matters that come before the extraordinary general meeting. However, a shareholder may only vote his or her shares if he or she is present in person or is represented by proxy at the extraordinary general meeting.
|
Q:
|
How many votes do I have?
|
A: |
Leo shareholders are entitled to one vote at the extraordinary general meeting for each ordinary share held of record as of the record date. As of the close of business on the record date for the extraordinary general meeting, there were 34,375,000 ordinary shares issued and outstanding, of which 27,500,000 were issued and outstanding public shares.
|
Q:
|
What constitutes a quorum?
|
A: |
A quorum of Leo shareholders is necessary to hold a valid meeting. A quorum will be present at the extraordinary general meeting if one or more shareholders who together hold not less than a majority of the issued and outstanding ordinary shares entitled to vote at the extraordinary general meeting are represented in person or by proxy at the extraordinary general meeting. As of the record date for the extraordinary general meeting, 17,187,501 ordinary shares would be required to achieve a quorum.
|
Q:
|
What vote is required to approve each proposal at the extraordinary general meeting?
|
A: |
The following votes are required for each proposal at the extraordinary general meeting:
|
(i) |
Business Combination Proposal:
|
(ii) |
Domestication Proposal:
two-thirds
(2/3) of the votes cast by the holders of the issued ordinary shares present in person or represented by proxy at the extraordinary general meeting and entitled to vote on such matter.
|
(iii) |
Charter Proposal:
two-thirds
(2/3) of the votes cast by the holders of the issued ordinary shares present in person or represented by proxy at the extraordinary general meeting and entitled to vote on such matter.
|
(iii) |
Governing Documents Proposals:
non-binding
advisory basis only.
|
(iv) |
The NYSE Proposal:
|
(v) |
Incentive Award Plan Proposal:
|
(vi)
|
Employee Stock Purchase Plan Proposal:
|
(vii) |
Director Proposal:
|
(viii) |
Adjournment Proposal:
|
Q:
|
Why is Leo proposing the Governing Documents Proposals?
|
A: |
Leo is requesting that its shareholders vote upon, on a
non-binding
advisory basis, proposals to approve certain governance provisions contained in the Proposed Certificate of Incorporation that materially affect shareholder rights. This separate vote is not required by Cayman Islands law separate and apart from the Charter Proposal, but pursuant to SEC guidance, Leo is required to submit these provisions to its shareholders separately for approval. However, the shareholder vote regarding this proposal is an advisory vote, and is not binding on Leo and the Leo Board (separate and apart from the approval of the Charter Proposal). Furthermore, the Business Combination is not conditioned on the separate approval of the Governing Documents Proposals (separate and apart from approval of the Charter Proposal). Please see the section entitled “
Governing Documents Proposals
|
Q:
|
What are the recommendations of the Leo Board?
|
A: |
The Leo Board believes that the Business Combination Proposal and the other proposals to be presented at the extraordinary general meeting are in the best interest of Leo and its shareholders and unanimously
|
recommends that its shareholders vote “FOR” the Business Combination Proposal, “FOR” the Domestication Proposal, “FOR” the Charter Proposal, “FOR” each of the separate Governing Documents Proposals, “FOR” the NYSE Proposal, “FOR” the Incentive Award Plan Proposal, “FOR” the Employee Stock Purchase Plan Proposal, “FOR” the Director Election Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the extraordinary general meeting. |
Q:
|
How do Sponsor and the other initial shareholders intend to vote their shares?
|
A: |
Unlike some other blank check companies in which the initial shareholders agree to vote their shares in accordance with the majority of the votes cast by the public shareholders in connection with an initial business combination, our initial shareholders have agreed to vote all their shares in favor of all the proposals being presented at the extraordinary general meeting. As of the date of this joint proxy statement/prospectus, our initial shareholders own approximately 20% of the issued and outstanding ordinary shares.
|
Q:
|
What happens if I sell my Leo ordinary shares before the extraordinary general meeting?
|
A: |
The record date for the extraordinary general meeting is earlier than the date of the extraordinary general meeting and earlier than the date that the Business Combination is expected to be completed. If you transfer your public shares after the applicable record date, but before the extraordinary general meeting, unless you grant a proxy to the transferee, you will retain your right to vote at such general meeting.
|
Q:
|
May I change my vote after I have mailed my signed extraordinary general meeting proxy card?
|
A: |
Yes. Shareholders may send a later-dated, signed extraordinary general meeting proxy card to our general counsel at our address set forth below so that it is received by our general counsel prior to the vote at the extraordinary general meeting (which is scheduled to take place on , 2021) or attend the extraordinary general meeting in person and vote. Shareholders also may revoke their proxy by sending a notice of revocation to our general counsel, which must be received by our general counsel prior to the vote at the extraordinary general meeting. However, if your shares are held in “street name” by your broker, bank or another nominee, you must contact your broker, bank or other nominee to change your vote.
|
Q:
|
What happens if I fail to take any action with respect to the extraordinary general meeting?
|
A: |
If you fail to vote with respect to the extraordinary general meeting and the Business Combination is approved by shareholders and the Business Combination is consummated, you will become a stockholder and/or warrant holder of New Local Bounti. If you fail to vote with respect to the extraordinary general meeting and the Business Combination is not approved, you will remain a shareholder and/or warrant holder of Leo. However, if you fail to vote with respect to the extraordinary general meeting, you will nonetheless be able to elect to redeem your public shares in connection with the Business Combination.
|
Q:
|
What should I do if I receive more than one set of voting materials?
|
A: |
Shareholders may receive more than one set of voting materials, including multiple copies of this joint proxy statement/prospectus and multiple extraordinary general meeting proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one extraordinary general meeting proxy card. Please complete, sign, date and return each extraordinary general meeting proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your ordinary shares.
|
Q:
|
Who will solicit and pay the cost of soliciting proxies for the extraordinary general meeting?
|
A: |
Leo will pay the cost of soliciting proxies for the extraordinary general meeting. Leo has engaged Morrow Sodali LLC (“
Morrow
”) to assist in the solicitation of proxies for the extraordinary general meeting. Leo has agreed to pay Morrow a fee of $ , plus disbursements, and will reimburse Morrow for its reasonable
out-of-pocket
|
Q:
|
Where can I find the voting results of the extraordinary general meeting?
|
A: |
The preliminary voting results will be announced at the extraordinary general meeting. Leo will publish final voting results of the extraordinary general meeting in a Current Report on Form
8-K
within four business days after the extraordinary general meeting.
|
Q:
|
Who can help answer my questions?
|
A: |
If you have questions about the Business Combination or if you need additional copies of the joint proxy statement/prospectus or the enclosed extraordinary general meeting proxy card you should contact:
|
Q:
|
What is being voted on at the Warrant Holders Meeting?
|
A: |
At the Warrant Holders Meeting, the holders of Leo public warrants are being asked to vote on the following Warrant Holders Proposals:
|
• |
a proposal to amend and restate the Warrant Agreement to implement certain changes that are intended to result in the warrants of Leo being accounted for as equity within the balance sheet of New Local Bounti, instead of as a liability measured at fair value with non-cash fair value adjustments recorded in earning at each reporting period; and
|
• |
a proposal to adjourn the Warrant Holders Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if it is determined by Leo that more time is necessary or appropriate to approve the Warrant Amendment Proposal.
|
Q:
|
What is the purpose of the Warrant Amendment for which approval is being sought?
|
A: |
Approval is being sought from public warrant holders as of the Record Date in order to amend the Warrant Agreement to implement certain changes that are intended to result in the warrants of Leo being accounted for as equity within the balance sheet of New Local Bounti, instead of as a liability measured at fair value with non-cash fair value adjustments recorded in earnings at each reporting period. A summary of the Warrant Amendment Proposal is set forth in the section entitled “Warrant Holders Proposal No. 1 - The Warrant Amendment Proposal” of this joint proxy statement/prospectus and a complete copy of the Warrant Amendment is included as Annex L to this joint proxy statement/prospectus.
|
Q:
|
When and where will the Warrant Holders Meeting be held?
|
A. |
The Warrant Holders Meeting will be held prior to the extraordinary general meeting at am, Eastern Time, on , 2021, at the offices of Kirkland & Ellis LLP located at 601 Lexington Avenue, 50th Floor, New York, New York 10022 or via a virtual meeting, or at such other time, on such other date and at such other place to which the meeting may be adjourned. Only Leo warrant holders at the close of business on , 2021 will be entitled to vote at the Warrant Holders Meeting and at any adjournments and postponements thereof.
|
Q:
|
Who is entitled to vote at the Warrant Holders Meeting?
|
A. |
Leo has fixed , 2021 as the record date for the Warrant Holders Meeting. If you were a Leo public warrant holder at the close of business on the record date, you are entitled to vote on matters that come before the Warrant Holders Meeting. However, a Leo public warrant holder may only vote his, her or its warrants if he, she or it is present in person or is represented by proxy at the Warrant Holders Meeting.
|
Q:
|
How do I vote?
|
A. |
If you are a record owner of warrants, there are two ways to vote your warrants at the Warrant Holders Meeting:
|
Q:
|
How many votes do I have?
|
A: |
Holders of Leo public warrants are entitled to one vote at the Warrant Holders Meeting for each Leo public warrant held of record as of the record date. As of the date of this joint proxy statement/prospectus there are 5,500,000 Leo public warrants issued and outstanding.
|
Q:
|
What constitutes a quorum?
|
A: |
A quorum of Leo public warrant holders is necessary to hold a valid meeting. A quorum will be present at the Warrant Holders Meeting if a majority of the warrants outstanding and entitled to vote at the Warrant
|
Holders Meeting are represented in person or by proxy. As of the record date for the Warrant Holders Meeting, Leo public warrants would be required to achieve a quorum. |
Q:
|
What if I do not vote my Leo public warrants or if I abstain from voting?
|
A. |
The approval of the Warrant Amendment Proposal requires the affirmative vote by the holders of at least 50% of the outstanding Leo public warrants. The Warrant Holders Adjournment Proposal, if presented, requires the affirmative vote by the holders of a majority of the outstanding Leo public warrants that are present and entitled to vote at the Warrant Holders Meeting. At the Warrant Holders Meeting, Leo will count a properly executed proxy marked “ABSTAIN” with respect to a particular proposal as present for purposes of determining whether a quorum is present. For purposes of approval, failure to vote or an abstention will not count as a vote cast at the Warrant Holders Meeting, and will have (i) the same effect as a vote against the Warrant Amendment Proposal and (ii) no effect on the Warrant Holder Adjournment Proposal, if presented.
|
Q:
|
What do I do if I want to vote against the warrant amendments?
|
A: |
If you are a Leo public warrant holder at the close of business on the record date and you wish to vote against the Warrant Amendment Proposal, you should sign and return your Warrant Holders Meeting proxy card indicating a vote “AGAINST.” Alternatively, you may vote in person at the Warrant Holders Meeting. If you are a Leo public warrant holder at the close of business on the record date and you do not sign and return your Warrant Holders Meeting proxy card to your broker or vote in person at the Warrant Holders Meeting, that will have the same effect as a vote against the Warrant Amendment Proposal.
|
Q:
|
What will happen to the warrants if the Warrant Amendment Proposal is not approved?
|
A: |
If the Warrant Amendment Proposal is not approved, the warrants will continue to be classified as liabilities on the financial statements of New Local Bounti following the completion of the Business Combination, which will (a) increase the administrative costs of New Local Bounti and (b) cause
non-cash
non-operating
expenses to be reflected higher than if the warrants were accounted for as equity.
|
Q:
|
What are the recommendations of the Leo Board?
|
A: |
After careful consideration, the Leo Board believes that the Warrant Amendment Proposal and the Warrant Holders Adjournment Proposal (if presented) are in the best interest of Leo and the holders of Leo public warrants and unanimously recommends that its public warrant holders vote “FOR” the Warrant Amendment Proposal and “FOR” the Warrant Holders Adjournment Proposal, in each case, if presented to the Warrant Holders Meeting.
|
Q:
|
What changes will be made to the terms of the warrants if the Warrant Amendment becomes operative?
|
A: |
We encourage you to review the substantive text of the proposed Warrant Amendment attached as Annex L to this joint proxy statement/prospectus. Please see the section entitled “
The Warrant Amendment
|
Q:
|
What is the record date?
|
A: |
The record date will be the close of business , 2021. All Leo public warrant holders of record at the close of business on this date will be entitled to vote on the Warrant Amendment.
|
Q:
|
What vote is required to approve the Warrant Holder Proposals presented at the Warrant Holder Meeting?
|
A: |
The approval of the Warrant Amendment Proposal requires the affirmative vote by the holders of at least 50% of the outstanding Leo public warrants. The approval of the Warrant Holders Adjournment Proposal, if presented, requires the affirmative vote by the holders of a majority of the outstanding Leo public warrants that are present and entitled to vote at the Warrant Holders Meeting.
|
Q:
|
If the Warrant Amendment is approved, when will it become effective?
|
A: |
The Warrant Amendment is expected to become effective promptly following the Warrant Holders Meeting and will be effective regardless of whether the Business Combination is completed.
|
Q:
|
In addition to receiving the necessary approval from Leo public warrant holders, what are the other conditions to the Warrant Amendment?
|
A: |
There are no other conditions for the Warrant Amendment to become operative.
|
Q:
|
If I purchase Leo public warrants after the record date, am I entitled to vote on the Warrant Amendment?
|
A: |
No. Only Leo public warrant holders on the record date will be eligible to vote on the Warrant Amendment. If you purchase Leo public warrants after this date, you will not be entitled to vote on the Warrant Amendment.
|
Q:
|
What happens if I sell my Leo public warrants prior to the record date for the Warrant Holders Meeting?
|
A: |
The record date for the Warrant Holders Meeting is , 2021. If you transfer your Leo public warrants after the record date, unless the transferee obtains from you a proxy to vote as to those warrants, you will retain your right to vote on Warrant Holders Proposals. If you transfer your Leo public warrants prior to the record date, you will have no right to participate in the Warrant Holders Meeting.
|
Q:
|
Who do I call if I have any questions about how to vote or any other questions relating to the Warrant Amendment Proposal or the Warrant Amendment?
|
A: |
Questions concerning the terms of the Warrant Amendment Proposal should be directed to Leo’s proxy solicitor at:
|
Combined Company Constituent Party
|
Combined Company Shares (1)
|
Voting%
|
||||||
PIPE Investors
|
12,500,000 | 11.4 | % | |||||
Local Bounti Common Stock (restricted and unrestricted)
|
59,493,616 | 54.3 | % | |||||
Local Bounti Convertible Note Holders
|
3,190,489 | 2.9 | % | |||||
Sponsor
|
6,875,000 | 6.3 | % | |||||
Public Shareholders (assuming no redemptions)
|
27,500,000 | 25.1 | % | |||||
Total
|
109,559,105 | 100.0 | % |
(1) |
Excludes 5,500,000 public warrants and excludes 5,333,333 private warrants. Subject to final adjustment as set forth in the Merger Agreement.
|
Combined Company Constituent Party
|
Combined Company Shares (1)
|
Voting%
|
||||||
PIPE Investors
|
12,500,000 | 11.4 | % | |||||
Local Bounti Common Stock (restricted and unrestricted)
|
59,493,616 | 54.3 | % | |||||
Local Bounti Convertible Note Holders
|
3,190,489 | 2.9 | % | |||||
Sponsor
|
6,875,000 | 6.3 | % | |||||
Public Shareholders (assuming no redemptions)
|
27,500,000 | 25.1 | % | |||||
Total
|
109,559,105 | 100.0 | % |
(1) |
Excludes 5,500,000 public warrants and excludes 5,333,333 private warrants. Subject to final adjustment as set forth in the Merger Agreement.
|
• |
Governing Documents Proposal A
|
• |
Governing Documents Proposal B
|
• |
Governing Documents Proposal C
|
• |
Governing Documents Proposal D
|
(i) |
are underperforming their potential but can demonstrate a clear microeconomic thesis for value creation;
|
(ii) |
are at an inflection point, such as those requiring additional management expertise;
|
(iii) |
have potential to improve the target’s growth prospects and help it realize opportunities to create shareholder value following the consummation of a business combination;
|
(iv) |
have significant embedded and/or underexploited expansion opportunities, accomplishable through a combination of accelerating organic growth and finding attractive
add-on
acquisition targets;
|
(v) |
exhibit unrecognized value or other characteristics that have been misevaluated by the marketplace based on our company-specific analysis and due diligence review; and
|
(vi) |
will offer attractive risk-adjusted equity returns for our shareholders evaluated based on (a) the potential for organic growth in cash flows, (b) the ability to achieve cost savings, (c) the ability to accelerate growth, including through the opportunity for
follow-on
acquisitions, and (d) the prospects for creating value through other value creation initiatives.
|
1. |
Best-in-class
low-cost
operations, enabled by its unique hybrid facility configuration that addresses the operational challenges of conventional greenhouse and vertical farming.
|
2. |
Superior Product vs. Traditional Agriculture.
|
3. |
Large Total Addressable Market.
|
4. |
Wide Product Offering Appealing to a Broad Customer Base.
URM-served
retail banners such as Rosauers, Super 1 Foods and Yoke’s.
|
5. |
Proven and Experienced Management Team.
Co-Chief
Executive Officers Craig M. Hurlbert and Travis Joyner, The Leo Board noted that Local Bounti’s management team has a
best-in-class
|
6. |
Strategic Plan with Multiple Levers of Growth.
|
(i) |
Organic Growth.
pre-engineered,
modular facility construction enables rapid scaling of new facilities with low execution risk. Furthermore, Local Bounti intends to expand the number of SKUs it offers, with potential for expansion into 40+ SKUs.
|
(ii) |
Investment
.
|
(iii) |
Pursue
New Growth Domestically and Internationally.
|
7. |
Financial Condition.
|
8. |
Terms of Transaction.
The Merger Agreement
Related Agreements
|
9. |
Results of Review of Transactions.
arm’s-length
basis in light of each party’s judgment about its ability to negotiate different or better terms. Based on the negotiations, the Leo Board considered that it believed that the terms of the Merger Agreement and related agreements were the best terms to which Local Bounti were reasonably likely to agree. See “ —
Background to the Business Combination
|
10. |
Continued Ownership by Sellers.
|
11. |
Results of Due Diligence.
|
(i) |
multiple meetings and calls with the Local Bounti management team regarding its operations and projections and the proposed transaction;
|
(ii) |
review of materials related to Local Bounti made available by Local Bounti, including material contracts, strategic plans, key metrics and performance indicators, benefit plans, insurance policies, litigation information, financial statements, risk mitigation materials and other legal diligence;
|
(iii) |
review of financial due diligence materials prepared by professional advisors, including quality of earnings reports and tax due diligence reports;
|
(iv) |
review of commercial due diligence materials prepared by professional advisors, including a market and competitive assessment and a business plan assessment;
|
(v) |
other financial, accounting, tax, legal, environmental, regulatory and real estate diligence; and
|
(vi) |
discussions with industry experts.
|
12. |
Potential Inability to Complete the Business Combination.
|
13. |
Local Bounti Business Risks.
Risk Factors
|
14. |
Limitations of Review.
|
15. |
No Survival of Remedies for Breach of Representations, Warranties or Covenants of Local Bounti.
|
16. |
Interests of Leo
’
s Directors and Executive Officers.
Interests of Leo
‘
s Directors and Executive Officers in the Business Combination
|
Share Ownership in New Local Bounti
|
||||||||
No redemptions
Percentage of Outstanding Shares |
Maximum redemptions
(1)
Percentage of Outstanding Shares |
|||||||
Leo public shareholders
|
25.1 | % | — | % | ||||
PIPE Investors
|
11.4 | % | 15.2 | % | ||||
Sponsor and our initial shareholders
(2)(3)
|
6.3 | % | 8.4 | % | ||||
Existing Local Bounti Stockholders
(4)
|
57.2 | % | 76.4 | % |
(1) |
Assumes that all of Leo’s outstanding public shares are redeemed in connection with the Business Combination.
|
(2) |
Includes 6,875,000 shares held by the initial shareholders originally acquired prior to or in connection with Leo’s initial public offering (including 20,000 shares held by each of Lori Bush, Mary E. Minnick and Mark Masinter, and 15,000 shares held by each of Scott Flanders, Imran Khan and Scott McNealy).
|
(3) |
Excludes shares of common stock to be purchased by certain officers and directors of Leo in connection with the PIPE Financing.
|
(4) |
Represents shares of common stock of Local Bounti that will be converted to shares of New Local Bounti Common Stock in connection with the Business Combination. Includes 2.9% of shares of New Local Bounti Common Stock to be issued to holders of Local Bounti Convertible Notes.
|
(i) |
Business Combination Proposal:
|
(ii) |
Domestication Proposal:
two-thirds
(2/3) of the votes cast by the holders of the issued ordinary shares present in person or represented by proxy at the extraordinary general meeting and entitled to vote on such matter.
|
(iii) |
Governing Documents Proposals:
non-binding
advisory basis only.
|
(iv) |
The NYSE Proposal:
|
(v) |
Incentive Award Plan Proposal:
|
(vi) |
Director Election Proposal:
|
(vii) |
Employee Stock Purchase Plan Proposal:
|
(viii) |
Adjournment Proposal:
|
(i) |
Warrant Amendment Proposal:
|
(ii) |
Warrant Holders Adjournment Proposal:
|
(i) |
(a) hold public shares, or (b) if you hold public shares through units, you elect to separate your units into the underlying public shares and warrants prior to exercising your redemption rights with respect to the public shares;
|
(ii) |
submit a written request to Continental, Leo’s transfer agent, in which you (i) request that New Local Bounti redeem all or a portion of your public shares for cash, and (ii) identify yourself as the beneficial holder of the public shares and provide your legal name, phone number and address; and
|
(iii) |
deliver your public shares to Continental, Leo’s transfer agent, physically or electronically through DTC.
|
• |
the fact that our initial shareholders have agreed not to redeem any Class A ordinary shares held by them in connection with a shareholder vote to approve a proposed initial business combination;
|
• |
the fact that the Sponsor paid an aggregate of $25,000 for the 6,8750,000 Class B ordinary shares currently owned by the initial shareholders and such securities will have a significantly higher value at the time of the Business Combination. Such shares had an estimated aggregate market value of $ based upon the closing price of $ per share on the NYSE on the record date;
|
• |
the fact that the Sponsor paid an aggregate purchase price of $8,000,000 (or $1.50 per warrant) for its private placement of 5,333,333 private placement warrants to purchase Class A ordinary shares and such private placement warrants will expire worthless if an initial business combination is not consummated by Mach 2, 2023. A portion of the proceeds from such private placement were placed in the trust account. Such warrants had an estimated aggregate value of $ based on the closing price of $ per public warrant on the NYSE on the record date;
|
• |
the fact that the initial shareholders and Leo’s other current officers and directors have agreed to waive their rights to liquidating distributions from the trust account with respect to any ordinary shares (other than public shares) held by them if Leo fails to complete an initial business combination by March 2, 2023. In such event, the 6,875,000 founder shares held by our initial shareholders, which were acquired for an aggregate purchase price of $25,000 prior to Leo’s initial public offering, would be worthless because the holders thereof are not entitled to participate in any redemption or distribution with respect to such shares;
|
• |
the fact that the Amended and Restated Registration Rights Agreement will be entered into by the initial shareholders;
|
• |
the fact that, at the option of the Sponsor, any amounts outstanding under any loan made by the Sponsor or any of its affiliates to Leo in an aggregate amount of up to $1,500,000 may be converted into warrants to purchase Class A ordinary shares in connection with the consummation of the Business Combination;
|
• |
the fact that certain of Leo’s directors and officers have committed to purchase shares of common stock in connection with the PIPE Financing;
|
• |
the continued indemnification of Leo’s directors and officers and the continuation of Leo’s directors’ and officers’ liability insurance after the Business Combination (
i.e.
|
• |
the fact that the Sponsor and Leo’s officers and directors will lose their entire investment in Leo and will not be reimbursed for any
out-of-pocket
|
• |
the fact that if the trust account is liquidated, including in the event Leo is unable to complete an initial business combination by March 2, 2023, the Sponsor has agreed to indemnify Leo to ensure that the proceeds in the trust account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the trust account on the liquidation date, by the claims of prospective target businesses with which Leo has entered into an acquisition agreement or claims of any third party for services rendered or products sold to Leo, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the trust account;
|
• |
following the completion of the Business Combination, the Sponsor, Leo’s officers and directors and their respective affiliates will be entitled to reimbursement for any reasonable
out-of-pocket
|
If Leo fails to complete an initial business combination within the required period, the Sponsor and Leo’s officers and directors and their respective affiliates will not have any claim against the trust account for reimbursement; and
|
• |
pursuant to the Amended and Restated Registration Rights Agreement, the Sponsor and certain of Leo’s directors and officers will have customary registration rights, including demand and piggy-back rights, subject to cooperation
and cut-back provisions
with respect to the shares of New Local Bounti
|
Sources of Funds
(1)
|
Uses
(1)
|
|||||||||
Leo Cash Held in Trust
(2)
|
$ | 275 |
Cash Consideration to Balance Sheet
|
$ | 362 | |||||
PIPE Financing
|
125 |
Transaction Fees and Expenses
(3)
|
38 | |||||||
|
|
|
|
|||||||
Total Sources
|
$ | 400 |
Total Uses
|
$ | 400 | |||||
|
|
|
|
Sources of Funds
(1)
|
Uses
(1)
|
|||||||||
Leo Cash Held in Trust
(2)
|
$ | 275 |
Cash Consideration to Balance Sheet
|
$ | 112 | |||||
PIPE Financing
|
125 |
Transaction Fees and Expenses
(3)
|
38 | |||||||
Shareholder Redemptions
(4)
|
250 | |||||||||
|
|
|
|
|||||||
Total Sources
|
$ | 400 |
Total Uses
|
$ | 400 | |||||
|
|
|
|
(1) |
Totals might be affected by rounding. Cash Consideration to Balance Sheet includes the cash consideration amount, the transaction bonus amount and the debt payoff amount payable pursuant to the Merger Agreement.
|
(2) |
As of June 30, 2021.
|
(3) |
Represents the total estimated transaction fees and expenses incurred by Leo and Local Bounti as part of the Business Combination.
|
(4) |
Assumes that the maximum number of Class A ordinary shares that can be redeemed are redeemed, while still satisfying the Aggregate Transaction Proceeds Condition.
|
• |
a U.S. Holder of Leo public shares whose Leo public shares have a fair market value of less than $50,000 on the date of the Domestication, and who on the date of the Domestication owns (actually and constructively) less than 10% of the total combined voting power of all classes of Leo public shares entitled to vote and less than 10% of the total value of all classes of Leo public shares, will generally not recognize any gain or loss and will generally not be required to include any part of Leo’s earnings in income pursuant to the Domestication;
|
• |
a U.S. Holder of Leo public shares whose Leo public shares have a fair market value of $50,000 or more on the date of the Domestication, but who on the date of the Domestication owns (actually and constructively) less than 10% of the total combined voting power of all classes of Leo public shares entitled to vote and less than 10% of the total value of all classes of Leo public shares will generally recognize gain (but not loss) on the exchange of Leo public shares for shares in New Local Bounti (a Delaware corporation) pursuant to the Domestication. As an alternative to recognizing gain, such U.S. Holder may file an election to include in income as a dividend the “all earnings and profits amount” (as defined in Treasury Regulation
Section 1.367(b)-2(d))
attributable to such holder’s Leo public shares, provided certain other requirements are satisfied. Leo does not expect to have significant cumulative earnings and profits on the date of the Domestication; and
|
• |
a U.S. Holder of Leo public shares who on the date of the Domestication owns (actually and constructively) 10% or more of the total combined voting power of all classes of Leo public shares entitled to vote or 10% or more of the total value of all classes of Leo public shares will generally be required to include in income as a dividend the “all earnings and profits amount” (as defined in Treasury Regulation
Section 1.367(b)-2(d))
attributable to its Leo public shares, provided certain other requirements are satisfied. Any such U.S. Holder that is a corporation may, under certain circumstances, effectively be exempt from taxation on a portion or all of the deemed dividend pursuant to Section 245A of the Code. Leo does not expect to have significant cumulative earnings and profits on the date of the Domestication.
|
• |
Local Bounti is an early stage company with a history of losses and expects to incur significant expenses and continuing losses for the foreseeable future. Local Bounti has only recently started to generate revenue and its ability to continue to generate revenue is uncertain given Local Bounti’s limited operating history. Local Bounti may never achieve or sustain profitability. Local Bounti’s business could be adversely affected if it fails to effectively manage its future growth.
|
• |
Local Bounti will require additional financing to achieve its goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, may force Local Bounti to delay, limit, reduce or terminate its operations and future growth.
|
• |
Local Bounti currently relies on a single facility for all its operations.
|
• |
Local Bounti’s first facility has been in operation at commercial capacity for less than 12 months, which makes it difficult to forecast future results of operations.
|
• |
Local Bounti’s operating results forecast rely in large part upon assumptions and analyses developed by Local Bounti. If these assumptions and analyses prove to be incorrect, Local Bounti’s actual operating results may suffer.
|
• |
The
build-out
of new facilities will require significant expenditures for capital improvements and operating expenses and may be subject to delays in construction and unexpected costs due to governmental approvals and permitting requirements, reliance on third parties for construction, delays relating to material delivery and supply chains, and fluctuating material prices.
|
• |
Local Bounti’s ability to decrease its cost of goods sold over time is dependent on its ability to scale its operations and Local Bounti may not be able to achieve such decreases due to factors outside of its control such as inflation or global supply chain interruptions.
|
• |
Any damage to or problems with Local Bounti’s CEA facilities could severely impact Local Bounti’s operations and financial condition.
|
• |
Local Bounti depends on employing a skilled local labor force, and failure to attract and retain qualified employees could negatively impact its business, results of operations and financial condition.
|
• |
If Local Bounti fails to develop and maintain its brand, its business could suffer.
|
• |
Local Bounti’s estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which it competes achieves the forecasted growth, Local Bounti’s business could fail to grow at similar rates, if at all.
|
• |
The effects of
COVID-19
and other potential future public health crises, epidemics, pandemics or similar events on Local Bounti’s business, operating results and cash flows are uncertain.
|
• |
If Local Bounti cannot maintain its company culture or focus on its vision as it grows, Local Bounti’s business and competitive position may be harmed.
|
• |
Local Bounti may be unable to successfully execute on its growth strategy.
|
• |
Local Bounti’s operating costs to grow and sell its products may be higher than expected, which could impact its results and financial condition.
|
• |
If Local Bounti’s estimates or judgments relating to its critical accounting policies prove to be incorrect, its results of operations could be adversely affected.
|
• |
Local Bounti will incur increased costs as a result of operating as a public company, and its management will devote substantial time to new compliance initiatives.
|
• |
Local Bounti’s ability to use net operating loss carryforwards and other tax attributes may be limited in connection with the business combination or other ownership changes.
|
• |
Local Bounti faces risks inherent in the CEA business, including the risks of diseases and pests.
|
• |
Local Bounti may not be able to compete successfully in the highly competitive natural food market.
|
• |
Local Bounti’s ability to generate and grow revenue is dependent on its ability to increase the yield in each of the anticipated product lines it intends to grow. If Local Bounti is unable to increase the yield in each or most of these product lines, Local Bounti’s projection may not be achieved on currently anticipated timelines or at all.
|
• |
Local Bounti may need to defend itself against intellectual property infringement claims, which may be time-consuming and could cause Local Bounti to incur substantial costs.
|
• |
The loss of any registered trademark or other intellectual property could enable other companies to compete more effectively with Local Bounti.
|
• |
Local Bounti relies on information technology systems and any inadequacy, failure, interruption or security breaches of those systems may harm its ability to effectively operate its business.
|
• |
Local Bounti could be adversely affected by a change in consumer preferences, perception and spending habits in the food industry, and failure to develop and expand its product offerings or gain market acceptance of its products could have a negative effect on Local Bounti’s business.
|
• |
Demand for lettuce, cilantro, basil and other greens and herbs is subject to seasonal fluctuations and may adversely impact Local Bounti’s results of operations in certain quarters.
|
• |
Local Bounti has entered into agreements on September 3, 2021 for a term loan facility with Cargill Financial Services Inc. (“
Cargill Financial
”), one of its existing lenders and an investor in the PIPE Financing, for a $200 million term loan credit facility. The credit facility is secured by all of the Combined Company’s assets, including its intellectual property. Additionally, the definitive documentation states that if there is an occurrence of an uncured event of default, Cargill Financial will be able to foreclose on all Local Bounti assets, and securities in the Combined Company could be rendered worthless.
|
• |
Our Sponsor and our executive officers and directors have entered into letter agreements with us to vote in favor of the Business Combination, regardless of how our public shareholders vote.
|
• |
Subsequent to consummation of the Business Combination, we may be required to subsequently take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and the share price of our securities, which could cause you to lose some or all of your investment.
|
• |
Our ability to successfully effect the Business Combination and to be successful thereafter will be dependent upon the efforts of key personnel of New Local Bounti, some of whom may be from Leo and Local Bounti, and some of whom may join New Local Bounti following the Business Combination. The loss of key personnel or the hiring of ineffective personnel after the Business Combination could negatively impact the operations and profitability of New Local Bounti.
|
• |
The ability of Leo’s shareholders to exercise redemption rights with respect to Leo’s Public Shares may prevent Leo from completing the Business Combination or optimizing its capital structure.
|
• |
A significant portion of our total outstanding shares are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of New Local Bounti Common Stock to drop significantly, even if New Local Bounti’s business is doing well.
|
• |
The public stockholders will experience immediate dilution as a consequence of the issuance of New Local Bounti Common Stock as consideration in the Business Combination and in the PIPE Financing.
|
Period from
January 8, 2021 (inception) through January 18, 2021 (audited) |
Period from
January 8, 2021 (inception) through June 30, 2021 (unaudited) |
|||||||
Statement of Operations Data
|
||||||||
Operating Costs
|
$ | 10,484 | $ | 623,937 | ||||
|
|
|
|
|||||
Loss from operations
|
(10,484 | ) | (623,937 | ) | ||||
|
|
|
|
|||||
Weighted average shares outstanding of Class A ordinary shares, basic and diluted
|
5,750,000 | 27,500,000 | ||||||
|
|
|
|
|||||
Basic and diluted net income per share, Class A ordinary shares
|
$
|
5,750,000
|
|
$
|
0.00
|
|
||
|
|
|
|
|||||
Weighted average shares outstanding of Class B ordinary shares, basic and diluted
|
5,750,000 | 6,608,477 | ||||||
|
|
|
|
|||||
Basic and diluted net loss per share, Class B ordinary shares
|
$
|
0.00
|
|
$
|
(0.65
|
)
|
||
|
|
|
|
|||||
June 30, 2021
(unaudited) |
January 18, 2021
(audited)
|
|||||||
Condensed Balance Sheet Data (At Period End):
|
||||||||
Total assets
|
$ | 276,386,096 | $ | 49,516 | ||||
Total liabilities
|
$ | 22,325,494 | $ | 35,000 | ||||
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 2,593,940 and 0 shares issued and outstanding (excluding 24,906,060 and 0 shares subject to possible redemption)
|
259 | — | ||||||
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 6,875,000 and 5,750,000 shares issued and outstanding
|
688 | 575 | ||||||
Total shareholders’ equity
|
$ | 5,000,002 | $ | 14,516 |
For the six months ended
June 30, |
For the years ended
December 31, |
|||||||||||||||
(in thousands, except per share information)
|
2021
|
2020
|
2020
|
2019
|
||||||||||||
Statement of Operations Information:
|
||||||||||||||||
Sales
|
$ | 165 | $ | — | $ | 82 | $ | — | ||||||||
Net loss
|
(16,988 | ) | (3,095 | ) | (8,409 | ) | (3,406 | ) | ||||||||
Net loss per share attributable to shareholders, basic and diluted
|
$ | (1.72) | $ | (0.31 | ) | $ | (0.84 | ) | $ | (0.35 | ) | |||||
Statement of Cash Flows Information:
|
||||||||||||||||
Net cash provided by (used in) operating activities
|
$ | (7,720 | ) | $ | (2,238 | ) | $ | (3,838 | ) | $ | (1,119 | ) | ||||
Net cash used in investing activities
|
(8,087 | ) | (3,654 | ) | (3,422 | ) | (3,743 | ) | ||||||||
Net cash provided by financing activities
|
38,906 | 4,630 | 5,168 | 6,999 |
As of June 30,
2021 |
As of December 31,
|
|||||||||||
(in thousands)
|
2020
|
2019
|
||||||||||
Balance Sheet Information:
|
||||||||||||
Total assets
|
$ | 43,525 | $ | 9,102 | $ | 5,888 | ||||||
Total liabilities
|
58,142 | 11,673 | 3,334 | |||||||||
Total shareholders’ equity (deficit)
|
(14,617 | ) | (2,571 | ) | 2,554 |
• |
Assuming No Redemptions
|
• |
Assuming Maximum Redemptions
|
Combined Pro Forma
|
||||||||
(in thousands, except share and per share data)
|
Assuming No
Redemptions |
Assuming
Maximum Redemptions |
||||||
Selected Unaudited Pro Forma Condensed Combined Statement of Operations Information for the Six Months Ended June 30, 2021
|
||||||||
Sales
|
$ | 165 | $ | 165 | ||||
Net loss
|
(18,247 | ) | (18,247 | ) | ||||
Net loss per share attributable to ordinary shareholders, basic and diluted
|
(0.17 | ) | (0.21 | ) | ||||
Weighted average ordinary shares outstanding, basic and diluted
|
110,515,489 | 85,609,429 | ||||||
Selected Unaudited Pro Forma Condensed Combined Statement of Operations Information for the Year Ended December 31, 2020
|
||||||||
Sales
|
$ | 82 | $ | 82 | ||||
Net loss
|
(27,015 | ) | (27,015 | ) | ||||
Net loss per share attributable to ordinary shareholders, basic and diluted
|
(0.24 | ) | (0.32 | ) | ||||
Weighted average ordinary shares outstanding, basic and diluted
|
110,515,489 | 85,609,429 | ||||||
Selected Unaudited Pro Forma Condensed Combined Balance Sheet Information as of June 30, 2021
|
||||||||
Total assets
|
$ | 360,861 | $ | 121,300 | ||||
Total liabilities
|
38,515 | 38,515 | ||||||
Total shareholders’ equity
|
322,346 | 82,785 |
• |
Assuming No Redemptions
|
• |
Assuming Maximum Redemptions
|
Pro Forma Combined
|
Local Bounti equivalent
pro forma
per share information
(3)
|
|||||||||||||||||||||||
Leo
(Historical)
(1)
|
Local
Bounti
(Historical)
|
Assuming
No
Redemptions
|
Assuming
Maximum
Redemptions
|
Assuming
No
Redemptions
|
Assuming
Maximum
Redemptions
|
|||||||||||||||||||
As of and for the Six Months Ended
June 30, 2021
(4)
|
||||||||||||||||||||||||
Book value per
share
(2)
|
$ | 0.15 | $ | (1.48 | ) | $ | 3.27 | $ | 1.42 | $ | 0.66 | $ | 0.29 | |||||||||||
Net income (loss) per share attributable to ordinary shareholders, basic and diluted
|
$ | (0.65 | ) | $ | (1.72 | ) | $ | (0.17 | ) | $ | (0.21 | ) | $ | (0.03 | ) | $ | (0.04 | ) |
Pro Forma Combined
|
Local Bounti equivalent
pro forma
per share information
(3)
|
|||||||||||||||||||||||
Leo
(Historical)
(1)
|
Local
Bounti
(Historical)
|
Assuming
No
Redemptions
|
Assuming
Maximum
Redemptions
|
Assuming
No
Redemptions
|
Assuming
Maximum
Redemptions
|
|||||||||||||||||||
Weighted average ordinary shares outstanding, basic and diluted
|
34,108,477 | 9,886,283 | 110,515,489 | 85,609,429 | 543,115,995 | 420,717,953 | ||||||||||||||||||
Basic and diluted net income per redeemable ordinary share
|
$ | — | ||||||||||||||||||||||
Weighted average redeemable ordinary shares outstanding, basic and diluted
|
24,906,060 | |||||||||||||||||||||||
Basic and diluted net income per non-redeemable ordinary share
|
$ | (0.65 | ) | |||||||||||||||||||||
Weighted average non-redeemable ordinary shares outstanding, basic and diluted
|
6,608,477 | |||||||||||||||||||||||
For the Year Ended December 31,
2020
(4)
|
||||||||||||||||||||||||
Net loss per share attributable to ordinary shareholders, basic and diluted
|
$ | — | $ | (0.84 | ) | $ | (0.24 | ) | $ | (0.32 | ) | $ | (0.05 | ) | $ | (0.06 | ) | |||||||
Weighted average ordinary shares outstanding, basic and diluted
|
— | 9,997,049 | 110,515,489 | 85,609,429 | 543,115,995 | 420,717,953 | ||||||||||||||||||
Basic and diluted net income per redeemable ordinary share
|
$ | — | ||||||||||||||||||||||
Weighted average redeemable ordinary shares outstanding, basic and diluted
|
— | |||||||||||||||||||||||
Basic and diluted net income per non-redeemable ordinary share
|
$ | — | ||||||||||||||||||||||
Weighted average non-redeemable ordinary shares outstanding, basic and diluted
|
— |
(1) |
Leo was incorporated on January 8, 2021 and therefore did not have any operations or historical financial information for the year ended December 31, 2020
|
(2) |
Book value per share = Total equity/shares outstanding.
|
(3) |
The equivalent pro forma basic and diluted per share data for Local Bounti is calculated by multiplying the pro forma combined per share data by the Exchange Ratio, which is expected to be approximately 4.914388 New Local Bounti Ordinary Shares.
|
(4) |
There were no cash dividends declared in the period presented.
|
• |
our ability to complete the Business Combination with Local Bounti or, if we do not consummate such Business Combination, any other initial business combination;
|
• |
satisfaction or waiver of the conditions to the Business Combination including, among others: (i) the approval by our shareholders of the Condition Precedent Proposals being obtained; (ii) the applicable waiting period under the Hart-Scott-Rodino Act of 1976 (the “
HSR Act
”) relating to the Merger Agreement having expired or been terminated; (iii) Leo having at least $5,000,001 of net tangible assets (as determined in accordance with Rule
3a51-1(g)(1)
of the Exchange Act) after giving effect to the transactions contemplated by the Merger Agreement, the PIPE Financing and all of the Leo shareholder redemptions; (iv) the Aggregate Transaction Proceeds Condition; (v) the approval by the NYSE of our initial listing application in connection with the Business Combination; (vi) the consent of the voting common stockholders of Local Bounti and the conversion of Local Bounti and (vii) the consummation of the Domestication;
|
• |
our ability to consummate the PIPE Financing or raise financing in the future;
|
• |
the occurrence of any event, change or other circumstances, including the outcome of any legal proceedings that may be instituted against Leo and Local Bounti following the announcement of the Merger Agreement and the transactions contemplated therein, that could give rise to the termination of the Merger Agreement;
|
• |
the projected financial information, growth rate and market opportunity of New Local Bounti;
|
• |
the amount of redemption requirements made by Public Shareholders;
|
• |
the ability to obtain and/or maintain the listing of the New Local Bounti Common Stock and the warrants on the NYSE, and the potential liquidity and trading of such securities;
|
• |
the risk that the proposed Business Combination disrupts current plans and operations of Local Bounti as a result of the announcement and consummation of the proposed Business Combination;
|
• |
the ability to recognize the anticipated benefits of the proposed Business Combination, which may be affected by, among other things, competition, the ability of the Combined Company to grow and manage growth profitably and retain its key employees;
|
• |
costs related to the proposed Business Combination;
|
• |
changes in applicable laws or regulations;
|
• |
the inability to develop and maintain effective internal controls;
|
• |
our ability to raise financing in the future;
|
• |
our success in retaining or recruiting, or changes required in, our officers, key employees or directors following the completion of the Business Combination;
|
• |
our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving the Business Combination;
|
• |
the period over which Local Bounti anticipates its existing cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements;
|
• |
the potential for Local Bounti’s business development efforts to maximize the potential value of its portfolio;
|
• |
regulatory developments in the United States and foreign countries;
|
• |
the impact of laws and regulations;
|
• |
Local Bounti’s estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
|
• |
Local Bounti’s financial performance;
|
• |
Local Bounti’s ability to remediate the material weakness in its internal controls over financial reporting;
|
• |
the effect of
COVID-19
on the foregoing, including our ability to consummate the Business Combination due to the uncertainty resulting from the recent
COVID-19
pandemic; and
|
• |
other factors detailed under the section entitled “
Risk Factors
|
• |
operates its existing facilities;
|
• |
expands the Montana Facility (as defined below) and completes the construction of other facilities for which building has commenced;
|
• |
identifies and invests in future growth opportunities, including expansion into new markets, development of new facilities, introduction of new products, and commercialization of new crops;
|
• |
invests in creating and protecting intellectual property; and
|
• |
incurs additional general administration expenses, including increased finance, legal and accounting expenses, associated with being a public company and growing operations.
|
• |
demand for Local Bounti’s products;
|
• |
competition, including from established and future competitors;
|
• |
Local Bounti’s ability to manage its growth;
|
• |
ability to obtain necessary governmental approvals;
|
• |
Local Bounti’s ability to satisfy the production demands associated with customer orders;
|
• |
whether Local Bounti can manage relationships with key partners and suppliers;
|
• |
Local Bounti’s ability to retain existing key management, integrate recent hires and attract, retain and motivate qualified personnel;
|
• |
the overall strength and stability of domestic and international economies;
|
• |
regulatory, legislative, and political changes;
|
• |
consumer spending habits
|
• |
ability to produce target yields; and
|
• |
Local Bounti’s ability to mitigate risk associated with plant pathogens.
|
• |
Production Scale
|
• |
Channel Mix
|
• |
Energy Interruption
|
• |
Supply of Seeds and Other Inputs
back-up
suppliers, the reliability of production of Local Bounti’s products could be diminished for a period of time. Local Bounti also depends on consistent access of other inputs and supplies to operate its facilities reliably, including water supply, nutrients, growth media, food safety testing, sanitation supplies, packaging materials, among others. If Local Bounti does not maintain access to these inputs of production, then its ability to operate its facilities could be materially and adversely affected.
|
• |
Labor
know-how
of its employees and farm operations teams, their experience, and their oversight of the operations of its facilities. Local Bounti relies on access to competitive, local labor supply, including skilled and unskilled positions, to operate its facilities consistently and reliably. Any issues affecting Local Bounti’s access to or relations with workers could negatively affect facility operations or financial condition.
|
• |
Food Safety and Quality Assurance
USDA
”) as Harmonized Good Agricultural Practices (GAP Plus+). The Combined Company is also subject to United States Food and Drug Administration (“
FDA
”) requirements, including requirements being implemented pursuant to the Food Safety Modernization Act (“
FSMA
”).
|
Local Bounti’s ability to operate facilities reliably may be interrupted for some period of time, or permanently, by any widespread food safety or quality issues involving loose leaf lettuce or other fresh produce, even if not involving Local Bounti’s facilities or products at all. Such events could erode consumer confidence in and demand for Local Bounti’s products, which could impact its ability to operate facilities reliably, and could generally cause serious adverse effects to Local Bounti’s business and financial condition.
|
• |
Weather
|
• |
Community Actions
|
• |
Other Factors Affecting Reliability of Facility Operations
|
• |
New Facilities Expansion.
|
These facilities require sizeable, useable space for agricultural production, including site-specific requirements such as sufficient access to, reliability of, and cost of utilities and other infrastructure; the ability to obtain the appropriate permits and approvals; adequate local labor availability; road access for input supply and distribution of output for sale; among other requirements.
|
• |
Expansion of Loose Leaf Lettuce Product Portfolio.
|
Alternatively, even if Local Bounti does succeed in commercializing new varieties of loose leaf lettuce products, there can be no guarantee that these products would result in overall growth of Local Bounti’s business through incremental revenue or economic benefit, which could materially and adversely affect Local Bounti’s financial condition and results of operations.
|
• |
Expansion into Additional Markets and Verticals.
|
• |
Utilities
|
• |
Labor
|
• |
Packaging Materials
on-shelf.
If raw material costs increase, or if Local Bounti is unable to achieve its expected packaging materials costs for any reason, its financial performance could be adversely impacted.
|
• |
Depreciation and Useful Life of Assets
|
• |
Seeds and Other Supplies
back-up
suppliers, the cost of seeds and its impact on production of Local Bounti’s products could be negatively impacted for a period of time. Local Bounti also depends on consistent access of other inputs and supplies to operate its facilities reliably, including water supply, nutrients, growth media, food safety testing, sanitation supplies and packaging materials, among others. If the cost of any of these inputs increases materially, then Local Bounti’s financial results could be adversely affected.
|
• |
Distribution of Finished Goods
|
• |
design and maintain formal accounting policies, procedures and controls over significant accounts and disclosures to appropriately analyze, record and disclose complex technical accounting matters, including, among other matters, equity transactions and stock-based compensation, commensurate with its accounting and reporting requirements;
|
• |
identify, select and apply GAAP sufficiently to provide reasonable assurance that transactions were being appropriately recorded; and
|
• |
assess risk and design appropriate control activities over information technology systems and financial and reporting processes necessary to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements.
|
• |
Mechanical Failure
|
• |
Systems or Software Failure
|
• |
Human Error
know-how
of its operations teams, their experience, and their oversight of the operations of its facilities. If issues are caused by human error during the various phases of seeding, germination, growing, harvesting, or other standard operating procedures, or if Local Bounti employees fail to properly oversee facility operations, then the yield and quality of Local Bounti’s products could be diminished, which more generally could have material and adverse effects on Local Bounti’s business, operating results, and financial condition; and
|
• |
Seed Supply and Quality
back-up
suppliers, the yield or quality of production of Local Bounti’s products could be diminished for a period of time. Bad seed lots, low germination rates, and similar issues that affect growing also could result in Local Bounti’s inability to achieve proper and consistent product yields or product quality, which could materially and adversely affect performance, and more generally could negatively impact Local Bounti’s business, financial condition and operating results.
|
• |
Consumer Preferences
|
• |
Safety and Quality Concerns
|
• |
Consumer Income
COVID-19
pandemic.
|
• |
Desire for Sustainable Products
in-line
with consumer preferences.
|
• |
Price Compression
|
• |
actual or anticipated fluctuations in operating results;
|
• |
failure to meet or exceed financial estimates and projections of the investment community or that Local Bounti provides to the public;
|
• |
issuance of new or updated research or reports by securities analysts or changed recommendations for the industry in general;
|
• |
announcements of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;
|
• |
operating and share price performance of other companies in the industry or related markets;
|
• |
the timing and magnitude of investments in the growth of the business;
|
• |
actual or anticipated changes in laws and regulations;
|
• |
additions or departures of key management or other personnel;
|
• |
increased labor costs;
|
• |
decreased pricing of product;
|
• |
disputes or other developments related to intellectual property or other proprietary rights, including litigation;
|
• |
the ability to market new and enhanced solutions on a timely basis;
|
• |
sales of substantial amounts of the Local Bounti Common Stock by Local Bounti’s directors, executive officers or significant stockholders or the perception that such sales could occur;
|
• |
changes in capital structure, including future issuances of securities or the incurrence of debt; and
|
• |
general economic, political and market conditions.
|
• |
the fact that our initial shareholders have agreed not to redeem any Class A ordinary shares held by them in connection with a shareholder vote to approve a proposed initial business combination;
|
• |
the fact that the Sponsor paid an aggregate of $25,000 for the 6,8750,000 Class B ordinary shares currently owned by the initial shareholders and such securities will have a significantly higher value at the time of the Business Combination. Such shares had an estimated aggregate market value of $ based upon the closing price of $ per share on the NYSE on the record date;
|
• |
the fact that the Sponsor paid an aggregate purchase price of $8,000,000 (or $1.50 per warrant) for its private placement of 5,333,333 private placement warrants to purchase Class A ordinary shares and such private placement warrants will expire worthless if an initial business combination is not consummated by March 2, 2023. A portion of the proceeds from such private placement were placed in the trust account. Such warrants had an estimated aggregate value of $ based on the closing price of $ per public warrant on the NYSE on the record date;
|
• |
Edward C. Forst, Chairman of the board of Leo, is expected to be a director of the Combined Company after the consummation of the Business Combination. As such in the future he may receive cash fees, stock options, stock awards or other remuneration that the New Local Bounti Board determines to pay its directors;
|
• |
the fact that the initial shareholders and Leo’s current officers and directors have agreed to waive their rights to liquidating distributions from the trust account with respect to any ordinary shares (other than public shares) held by them if Leo fails to complete an initial business combination by March 2, 2023. In such event, the 6,875,000 founder shares held by our initial shareholders, which were acquired for an aggregate purchase price of $25,000 prior to Leo’s initial public offering, would be worthless because the holders thereof are not entitled to participate in any redemption or distribution with respect to such shares;
|
• |
the fact that the Amended and Restated Registration Rights Agreement will be entered into by the initial shareholders;
|
• |
the fact that, at the option of the Sponsor, any amounts outstanding under any loan made by the Sponsor or any of its affiliates to Leo in an aggregate amount of up to $1,500,000 may be converted into warrants to purchase Class A ordinary shares in connection with the consummation of the Business Combination;
|
• |
the fact that certain of Leo’s directors and officers have committed to purchase shares of common stock in connection with the PIPE Financing;
|
• |
the continued indemnification of Leo’s directors and officers and the continuation of Leo’s directors’ and officers’ liability insurance after the Business Combination (
i.e.
|
• |
the fact that the Sponsor and Leo’s officers and directors will lose their entire investment in Leo and will not be reimbursed for any
out-of-pocket
|
• |
the fact that if the trust account is liquidated, including in the event Leo is unable to complete an initial business combination by March 2, 2023, the Sponsor has agreed to indemnify Leo to ensure that the proceeds in the trust account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the trust account on the liquidation date, by the claims of prospective target businesses with which Leo has entered into an acquisition agreement or claims of any third party for services rendered or products sold to Leo, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the trust account;
|
• |
following the completion of the Business Combination, the Sponsor, Leo’s officers and directors and their respective affiliates will be entitled to reimbursement for any reasonable
out-of-pocket
|
• |
pursuant to the Amended and Restated Registration Rights Agreement, the Sponsor and certain of Leo’s directors and officers will have customary registration rights, including demand and piggy-back rights, subject to cooperation
and cut-back provisions
with respect to the shares of New Local Bounti
|
• |
restrictions on the nature of our investments; and
|
• |
restrictions on the issuance of securities, each of which may make it difficult for us to complete the Business Combination.
|
• |
registration as an investment company;
|
• |
adoption of a specific form of corporate structure; and
|
• |
reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.
|
• |
changes in the industries in which New Local Bounti and its customers operate;
|
• |
variations in its operating performance and the performance of its competitors in general;
|
• |
material and adverse impact of the
COVID-19
pandemic on the markets and the broader global economy;
|
• |
actual or anticipated fluctuations in New Local Bounti’s quarterly or annual operating results;
|
• |
publication of research reports by securities analysts about New Local Bounti or its competitors or its industry;
|
• |
the public’s reaction to New Local Bounti’s press releases, its other public announcements and its filings with the SEC;
|
• |
New Local Bounti’s failure or the failure of its competitors to meet analysts’ projections or guidance that New Local Bounti or its competitors may give to the market;
|
• |
additions and departures of key personnel;
|
• |
changes in laws and regulations affecting its business;
|
• |
commencement of, or involvement in, litigation involving New Local Bounti;
|
• |
changes in New Local Bounti’s capital structure, such as future issuances of securities or the incurrence of additional debt;
|
• |
the volume of shares of New Local Bounti Common Stock available for public sale; and
|
• |
general economic and political conditions such as recessions, interest rates, fuel prices, foreign currency fluctuations, international tariffs, social, political and economic risks and acts of war or terrorism.
|
Combined Company Constituent Party
|
Combined Company Shares (1)
|
Voting %
|
||||
PIPE Investors
|
12,500,000 | 11.4% | ||||
Local Bounti Common Stock (restricted and unrestricted)
|
59,493,616 | 54.3% | ||||
Local Bounti Convertible Note Holders
|
3,190,489 | 2.9% | ||||
Sponsor
|
6,875,000 | 6.3% | ||||
Public Shareholders (assuming no redemptions)
|
27,500,000 | 25.1% | ||||
Total
|
109,559,105 | 100.0% |
(1) |
Excludes 5,500,000 public warrants and excludes 5,333,333 private placement warrants. Subject to final adjustment as set forth in the Merger Agreement.
|
• |
a limited availability of market quotations for New Local Bounti’s securities;
|
• |
reduced liquidity for New Local Bounti’s securities;
|
• |
a determination that New Local Bounti Common Stock is a “penny stock” which will require brokers trading in New Local Bounti Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for New Local Bounti’s securities;
|
• |
a limited amount of news and analyst coverage; and
|
• |
a decreased ability to issue additional securities or obtain additional financing in the future.
|
• |
a U.S. Holder of Leo public shares whose Leo public shares have a fair market value of less than $50,000 on the date of the Domestication, and who on the date of the Domestication owns (actually and constructively) less than 10% of the total combined voting power of all classes of Leo public shares entitled to vote and less than 10% of the total value of all classes of Leo public shares, will generally not recognize any gain or loss and will generally not be required to include any part of Leo’s earnings in income pursuant to the Domestication;
|
• |
a U.S. Holder of Leo public shares whose Leo public shares have a fair market value of $50,000 or more on the date of the Domestication, but who on the date of the Domestication owns (actually and constructively) less than 10% of the total combined voting power of all classes of Leo public shares entitled to vote and less than 10% of the total value of all classes of Leo public shares will generally recognize gain (but not loss) on the exchange of Leo public shares for shares in New Local Bounti (a Delaware corporation) pursuant to the Domestication. As an alternative to recognizing gain, such U.S. Holders may file an election to include in income as a dividend the “all earnings and profits amounts” (as defined in Treasury Regulation
Section 1.367(b)-2(d))
attributable to their Leo public shares, provided certain other requirements are satisfied. Leo does not expect to have significant cumulative earnings and profits on the date of the Domestication; and
|
• |
a U.S. Holder of Leo public shares who on the date of the Domestication owns (actually and constructively) 10% or more of the total combined voting power of all classes of Leo public shares entitled to vote or 10% or more of the total value of all classes of Leo public shares will generally be required to include in income as a dividend the “all earnings and profits amount” (as defined in Treasury Regulation
Section 1.367(b)-2(d))
attributable to its Leo public shares, provided certain other requirements are satisfied. Any such U.S. Holder that is a corporation may, under certain circumstances, effectively be exempt from taxation on a portion or all of the deemed dividend pursuant to Section 245A of the Code. Leo does not expect to have significant cumulative earnings and profits on the date of the Domestication.
|
• |
the ability of the New Local Bounti Board to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
|
• |
the limitation of the liability of, and the indemnification of, New Local Bounti’s directors and officers;
|
• |
a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of stockholders after such date and could delay the ability of stockholders to force consideration of a stockholder proposal or to take action, including the removal of directors;
|
• |
the requirement that a special meeting of stockholders may be called only by a majority of the entire New Local Bounti Board, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors;
|
• |
controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings;
|
• |
the ability of the New Local Bounti Board to amend the bylaws, which may allow the New Local Bounti Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt; and
|
• |
advance notice procedures with which stockholders must comply to nominate candidates to the New Local Bounti Board or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in the New Local Bounti Board, and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of New Local Bounti.
|
• |
a proposal to approve by ordinary resolution and adopt the Merger Agreement, including the Merger, and the transactions contemplated thereby;
|
• |
a proposal to approve by special resolution the Domestication;
|
• |
a proposal to approve by special resolution the Proposed Certificate of Incorporation;
|
• |
a proposal to approve, on
a non-binding advisory
basis, each of the Governing Documents Proposals and thereby (i) authorize change to authorized capital stock, (ii) authorize the Leo Board to make issuances of preferred stock, (iii) adopt Delaware as the exclusive forum for certain stockholder litigation and the federal district courts of the United States as the exclusive forum for litigation arising out of the Securities Act, and (iv) approve other changes to be made in connection with the adoption of Governing Documents. A copy of the Proposed Certificate of Incorporation and Proposed Bylaws is attached to this joint proxy statement/prospectus as Annex C and D, respectively;
|
• |
to authorize by way of ordinary resolution the change in the authorized capital stock of Leo from (i) 500,000,000 Class A ordinary shares, par value $0.0001 per share, (ii) 50,000,000 Class B ordinary shares, par value $0.0001 per share and (iii) 5,000,000 preference shares, par value $0.0001 per share, to (a) 400,000,000 shares of common stock, par value $0.0001 per share, of New Local Bounti and (b) 100,000,000 shares of preferred stock, par value $0.0001 per share, of New Local Bounti.;
|
• |
to authorize the New Local Bounti Board to issue any or all shares of New Local Bounti Preferred Stock in one or more classes or series, with such terms and conditions as may be expressly determined by the New Local Bounti Board and as may be permitted by the DGCL;
|
• |
to authorize the removal of the ability of New Local Bounti stockholders to take action by written consent in lieu of a meeting; and
|
• |
to amend and restate the Existing Governing Documents and authorize all other changes necessary or, as mutually agreed in good faith by Leo and Local Bounti, desirable in connection with the replacement of Existing Governing Documents with the Proposed Governing Documents as part of the Domestication;
|
• |
a proposal to approve by ordinary resolution shares of New Local Bounti Common Stock in connection with the Business Combination and the PIPE Financing in compliance with the NYSE listing requirements;
|
• |
a proposal to approve and adopt by ordinary resolution the Equity Incentive Plan;
|
• |
a proposal to approve and adopt by ordinary resolution the ESPP;
|
• |
a proposal to approve and adopt by ordinary resolution the election of seven (7) members of the board of directors of New Local Bounti following Closing; and
|
• |
a proposal to approve by ordinary resolution the adjournment of the extraordinary general meeting to a later date or dates, if necessary, to, among other things, permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting.
|
• |
You can vote by signing and returning the enclosed extraordinary general meeting proxy card
. If you vote by proxy card, your “proxy,” whose name is listed on the extraordinary general meeting proxy card, will vote your shares as you instruct on the extraordinary general meeting proxy card. If you sign and return the extraordinary general meeting proxy card but do not give instructions on how to vote your shares, your shares will be voted as recommended by the Leo Board “FOR” the Business Combination Proposal, “FOR” the Domestication Proposal, “FOR” the Charter Proposal, “FOR” each of the separate Governing Documents Proposals, “FOR” the NYSE Proposal, “FOR” the Incentive Award Plan Proposal, “FOR” the Employee Stock Purchase Plan Proposal, “FOR” the Director Election Proposal and “FOR” the Adjournment Proposal, in each case, if presented to the extraordinary general meeting. Votes received after a matter has been voted upon at the extraordinary general meeting will not be counted.
|
• |
You can attend the extraordinary general meeting and vote in person
. You will receive a ballot when you arrive. However, if your shares are held in the name of your broker, bank or another nominee, you must get a valid legal proxy from the broker, bank or other nominee. That is the only way Leo can be sure that the broker, bank or nominee has not already voted your shares.
|
• |
you may send another extraordinary general meeting proxy card with a later date;
|
• |
you may notify Leo’s general counsel in writing before the extraordinary general meeting that you have revoked your proxy; or
|
• |
you may attend the extraordinary general meeting, revoke your proxy, and vote in person, as indicated above.
|
(i) |
(a) hold public shares, or (b) if you hold public shares through units, you elect to separate your units into the underlying public shares and warrants prior to exercising your redemption rights with respect to the public shares;
|
(ii) |
submit a written request to Continental, Leo’s transfer agent, in which you (i) request that New Local Bounti redeem all or a portion of your public shares for cash, and (ii) identify yourself as the beneficial holder of the public shares and provide your legal name, phone number and address; and
|
(iii) |
deliver your public shares to Continental, Leo’s transfer agent, physically or electronically through DTC.
|
(a) |
On the Closing Date, prior to the time at which the First Effective Time occurs, Leo will change its jurisdiction of incorporation by deregistering as a Cayman Islands exempted company and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware, upon which Leo will change its name to “Local Bounti Corporation”;
|
(b) |
The parties to the Merger Agreement will cause certificates of merger to be executed and filed with the Secretary of State of the State of Delaware, pursuant to which (i) following the Domestication, First Merger Sub will merge with and into Local Bounti, with Local Bounti as the
|
surviving company in the First Merger and, after giving effect to such merger, Local Bounti shall be a wholly-owned subsidiary of Leo, and (ii) immediately following the consummation of the First Merger, Local Bounti will merge with and into Second Merger Sub, with Second Merger Sub as the surviving company in the Second Merger and, after giving effect to such merger, Local Bounti shall be a wholly-owned subsidiary of Leo; |
(c) |
In accordance with the terms and subject to the conditions of the Merger Agreement, at the First Effective Time, (i) each share of Local Bounti common stock outstanding as of immediately prior to the First Effective Time (other than dissenting shares and shares held by Local Bounti as treasury stock (which treasury shares will be cancelled for no consideration as part of the First Merger)) will be cancelled and converted into the right to receive the applicable portion of the merger consideration comprised of New Local Bounti Common Stock, earnout shares (as described below) and up to $37.5 million of cash consideration (subject to certain conditions specified in the Merger Agreement), each as determined in the Merger Agreement, (ii) each share of Local Bounti restricted stock will be cancelled and converted into the right to receive the applicable portion of the merger consideration comprised of New Local Bounti Common Stock and earnout shares (as described below), each as determined in the Merger Agreement, (iii) each Local Bounti restricted stock unit, whether or not then vested, will be assumed by Leo and converted into a Leo restricted stock unit, subject to the same terms and conditions, including vesting schedule, as applied to such Local Bounti restricted stock unit immediately prior to the Closing with a value as if such Local Bounti restricted stock unit were settled immediately prior to the Closing and the right to receive the applicable portion of the earnout shares (as described below), and (iv) each warrant of Local Bounti that is outstanding and unexercised will be assumed by Leo and converted into a warrant to purchase New Local Bounti Common Stock and represent the right to receive the applicable portion of the merger consideration upon exercise of such warrant as if such warrant were exercised immediately prior to the Closing;
|
(d) |
In addition, all outstanding principal amount, and all accrued and unpaid interest on, Local Bounti’s convertible debt will be fully converted into Local Bounti common stock as of immediately prior to the Closing and become eligible to receive New Local Bounti Common Stock based on the number of shares of Local Bounti common stock issuable upon conversion of such convertible debt; and
|
(e) |
Equal thirds of 2.5 million earnout shares will be issued to Local Bounti equityholders entitled to receive a portion of the earnout consideration on a pro rata basis if the trading price of New Local Bounti Common Stock is greater than or equal to $13.00, $15.00 or $17.00 for any 20 trading days within any
30-trading
day period and will also accelerate and be fully issuable in connection with any Change of Control (as defined in the Merger Agreement) if the applicable thresholds are met in such Change of Control.
|
• |
each issued and outstanding Class A ordinary share of Leo will convert automatically by operation of law, on a
one-for-one
|
• |
each issued and outstanding Class B ordinary share of Leo will convert automatically by operation of law, on a
one-for-one
|
• |
each issued and outstanding whole warrant to purchase Class A ordinary shares of Leo will represent the right to purchase one share of New Local Bounti Common Stock at an exercise price of $11.50 per share on the terms and conditions set forth in the Leo Warrant Agreement;
|
• |
the governing documents of Leo will be amended and restated and become the certificate of incorporation and the bylaws as described in this joint proxy statement/prospectus and Leo’s name will change to “Local Bounti Corporation”;
|
• |
the form of the certificate of incorporation and the bylaws will be appropriately adjusted to give effect to any amendments contemplated by the form of certificate of incorporation or the bylaws that are not adopted and approved by the Leo shareholders, other than the amendments to the Leo governing documents that are contemplated by the Charter Proposal, which are a condition to the Closing; and
|
• |
in connection with the first three bullets above, each issued and outstanding unit of Leo that has not been previously separated into the underlying Class A ordinary shares of Leo and underlying Leo warrants upon the request of the holder thereof prior to the Domestication will be cancelled and will entitle the holder thereof to one share of New Local Bounti Common Stock and
one-fifth
of one warrant representing the right to purchase one share of New Local Bounti Common Stock at an exercise price of $11.50 per share on the terms and subject to the conditions set forth in the Leo Warrant Agreement.
|
• |
no order or law issued by any court of competent jurisdiction or other governmental entity or other legal restraint or prohibition preventing the consummation of the transactions contemplated by Business Combination being in effect;
|
• |
all required filings under the HSR Act shall have been completed, and the applicable waiting period under the HSR Act relating to the Business Combination having been expired or been terminated;
|
• |
the approval of each Condition Precedent Proposal by the affirmative vote of the holders of the requisite number of ordinary shares of Leo being obtained in accordance with Leo’s Governing Documents and applicable law;
|
• |
the approval of the Merger Agreement and the transactions contemplated thereby being obtained by the requisite number of Local Bounti Stockholders in accordance with the DGCL, Local Bounti’s governing documents and Local Bounti’s stockholder agreements;
|
• |
this registration statement/proxy statement becoming effective in accordance with the provisions of the Securities Act, no stop order being issued by the SEC and remaining in effect with respect to this registration statement/proxy statement, and no proceeding seeking such a stop order being threatened or initiated by the SEC and remaining pending;
|
• |
the representations and warranties of Local Bounti regarding organization and qualification of Local Bounti and its subsidiaries, the representations and warranties regarding the authority of Local Bounti to, among other things, consummate the transactions contemplated by the Merger Agreement, certain representations and warranties regarding the capitalization of Local Bounti, the representations and warranties regarding ownership and capitalization of Local Bounti’s subsidiaries and the representations and warranties of Local Bounti regarding brokers fees being true and correct in all but de minimis respects as of the Closing Date as if made at and as of such date (or, if given as of an earlier date, as of such earlier date);
|
• |
the other representations and warranties of Local Bounti being true and correct (without giving effect to any limitation as to “materiality” or “Local Bounti Material Adverse Effect” or any similar limitation set forth in the Merger Agreement) as of the Closing Date (or, if given as of an earlier date, as of such earlier date), except where the failure of such representations and warranties to be true and correct, in the aggregate, would not or would not reasonably be expected to have a Local Bounti Material Adverse Effect;
|
• |
Local Bounti having performed in all material respects the covenants and agreements required to be performed by it under the Merger Agreement prior to the Closing;
|
• |
since the date of the Merger Agreement, no Local Bounti Material Adverse Effect has occurred that is continuing;
|
• |
all Local Bounti equity interests that are not Local Bounti common stock, including any securities convertible into (including Local Bounti’s convertible debt) or exchangeable for, or options, warrants (other than the assumed warrants) or rights to purchase or subscribe for any shares of Local Bounti’s capital stock having been converted into shares of Local Bounti common stock as of immediately prior to the First Effective Time;
|
• |
Leo having received a certificate executed by an authorized officer of Local Bounti confirming that the conditions set forth in the first four bullet points in this section have been satisfied; and
|
• |
Local Bounti having delivered evidence of the filing and acceptance of the certificate of validation with the Secretary of the State of the State of Delaware to ratify the increase in the number of authorized shares and the issuance of the Local Bounti restricted stock in the form mutually agreed upon by Local Bounti and Leo and effectiveness of such certificate of validation from the Secretary of the State of the State of Delaware.
|
• |
the representations and warranties of the Leo Parties being true and correct (without giving effect to any limitation as to “materiality” or “Material Adverse Effect” or any similar limitation set forth in the Merger Agreement) as of the Closing Date (or, if given as of an earlier date, as of such earlier date), except where the failure of such representations and warranties to be true and correct, in the aggregate, would not or would not reasonably be expected to have a material adverse effect on the ability of the Leo Parties to consummate the transactions contemplated by this Agreement;
|
• |
the Leo Parties having performed in all material respects the covenants and agreements required to be performed by them under the Merger Agreement prior to the Closing;
|
• |
Local Bounti having received a certificate executed by an authorized officer of Leo confirming that the conditions set forth in the first two bullet points of this section have been satisfied;
|
• |
the Available Cash being equal to or greater than $150,000,000;
|
• |
the shares of New Local Bounti Common Stock (including the shares of New Local Bounti Common Stock to be issued in connection with the Merger and the Domestication) being listed or approved for listing on NYSE, subject only to official notice of issuance thereof;
|
• |
the filing with the Delaware Secretary of State of the Proposed Certificate of Incorporation attached to this joint proxy statement/prospectus as Annex C and New Local Bounti adopting the Proposed Bylaws attached to this joint proxy statement/prospectus as Annex D, in each case, subject to the required approval of the holders of Leo’s ordinary shares;
|
• |
the PIPE Financing having been consummated materially in accordance with the terms set forth in the applicable Subscription Agreements;
|
• |
after giving effect to the transactions contemplated by the Merger Agreement (including the PIPE Financing), Leo having at least $5,000,001 of net tangible assets (as determined in accordance with Rule
3a51-1(g)(1)
of the Exchange Act) immediately after the Closing; and
|
• |
the Domestication having been consummated.
|
• |
Subject to certain exceptions or as consented to in advance in writing by Leo, prior to the Closing or earlier termination of the Merger Agreement, Local Bounti will, and will cause its subsidiaries to (i) conduct the business of Local Bounti and its subsidiaries in the ordinary course and in compliance in all material respects with applicable laws and (ii) use its reasonable best efforts to (A) preserve intact its present business organization, (B) keep available the services of and retain its directors, officers and key employees and (C) maintain and preserve existing relationships with its suppliers, vendors, customers, employees, insurers and others having material business relationships with Local Bounti.
|
• |
Subject to certain exceptions, prior to the Closing or earlier termination of the Merger Agreement, Local Bounti will, and will cause its subsidiaries to, not do any of the following without Leo’s prior written consent:
|
• |
amend, modify, waive or fail to enforce any of the governing documents or stockholder agreements of Local Bounti;
|
• |
issue, sell or authorize any shares of capital stock or any other equity interests of Local Bounti;
|
• |
split, combine, redeem or reclassify, or purchase or otherwise acquire, any shares of capital stock or any other equity interests of Local Bounti;
|
• |
make, declare, set aside or pay any dividend or make any other distribution, in each case whether in cash, stock or otherwise;
|
• |
make any change to any of the cash management practices of Local Bounti or any of its subsidiaries;
|
• |
make any change to any policy or practice regarding extensions of credit, prepayments, sales, recognition of deferred revenue, collections, receivables or payment of accounts with respect to its business or accelerate or delay the payment or receipt of any payables or receivables;
|
• |
(i) grant any material refunds, credits, rebates or allowances to customers or (ii) give any discount, accommodation or other concession other than in the ordinary course, in order to accelerate or induce the collection of any receivable;
|
• |
take any action or fail to take any action that would have, or could reasonably be expected to have, the effect of (i) delaying or postponing the payment of any accounts payable or commissions or any other liability to post-closing periods or (ii) accelerating the collection of (or discount) any accounts or notes receivable to
pre-closing
periods;
|
• |
incur any indebtedness in excess of $250,000 in the aggregate, other than indebtedness related to the Live Oak Term Sheet and the Additional Cargill Warrants (each as defined in the Merger Agreement), or make any loans or advances to any other person;
|
• |
cancel or forgive any indebtedness in excess of $250,000 in the aggregate owed to Local Bounti or any of its subsidiaries;
|
• |
except as may be required by law or U.S. GAAP, make any material change in the financial or tax accounting methods, principles or practices of Local Bounti or any of its subsidiaries;
|
• |
make, change or rescind any tax election; settle or compromise any claim, notice, audit report or assessment in respect of taxes; change any tax period; adopt or change any method of tax accounting; file any amended tax return or claim for a tax refund; surrender any right to claim a refund of taxes; enter into any tax allocation agreement, sharing agreement, indemnity agreement,
pre-filing
agreement, advance pricing agreement, cost sharing agreement or closing agreement related to any tax; request any tax ruling from a competent authority; or consent to any extension or waiver of the statute of limitations period applicable to any tax claim or assessment;
|
• |
enter into, renew, modify or amend any affiliate agreements;
|
• |
grant or otherwise create or consent to the creation of any lien (other than a permitted lien) on any of its material assets, owned real properties or leased real properties;
|
• |
sell, lease, license or otherwise dispose of any of its material properties or assets that are material its business, except sales of inventory in the ordinary course of business;
|
• |
sell, assign, transfer, lease, license, abandon, let lapse, cancel, dispose of, or otherwise subject to any lien (other than permitted liens) any material intellectual property, except
non-exclusive
licenses of intellectual property granted in the ordinary course or the full-term expiration of registered intellectual property or abandonment in the ordinary course of intellectual property not material to the business of Local Bounti or any of its subsidiaries;
|
• |
amend, extend, renew, assign or otherwise modify any material contract in a manner materially less favorable to Local Bounti or any of its subsidiaries, taken as a whole; enter into any material contract; or terminate any material contract other than in the ordinary course;
|
• |
hire, engage or terminate without cause, furlough or temporarily layoff any employee or independent contractor with annual compensation in excess of $250,000;
|
• |
waive or release any noncompetition, nonsolicitation, nondisparagement, nondisclosure or other restrictive covenant obligation of any current or former employee or independent contractor, other than in the ordinary course;
|
• |
increase the wages or bonus, severance, profit sharing, retirement, insurance or other compensation or benefits; adopt, enter into or establish any plan or arrangement, or amend, modify, terminate any existing benefit plan of Local Bounti; accelerate the time of payment, vesting or funding of any compensation or benefits under any benefit plan of Local Bounti; make or agree to new make any bonus or incentive payments to any individual; or make any personnel change to the management of Local Bounti;
|
• |
modify, negotiate, extend, terminate or enter into any collective bargaining agreement, or recognize or certify any labor union or organization, works council, or group of employees as the bargaining representative for any employees;
|
• |
implement or announce any employee layoffs or furloughs, reductions in force or similar actions that could implicate the WARN Act;
|
• |
pay, discharge, compromise, waive, release or settle any material rights or pending or threatened actions (i) involving payments in excess of a certain threshold, (ii) seeking injunctive or other equitable remedy, (iii) imposing any material restrictions on the operations of Local Bounti or any of its subsidiaries or (iv) by any equityholders or any other person, which relates to the transactions contemplated by the Merger Agreement, except for certain exceptions;;
|
• |
make or incur any capital expenditures that in aggregate exceed $100,000 in excess of Local Bounti’s annual capital expenditure budget;
|
• |
buy, purchase or otherwise acquire any assets, securities, properties, interests or businesses, other than inventory and supplies in the ordinary course of business, or other assets in an amount not to exceed $150,000 individually or $250,000 in the aggregate;
|
• |
merge or consolidate with any other person;
|
• |
adopt or effect a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization;
|
• |
enter into any new line of business, except as expressly set forth in any business plan made available to Leo;
|
• |
fail to maintain the insurance policies or comparable replacement policies consistent with levels maintained by Local Bounti and each subsidiary as of the date of the Merger Agreement;
|
• |
take any action or enter into any transaction, the effect of which might reasonably be expected to impair, delay or prevent any required approvals under antitrust or competition laws;
|
• |
make any political contributions to political candidates or political action committees; and
|
• |
take any action that is reasonably likely to prevent, delay or impede the consummation of the Mergers or the other transactions contemplated by the Merger Agreement.
|
• |
Local Bounti will terminate certain affiliate contracts except as set forth on the Local Bounti disclosure schedules effective as of the Closing.
|
• |
Within forty-eight (48) hours of this joint proxy statement/prospectus being declared effective by the SEC, Local Bounti will deliver to Leo a copy of a written consent of the Local Bounti Stockholders approving the Merger Agreement and the transactions contemplated thereby, duly executed by the Local Bounti Stockholders required to approve and adopt such matters (the “
Local Bounti Stockholder Written Consent
”).
|
• |
Local Bounti will deliver to Leo (i) within fifteen (15) days following the end of any month prior to the Closing, the unaudited balance sheet as of the end of such month, and (ii) if this joint proxy statement/prospectus has not been declared effective by the SEC on or prior to August 12, 2021, within thirty (30) days following the end of any fiscal quarter prior to the Closing, the unaudited balance sheet as of the end of such fiscal quarter.
|
• |
On or prior to the Closing, Local Bounti will purchase a “tail” policy providing liability insurance coverage for Local Bounti directors and officers with respect to matters occurring on or prior to the Closing.
|
• |
Prior to the Closing or earlier termination of the Merger Agreement in accordance with its terms, Local Bounti will not, and will cause its representatives and subsidiaries not to: (i) solicit, initiate or knowingly take any action to facilitate or encourage any inquiries or the making, submission or announcement of, any proposal or offer from any third party other than Leo and the Sponsor (and their respective representatives, acting in their capacity as such) (a “
Competing Buyer
”) that may constitute, or could reasonably be expected to lead to, a Local Bounti Competing Transaction; (ii) enter into, participate in, continue or otherwise engage in, any discussions or negotiations with any Competing Buyer regarding a Local Bounti Competing Transaction; (iii) furnish (including through any virtual dataroom) any information relating to Local Bounti or any of its assets or businesses, or afford access to the assets, business, properties, books or records of Local Bounti to a Competing Buyer, for the express purpose of assisting with or facilitating, or that could otherwise reasonably be expected to lead to, a Local Bounti Competing Transaction; (iv) approve, endorse or recommend, or propose publicly to approve, endorse or recommend, any Local Bounti Competing Transaction; (v) approve, endorse, recommend, execute or enter into any agreement or written arrangement relating to any Local Bounti Competing Transaction or any proposal or offer that would reasonably be expected to lead to a Local Bounti Competing Transaction; or (vi) resolve or agree to do any of the foregoing or otherwise authorize or permit any of its representatives acting on its behalf to take any such action.
|
• |
Subject to certain exceptions or as consented to in writing by Local Bounti, prior to the Closing, the Leo Parties will not do any of the following:
|
• |
amend or modify the Existing Governing Documents or the trust agreement;
|
• |
make any reduction in the trust amount, other than as expressly permitted by the Existing Governing Documents or the trust agreement;
|
• |
issue, sell or authorize any shares of capital stock or any other equity interests, as applicable, other than issuance of additional Leo shares to third-party investors solely for the purposes of satisfying the minimum available cash condition;
|
• |
split, combine, redeem or reclassify, or purchase or otherwise acquire, any shares of capital stock or any other equity interests, as applicable;
|
• |
make any material tax election not required by law or settle or compromise any material tax liability other than in the ordinary course of business;
|
• |
except as may be required by law or U.S. GAAP, make any material change in the financial or tax accounting methods, principles or practices of Leo or Merger Subs;
|
• |
make, declare, set aside or pay any dividend or make any other distribution, in each case whether in cash, stock or otherwise;
|
• |
buy, purchase or acquire any assets, securities, properties, interests or businesses;
|
• |
incur any indebtedness or make any loans or advances to any other person, in each case, except a working capital loan not to exceed $1 million from the Sponsor or an affiliate thereof or certain of Leo’s officers and directors to finance Leo’s transaction costs;
|
• |
take any action or enter into any transaction, the effect of which might reasonably be expected to impair, delay or prevent any required approvals under antitrust or competition laws;
|
• |
pay, discharge, compromise, waive, release or settle any material rights or pending or threatened actions (i) involving payments in excess of a certain threshold, (ii) seeking injunctive or other equitable remedy, (iii) imposing any material restrictions on the operations of Leo, New Local Bounti or any of its subsidiaries or (iv) not providing for a general and complete release of all claims against Leo, its affiliates and any other person to which Leo owes any obligation; and
|
• |
adopt or effect a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization.
|
• |
Following the effectiveness of this registration statement of which this joint proxy statement/prospectus forms a part, Leo will duly give notice of and use its reasonable best efforts to duly convene and hold the extraordinary general meeting to approve the Condition Precedent Proposals.
|
• |
Subject to certain exceptions, Leo will use its reasonable best efforts to cause: (i) Leo’s initial listing application with NYSE to have been approved; (ii) Leo to satisfy all applicable initial and continuing listing requirements of NYSE; and (iii) the New Local Bounti Common Stock issuable in accordance with the Merger Agreement, including the Domestication and the Merger, to be approved for listing on NYSE.
|
• |
Prior to the Closing or earlier termination of the Merger Agreement in accordance with its terms, Leo will not, and will cause its representatives and subsidiaries not to: (i) enter into, solicit, initiate, knowingly facilitate, knowingly encourage or continue any discussions or negotiations with, or knowingly encourage or respond to any inquiries or proposals by, or participate in any negotiations/ with, or provide any information to, or otherwise cooperate in any way with, any person other than Local Bounti and its subsidiaries (a “
Parent Competing Transaction
”); (ii) approve, endorse or recommend, or propose publicly to approve, endorse or recommend, any Parent Competing Transaction, (iii) approve, endorse, recommend, execute or enter into any agreement in principle, confidentiality agreement, letter of intent, memorandum of understanding, term sheet, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or other written arrangement relating to any Parent Competing Transaction or any proposal or offer that would reasonably be expected to lead to a Parent Competing Transaction or (iv) resolve or agree to do any of the foregoing or otherwise authorize or permit any of its representatives acting on its behalf to take any such action.
|
• |
using reasonable best efforts to consummate the Business Combination;
|
• |
keeping certain information confidential in accordance with the existing
non-disclosure
agreements;
|
• |
not making or issuing relevant public announcements or press releases without the prior written consent of the other parties;
|
• |
using reasonable best efforts to cause the each of the Domestication and the Mergers to constitute a transaction treated as a “reorganization” within the meaning of Section 368 of the Code or otherwise use commercially reasonable efforts to restructure the Mergers to so qualify; and
|
• |
cooperate in connection with certain tax matters and filings.
|
• |
by the mutual written consent of Leo and Local Bounti;
|
• |
by either Leo or Local Bounti, if an order by any governmental entity of any nature is in effect prohibiting the consummation of the transactions contemplated by the Merger Agreement or any law has been adopted that makes consummation of the transactions contemplated by the Merger Agreement illegal or otherwise prohibited;
|
• |
by Leo, subject to certain exceptions, (A) if there has occurred a Local Bounti Material Adverse Effect such that certain conditions to the obligations of the Leo Parties, as described in the section entitled “
—Conditions to Closing of the Business Combination
—Conditions to Closing of the Business Combination
Outside Date
”);
|
• |
by Local Bounti, (A) if there has occurred a Leo Material Adverse Effect such that certain conditions to the obligations of Local Bounti, as described in the section entitled “
—Conditions to Closing of the Business Combination
—Conditions to Closing of the Business Combination
|
• |
by either Leo or Local Bounti, if the transactions contemplated by the Merger Agreement are not consummated on or prior to the Outside Date, unless the breach of any covenants or obligations under the Merger Agreement by the party seeking to terminate was a principal cause of or primarily resulted in the failure to consummate the transactions contemplated by the Merger Agreement on or prior to the Outside Date;
|
• |
by either Leo or Local Bounti, if the approval of the Condition Precedent Proposals is not obtained at the extraordinary general meeting (including any adjournment thereof); and
|
• |
by Leo, at any time prior to the delivery of the Local Bounti Stockholder Written Consent, if Local Bounti does not deliver the Local Bounti Stockholder Written Consent within forty-eight (48) hours of this joint proxy statement/prospectus being declared effective by the SEC.
|
• |
Demand registration rights.
six-month
period or (ii) any demand registration if a registration statement on Form
S-3
or its successor form, or, if New Local Bounti is ineligible to use Form
S-3,
a registration statement on Form
S-1,
for an offering to be made on a continuous basis pursuant to Rule 415 of the Securities Act registering the resale from time to time pursuant to any method or combination of methods legally available to, and requested by, the Investors of all of the registrable securities then held by such Investors that are not covered by an effective resale registration statement (the “
Resale Shelf Registration Statement
”). In order to be effected, any underwritten demand registration must result in aggregate proceeds to the selling shareholders of at least $30,000,000.
|
• |
Shelf registration rights.
|
• |
Piggy-back registration rights.
|
• |
Expenses and indemnification.
|
• |
Registrable securities
|
(i) |
are underperforming their potential but can demonstrate a clear microeconomic thesis for value creation;
|
(ii) |
are at an inflection point, such as those requiring additional management expertise;
|
(iii) |
have potential to improve the target’s growth prospects and help it realize opportunities to create shareholder value following the consummation of a business combination;
|
(iv) |
have significant embedded and/or underexploited expansion opportunities, accomplishable through a combination of accelerating organic growth and finding attractive add-on acquisition targets;
|
(v) |
exhibit unrecognized value or other characteristics that have been misevaluated by the marketplace based on our company-specific analysis and due diligence review; and
|
(vi) |
will offer attractive risk-adjusted equity returns for our shareholders evaluated based on (a) the potential for organic growth in cash flows, (b) the ability to achieve cost savings, (c) the ability to accelerate growth, including through the opportunity for follow-on acquisitions, and (d) the prospects for creating value through other value creation initiatives.
|
1. |
Best-in-class Unit Economics
|
2. |
Superior Product vs. Traditional Agriculture.
|
3. |
Large Total Addressable Market.
|
4. |
Wide Product Offering Appealing to a Broad Customer Base.
|
5. |
Proven and Experienced Management Team.
|
6. |
Strategic Plan with Multiple Levers of Growth.
|
(i) |
Organic Growth.
|
(ii) |
Investment
.
|
(iii) |
Pursue
New Growth Domestically and Internationally.
|
strategy, leveraging the opportunity to deliver its controlled environment agriculture expertise and technology to additional markets. |
7. |
Financial Condition.
|
8. |
Terms of Transaction.
The Merger Agreement
Related Agreements
|
9. |
Results of Review of Transactions.
Background to the Business Combination
|
10. |
Continued Ownership by Sellers.
|
11. |
Results of Due Diligence.
|
(i) |
multiple meetings and calls with the Local Bounti management team regarding its operations and projections and the proposed transaction;
|
(ii) |
review of materials related to Local Bounti made available by Local Bounti, including material contracts, strategic plans, key metrics and performance indicators, benefit plans, insurance policies, litigation information, financial statements, risk mitigation materials and other legal diligence;
|
(iii) |
review of financial due diligence materials prepared by professional advisors, including quality of earnings reports and tax due diligence reports;
|
(iv) |
review of commercial due diligence materials prepared by professional advisors, including a market and competitive assessment and a business plan assessment;
|
(v) |
other financial, accounting, tax, legal, environmental, regulatory and real estate diligence; and
|
(vi) |
discussions with industry experts.
|
12. |
Potential Inability to Complete the Business Combination.
|
13. |
Local Bounti Business Risks.
Risk Factors
|
14. |
Limitations of Review.
|
15. |
No Survival of Remedies for Breach of Representations, Warranties or Covenants of Local Bounti.
|
16. |
Interests of Leo’s Directors and Executive Officers.
Interests of Leo ‘s Directors and Executive Officers in the Business Combination
|
Forecast Year Ended December 31,
|
||||||||||||||||||||||||
(in millions, except percentages)
|
2021E
(1)
|
2022E
(2)
|
2023E
(1)
|
2024E
(1)
|
2025E
(1)
|
Run-Rate
(1)
|
||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||
Revenue
(2)
|
$
|
1
|
|
$
|
13
|
|
$
|
85
|
|
$
|
282
|
|
$
|
462
|
|
$
|
495
|
|
||||||
Gross margin
|
$
|
— |
$
|
7
|
|
$
|
49
|
|
$
|
173
|
|
$
|
295
|
|
$
|
317
|
|
|||||||
Gross margin (%)
|
26 | % | 54 | % | 58 | % | 62 | % | 64 | % | 64 | % | ||||||||||||
Facility EBITDA
(3)
|
$
|
(2
|
)
|
$
|
2
|
|
$
|
38
|
|
$
|
146
|
|
$
|
256
|
|
$
|
275
|
|
||||||
Facility EBITDA margin (%)
(3)
|
N/A | 17 | % | 45 | % | 52 | % | 55 | % | 56 | % | |||||||||||||
Corporate EBITDA
(3)
|
$
|
(22
|
)
|
$
|
(34
|
)
|
$
|
(5
|
)
|
$
|
95
|
|
$
|
193
|
|
$
|
212
|
|
||||||
Corporate EBITDA margin (%)
(3)
|
N/A | N/A | N/A | 34 | % | 42 | % | 43 | % |
(1) |
Based on a projected number of facilities of 1, 3, 7, 7, 8 and 8 for the years ending December 31, 2021, 2022, 2023, 2024 and 2025 and for the
run-rate,
respectively.
|
(2) |
Revenue for the year ending December 31, 2021 is projected as $1 million because 72% of the facility is dedicated to SKU optimization.
|
(3) |
Facility EBITDA means Earnings Before Interest, Taxes, Depreciation and Amortization (“
EBITDA
”) that takes into account costs that are directly incurred for facility operations. Corporate EBITDA means EBITDA that takes into account (a) costs that are directly incurred for facility operations, and (b) corporate overhead costs for administrative purposes.
|
• |
Total revenue driven primarily by the operation of eight facilities producing loose leaf lettuce in North America, successfully constructed and commissioned to management’s expected expansion timeline.
|
• |
Revenue growth is also driven by increasing yield due to forecasted investment in plant science and facility technology, which is expected to optimize genetic traits and growing conditions.
|
• |
Increasing price per unit in line with inflation.
|
• |
Operating costs, including facility costs, such as labor, utility and distribution, and corporate costs, such as sales, marketing and administrative items.
|
• |
Declining cost of sales on a per unit basis, due to investment in plant science and facility technology, and overall performance optimization, which is expected to reduce the cost of seeds, labor and utilities on per unit basis.
|
• |
The EBITDA forecast includes spending on research and development for trial plant production in 2021 and 2022 in the Montana Facility, as well as increased sales, general and administrative costs based on management’s estimation of amounts required to support forecast growth.
|
• |
Continuation of Local Bounti’s sale of product at the current demonstrated price level for leafy green products sold to consumers through retailers and with management’s estimate of product mix and channel mix.
|
• |
Consumer demand for Local Bounti’s products similar to that demonstrated in Local Bounti’s current operating geographies.
|
• |
Achieving modeled farm yields operating efficiencies.
|
• |
Current trends in economic activity and corresponding expectations of future rates of inflation.
|
• |
AppHarvest, Inc.
|
• |
AeroFarms
|
• |
Freshpet, Inc.
|
• |
Beyond Meat, Inc.
|
• |
Peloton Interactive, Inc.
|
• |
Vital Farms, Inc.
|
Company
|
Calendar
Year (CY) 2022E Revenue Growth (%) |
CY 2022E
EBITDA Margin (%) |
CY 2024E
Revenue Growth (%) |
CY 2025E
Revnenue Growth (%) |
CY 2024E
EBITDA Margin (%) |
CY 2025E
EBITDA Margin (%) |
||||||||||||||||||
Local Bounti
(1)
|
N/A | N/A | 232.4 | % | 63.9 | % | 33.8 | % | 41.7 | % | ||||||||||||||
CEA Comparables
|
||||||||||||||||||||||||
AppHarvest, Inc.
|
N/A | N/A | 77.9 | % | 50.0 | % | 23.6 | % | 31.5 | % | ||||||||||||||
AeroFarms
(2)
|
N/A | 201.9 | % | 102.5 | % | N/A | 24.8 | % | ||||||||||||||||
High-Growth Healthy-Consumer Comparables
|
||||||||||||||||||||||||
Freshpet, Inc.
|
31.8 | % | 17.3 | % | N/A | N/A | N/A | N/A | ||||||||||||||||
Beyond Meat, Inc.
|
47.6 | % | 6.4 | % | N/A | N/A | N/A | N/A | ||||||||||||||||
Peloton Interactive, Inc.
|
37.9 | % | 28.0 | % | N/A | N/A | N/A | N/A | ||||||||||||||||
Vital Farms, Inc.
|
27.4 | % | 5.0 | % | N/A | N/A | N/A | N/A |
(1) |
Based on Local Bounti projections.
|
(2) |
Based on projections provided in AeroFarms investor presentation.
|
Company
|
CY 2022E
AV / Revenue |
CY 2022E
AV / EBITDA |
CY 2024E
AV / Revenue |
CY 2025E
AV / Revenue |
CY 2024E
AV / EBITDA |
CY 2025E
AV / EBITDA |
||||||||||||||||||
Local Bounti
(1)
|
N/A | N/A | 2.7x | 1.6x | 7.9x | 3.9x | ||||||||||||||||||
CEA Comparables
|
||||||||||||||||||||||||
AppHarvest, Inc.
|
N/A | N/A | 5.7x | 3.8x | 24.3x | 12.1x | ||||||||||||||||||
AeroFarms
(2)
|
N/A | 5.3x | 2.6x | N/A | 10.5x | |||||||||||||||||||
High-Growth Healthy-Consumer Comparables
|
||||||||||||||||||||||||
Freshpet, Inc.
|
12.9x | 74.5x | N/A | N/A | N/A | N/A | ||||||||||||||||||
Beyond Meat, Inc.
|
12.2x | 191.1x | N/A | N/A | N/A | N/A | ||||||||||||||||||
Peloton Interactive, Inc.
|
6.1x | 52.8x | N/A | N/A | N/A | N/A | ||||||||||||||||||
Vital Farms, Inc.
|
2.6x | 50.9x | N/A | N/A | N/A | N/A |
(1) |
Based on Local Bounti projections.
|
(2) |
Based on projections provided in AeroFarms investor presentation.
|
• |
the fact that our initial shareholders have agreed not to redeem any Class A ordinary shares held by them in connection with a shareholder vote to approve a proposed initial business combination;
|
• |
the fact that the Sponsor paid an aggregate of $25,000 for the 6,8750,000 Class B ordinary shares currently owned by the initial shareholders and such securities will have a significantly higher value at the time of the Business Combination;
|
• |
the fact that the Sponsor paid $8,00,000 for its private placement of 5,333,333 private placement warrants to purchase Class A ordinary shares and such private placement warrants will expire worthless if an initial business combination is not consummated by March 2, 2023;
|
• |
the fact that the initial shareholders and Leo’s current officers and directors have agreed to waive their rights to liquidating distributions from the trust account with respect to any ordinary shares (other than public shares) held by them if Leo fails to complete an initial business combination by March 2, 2023;
|
• |
the fact that the Amended and Restated Registration Rights Agreement will be entered into by the initial shareholders;
|
• |
the fact that, at the option of the Sponsor, any amounts outstanding under any loan made by the Sponsor or any of its affiliates to Leo in an aggregate amount of up to $1,500,000 may be converted into warrants to purchase Class A ordinary shares in connection with the consummation of the Business Combination;
|
• |
the fact that certain of Leo’s directors and officers have committed to purchase shares of common stock in connection with the PIPE Financing;
|
• |
the continued indemnification of Leo’s directors and officers and the continuation of Leo’s directors’ and officers’ liability insurance after the Business Combination (
i.e.
|
• |
the fact that the Sponsor and Leo’s officers and directors will lose their entire investment in Leo and will not be reimbursed for any
out-of-pocket
|
• |
the fact that if the trust account is liquidated, including in the event Leo is unable to complete an initial business combination by March 2, 2023, the Sponsor has agreed to indemnify Leo to ensure that the proceeds in the trust account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the trust account on the liquidation date, by the claims of prospective target businesses with which Leo has entered into an acquisition agreement or claims of any third party for services rendered or products sold to Leo, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the trust account;
|
• |
following the completion of the Business Combination, the Sponsor, Leo’s officers and directors and their respective affiliates will be entitled to reimbursement for any reasonable
out-of-pocket
|
• |
pursuant to the Amended and Restated Registration Rights Agreement, the Sponsor and certain of Leo’s directors and officers will have customary registration rights, including demand and piggy-back rights, subject to cooperation
and cut-back provisions
with respect to the shares of New Local Bounti
|
• |
Prominence, Predictability, and Flexibility of Delaware Law
|
changed corporate domicile to Delaware. Because of Delaware’s prominence as the state of incorporation for many major corporations, both the legislature and courts in Delaware have demonstrated the ability and a willingness to act quickly and effectively to meet changing business needs. The DGCL is frequently revised and updated to accommodate changing legal and business needs and is more comprehensive, widely used and interpreted than other state corporate laws. This favorable corporate and regulatory environment is attractive to businesses such as ours.
|
• |
Well-Established Principles of Corporate Governance
|
• |
Increased Ability to Attract and Retain Qualified Directors
|
Existing Governing Documents
|
Proposed Governing Documents
|
|||
Authorize the Board of Directors to Issue Preferred Stock Without Stockholder Consent
(Governing Documents Proposal B)
|
The Existing Governing Documents authorize the issuance of 5,000,000 preference shares with such designation, rights and preferences as may be determined from time to time by our board of directors. Accordingly, our board of directors is empowered under the Existing Governing Documents, without shareholder approval, to issue preference shares with dividend, liquidation, redemption, voting or other rights which could adversely affect the voting power or other rights of the holders of ordinary shares. | The Proposed Governing Documents authorize the board of directors to issue all or any shares of preferred stock in one or more series and to fix for each such series such voting powers, full or limited, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as the board of directors may determine. | ||
See paragraph 5 of the Memorandum of Association and Article 3 of the Articles of Association.
|
See Article IV subsection 1.2 of the Proposed Certificate of Incorporation.
|
|||
Shareholder/Stockholder Written Consent In Lieu of a Meeting
(Governing Documents Proposal C)
|
The Existing Governing Documents provide that resolutions may be passed by a vote in person, by proxy at a general meeting, or by unanimous written resolution. | The Proposed Governing Documents allow stockholders to vote in person or by proxy at a meeting of stockholders, but prohibit the ability of stockholders to act by written consent in lieu of a meeting. | ||
See Article 1 of the Articles of Association.
|
See Article IV subsection 2.3 and Article VIII subsection 1 of the Proposed Certificate of Incorporation.
|
|||
Corporate Name
(Governing Documents Proposal D)
|
The Existing Governing Documents provide the name of the company is “Leo Holdings III Corp” | The Proposed Governing Documents will provide that the name of the corporation will be “Local Bounti Corporation” | ||
See paragraph 1 of the Memorandum of Association.
|
See Article I of the Proposed Certificate of Incorporation.
|
|||
Perpetual Existence
(Governing Documents Proposal D)
|
The Existing Governing Documents provide that if we do not consummate a business combination (as defined in the Existing Governing Documents) by March 2, 2023 (twenty-four months after the closing of Leo’s initial public offering), Leo will cease all operations except for the purposes of winding up and will redeem the shares issued in Leo’s initial public offering and liquidate its trust account. | The Proposed Governing Documents do not include any provisions relating to New Local Bounti’s ongoing existence; the default under the DGCL will make New Local Bounti’s existence perpetual. |
Plan Category
|
Number of
securities to be issued upon exercise of outstanding options, warrants and rights (a) |
Weighted
average exercise price of outstanding options, warrants and rights (b) |
Number of
securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
|||||||||
Equity compensation plans approved by security holders
|
— | $ | — | — | ||||||||
Equity compensation plans not approved by security holders
|
— | — | — | |||||||||
Total
|
— | $ | — | — |
• |
a transfer of all or substantially all of our company’s assets;
|
• |
a merger, consolidation or other capital reorganization or business combination transaction of our company with or into another corporation, entity or person; or
|
• |
the consummation of a transaction, or series of related transactions, in which any person becomes the beneficial owner, directly or indirectly, of more than 50% of our then outstanding capital stock;
|
• |
If the stock is disposed of more than 2 years after the beginning of the offering and more than one year after the stock is transferred to the participant, then the lesser of (i) the excess of the fair market value of the stock at the time of such disposition over the purchase price, or (ii) the excess of the fair market value of the stock as of the beginning of the offering over the purchase price (determined as of the beginning of the offering) will be treated as ordinary income. Any further gain or any loss will be taxed as a long-term capital gain or loss.
|
• |
If the stock is sold or disposed of before the expiration of either of the holding periods described above, then the excess of the fair market value of the stock on the purchase date over the purchase price will be treated as ordinary income at the time of such disposition. The balance of any gain will be treated as capital gain. Even if the stock is later disposed of for less than its fair market value on the purchase date, the same amount of ordinary income is attributed to the participant, and a capital loss is recognized equal to the difference between the sales price and the fair market value of the stock on such purchase date.
|
• |
You can vote your warrants by completing, signing, dating and returning the enclosed Warrant Holders Meeting proxy card in the postage-paid envelope provided. If you hold your warrants in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your warrants are represented and voted at the Warrant Holders Meeting. If you vote by proxy card, your “proxy,” whose name is listed on the Warrant Holders Meeting proxy card, will
|
vote your warrants as you instruct on the Warrant Holders Meeting proxy card. If you sign and return the Warrant Holders Meeting proxy card but do not give instructions on how to vote your warrants, your warrants will be voted as recommended by Leo’s board of directors. Leo’s board of directors recommends voting “FOR” the Warrant Amendment Proposal and “FOR” the Warrant Holders Adjournment Proposal.
|
• |
You can attend the Warrant Holders Meeting and vote in person even if you have previously voted by submitting a proxy pursuant to any of the methods noted above. You will be given a ballot when you arrive. However, if your warrants are held in the name of your broker, bank or other nominee, you must get a proxy from the broker, bank or other nominee. That is the only way to ensure that the broker, bank or nominee has not already voted your warrants.
|
• |
you may send another Warrant Holders Meeting proxy card with a later date;
|
• |
you may send a notice of revocation to our general counsel, which must be received by our general counsel prior to the vote at the Warrant Holders Meeting; or
|
• |
you may attend the Warrant Holders Meeting, revoke your proxy, and vote in person, as indicated above.
|
• |
amends the rights specific to the Leo private placement warrants such that (A) the rights specific to such warrants are retained by the holder thereof regardless of such holder’s identity, (B) such warrants are no longer subject to redemption by Leo at any price and (C) such warrants are no longer generally exercisable on a “cashless basis;”
|
• |
eliminates Leo’s ability to redeem any Leo public warrants unless the Class A ordinary shares are trading at a price equal to or in excess of $18.00 per share; and
|
• |
removes certain language providing for, among other things, net settlement of Leo warrants in the event of a tender offer for the shares underlying such warrants.
|
2.6. |
Private Placement Warrants. The Private Placement Warrants shall be identical to the Public Warrants, except that the Private Placement Warrants: (i) including the Ordinary Shares issuable upon exercise of the Private Placement Warrants, may not be transferred, assigned or sold until thirty (30) days after the completion by the Company of an initial Business Combination, and (ii) shall not be redeemable by the Company; provided, however, that in the case of (i), the Private Placement Warrants and any Ordinary Shares issued upon exercise of the Private Placement Warrants may be transferred by the holders thereof:
|
(a) |
to the Company’s officers or directors, any affiliates or family members of any of the Company’s officers or directors, any members or partners of the Sponsor or their affiliates, any affiliates of the Sponsor or any employees of such affiliates;
|
(b) |
in the case of an individual, by gift to a member of one of the individual’s immediate family or to a trust, the beneficiary of which is a member of the individual’s immediate family, an affiliate of such person or to a charitable organization;
|
(c) |
in the case of an individual, by virtue of laws of descent and distribution upon death of the individual;
|
(d) |
in the case of an individual, pursuant to a qualified domestic relations order;
|
(e) |
by private sales or transfers made in connection with the Business Combination at prices no greater than the price at which the Private Placement Warrants or Ordinary Shares, as applicable, were originally purchased;
|
(f) |
by virtue of the holder’s organizational documents upon liquidation or dissolution of the holder;
|
(g) |
to the Company for no value for cancellation in connection with the consummation of its initial Business Combination;
|
(h) |
in the event of the Company’s liquidation prior to the completion of its initial Business Combination; or
|
(i) |
in the event of the Company’s completion of a liquidation, merger, share exchange or other similar transaction which results in all of the Company’s shareholders having the right to exchange their Ordinary Shares for cash, securities or other property subsequent to the completion of the Company’s initial Business Combination; provided, however, that, in the case of clauses (a) through (f), these permitted transferees (the “
Permitted Transferees
|
3.3. |
Exercise of Warrants.
|
3.3.1. |
Payment. Subject to the provisions of the Warrant and this Agreement, a Warrant may be exercised by the Registered Holder thereof by delivering to the Warrant Agent at its corporate trust department (i) the Definitive Warrant Certificate evidencing the Warrants to be exercised, or, in the case of a Warrant represented by a book-entry, the Warrants to be exercised (the “
Book-Entry Warrants
Election to Purchase
|
(a) |
in lawful money of the United States, in good certified check or good bank draft payable to the Warrant Agent; or
|
(b) |
as provide in Section 7.4 hereof.
|
3.2 |
Duration of Warrants. A Warrant may be exercised only during the period (the “
Exercise Period
Expiration Date
|
4.4 |
Raising of the Capital in Connection with the Initial Business Combination. If (x) the Company issues additional Ordinary Shares or equity-linked securities for capital raising purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per Ordinary Share (with such issue price or effective issue price to be determined in good faith by the Board and, (i) in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Class B ordinary shares of the Company, par value $0.0001 per share (the “
Class B ordinary shares
Newly Issued Price
Market Value
|
6.4 |
Exercise After Notice of Redemption. The Public Warrants may be exercised, for cash at any time after notice of redemption shall have been given by the Company pursuant to Section 6.3 hereof and prior to the Redemption Date. On and after the Redemption Date, the record holder of the Public Warrants shall have no further rights except to receive, upon surrender of the Public Warrants, the Redemption Price.
|
4.5. |
Replacement of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the issued and outstanding Ordinary Shares (other than a change under Section 4.1 or Section 4.2 hereof or that solely affects the par value of such Ordinary Shares), or in the case of any merger or consolidation of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the issued and outstanding Ordinary Shares), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the holders of the Warrants shall thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the Warrants and in lieu of the Ordinary Shares of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the Warrants would have received if such holder had exercised his, her or its Warrant(s) immediately prior to such event (the “
Alternative Issuance
Black-Scholes Warrant Value” means
Bloomberg
Per Share Consideration” means
|
shall be made pursuant to subsection 4.1.1 or Sections 4.2, 4.3 and this Section 4.5. The provisions of this Section 4.5 shall similarly apply to successive reclassifications, reorganizations, mergers or consolidations, sales or other transfers. In no event will the Warrant Price be reduced to less than the par value per share issuable upon exercise of the Warrant. |
• |
an individual citizen or resident of the United States;
|
• |
a corporation (or other entity treated as a corporation) that is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia;
|
• |
an estate whose income is subject to U.S. federal income taxation regardless of its source; or
|
• |
a trust if (i) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (ii) it has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person.
|
• |
financial institutions or financial services entities;
|
• |
broker-dealers;
|
• |
persons that are subject to the
mark-to-market
|
• |
tax-exempt
entities;
|
• |
governments or agencies or instrumentalities thereof;
|
• |
insurance companies;
|
• |
regulated investment companies;
|
• |
real estate investment trusts;
|
• |
certain expatriates or former long-term residents of the United States;
|
• |
persons that acquired Leo public shares pursuant to an exercise of employee options, in connection with employee incentive plans or otherwise as compensation;
|
• |
persons that hold Leo public shares or public warrants as part of a straddle, constructive sale, hedging, redemption or other integrated transaction;
|
• |
persons whose functional currency is not the U.S. dollar;
|
• |
controlled foreign corporations;
|
• |
passive foreign investment companies;
|
• |
persons required to accelerate the recognition of any item of gross income with respect to Leo public shares or public warrants as a result of such income being recognized on an applicable financial statement;
|
• |
persons who actually or constructively own 5 percent or more of the shares of Leo by vote or value (except as specifically provided below);
|
• |
foreign corporations with respect to which there are one or more United States shareholders within the meaning of Treasury Regulation
Section 1.367(b)-3(b)(1)(ii);
or
|
• |
the Sponsor or its affiliates.
|
A.
|
U.S. Holders Who Own More Than 10 Percent of the Voting Power or Value of Leo
|
B.
|
U.S. Holders Whose Leo Public Shares Have a Fair Market Value of $50,000 or More But Who Own Less Than 10 Percent of the Voting Power of Leo and Less than 10 Percent of the Total Value of Leo
|
(i) |
a statement that the Domestication is a Section 367(b) exchange;
|
(ii) |
a complete description of the Domestication;
|
(iii) |
a description of any stock, securities or other consideration transferred or received in the Domestication;
|
(iv) |
a statement describing the amounts required to be taken into account for U.S. federal income tax purposes;
|
(v) |
a statement that the U.S. Holder is making the election and that includes (A) a copy of the information that the U.S. Holder received from Leo establishing and substantiating the “all earnings and profits amount” with respect to the U.S. Holder’s Leo public shares, and (B) a representation that the U.S. Holder has notified Leo (or New Local Bounti) that the U.S. Holder is making the election; and
|
(vi) |
certain other information required to be furnished with the U.S. Holder’s tax return or otherwise furnished pursuant to the Code or the Treasury Regulations thereunder.
|
C.
|
U.S. Holders Whose Leo Public Shares Have a Fair Market Value of Less Than $50,000 and Who Own Less Than 10 Percent of the Voting Power of Leo and Less than 10 Percent of the Total Value of Leo.
|
(i) |
such
Non-U.S.
Holder is an individual who was present in the United States for 183 days or more in the taxable year of such disposition and certain other requirements are met;
|
(ii) |
the gain is effectively connected with a trade or business of such
Non-U.S.
Holder in the United States (and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment or fixed base); or
|
(iii) |
New Local Bounti is or has been a “U.S. real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of such disposition or such
Non-U.S.
Holder’s holding period for such securities disposed of, and either (A) the New Local Bounti Common Stock are not considered to be regularly traded on an established securities market or (B) such
Non-U.S.
Holder has owned or is deemed to have owned, at any time during the shorter of the five-year period preceding such disposition and such
Non-U.S.
Holder’s holding period more than 5% of outstanding New Local Bounti Common Stock. There can be no assurance that New Local Bounti Common Stock will be treated as regularly traded on an established securities market for this purpose.
|
• |
Local Bounti comprising the ongoing operations of the Combined Company;
|
• |
Local Bounti’s senior management comprising the senior management of the Combined Company; and
|
• |
Local Bounti stockholders will have the largest voting interest in the post-combination Combined Company in both the no and maximum redemption scenarios.
|
Assuming
No Redemptions |
Assuming
Maximum Redemptions |
|||||||
Shares of New Local Bounti Common Stock issued to public shareholders
(1)
|
$ | 275,000 | $ | 25,939 | ||||
Shares of New Local Bounti Common Stock issued to Leo Initial Shareholders
(2)
|
68,750 | 68,750 | ||||||
Shares of New Local Bounti Common Stock issued to PIPE Investors
|
125,000 | 125,000 | ||||||
Shares of New Local Bounti Common Stock issued to Local Bounti Securityholders
|
604,500 | 604,500 | ||||||
Shares of New Local Bounti Common Stock issued to Convertible Notes
|
31,905 | 31,905 | ||||||
|
|
|
|
|||||
Share Consideration – at Closing
|
$
|
1,105,155
|
|
$
|
856,094
|
|
||
|
|
|
|
(1) |
Excludes 5,500,000 in warrants exercised at $11.50 per share
|
(2) |
Excludes 5,333,333 in warrants exercised at $11.50 per share
|
• |
Assuming No Redemptions
—
|
• |
Assuming Maximum Redemptions
—
|
payment of any transaction expenses (including deferred underwriting expenses from the initial public offering), be not less than $150.0 million. This scenario gives effect to the maximum number of redemptions that meet all of the conditions to permit consummation of the Business Combination.
|
Assuming
No Redemptions
|
Assuming
Maximum Redemptions
|
|||||||||||||||
Shares
|
%
|
Shares
|
%
|
|||||||||||||
New Local Bounti Common Stock issued to public shareholders
(1)
|
27,500 | 25 | % | 2,594 | 2 | % | ||||||||||
New Local Bounti Common Stock issued to initial shareholders
(2)
(3)
|
6,875 | 6 | % | 6,875 | 8 | % | ||||||||||
New Local Bounti Common Stock issued to PIPE Investors
|
12,500 | 11 | % | 12,500 | 15 | % | ||||||||||
New Local Bounti Common Stock issued to Local Bounti Stockholders (including holders of Local Bounti restricted stock units and Local Bounti Warrants)
(3)
|
60,450 | 55 | % | 60,450 | 71 | % | ||||||||||
New Local Bounti Common Stock issued to holders of Convertible Notes
|
3,190 | 3 | % | 3,190 | 4 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Pro Forma Shares Outstanding
|
|
110,515
|
|
|
100
|
%
|
|
85,609
|
|
|
100
|
%
|
(1) |
Excludes 5,500,000 warrants
|
(2) |
Excludes 5,333,333 warrants
|
(3) |
Excludes 2,500,000 of contingent earnout shares to be issued to Local Bounti equityholders who are entitled to receive a portion of the earnout consideration on a pro rata basis, in equal thirds, if the trading price of New Local Bounti Common Stock is greater than or equal to $13.00, $15.00 or $17.00 for any 20 trading days within any 30-trading day period. Contingent earnout shares will also accelerate and be fully issuable in connection with any Change of Control (as defined in the Merger Agreement) if the applicable thresholds are met in such Change of Control.
|
As of
June 30, 2021
|
As of
June 30,
2021 |
As of
June 30,
2021 |
||||||||||||||||||||||||||||||||||||||||||||
LEO
(Historical)
(US GAAP)
|
Local
Bounti
(Historical)
(US GAAP)
|
Local
Bounti Transaction Adjustments |
Local
Bounti
As
Adjusted |
Combined
|
Transaction
Adjustments (Assuming No Redemptions) |
Pro Forma
New Local
Bounti Combined (Assuming No Redemptions) |
Additional
Transaction
Adjustments (Assuming Maximum Redemptions) |
Pro Forma
New Local
Bounti (Assuming Maximum Redemptions) |
||||||||||||||||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||||||||||||||||||||||||
Current Assets
|
||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents
|
$ | 460 | $ | 23,144 | $ | (10,000 | ) | (A) | $ | 13,144 | $ | 13,604 | $ | 275,007 | (D) | $ | 339,561 | (249,061 | ) | (W) | $ | 100,000 | ||||||||||||||||||||||||
15,987 | (B) | 15,987 | $ | 15,987 | (38,571 | ) | (E) | 9,500 | (X) | |||||||||||||||||||||||||||||||||||||
(219 | ) | (C) | (219 | ) | $ | (219 | ) | (9,625 | ) | (F) | ||||||||||||||||||||||||||||||||||||
— | 125,000 | (G) | ||||||||||||||||||||||||||||||||||||||||||||
— | (4,000 | ) | (H) | |||||||||||||||||||||||||||||||||||||||||||
— | (122 | ) | (I) | |||||||||||||||||||||||||||||||||||||||||||
— | (37,500 | ) | (K) | |||||||||||||||||||||||||||||||||||||||||||
Accounts receivable, net of allowance
|
— | 47 | — | 47 | 47 | — | 47 | — | 47 | |||||||||||||||||||||||||||||||||||||
Accounts receivable - related party
|
— | 14 | — | 14 | 14 | — | 14 | — | 14 | |||||||||||||||||||||||||||||||||||||
Inventory, net of allowance
|
— | 411 | — | 411 | 411 | — | 411 | — | 411 | |||||||||||||||||||||||||||||||||||||
Prepaid assets
|
919 | 3,609 | — | 3,609 | 4,528 | — | 4,528 | — | 4,528 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total Current Assets
|
|
1,379
|
|
|
27,225
|
|
|
5,768
|
|
|
32,993
|
|
|
34,372
|
|
|
310,189
|
|
|
344,561
|
|
|
(239,561
|
)
|
|
105,000
|
|
|||||||||||||||||||
Property and equipment, net
|
— | 16,260 | — | 16,260 | 16,260 | — | 16,260 | — | 16,260 | |||||||||||||||||||||||||||||||||||||
Cash held in Trust Account
|
275,007 | — | — | — | 275,007 | (275,007 | ) | (D) | — | — | — | |||||||||||||||||||||||||||||||||||
Other assets, net
|
— | 40 | — | 40 | 40 | — | 40 | — | 40 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total Assets
|
$
|
276,386
|
|
$
|
43,525
|
|
$
|
5,768
|
|
$
|
49,293
|
|
$
|
325,679
|
|
$
|
35,182
|
|
$
|
360,861
|
|
$
|
(239,561
|
)
|
$
|
121,300
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Liabilities, Temporary Equity and Shareholders’ equity
|
||||||||||||||||||||||||||||||||||||||||||||||
Current Liabilities
|
||||||||||||||||||||||||||||||||||||||||||||||
Accounts payable
|
$ | 11 | $ | 1,890 | $ | — | $ | 1,890 | $ | 1,901 | $ | — | 1,901 | $ | — | $ | 1,901 | |||||||||||||||||||||||||||||
Accrued liabilities
|
— | 4,510 | (219 | ) | (C) | 4,291 | 4,291 | (544 | ) | (L) | 3,747 | — | 3,747 | |||||||||||||||||||||||||||||||||
Accrued expenses
|
122 | — | — | — | 122 | (122 | ) | (I) | — | — | — | |||||||||||||||||||||||||||||||||||
Term loan, net of deferred financing costs
|
— | 8,864 | (10,000 | ) | (A) | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
1,136 | (A) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total Current Liabilities
|
|
133
|
|
|
15,264
|
|
|
(9,083
|
)
|
|
6,181
|
|
|
6,314
|
|
|
(666
|
)
|
|
5,648
|
|
|
—
|
|
|
5,648
|
|
|||||||||||||||||||
Deferred underwriting commissions
|
9,625 | — | — | — | 9,625 | (9,625 | ) | (F) | — | — | — | |||||||||||||||||||||||||||||||||||
Long-term debt
|
— | — | 15,987 | (B) | 15,987 | 15,987 | 15,987 | — | 15,987 |
As of
June 30, 2021
|
As of
June 30,
2021 |
As of
June 30,
2021 |
||||||||||||||||||||||||||||||||||||||||||||
LEO
(Historical)
(US
GAAP) |
Local
Bounti
(Historical)
(US
GAAP) |
Local
Bounti Transaction Adjustments |
Local
Bounti
As
Adjusted |
Combined
|
Transaction
Adjustments (Assuming No Redemptions) |
Pro Forma
New Local
Bounti Combined (Assuming No Redemptions) |
Additional
Transaction
Adjustments (Assuming Maximum Redemptions) |
Pro Forma
New Local
Bounti (Assuming Maximum Redemptions) |
||||||||||||||||||||||||||||||||||||||
Financing obligation
|
— | 12,426 | — | 12,426 | 12,426 | — | 12,426 | — | 12,426 | |||||||||||||||||||||||||||||||||||||
Warrant liabilities
|
12,567 | 1,418 | — | 1,418 | 13,985 | (6,380 | ) | (M) | 4,454 | — | 4,454 | |||||||||||||||||||||||||||||||||||
(1,733 | ) | (N) | ||||||||||||||||||||||||||||||||||||||||||||
(1,415 | ) | (O) | ||||||||||||||||||||||||||||||||||||||||||||
(3 | ) | (P) | ||||||||||||||||||||||||||||||||||||||||||||
Convertible notes
|
— | 29,034 | — | 29,034 | 29,034 | (29,034 | ) | (J) | — | — | — | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total Liabilities
|
|
22,325
|
|
|
58,142
|
|
|
6,904
|
|
|
65,046
|
|
|
87,371
|
|
|
(48,856
|
)
|
|
38,515
|
|
|
—
|
|
|
38,515
|
|
|||||||||||||||||||
Temporary Equity
|
||||||||||||||||||||||||||||||||||||||||||||||
Class A common stock subject to possible redemption
|
249,061 | — | — | — | 249,061 | (249,061 | ) | (Q) | — | — | — | |||||||||||||||||||||||||||||||||||
Shareholders’ Equity
|
||||||||||||||||||||||||||||||||||||||||||||||
New Local Bounti ordinary shares
|
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Local Bounti Voting common stock
|
— | 1 | — | 1 | 1 | 1 | (G) | 1 | — | 1 | ||||||||||||||||||||||||||||||||||||
(1 | ) | (R) | ||||||||||||||||||||||||||||||||||||||||||||
LEO Class A ordinary shares
|
— | — | — | — | — | — | (S) | — | — | — | ||||||||||||||||||||||||||||||||||||
LEO Class B ordinary shares
|
1 | — | — | — | 1 | (1 | ) | (T) | — | — | — | |||||||||||||||||||||||||||||||||||
Additional paid in capital
|
9,305 | 14,519 | — | 14,519 | 23,824 | (34,721 | ) | (E) | 366,478 | (249,061 | ) | (W | ) | 126,917 | ||||||||||||||||||||||||||||||||
124,999 | (G) | 9,500 | (X | ) | ||||||||||||||||||||||||||||||||||||||||||
6,380 | (M) | |||||||||||||||||||||||||||||||||||||||||||||
1,415 | (O) | |||||||||||||||||||||||||||||||||||||||||||||
31,905 | (J) | |||||||||||||||||||||||||||||||||||||||||||||
249,061 | (Q) | |||||||||||||||||||||||||||||||||||||||||||||
1 | (R) | |||||||||||||||||||||||||||||||||||||||||||||
— | (S) | |||||||||||||||||||||||||||||||||||||||||||||
1 | (T) | |||||||||||||||||||||||||||||||||||||||||||||
5,419 | (U) | |||||||||||||||||||||||||||||||||||||||||||||
(37,500 | ) | (K) | ||||||||||||||||||||||||||||||||||||||||||||
(4,306 | ) | (V) | ||||||||||||||||||||||||||||||||||||||||||||
Retained earnings (accumulated deficit)
|
(4,306 | ) | (29,137 | ) | (1,136 | ) | (J | ) | (30,273 | ) | (34,579 | ) | (4,000 | ) | (H) | (44,133 | ) | — | (44,133 | ) | ||||||||||||||||||||||||||
544 | (L) | |||||||||||||||||||||||||||||||||||||||||||||
(2,871 | ) | (J) | ||||||||||||||||||||||||||||||||||||||||||||
(3,850 | ) | (E) | ||||||||||||||||||||||||||||||||||||||||||||
(5,419 | ) | (U) | ||||||||||||||||||||||||||||||||||||||||||||
1,733 | (N) | |||||||||||||||||||||||||||||||||||||||||||||
3 | (P) | |||||||||||||||||||||||||||||||||||||||||||||
4,306 | (V) | |||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total Shareholders’ Equity
|
|
5,000
|
|
|
(14,617
|
)
|
|
(1,136
|
)
|
|
(15,753
|
)
|
|
(10,753
|
)
|
|
333,099
|
|
|
322,346
|
|
|
(239,561
|
)
|
|
82,785
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total Liabilities, Temporary Equity and Shareholders’ Equity
|
$
|
276,386
|
|
$
|
43,525
|
|
$
|
5,768
|
|
$
|
—
|
|
$
|
49,293
|
|
$
|
325,679
|
|
$
|
35,182
|
|
$
|
360,861
|
|
$
|
(239,561
|
)
|
$
|
121,300
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
215 |
For the six months ended
June 30, 2021 |
For the six months
ended June 30, 2021 |
For the six
months ended June 30, 2021 |
||||||||||||||||||||||||||||||||||||||||||
LEO
(Historical) (US GAAP) |
Local
Bounti (Historical) (US GAAP) |
Local
Bounti Transaction Adjustments |
Local
Bounti As Adjusted |
Combined
|
Transaction
Adjustments (Assuming No Redemptions) |
Pro Forma New Local Bounti (Assuming No Redemptions) |
Additional
Transaction Adjustments (Assuming Maximum Redemptions) |
Pro Forma
New Local Bounti (Assuming Maximum Redemptions) |
||||||||||||||||||||||||||||||||||||
(in thousands, except share and per share data)
|
||||||||||||||||||||||||||||||||||||||||||||
Sales
|
— | $ | 165 | $ | — | $ | 165 | $ | 165 | $ | 165 | $ | — | 165 | ||||||||||||||||||||||||||||||
Cost of goods sold (exclusive of items shown separately below)
|
— | 126 | — | 126 | 126 | — | 126 | — | 126 | |||||||||||||||||||||||||||||||||||
— | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Gross Margin
|
|
—
|
|
|
39
|
|
|
—
|
|
|
39
|
|
|
39
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|
39
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Operating Expenses:
|
||||||||||||||||||||||||||||||||||||||||||||
Research and development
|
— | 1,155 | — | 1,155 | 1,155 | — | 1,155 | — | 1,155 | |||||||||||||||||||||||||||||||||||
Selling, general and administrative
|
586 | 11,006 | — | 11,006 | 11,592 | 2,197 | (CC) | 13,789 | — | 13,789 | ||||||||||||||||||||||||||||||||||
Administrative fee - related party
|
38 | — | — | — | 38 | (38 | ) | (DD) | — | — | — | |||||||||||||||||||||||||||||||||
Depreciation and amortization
|
— | 250 | — | 250 | 250 | — | 250 | — | 250 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total Operating Expenses
|
|
624
|
|
|
12,411
|
|
|
—
|
|
|
12,411
|
|
|
13,035
|
|
|
2,159
|
|
|
15,194
|
|
|
—
|
|
|
15,194
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Loss From Operations
|
|
(624
|
)
|
|
(12,372
|
)
|
|
—
|
|
|
(12,372
|
)
|
|
(12,996
|
)
|
|
(2,159
|
)
|
|
(15,155
|
)
|
|
—
|
|
|
(15,155
|
)
|
|||||||||||||||||
Convertible notes fair value adjustment
|
— | (2,984 | ) | — | (2,984 | ) | (2,984 | ) | 2,984 | (EE) | — | — | — | |||||||||||||||||||||||||||||||
Change in fair value of warrant liabilities
|
(3,413 | ) | (3 | ) | — | (3 | ) | (3,416 | ) | 1,733 | (FF) | (1,680 | ) | — | (1,680 | ) | ||||||||||||||||||||||||||||
3 | (GG) | |||||||||||||||||||||||||||||||||||||||||||
Offering costs associated with issuance of warrants
|
(276 | ) | — | — | — | (276 | ) | 140 | (FF) | (136 | ) | — | (136 | ) | ||||||||||||||||||||||||||||||
Net gain from investments held in Trust Account
|
7 | — | — | — | 7 | (7 | ) | (HH) | — | — | — |
For the six months ended
June 30, 2021 |
For the six months
ended June 30, 2021 |
For the six
months ended June 30, 2021 |
||||||||||||||||||||||||||||||||||||||||||
LEO
(Historical) (US GAAP) |
Local
Bounti (Historical) (US GAAP) |
Local
Bounti Transaction Adjustments |
Local
Bounti As Adjusted |
Combined
|
Transaction
Adjustments (Assuming No Redemptions) |
Pro Forma New Local Bounti (Assuming No Redemptions) |
Additional
Transaction Adjustments (Assuming Maximum Redemptions) |
Pro Forma
New Local Bounti (Assuming Maximum Redemptions) |
||||||||||||||||||||||||||||||||||||
(in thousands, except share and per share data)
|
||||||||||||||||||||||||||||||||||||||||||||
Other Income (Expense):
|
||||||||||||||||||||||||||||||||||||||||||||
Management fee income
|
— | 44 | — | 44 | 44 | — | 44 | — | 44 | |||||||||||||||||||||||||||||||||||
Interest expense, net
|
— | (1,673 | ) | 648 | (AA | ) | (1,864 | ) | (1,864 | ) | 544 | (II) | (1,320 | ) | — | (1,320 | ) | |||||||||||||||||||||||||||
(839 | ) | (BB | ) | |||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Income (Loss) Before Provision For Income Taxes
|
|
(4,306
|
)
|
|
(16,988
|
)
|
|
(191
|
)
|
|
|
|
|
(17,179
|
)
|
|
(21,485
|
)
|
|
3,238
|
|
|
(18,247
|
)
|
|
—
|
|
|
(18,247
|
)
|
||||||||||||||
Income tax expense
|
— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Net Income (Loss)
|
|
(4,306
|
)
|
|
(16,988
|
)
|
|
(191
|
)
|
|
(17,179
|
)
|
|
(21,485
|
)
|
|
3,238
|
|
|
(18,247
|
)
|
|
—
|
|
|
(18,247
|
)
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Weighted average Class A shares outstanding, basic and diluted
|
27,500,000 | 9,886,283 | 110,515,489 | 85,609,429 | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
Basic and diluted net loss per Class A common share
|
$ | (1.72) | $ | (0.17) | $ | (0.21) | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
Weighted average Class B shares outstanding, basic and diluted
|
6,608,477 | |||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||
Basic and diluted net loss per Class B common share
|
$ | (0.65) | ||||||||||||||||||||||||||||||||||||||||||
|
|
217 |
12/31/2020
|
12/31/2020
|
|||||||||||||||||||||||||||||||||||||||||||
LEO
(Historical) (US GAAP) |
Local
Bounti (Historical) (US GAAP) |
Local
Bounti Transaction Adjustments |
Local
Bounti Adjusted |
Combined
|
Transaction
Adjustments (Assuming No Redemptions) |
Pro Forma
New Local Bounti (Assuming No Redemptions) |
Additional
Transaction Adjustments (Assuming Maximum Redemptions) |
Pro Forma
New Local Bounti (Assuming Maximum Redemptions) |
||||||||||||||||||||||||||||||||||||
(in thousands, except share and per share data)
|
||||||||||||||||||||||||||||||||||||||||||||
Sales
|
$ | — | $ | 82 | $ | — | $ | 82 | $ | 82 | $ | 82 | $ | — | 82 | |||||||||||||||||||||||||||||
Cost of goods sold (exclusive of items shown separately below)
|
— | 91 | — | 91 | 91 | 91 | — | 91 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Gross loss
|
$
|
—
|
|
$
|
(9)
|
|
$
|
—
|
|
$
|
(9)
|
|
$
|
(9)
|
|
$
|
—
|
|
$
|
(9)
|
|
$
|
—
|
|
$
|
(9)
|
|
|||||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||||||||||||||||||||||
Research and development
|
— | 1,079 | — | 1,079 | 1,079 | — | 1,079 | $ | 1,079 | |||||||||||||||||||||||||||||||||||
Selling, general and administrative
|
— | 6,547 | — | 6,547 | 6,547 | 3,222 | (CC) | 17,619 | 17,619 | |||||||||||||||||||||||||||||||||||
— | — | — | — | — | 3,850 | (JJ) | — | |||||||||||||||||||||||||||||||||||||
4,000 | (KK) | |||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization
|
— | 287 | — | 287 | 287 | — | 287 | 287 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total operating expenses
|
|
—
|
|
|
7,913
|
|
|
—
|
|
|
7,913
|
|
|
7,913
|
|
|
11,072
|
|
|
18,985
|
|
|
—
|
|
|
18,985
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Loss from operations
|
|
—
|
|
|
(7,922
|
)
|
|
—
|
|
|
(7,922
|
)
|
|
(7,922
|
)
|
|
(11,072
|
)
|
|
(18,994
|
)
|
|
—
|
|
|
(18,994
|
)
|
|||||||||||||||||
Other income (expense):
|
||||||||||||||||||||||||||||||||||||||||||||
Management fee income
|
— | 35 | — | 35 | 35 | — | 35 | 35 | ||||||||||||||||||||||||||||||||||||
Interest expense, net
|
— | (522 | ) | (1,679 | ) | (BB | ) | (2,201 | ) | (2,201 | ) | (5,855 | ) | (LL | ) | (8,056 | ) | (8,056 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Income (loss) before provision for income taxes
|
|
—
|
|
|
(8,409
|
)
|
|
(1,679
|
)
|
|
(10,088
|
)
|
|
(10,088
|
)
|
|
(16,927
|
)
|
|
(27,015
|
)
|
|
—
|
|
|
(27,015
|
)
|
|||||||||||||||||
Income tax expense
|
— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Net income (loss)
|
|
—
|
|
|
(8,409
|
)
|
|
(1,679
|
)
|
|
(10,088
|
)
|
|
(10,088
|
)
|
|
(16,927
|
)
|
|
(27,015
|
)
|
|
—
|
|
|
(27,015
|
)
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Weighted average shares outstanding, basic and diluted
|
— | 9,997,049 | 110,515,489 | 85,609,429 | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
Basic and diluted net loss per common share
|
$ | — | $ | (0.84) | $ | (0.24) | $ | (0.32) | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
218 |
• |
Local Bounti’s existing operations will comprise the ongoing operations of the Combined Company;
|
• |
Local Bounti’s senior management will comprise the senior management of the Combined Company; and
|
• |
the legacy shareholders of Local Bounti will control at least 49.9% of the voting shares after the Business Combination in a no redemption scenario.
|
(
A
|
Reflects the settlement of the Cargill Initial Term Loan along with the relevant debt costs which was repaid in connection with the execution of the Cargill Subordinated Credit Agreement.
|
(
B
|
Reflects the $16.0 million long term debt borrowing under the Cargill Subordinated Credit Agreement.
|
(
C
|
Reflects the reversal of Cargill Initial Term Loan related interest expense which is anticipated to be settled in connection with the execution of the Cargill Subordinated Credit Agreement and discussed in (A) above.
|
(D)
|
Reflects the reclassification of $275.0 million of cash and investments held in the Leo trust account that becomes available to fund the Business Combination.
|
(E)
|
Reflects the payment of transactions costs assuming no redemptions, expected to be incurred in connection with the Business Combination.
|
(F)
|
Reflects the settlement of deferred underwriter’s fees incurred during Leo’s initial public offering, due upon completion of the Business Combination.
|
(G)
|
Reflects the issuance of 12,500,000 shares of New Local Bounti Common Stock at a subscription price of $10.00 per share for proceeds of $125.0 million, net of issuance costs of $3.8 million in connection with the PIPE Financing, pursuant to the Subscription Agreements which is included in the transaction costs discussed in
(F)
|
(H)
|
Reflects the payment of $4.0 million of transaction bonuses to be paid to certain Local Bounti employees as part of the Business Combination with an offset to retained earnings.
|
(I)
|
Reflects the settlement of related party account payable with cash as part of the Business Combination.
|
(
J
|
Reflects the settlement of the Convertible Notes at close at $10.00 per share. During the first half of 2021, Local Bounti entered into a series of identical long-term notes with various parties with a maturity date of February 8, 2023. The combined total face value of the convertible notes is $26.1 million and bears interest at 8% per annum. The Convertible Notes contain an automatic conversion feature at a specified conversion price in the event of a merger or a qualified equity financing. In the event of a merger with a SPAC, the outstanding principal balance of the notes, and unpaid accrued interest thereon, will convert into equity securities issued by the SPAC in the PIPE at a conversion price per share equal to the purchase price for each equity securities issued in the PIPE multiplied by 85%. As part of the settlement, $610 thousand of interest expense was recorded through the six months ended June 30, 2021. The monthly interest expense of approximately $174 thousand would represent an additional conversion of approximately 20,431 shares of New Local Bounti common stock on a monthly basis.
|
(
K
|
Represents cash consideration to be paid to Local Bounti equity holders, subject to a minimum cash requirement of $100.0 million, and certain additional conditions, that are specified in the Merger Agreement, as part of the Business Combination.
|
(
L
|
Reverse Local Bounti Convertible Notes interest expense as part of the transaction
|
(
M
|
Reflects the exchange of public warrants, which are liability classified, for an equivalent amount of public warrants following the Domestication, which are expected to be equity classified, upon consummation of the Business Combination. The unaudited pro forma condensed combined balance sheet reflects this reclassification as a decrease in warrant liabilities and a corresponding increase in New Local Bounti’s additional paid-in capital.
|
(
N
|
Reflects the reversal of a fair value adjustment of public warrants which will be converted to equity as part of the Business Combination.
|
(
O
|
Reflects the reversal of Local Bounti warrant liability which will be converted as part of the Business Combination.
|
(
P
|
Reflects the reversal of a fair value adjustment of Local Bounti warrant liabilities which will be converted as part of the Business Combination.
|
(
Q
|
Reflects reclassification of approximately $249.1 million from temporary equity to permanent equity as a result of the Business Combination, subject to possible redemption which is discussed in Note (W) below.
|
(R)
|
Reflects the conversion of Local Bounti voting common stock,
non-voting
common stock and restricted stock units into shares of New Local Bounti Common Stock pursuant to the Business Combination, based on the Exchange Ratio, which is expected to be approximately 4.914388.
|
(S)
|
Reflects the conversion of Leo Class A ordinary shares into shares of New Local Bounti Common Stock pursuant to the Business Combination.
|
(T)
|
Reflects the conversion of Leo Class B ordinary shares into shares of New Local Bounti Common Stock pursuant to the Business Combination.
|
(
U
|
Reflects the recognition of stock-based compensation expense, and subsequent period amortization, for Local Bounti restricted common stock that meets a vesting condition upon the close of the Business Combination.
|
(V)
|
Reflects the elimination of Leo historical retained earnings under the no redemption scenario as a result of the reverse recapitalization.
|
(W)
|
Reflects the maximum redemption of 24,906,060 ordinary shares for approximately $249.1 million allocated to ordinary shares and additional
paid-in capital
using par value of $0.0001 per share and at a redemption price of $10.00 per share.
|
(X)
|
Reflects an adjustment to cash consideration paid to Local Bounti equity holders in the maximum redemption scenario consistent with the Business Combination. In the maximum redemption scenario, the cash consideration to Local Bounti equity holders is estimated to be $28 million.
|
(
AA
|
Reflects the elimination of Local Bounti Cargill note interest expense for convertible notes that are repaid in connection with the execution of the Cargill Subordinated Credit Agreement.
|
(
BB
|
Reflects the interest expense related to the $16.0 million draw on the Cargill Subordinated Credit Agreement discussed in (
B
|
(CC)
|
Reflects the stock-based compensation expense for Local Bounti restricted common stock that meets a vesting condition upon the close of the Business Combination.
|
(DD)
|
Reflects the elimination of related party administrative fee of Leo related to the Business Combination.
|
(EE)
|
Reflects the fair value adjustment for convertible notes that are repaid as part of the Business Combination.
|
(FF)
|
Reflects the reversal of the historical fair value adjustment, as well as warrant issuance cost, for the reclassification of the Leo public warrants that would not have been liability classified had the Business Combination been consummated on January 1, 2020, as further discussed in (N) above.
|
(
GG
|
Reflects the fair value adjustment for Local Bounti warrants that are repaid as part of the Business Combination.
|
(
HH
|
Reflects the removal of net gain from investments held in Leo’s Trust Account.
|
(
II
|
Reflects the elimination of interest expense incurred for the six months ended June 30, 2021 associated with the issuances of the Convertible Notes entered into during the six months ended June 30, 2021 since the pro forma assumes such notes were settled for the year ended December 31, 2020.
|
(JJ)
|
Reflects the remaining transaction expenses to be incurred by Leo and Local Bounti related to the Transaction for the year ended December 31, 2020.
|
(KK)
|
Reflects the transaction bonus to be paid to certain Local Bounti employees upon the close of the Business Combination.
|
(LL)
|
The $5.9 million additional interest expense for the year ended December 31, 2020 reflects a $4.8 million loss on extinguishment of the debt and $1.1 million of interest expense associated with the issuances of Convertible Notes, entered during 2021. The Convertible Notes are being settled, as part of consideration, at the Closing. The interest expense includes interest expense from the issuance dates through the estimated deal close date of September 30, 2021.
|
Pro Forma Combined
|
||||||||
(Assuming No
Redemptions) |
(Assuming
Maximum Redemptions) |
|||||||
For the Six Months Ended June 30, 2021
|
||||||||
Pro forma net loss
|
$ | (18,247 | ) | $ | (18,247 | ) | ||
Pro forma net loss per share attributable to ordinary shareholders, basic and diluted
(1)
|
$ | (0.17 | ) | $ | (0.21 | ) | ||
Weighted average ordinary shares outstanding, basic and diluted
|
110,515,489 | 85,609,429 | ||||||
For the Year Ended December 31, 2020
|
||||||||
Pro forma net loss
|
$ | (27,015 | ) | $ | (27,015 | ) | ||
Pro forma net loss per share attributable to ordinary shareholders, basic and diluted
(1)
|
$ | (0.24 | ) | $ | (0.32 | ) | ||
Weighted average ordinary shares outstanding, basic and diluted
|
110,515,489 | 85,609,429 |
(1) |
Diluted loss per ordinary share is the same as basic loss per ordinary share for all periods presented because the effects of potentially dilutive items were anti-dilutive given the Company’s net loss.
|
• |
subject it to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which it operates after its initial business combination; and
|
• |
cause it to depend on the marketing and sale of a single product or limited number of products or services.
|
Name
|
Age
|
Position
|
||
Edward C. Forst
|
60 |
Chairman
|
||
Lyndon Lea
|
52 |
President, Chief Executive Officer and Director
|
||
Robert Darwent
|
48 |
Chief Financial Officer and Director
|
||
Lori Bush
|
64 |
Director
|
||
Mary E. Minnick
|
61 |
Director
|
||
Mark Masinter
|
54 |
Director
|
• |
meeting with Leo’s independent registered public accounting firm regarding, among other issues, audits, and adequacy of Leo’s accounting and control systems;
|
• |
monitoring the independence of the independent registered public accounting firm;
|
• |
verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law;
|
• |
inquiring and discussing with management Leo’s compliance with applicable laws and regulations;
|
• |
pre-approving
all audit services and permitted
non-audit
services to be performed by Leo’s independent registered public accounting firm, including the fees and terms of the services to be performed;
|
• |
appointing or replacing the independent registered public accounting firm;
|
• |
determining the compensation and oversight of the work of the independent registered public accounting firm (including resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting) for the purpose of preparing or issuing an audit report or related work;
|
• |
establishing procedures for the receipt, retention and treatment of complaints received by Leo regarding accounting, internal accounting controls or reports which raise material issues regarding Leo’s financial statements or accounting policies;
|
• |
monitoring compliance on a quarterly basis with the terms of the initial public offering and, if any noncompliance is identified, immediately taking all action necessary to rectify such noncompliance or otherwise causing compliance with the terms of the initial public offering; and
|
• |
reviewing and approving all payments made to Leo’s existing shareholders, executive officers or directors and their respective affiliates. Any payments made to members of Leo’s audit committee will be reviewed and approved by Leo’s board of directors, with the interested director or directors abstaining from such review and approval.
|
• |
reviewing and approving on an annual basis the corporate goals and objectives relevant to Leo’s Chief Executive Officer’s compensation, evaluating Leo’s Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of Leo’s Chief Executive Officer based on such evaluation;
|
• |
reviewing and approving the compensation of all of Leo’s other Section 16 executive officers;
|
• |
reviewing Leo’s executive compensation policies and plans;
|
• |
implementing and administering Leo’s incentive compensation equity-based remuneration plans;
|
• |
assisting management in complying with Leo’s proxy statement and annual report disclosure requirements;
|
• |
approving all special perquisites, special cash payments and other special compensation and benefit arrangements for Leo’s executive officers and employees;
|
• |
producing a report on executive compensation to be included in Leo’s annual proxy statement; and
|
• |
reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
|
• |
duty to act in good faith in what the director or officer believes to be in the best interests of the company as a whole;
|
• |
duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose;
|
• |
directors should not improperly fetter the exercise of future discretion;
|
• |
duty to exercise powers fairly between difference sections of shareholders;
|
• |
duty not to put themselves in a position in which there is a conflict between their duty to Leo and their personal interests; and
|
• |
duty to exercise independent judgment.
|
• |
Leo’s executive officers and directors are not required to, and will not, commit their full time to Leo’s affairs, which may result in a conflict of interest in allocating their time between Leo’s operations and Leo’s search for a business combination and their other businesses. Leo does not intend to have any full-time employees prior to the completion of Leo’s initial business combination. Each of Leo’s executive officers is engaged in several other business endeavors for which he may be entitled to substantial compensation, and Leo’s executive officers are not obligated to contribute any specific number of h Leo’s s per week to Leo’s affairs.
|
• |
Leo’s sponsor subscribed for Class B ordinary shares prior to the date of Leo’s initial public closing and purchase private placements warrants in a transaction that will close simultaneously with the closing of Leo’s initial public offering.
|
• |
The Sponsor and Leo’s management team have entered into an agreement with it, pursuant to which they have agreed to waive their redemption rights with respect to their Class B ordinary shares, private placement shares and any public shares purchased during or after Leo’s initial public offering in connection with (i) the completion of Leo’s initial business combination and (ii) a shareholder vote to approve an amendment to the Existing Governing Documents (A) that would modify the substance or timing of Leo’s obligation to provide holders of Leo’s public shares the right to have their shares redeemed in connection with Leo’s initial business combination or to redeem 100% of Leo’s public shares if Leo does not complete its initial business combination by March 2, 2023 or (B) with respect to any other provision relating to the rights of holders of Leo’s Class A ordinary shares. With certain limited exceptions, the private
|
placement units, the private placement shares, the private placement warrants and the Class A ordinary shares underlying such warrants, will not be transferable until 30 days following the completion of Leo’s initial business combination. Because each of Leo’s executive officers and director nominees will own ordinary shares or warrants directly or indirectly, they may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate Leo’s initial business combination.
|
• |
Leo’s officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to Leo’s initial business combination.
|
• |
staffing for financial, accounting and external reporting areas, including segregation of duties;
|
• |
reconciliation of accounts;
|
• |
proper recording of expenses and liabilities in the period to which they relate;
|
• |
evidence of internal review and approval of accounting transactions;
|
• |
documentation of processes, assumptions and conclusions underlying significant estimates; and
|
• |
documentation of accounting policies and procedures.
|
Craig M. Hurlbert | Travis Joyner, JD, PHD | |||||
Co-CEO
|
Co-CEO
|
|
|
• |
Greenhouse
|
• |
Indoor Growing / Indoor Farming
|
• |
Protected Cropping
|
• |
Vertical Farming
|
• |
Aeroponics
|
• |
Aquaponics
|
• |
Hydroponic
|
U.N. Sustainable
Development Goal
|
CEA Benefit
|
|
1) Zero Hunger
|
The flexibility of CEA locations enables access to fresh food to many parts of the world | |
2) Clean Water and Sanitation
|
Drastic reduction in water usage in CEA conserves resources and does not produce polluted runoff like traditional, field-based agriculture | |
3) Affordable and Clean Energy
|
CEA facilities can be designed to be energy-efficient and sited with preference for availability of renewable energy in the community and
on-site
|
|
4) Decent Work and Economic Growth
|
CEA provides full time, full year, indoor jobs versus transient, outdoor and seasonal labor in traditional agriculture | |
5) Industry, Innovation and Infrastructure
|
CEA spurs investment in sustainable and innovative infrastructure and technology | |
6) Sustainable Cities and Communities
|
CEA can locate facilities in and near urban environments, increasing jobs, taxes and investment in cities | |
7) Responsible Consumption and Production
|
Due to reduction in transportation distance and controlled growing conditions, CEA can increase product shelf life and reduce food waste throughout the agricultural supply chain | |
8) Climate Action
|
Distributed, regional production potential of CEA drastically reduces emissions from food supply chain transportation | |
9) Life Below Water
|
CEA eliminates agricultural runoff that contributes to pollution of aquatic habitats | |
10) Life on Land
|
CEA utilizes 90% less land and thus reduces the impacts on wildlife and the environment |
• |
updates and expands the
build-out
of the Montana Facility;
|
• |
identifies and invests in future growth opportunities, including new or expanded facilities and new product lines;
|
• |
invests in sales and marketing efforts to increase brand awareness, engage customers and drive sales of its products;
|
• |
invests in product innovation and development; and
|
• |
incurs additional general administration expenses, including increased finance, legal and accounting expenses associated with being a public company, and growing operations.
|
Six Months Ended
June 30, |
Change In
|
|||||||||||||||
2021
|
2020
|
$
|
%
|
|||||||||||||
Sales
|
$ | 165 | $ | — | $ | 165 | N/A | |||||||||
Costs of goods sold (exclusive of items shown separately below)
|
126 | — | 126 | N/A | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit
|
39 | — | 39 | N/A | ||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
1,155 | — | 1,155 | N/A | ||||||||||||
Selling, general and administrative expenses
|
11,006 | 2,948 | 8,058 | 273.3 | % | |||||||||||
Depreciation
|
250 | 41 | 209 | 509.8 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses
|
12,411 | 2,989 | 9,422 | 315.2 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss from operations
|
(12,372 | ) | (2,989 | ) | 9,383 | 313.9 | % | |||||||||
Other income (expense):
|
||||||||||||||||
Management fee income
|
44 | 8 | 36 | 450.0 | % | |||||||||||
Convertible notes fair value adjustment
|
(2,984 | ) | — | (2,984 | ) | N/A | ||||||||||
Warrant fair value adjustment
|
(3 | ) | — | (3 | ) | N/A | ||||||||||
Interest expense, net
|
(1,673 | ) | (114 | ) | (1,559 | ) | 1367.5 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss
|
$ | (16,988 | ) | $ | (3,095 | ) | $ | 13,893 | 448.9 | % | ||||||
|
|
|
|
|
|
|
|
Year Ended
December 31, |
Change
|
|||||||||||||||
2020
|
2019
|
$
|
%
|
|||||||||||||
Sales
|
$ | 82 | $ | — | $ | 82 | N/A | |||||||||
Cost of goods sold (exclusive of items shown separately below)
|
91 | — | 91 | N/A | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross loss
|
(9 | ) | — | (9 | ) | N/A | ||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
1,079 | — | 1,079 | N/A | ||||||||||||
Selling, general and administrative expenses
|
6,547 | 3,367 | 3,180 | 94.5 | % | |||||||||||
Depreciation
|
287 | — | 287 | N/A | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses
|
7,913 | 3,367 | 4,546 | 135.0 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss from operations
|
(7,922 | ) | (3,367 | ) | (4,555 | ) | 135.3 | % | ||||||||
Other income (expense): |
|
|
|
|||||||||||||
Management fee income
|
35 | — | 35 | N/A | ||||||||||||
Interest expense, net
|
(522 | ) | (39 | ) | (483 | ) | 1,238.5 | % | ||||||||
Net loss
|
$ | (8,409 | ) | (3,406 | ) | (5,003 | ) | 146.9 | % | |||||||
|
|
|
|
|
|
|
|
Six Months Ended
June 30, |
Year Ended
December 31, |
|||||||||||||||
2021
|
2020
|
2020
|
2019
|
|||||||||||||
Net cash provided/(used) in operating activities
|
$ | (7,720 | ) | $ | (2,238 | ) | $ | (3,838 | ) | $ | (1,119 | ) | ||||
Net cash used in investing activities
|
(8,087 | ) | (3,654 | ) | (3,422 | ) | (3,743 | ) | ||||||||
Net cash provided by financing activities
|
$ | 38,906 | 4,630 | 5,168 | 6,999 | |||||||||||
Cash and cash equivalents, beginning of period
|
45 | 2,137 | 2,137 | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cash and cash equivalents, end of period
|
$
|
23,144
|
|
$
|
875
|
|
$
|
45
|
|
$
|
2,137
|
|
||||
|
|
|
|
|
|
|
|
• |
the timing of potential events (like in initial public offering or SPAC transaction) and their probability of occurring,
|
• |
the selection of guideline public company multiples,
|
• |
a discount for the lack of marketability of the preferred and common stock,
|
• |
the projected future cash flows, and
|
• |
the discount rate used to calculate the present-value of the estimated equity value allocated to each share class.
|
• |
Craig M. Hurlbert:
Co-Chief
Executive Officer
|
• |
Travis Joyner:
Co-Chief
Executive Officer
|
• |
B. David Vosburg Jr.:
Interim Chief Financial Officer and Chief Operating Officer
|
(1) |
Messrs. Hurlbert and Joyner became employees and
co-chief
executive officers on April 1, 2021.
|
(2) |
Restricted stock awards are reported at aggregate grant date fair value in the year granted, as determined in accordance with the provisions of FASB ASC Topic 718. For the assumptions used in valuing these awards for purposes of computing this expense, please see Note 10 of the Local Bounti financial statements for the year ended December 31, 2020.
|
(3) |
Represents, with respect to each of Messrs. Hurlbert and Joyner, management fees paid to BrightMark Partners, LLC, a Texas limited liability company (“
BrightMark
”), of which Messrs. Hurlbert and Joyner are each 50%
co-owners.
|
(4) |
Mr. Vosburg commenced employment with Local Bounti on October 5, 2020.
|
Stock awards
|
||||||||||||||||
Name
|
Number
of shares that have not vested (#) |
Market
value of shares that have not vested ($) |
Equity Incentive Plan
Awards: Number of Unearned Shares, Units or Other Rights That Have Not Yet Vested (#) |
Equity Incentive
Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Yet Vested ($) |
||||||||||||
Craig M. Hurlbert
|
1,381,875 |
(1)
|
12,906,713 | — | — | |||||||||||
Travis Joyner
|
1,381,875 |
(1)
|
12,906,713 | — | — | |||||||||||
B. David Vosburg Jr.
|
— | — | 242,726 |
(2)
|
2,267,061 |
(1) |
Represents, with respect to each of Messrs. Hurlbert and Joyner, 50% of the restricted voting common stock of Local Bounti owned by BrightMark that vests in 12 equal installments on the last day of each calendar quarter from June 2019. The market value of the restricted stock is calculated by multiplying the number of shares by $9.34, the fair market value of Local Bounti voting common stock on December 31, 2020, as determined by the Local Bounti board of directors. The shares of restricted stock are attributed 50% to Mr. Hulbert and 50% to Mr. Joyner as equal principals and owners of BrightMark. The Local Bounti board of directors accelerated in full the vesting of the unvested shares of this restricted stock in March 2021.
|
(2) |
Represents change in control restricted nonvoting common stock of Local Bounti pursuant to the 2020 Plan that vests in full upon a change in control resulting in aggregate proceeds to the Company or its stockholders of not less than $30,000,000, or that vests, contingent upon a qualified public offering (as defined in the 2020 Plan), as to 50% upon the qualified public offering and as to the remaining 50% of the shares, in equal installments on the next 12 quarterly anniversaries thereafter, subject to Mr. Vosburg’s continued service to Local Bounti. The market value of the restricted stock is calculated by multiplying the number of shares by $9.34, the fair value per share of the award on December 31, 2021 based on the fair market value of Local Bounti nonvoting common stock on December 31, 2020, as determined by the Local Bounti board of directors.
|
Name
|
Age
|
Title
|
||||
Executive Officers
|
||||||
Craig M. Hurlbert
|
58 |
Co-Chief
Executive Officer and Director
|
||||
Travis Joyner
|
39 |
Co-Chief
Executive Officer and Director
|
||||
Kathleen Valiasek
|
58 |
Chief Financial Officer
|
||||
Mark McKinney
|
58 | Chief Operating Officer | ||||
B. David Vosburg Jr.
|
39 |
Chief Innovation Officer
|
||||
Gary Hilberg
|
55 |
Chief Sustainability Officer
|
||||
Non-Employee
Directors
|
||||||
Pamela Brewster
|
51 |
Director
|
||||
Mark J. Nelson
|
52 |
Director
|
||||
Edward C. Forst
|
60 |
Director
|
||||
Matt Nordby
|
41 |
Director
|
||||
Key Employee
|
||||||
Joshua White
|
46 |
Chief Marketing Officer
|
• |
Class I, which Local Bounti anticipates will consist of Pamela Brewster, Matthew Nordby and , whose terms will expire at Combined Company’s first annual meeting of stockholders to be held after consummation of the Business Combination;
|
• |
Class II, which Local Bounti anticipates will consist of Mark J. Nelson and Edward C. Forst, whose term will expire at the Combined Company’s second annual meeting of stockholders to be held after consummation of the Business Combination; and
|
• |
Class III, which Local Bounti anticipates will consist of Craig M. Hurlbert and Travis Joyner, whose term will expire at the Combined Company’s third annual meeting of stockholders to be held after consummation of the Business Combination.
|
• |
appointing, compensating, retaining, evaluating, terminating and overseeing the Combined Company’s independent registered public accounting firm;
|
• |
reviewing the adequacy of the Combined Company’s system of internal controls and the disclosure regarding such system of internal controls contained in the Combined Company’s periodic filings;
|
• |
pre-approving
all audit and permitted
non-audit
services and related engagement fees and terms for services provided by the Combined Company’s independent auditors;
|
• |
reviewing with the Combined Company’s independent auditors their independence from management;
|
• |
reviewing, recommending and discussing various aspects of the financial statements and reporting of the financial statements with management and the Combined Company’s independent auditors; and
|
• |
establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters.
|
• |
setting the compensation of the Chief Executive Officer and, in consultation with the Chief Executive Officer, reviewing and approving the compensation of the other executive officers of the Combined Company;
|
• |
reviewing on a periodic basis and making recommendations regarding
non-employee
director compensation to the New Local Bounti Board;
|
• |
reviewing on a periodic basis and discussing with the Chief Executive Officer and the Board regarding the development and succession plans for senior management positions;
|
• |
administering the Combined Company’s cash and equity-based incentive plans that are stockholder-approved and/or where participants include the Combined Company’s executive officers and directors; and
|
• |
providing oversight of and recommending improvements to the Combined Company’s overall compensation and incentive plans and benefit programs.
|
• |
identifying, evaluating and making recommendations to the New Local Bounti Board regarding nominees for election to the board of directors and its committees;
|
• |
developing and making recommendations to the New Local Bounti Board regarding corporate governance guidelines and matters;
|
• |
overseeing the Combined Company’s corporate governance practices;
|
• |
reviewing the Combined Company’s code of business conduct and ethics and approve any amendments or waivers on a periodic basis;
|
• |
overseeing the evaluation and the performance of the New Local Bounti Board and individual directors; and
|
• |
contributing to succession planning.
|
• |
for any transaction from which the director derives an improper personal benefit;
|
• |
for any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
|
• |
for any unlawful payment of dividends or redemption of shares; or
|
• |
for any breach of a director’s duty of loyalty to the corporation or its stockholders.
|
• |
each person known by Leo to be the beneficial owner of more than 5% of Leo’s outstanding ordinary shares on the record date;
|
• |
each person known by Leo who may become beneficial owner of more than 5% of New Local Bounti’s outstanding Common Stock immediately following the Business Combination;
|
• |
each of Leo’s current executive officers and directors;
|
• |
each person who will become an executive officer or a director of New Local Bounti upon consummation of the Business Combination;
|
• |
all of Leo’s current executive officers and directors as a group; and
|
• |
all of New Local Bounti’s executive officers and directors as a group after the consummation of the Business Combination.
|
Prior to Business
Combination
(2)
|
After Business Combination
|
|||||||||||||||||||||||
Assuming No
Redemptions
(3)
|
Assuming Maximum
Redemptions
(4)
|
|||||||||||||||||||||||
Name and Address of Beneficial Owners
(1)
|
Number of
Shares |
%
|
Number of
Shares |
%
|
Number of
Shares |
%
|
||||||||||||||||||
Directors and officers Prior to the Business Combination:
|
||||||||||||||||||||||||
Lyndon Lea
|
526,962 | * | 526,962 | * | ||||||||||||||||||||
Edward C. Forst
|
262,799 | * | 262,799 | * | ||||||||||||||||||||
Robert Darwent
|
210,239 | * | 210,239 | * | ||||||||||||||||||||
Lori Bush
|
20,000 | * | 20,000 | * | 20,000 | * | ||||||||||||||||||
Mary E. Minnick
|
20,000 | * | 20,000 | * | 20,000 | * | ||||||||||||||||||
Mark Masinter
|
20,000 | * | 120,000 | * | 120,000 | * | ||||||||||||||||||
All directors and officers prior to the Business Combination (six persons)
|
60,000 | * | 1,160,000 | 1.1 | 1,160,000 | 1.4 | ||||||||||||||||||
Director and officers after the Business Combination:
|
||||||||||||||||||||||||
Craig M. Hurlbert
(5)
|
— | — | 18,109,520 | 16.5 | 18,109,520 | 22.1 | ||||||||||||||||||
Travis C Joyner
(6)
|
— | — | 18,109,520 | 16.5 | 18,109,520 | 22.1 | ||||||||||||||||||
Pamela Brewster
|
— | — | 1,510,275 | 1.4 | 1,510,275 | 1.8 |
Prior to Business
Combination
(2)
|
After Business Combination
|
|||||||||||||||||||||||
Assuming No
Redemptions
(3)
|
Assuming Maximum
Redemptions
(4)
|
|||||||||||||||||||||||
Name and Address of Beneficial Owners
(1)
|
Number of
Shares |
%
|
Number of
Shares |
%
|
Number of
Shares |
%
|
||||||||||||||||||
Mark J. Nelson
(7)
|
— | — | — | — | — | — | ||||||||||||||||||
Kathleen Valiasek
|
— | — | 1,043,737 | 1.0 | 1,043,737 | 1.3 | ||||||||||||||||||
B. David Vosburg Jr.
|
— | — | 1,192,850 | 1.1 | 1,192,850 | 1.5 | ||||||||||||||||||
Gary Hilberg
|
— | — | 298,210 | * | 298,210 | * | ||||||||||||||||||
All directors and officers after the Business Combination as a group (7 persons)
|
40,264,112 | 36.8 | 40,264,112 | 49.1 | ||||||||||||||||||||
Five Percent Holders:
|
||||||||||||||||||||||||
Leo Investors III LP
(8)
|
6,770,000 | 19.7 | 6,770,000 | 6.2 | 6,770,000 | 8.3 | ||||||||||||||||||
Millennium Group Management LLC
(9)
|
1,460,000 | 4.2 | 1,460,000 | 1.3 | 1,460,000 | 1.8 | ||||||||||||||||||
McLeod Management Co., LLC
(6)
|
— | — | 18,109,520 | 16.5 | 18,109,520 | 22.1 | ||||||||||||||||||
Wheat Wind Farms, LLC
(5)
|
— | — | 18,109,520 | 16.5 | 18,109,520 | 22.1 | ||||||||||||||||||
Live Oak Ventures, LLC
(10)
|
— | — | 8,660,278 | 7.9 | 8,660,278 | 10.6 | ||||||||||||||||||
Citadel Advisors LLC
(11)
|
1,517,460 | 4.4 | 1,517,460 | 1.4 |
|
1,517,460
|
|
1.8 |
* |
Less than 1%
|
(1) |
Unless otherwise noted, the business address of each of the directors and officers prior to the Business Combination is 21 Grosvenor Pl, London SW1X 7HF, United Kingdom.
|
(2) |
Prior to the Business Combination, the percentage of beneficial ownership of Leo on the record date is calculated based on (i) 27,500,000 Class A ordinary shares and (ii) 6,875,000 Class B ordinary shares, in each case, outstanding as of such date.
|
(3) |
The expected beneficial ownership of New Local Bounti immediately upon consummation of the Business Combination, assuming no holders of public shares exercise their redemption rights in connection therewith and the Closing occurs on , 2021, is based on 109,559,105 shares of New Local Bounti Common Stock outstanding as of such date, and consists of (i) 27,500,000 Class A ordinary shares that will convert into a like number of shares of New Local Bounti Common Stock, (ii) 6,875,000 Class B ordinary shares that will convert into a like number of shares of New Local Bounti Common Stock, (iii) 62,684,105 shares of New Local Bounti Common Stock that will be issued to the holders of shares of common stock of Local Bounti (including shares issued to holders of Convertible Notes), and (iv) 12,500,000 shares of New Local Bounti Common Stock that will be issued in the PIPE Financing.
|
(4) |
The expected beneficial ownership of New Local Bounti immediately upon consummation of the Business Combination, assuming all holders of Leo’s public shares exercise their redemption rights in connection therewith and the Closing occurs on , 2021, is based on 82,059,105 shares of New Local Bounti Common Stock outstanding as of such date, and consists of (i) No Class A ordinary shares that will convert into a like number of shares of New Local Bounti Common Stock, (ii) 6,875,000 Class B ordinary shares that will convert into a like number of shares of New Local Bounti Common Stock, (iii) 62,684,105 shares of New Local Bounti Common Stock that will be issued to the holders of shares of common stock of Local Bounti (including shares issued to holders of Convertible Notes), and (iv) 12,500,000 shares of New Local Bounti Common Stock that will be issued in the PIPE Financing.
|
(5) |
Consists of shares held by Wheat Wind Farms, LLC, which is controlled by Mr. Hurlbert.
|
(6) |
Consists of shares held by McLeod Management Co., LLC, which is controlled by Mr. Joyner.
|
(7) |
Excludes restricted stock units which are not expected to settle within 60 days of , 2021. Twenty-five percent of such restricted stock units will vest in connection with the consummation of the Business Combination.
|
(8) |
The Sponsor is the record holder of the securities reported herein. The Sponsor is controlled by its general partner, Leo Investors GP II Limited, which is governed by a three member board of directors. Each director has one vote, and the approval of a majority of the directors is required to approve an action of the Sponsor. Under the
so-called
“rule of three,” if voting and dispositive decisions regarding an entity’s securities are made by two or more individuals, and a voting and dispositive decision requires the approval of a majority
|
of those individuals, then none of the individuals is deemed a beneficial owner of the entity’s securities. No individual director of the general partner of the Sponsor exercises voting or dispositive control over any of the securities held by the Sponsor, even those in which such director directly holds a pecuniary interest. Accordingly, none of them will be deemed to have or share beneficial ownership of such shares. |
(9) |
Represents the 1,090,000 Class A ordinary shares held by Integrated Core Strategies (US) LLC (“
Integrated Core Strategies
”), the 10,000 Class A ordinary shares held by ICS Opportunities II LLC (“
ICS Opportunities II
”), and the 360,000 Class A ordinary shares held by ICS Opportunities, Ltd. (“
ICS Opportunities
”). Millennium International Management LP (“
Millennium International Management
”) is the investment manager to ICS Opportunities II and ICS Opportunities and may be deemed to have shared voting control and investment discretion over securities owned by ICS Opportunities II and ICS Opportunities. Millennium Management LLC (“
Millennium Management
”) is the general partner of the managing member of Integrated Core Strategies and may be deemed to have shared voting control and investment discretion over securities owned by Integrated Core Strategies. Millennium Management is also the general partner of the 100% owner of ICS Opportunities II and ICS Opportunities and may also be deemed to have shared voting control and investment discretion over securities owned by ICS Opportunities II and ICs Opportunities. Millennium Group Management LLC (“
Millennium Group Management
”) is the managing member of Millennium Management and may also be deemed to have shared voting control and investment discretion over securities owned by Integrated Core Strategies. Millennium Group Management is also the general partner of Millennium international Management and may also be deemed to have shared voting control and investment discretion over securities owned by ICS Opportunities II and ICS Opportunities. The managing member of Millennium Group Management is a trust of which Israel A. Englander currently serves as the sole voting trustee. Therefore, Mr. Englander may also be deemed to have shared voting control and investment discretion over securities owned by Integrated Core Strategies, ICS Opportunities II and ICS Opportunities.
|
(10) |
Consists of shares held by Live Oak Ventures, LLC, which is controlled by Charles R. Schwab.
|
(11) |
Represents the 1,513,830 Class A ordinary shares held by Citadel Multi-Strategy Equities Master Fund Ltd., and the 3,630 Class A ordinary shares held by Citadel Securities LLC. Each of Citadel Advisors LLC, Citadel Advisors Holdings LP and Citadel GP LLC may be deemed to beneficially own 1,513,830 Class A ordinary shares. Each of Citadel Securities LLC, CALC IV LP and Citadel Securities GP LLC may be deemed to beneficially own 3,630 Class A ordinary shares. Kenneth Griffin may be deemed to beneficially own 1,517,460 Class A ordinary shares.
|
Delaware
|
Cayman Islands
|
|||
Stockholder/Shareholder Approval of Business Combinations
|
Mergers generally require approval of a majority of all outstanding shares. Mergers in which less than 20% of the acquirer’s stock is issued generally do not require acquirer stockholder approval. Mergers in which one corporation owns 90% or more of a second corporation may be completed without the vote of the second corporation’s board of directors or stockholders. | Mergers require a special resolution, and any other authorization as may be specified in the relevant articles of association. Parties holding certain security interests in the constituent companies must also consent. All mergers (other than parent/subsidiary mergers) require shareholder approval—there is no exception for smaller mergers. Where a bidder has acquired 90% or more of the shares in a Cayman Islands company, it can compel the acquisition of the shares of the remaining shareholders and thereby become the sole shareholder. A Cayman Islands company may also be acquired through a “scheme of arrangement” sanctioned by a Cayman Islands court and approved by 50%+1 in number and 75% in value of shareholders in attendance and voting at a shareholders’ meeting. | ||
Stockholder/Shareholder Votes for Routine Matters
|
Generally, approval of routine corporate matters that are put to a stockholder vote require the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter. | Under Cayman Islands law and the Existing Governing Documents, routine corporate matters may be approved by an ordinary resolution (being the affirmative vote (in person, online or by proxy) of a majority of the holders of the Class A Ordinary Shares and Class B Ordinary Shares entitled to vote entitled to vote and actually casting votes thereon at the extraordinary general meeting, voting as a single class). |
Delaware
|
Cayman Islands
|
|||
Appraisal Rights
|
Generally a stockholder of a publicly traded corporation does not have appraisal rights in connection with a merger. | Minority shareholders that dissent from a Cayman Islands statutory merger are entitled to be paid the fair market value of their shares, which if necessary may ultimately be determined by the court. | ||
Inspection of Books and Records
|
Any stockholder may inspect the corporation’s books and records for a proper purpose during the usual hours for business. | Shareholders generally do not have any rights to inspect or obtain copies of the register of shareholders or other corporate records of a company. | ||
Stockholder/Shareholder Lawsuits
|
A stockholder may bring a derivative suit subject to procedural requirements (including adopting Delaware as the exclusive forum as per Governing Documents Proposal D). | In the Cayman Islands, the decision to institute proceedings on behalf of a company is generally taken by the company’s board of directors. A shareholder may be entitled to bring a derivative action on behalf of the company, but only in certain limited circumstances. | ||
Fiduciary Duties of Directors
|
Directors must exercise a duty of care and duty of loyalty and good faith to the company and its stockholders. | A director owes fiduciary duties to a company, including to exercise loyalty, honesty and good faith to the company as a whole. In addition to fiduciary duties, directors of Leo owe a duty of care, diligence and skill. Such duties are owed to the company but may be owed direct to creditors or shareholders in certain limited circumstances. | ||
Indemnification of Directors and Officers
|
A corporation is generally permitted to indemnify its directors and officers acting in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation. | A Cayman Islands company generally may indemnify its directors or officers except with regard to fraud or willful default. | ||
Limited Liability of Directors
|
Permits limiting or eliminating the monetary liability of a director to a corporation or its stockholders, except with regard to breaches of duty of loyalty, intentional misconduct, unlawful repurchases or dividends, or improper personal benefit. | Liability of directors may be unlimited, except with regard to their own fraud or willful default. | ||
Business Combination or Antitakeover Statutes
|
Section 203 is a default provision of the DGCL that prohibits a publicly held Delaware corporation from engaging in a business combination, such as a merger, with “interested stockholders” (a person or group | There are none. |
Delaware
|
Cayman Islands
|
|||
owning 15% or more of the corporation’s voting stock) for three years following the date that person becomes an interested stockholder, unless: (i) before such stockholder becomes an “interested stockholder,” the board of directors approves the Business Combination or the transaction that results in the stockholder becoming an interested stockholder; (ii) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the outstanding voting stock of the corporation at the time of the transaction (excluding stock owned by certain persons); or (iii) at the time or after the stockholder became an interested stockholder, the board of directors and at
least two-thirds of
the disinterested outstanding voting stock of the corporation approves the transaction.
New Local Bounti has not opted out of the protections of Section 203 of the DGCL. As a result, the statute applies to New Local Bounti.
|
• |
if New Local Bounti were to seek to amend the Proposed Certificate of Incorporation to increase or decrease the par value of a class of New Local Bounti capital stock, then that class would be required to vote separately to approve the proposed amendment; and
|
• |
if New Local Bounti were to seek to amend the Proposed Certificate of Incorporation in a manner that alters or changes the powers, preferences, or special rights of a class of New Local Bounti capital stock in a manner that affected its holders adversely, then that class would be required to vote separately to approve the proposed amendment.
|
• |
in whole and not in part;
|
• |
at a price of $0.01 per warrant;
|
• |
upon a minimum of 30 days’ prior written notice of redemption; and
|
• |
if, and only if, the last sale price of the New Local Bounti Common Stock equals or exceeds $18.00 per share (as adjusted for share
sub-divisions,
share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a
30-trading day
period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders.
|
• |
in whole and not in part;
|
• |
at a price equal to a number of shares of New Local Bounti Common Stock to be determined by reference to an agreed table based on the redemption date and the “fair market value” of the New Local Bounti Common Stock;
|
• |
upon a minimum of 30 days’ prior written notice of redemption; and
|
• |
if, and only if, the last sale price of the New Local Bounti Common Stock equals or exceeds $10.00 per share (as adjusted per share
sub-divisions,
share dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which we send the notice of redemption to the warrant holders.
|
• |
1% of the total number of New Local Bounti Common Stock then outstanding; or
|
• |
the average weekly reported trading volume of the New Local Bounti Common Stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.
|
• |
the issuer of the securities that was formerly a shell company has ceased to be a shell company;
|
• |
the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
|
• |
the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding twelve months (or such shorter period that the issuer was required to file such reports and materials), other than Form
8-K
reports; and
|
• |
at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
|
• |
not later than the 90th day; and
|
• |
not earlier than the 120th day before the
one-year
anniversary of the preceding year’s annual meeting.
|
Page
|
||
Audited Financial Statements of Leo Holdings III Corp
|
||
F-2 | ||
F-3 | ||
F-4 | ||
F-5 | ||
F-6 | ||
F-7 | ||
Unaudited Condensed Financial Statements of Leo Holdings III Corp
|
||
F-17 | ||
F-18 | ||
F-19 | ||
F-20 | ||
F-21 | ||
Audited Financial Statements of Local Bounti Corporation
|
||
F-36
|
||
F-37
|
||
F-38
|
||
F-39
|
||
F-40
|
||
F-41
|
||
Interim Financial Statements of Local Bounti Corporation
|
||
F-55
|
||
F-56
|
||
F-57
|
||
F-58
|
||
F-59
|
Assets:
|
||||
Current assets:
|
||||
Prepaid expenses
|
$ | 14,516 | ||
|
|
|||
Total current assets
|
14,516 | |||
Deferred offering costs associated with proposed public offering
|
35,000 | |||
|
|
|||
Total Assets
|
$
|
49,516
|
|
|
|
|
|||
Liabilities and Shareholder’s Equity:
|
||||
Current liabilities:
|
||||
Accrued expenses
|
$ | 35,000 | ||
|
|
|||
Total current liabilities
|
35,000 | |||
|
|
|||
Commitments and Contingencies
|
||||
Shareholder’s Equity:
|
||||
Preference shares, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding
|
— | |||
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; none issued and outstanding
|
— | |||
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 6,900,000 shares issued and outstanding (1)(2)
|
690 | |||
Additional
paid-in
capital
|
24,310 | |||
Accumulated deficit
|
(10,484 | ) | ||
|
|
|||
Total shareholder’s equity
|
14,516 | |||
|
|
|||
Total Liabilities and Shareholder’s Equity
|
$
|
49,516
|
|
|
|
|
(1)
|
This number includes up to 900,000 Class
B ordinary shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriter.
|
(2)
|
On February
25, 2021, the Company effected a share capitalization, resulting in an aggregate of 6,900,000 Class
B ordinary shares outstanding. All shares and associated amounts have been retroactively restated to reflect the share capitalization (see Note 4).
|
General and administrative expenses
|
$ | 10,484 | ||
|
|
|||
Net loss
|
$ | (10,484 | ) | |
|
|
|||
Weighted average shares outstanding, basic and diluted(1)(2)
|
6,000,000 | |||
|
|
|||
Basic and diluted net loss per share
|
$ | (0.00 | ) | |
|
|
(1)
|
This number excludes an aggregate of up to 900,000 Class
B ordinary shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriter.
|
(2)
|
On February
25, 2021, the Company effected a share capitalization, resulting in an aggregate of 6,900,000 Class
B ordinary shares outstanding. All shares and associated amounts have been retroactively restated to reflect the share capitalization (see Note 4).
|
Ordinary Shares
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Total
Shareholder’s
Equity
|
|||||||||||||||||||||||||
Class A
|
Class B
|
|||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||
Balance — January —January 8, 2021 (inception)
|
|
—
|
$
|
—
|
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||||||||
Issuance of Class B ordinary shares to Sponsor
(1)(2)
|
— | — | 6,900,000 | 690 | 24,310 | — | 25,000 | |||||||||||||||||||||
Net loss
|
— | — | — | — | — | (10,484 | ) | (10,484 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance—January 18, 2021
|
|
—
|
|
$
|
—
|
|
6,900,000
|
|
$
|
690
|
|
$
|
24,310
|
|
$
|
(10,484
|
)
|
$
|
14,516
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
This number includes up to 900,000 Class
B ordinary shares subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriter.
|
(2)
|
On February
25, 2021, the Company effected a share capitalization, resulting in an aggregate of 6,900,000 Class
B ordinary shares outstanding. All shares and associated amounts have been retroactively restated to reflect the share capitalization (see Note 4).
|
Cash Flows from Operating Activities:
|
||||
Net loss
|
$ | (10,484 | ) | |
Changes in operating assets and liabilities:
|
||||
Prepaid expenses
|
10,484 | |||
|
|
|||
Net cash used in operating activities
|
— | |||
|
|
|||
Net increase in cash
|
— | |||
Cash—beginning of the period
|
— | |||
|
|
|||
Cash—ending of the period
|
$
|
—
|
|
|
|
|
|||
Supplemental disclosure of noncash investing and financing activities:
|
||||
Deferred offering costs included in accrued expenses
|
$ | 35,000 | ||
Prepaid expenses paid by Sponsor in exchange for issuance of Class B ordinary shares
|
$ | 25,000 |
F-8 |
F-9 |
F-10 |
F-11 |
F-12 |
F-13 |
F-14 |
• |
in whole and not in part;
|
• |
at a price of $0.01 per warrant;
|
• |
upon a minimum of 30 days’ prior written notice of redemption;
|
• |
if, and only if, the closing price of our ordinary shares equals or exceeds $18.00 per share (as adjusted for share
sub-divisions,
share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a
30-trading
day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders.
|
• |
in whole and not in part;
|
• |
$0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” of Class A ordinary shares;
|
• |
if, and only if, the closing price of Class A ordinary shares equals or exceeds $10.00 per Public Share (as adjusted for adjustments) for any
20
trading days within the
30-trading
day period ending three trading days before we send the notice of redemption to the warrant holders; and
|
• |
if the closing price of the Class A ordinary shares for any 20 trading days within a
30-trading
day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders is less than $18.00 per share (as adjusted for adjustments to the number of shares issuable upon
|
F-15 |
exercise or the exercise price of a warrant as described under the heading “Description of Securities—Warrants—Public Shareholders’ Warrants—Anti-dilution Adjustments”), the private placement warrants must also be concurrently called for redemption on the same terms as the outstanding public warrants, as described above.
|
F-16 |
|
|
June 30, 2021
|
|
|
Assets:
|
|
|||
Current assets:
|
|
|||
Cash
|
$ | 460,232 | ||
Prepaid expenses
|
919,083 | |||
|
|
|||
Total current assets
|
1,379,315 | |||
Investments held in Trust Account
|
275,006,781 | |||
|
|
|||
Total Assets
|
$
|
276,386,096
|
|
|
|
|
|||
Liabilities and Shareholders’ Equity:
|
||||
Current liabilities:
|
||||
Accounts payable
|
$ | 11,500 | ||
Accrued expenses
|
122,328 | |||
|
|
|||
Total current liabilities
|
133,828 | |||
Deferred underwriting commissions
|
9,625,000 | |||
Warrant liabilities
|
12,566,666 | |||
|
|
|||
Total liabilities
|
22,325,494 | |||
Commitments and Contingencies (Note 6)
|
||||
Class A ordinary shares, $0.0001 par value; 24,906,060 shares subject to possible redemption at $10.00 per share
|
249,060,600 | |||
Shareholders’ Equity:
|
||||
Preference shares, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding
|
— | |||
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 2,593,940 shares issued and outstanding (excluding 24,906,060 shares subject to possible redemption)
|
259 | |||
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 6,875,000 shares issued and outstanding
|
688 | |||
Additional
paid-in
capital
|
9,305,166 | |||
Accumulated deficit
|
(4,306,111 | ) | ||
|
|
|||
Total shareholders’ equity
|
5,000,002 | |||
|
|
|||
Total Liabilities and Shareholders’ Equity
|
$
|
276,386,096
|
|
|
|
|
|
|
For the Three Months Ended
June 30, 2021
|
|
|
For the Period from
January 8, 2021 (Inception)
through June 30, 2021
|
|
||
Operating expenses
|
|
|
||||||
General and administrative expenses
|
$ | 461,434 | $ | 586,376 | ||||
Administrative fee - related party
|
27,884 | 37,561 | ||||||
|
|
|
|
|||||
Loss from operations
|
(489,318 | ) | (623,937 | ) | ||||
Other income (expenses):
|
||||||||
Change in fair value of warrant liabilities
|
(4,821,666 | ) | (3,413,333 | ) | ||||
Offering costs associated with issuance of warrants
|
— | (275,622 | ) | |||||
Net gain from investments held in Trust Account
|
6,781 | 6,781 | ||||||
|
|
|
|
|||||
Net loss
|
$ | (5,304,203 | ) | $ | (4,306,111 | ) | ||
|
|
|
|
|||||
Weighted average shares outstanding of Class A ordinary shares, basic and diluted
|
27,500,000 | 27,500,000 | ||||||
|
|
|
|
|||||
Basic and diluted net income per share, Class A ordinary shares
|
$ | 0.00 | $ | 0.00 | ||||
|
|
|
|
|||||
Weighted average shares outstanding of Class B ordinary shares, basic and diluted
|
6,875,000 | 6,608,477 | ||||||
|
|
|
|
|||||
Basic and diluted net loss per share, Class B ordinary shares
|
$ | (0.77 | ) | $ | (0.65 | ) | ||
|
|
|
|
|
|
Ordinary Shares
|
|
|
Additional
|
|
|
Retained
Earnings |
|
|
Total
|
|
||||||||||||||||
|
|
Class A
|
|
|
Class B
|
|
|
Paid-in
|
|
|
(Accumulated
|
|
|
Shareholders’
|
|
|||||||||||||
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit)
|
|
|
Equity
|
|
|||||||
Balance—January 8, 2021 (inception)
|
— | $ | — | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Issuance of Class B ordinary shares to Sponsor
|
— | — | 6,900,000 | 690 | 24,310 | — | 25,000 | |||||||||||||||||||||
Sale of units in initial public offering, less fair value of warrant liabilities for public warrants
|
27,500,000 | 2,750 | — | — | 270,377,250 | — | 270,380,000 | |||||||||||||||||||||
Offering costs
|
— | — | — | — | (15,504,954 | ) | — | (15,504,954 | ) | |||||||||||||||||||
Excess cash received over the fair value of the private warrants
|
— | — | — | — | 3,466,667 | — | 3,466,667 | |||||||||||||||||||||
Class A ordinary shares subject to possible redemption
|
(25,436,480 | ) | (2,544 | ) | — | — | (254,362,256 | ) | — | (254,364,800 | ) | |||||||||||||||||
Net income
|
— | — | — | — | — | 998,092 | 998,092 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance—March 31, 2021 (unaudited)
|
|
2,063,520
|
|
|
206
|
|
|
6,900,000
|
|
|
690
|
|
|
4,001,017
|
|
|
998,092
|
|
|
5,000,005
|
|
|||||||
Class B ordinary shares forfeited
|
— | — | (25,000 | ) | (2 | ) | 2 | — | — | |||||||||||||||||||
Class A ordinary shares subject to possible redemption
|
530,420 | 53 | — | — | 5,304,147 | — | 5,304,200 | |||||||||||||||||||||
Net
loss
|
— | — | — | — | — | (5,304,203 | ) | (5,304,203 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance—June 30, 2021 (unaudited)
|
|
2,593,940
|
|
$
|
259
|
|
|
6,875,000
|
|
$
|
688
|
|
$
|
9,305,166
|
|
$
|
(4,306,111
|
)
|
$
|
5,000,002
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Period from
|
||||
January 8, 2021 (Inception)
|
||||
through June 30, 2021
|
||||
Cash Flows from Operating Activities:
|
||||
Net loss
|
$ | (4,306,111 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||
Change in fair value of warrant liabilities
|
3,413,333 | |||
Offering costs associated with issuance of warrants
|
275,622 | |||
Net gain from investments held in Trust Account
|
(6,781 | ) | ||
Changes in operating assets and liabilities:
|
||||
Prepaid expenses
|
(894,083 | ) | ||
Accounts payable
|
11,500 | |||
Accrued expenses
|
37,328 | |||
|
|
|||
Net cash used in operating activities
|
(1,469,192 | ) | ||
|
|
|||
Cash Flows from Investing Activities:
|
||||
Cash deposited in Trust Account
|
(275,000,000 | ) | ||
|
|
|||
Net cash used in investing activities
|
(275,000,000 | ) | ||
|
|
|||
Cash Flows from Financing Activities:
|
||||
Proceeds from note payable to related party
|
111,835 | |||
Repayment of note payable to related party
|
(111,835 | ) | ||
Proceeds received from initial public offering, gross
|
275,000,000 | |||
Proceeds received from private placement
|
8,000,000 | |||
Offering costs paid
|
(6,070,576 | ) | ||
|
|
|||
Net cash provided by financing activities
|
276,929,424 | |||
|
|
|||
Net increase in cash
|
460,232 | |||
Cash—beginning of the period
|
— | |||
|
|
|||
Cash—end of the period
|
$
|
460,232
|
|
|
|
|
|||
Supplemental disclosure of noncash activities:
|
||||
Prepaid expenses paid by Sponsor in exchange for issuance of Class B ordinary shares
|
$ | 25,000 | ||
Offering costs included in accrued expenses
|
$ | 85,000 | ||
Deferred underwriting commissions
|
$ | 9,625,000 | ||
Forfeiture of Class B ordinary shares
|
$ | 2 | ||
Initial value of Class A ordinary shares subject to possible redemption
|
$ | 253,038,210 | ||
Change in value of Class A ordinary shares subject to possible redemption
|
$ | (3,977,610 | ) |
•
|
|
Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
|
•
|
|
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
|
•
|
|
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
|
|
|
|
|
For the Period from
|
|
||
|
|
For the Three Months Ended
June 30, 2021 |
|
|
January 8, 2021 (Inception)
through June 30, 2021 |
|
||
Class A ordinary shares
|
|
|
||||||
Numerator:
|
|
|
||||||
Net gain from investments held in Trust Account
|
$ | 6,781 | $ | 6,781 | ||||
|
|
|
|
|||||
Net income attributable to Class A ordinary shares
|
$ | 6,781 | $ | 6,781 | ||||
Denominator:
|
||||||||
Weighted average shares outstanding of Class A ordinary shares , basic and diluted
|
27,500,000 | 27,500,000 | ||||||
|
|
|
|
|||||
Basic and diluted net income per share, Class A ordinary shares
|
$ | 0.00 | $ | 0.00 | ||||
|
|
|
|
|||||
Class B ordinary shares
|
||||||||
Numerator:
|
||||||||
Net loss
|
$ | (5,304,203 | ) | $ | (4,306,111 | ) | ||
Less: Net income attributable to Class A ordinary shares
|
(6,781 | ) | (6,781 | ) | ||||
|
|
|
|
|||||
Net loss attributable to Class B ordinary shares
|
$ | (5,310,984 | ) | $ | (4,312,892 | ) | ||
Denominator:
|
||||||||
Weighted average shares outstanding of Class B ordinary shares, basic and diluted
|
6,875,000 | 6,608,477 | ||||||
|
|
|
|
|||||
Basic and diluted net loss per share, Class B ordinary shares
|
$ | (0.77 | ) | $ | (0.65 | ) | ||
|
|
|
|
• |
in whole and not in part;
|
• |
at a price of $0.01 per warrant;
|
• |
upon a minimum of 30 days’ prior written notice of redemption;
|
• |
if, and only if, the closing price of the Class A ordinary shares equals or exceeds $18.00 per share (as adjusted for share
sub-divisions,
share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a
30-trading
day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
|
•
|
|
in whole and not in part;
|
•
|
|
$0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” of Class A ordinary shares;
|
• |
if, and only if, the closing price of Class A ordinary shares equals or exceeds $10.00 per Public Share (as adjusted for adjustments) for any 20 trading days within the
30
-trading
day period ending three trading days before the Company sends the notice of redemption to the warrant holders; and
|
• |
if the closing price of the Class A ordinary shares for any 20 trading days within a
30
-trading
day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders is less than $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described under the heading “Description of Securities—Warrants—Public Shareholders’ Warrants—Anti-dilution Adjustments”), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.
|
|
|
Fair Value Measured as of June 30, 2021
|
|
|||||||||||||
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
||||
Assets
|
|
|
|
|
||||||||||||
Investments held in Trust Account – U.S. Treasury Securities
|
$ | 275,006,781 | $ | — | $ | — | $ | 275,006,781 | ||||||||
Liabilities:
|
||||||||||||||||
Warrant liabilities—public warrants
|
$ | 6,380,000 | $ | — | $ | — | $ | 6,380,000 | ||||||||
Warrant liabilities—private warrants
|
$ | — | $ | — | $ | 6,186,666 | $ | 6,186,666 |
|
Warrant liabilities at January 8, 2021
|
$ | — | ||
Issuance of Public and Private Warrants
|
9,153,333 | |||
Change in fair value of warrant liabilities
|
(1,408,333 | ) | ||
|
|
|||
Warrant liabilities at March 31, 2021
|
7,745,000 | |||
Public Warrants transferred to Level 1
|
(3,905,000 | ) | ||
Change in fair value of warrant liabilities
|
2,346,666 | |||
|
|
|||
Warrant liabilities at June 30, 2021
|
$ | 6,186,666 | ||
|
|
June 30, 2021
|
March 2, 2021
|
|||||||
Exercise price
|
$ | 11.50 | $ | 11.50 | ||||
Stock Price
|
$ | 9.87 | $ | 9.83 | ||||
Term (in years)
|
5.25 | 5.58 | ||||||
Volatility
|
17.80 | % | 15.10 | % | ||||
Risk-free interest rate
|
0.91 | % | 0.79 | % | ||||
Dividend yield
|
— | — |
As of December 31,
|
||||||||
2020
|
2019
|
|||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 45 | $ | 2,137 | ||||
Accounts receivable, net of allowance of $8 thousand
|
11 | — | ||||||
Accounts receivable—related party
|
322 | — | ||||||
Inventory, net of allowance
|
243 | — | ||||||
Prepaid assets
|
7 | 8 | ||||||
|
|
|
|
|||||
Total current assets
|
628 | 2,145 | ||||||
Property and equipment, net
|
8,423 | 3,743 | ||||||
Other assets
|
51 | — | ||||||
|
|
|
|
|||||
Total assets
|
$ | 9,102 | $ | 5,888 | ||||
|
|
|
|
|||||
Liabilities and stockholders’ equity (deficit)
|
||||||||
Current liabilities
|
||||||||
Accounts payable
|
$ | 176 | $ | 147 | ||||
Accrued liabilities
|
1,294 | 348 | ||||||
Accrued liabilities—related party
|
833 | 342 | ||||||
Short-term debt
|
50 | — | ||||||
|
|
|
|
|||||
Total current liabilities
|
2,353 | 837 | ||||||
Long-term debt
|
104 | 2,497 | ||||||
Financing obligation
|
9,216 | — | ||||||
|
|
|
|
|||||
Total liabilities
|
11,673 | 3,334 | ||||||
Stockholders’ equity (deficit)
|
||||||||
Voting common stock, 0.0001 par value, 20,000,000 shares authorized, 9,886,283 and 10,291,688 issued and outstanding as of December 31, 2020 and 2019, respectively
|
1 | 1 | ||||||
Additional paid in capital
|
9,577 | 6,293 | ||||||
Accumulated deficit
|
(12,149 | ) | (3,740 | ) | ||||
|
|
|
|
|||||
Total stockholders’ equity (deficit)
|
(2,571 | ) | 2,554 | |||||
|
|
|
|
|||||
Total liabilities and stockholders’ equity (deficit)
|
$ | 9,102 | $ | 5,888 | ||||
|
|
|
|
For the years ended
December 31, |
||||||||
2020
|
2019
|
|||||||
Sales
|
$ | 82 | $ | — | ||||
Cost of goods sold
|
91 | — | ||||||
|
|
|
|
|||||
Gross loss
|
(9 | ) | — | |||||
Operating expenses:
|
||||||||
Research and development
|
1,079 | — | ||||||
Selling, general and administrative
|
6,547 | 3,367 | ||||||
Depreciation
|
287 | — | ||||||
|
|
|
|
|||||
Total operating expenses
|
7,913 | 3,367 | ||||||
|
|
|
|
|||||
Loss from operations
|
(7,922 | ) | (3,367 | ) | ||||
Other income (expense):
|
||||||||
Management fee income
|
35 | — | ||||||
Interest expense, net
|
(522 | ) | (39 | ) | ||||
|
|
|
|
|||||
Loss before income taxes
|
(8,409 | ) | (3,406 | ) | ||||
Income tax expense
|
— | — | ||||||
|
|
|
|
|||||
Net loss
|
(8,409 | ) | (3,406 | ) | ||||
|
|
|
|
|||||
Net loss attributable to stockholders (Note 13):
|
||||||||
|
|
|
|
|||||
Basic and diluted
|
$ | (0.84 | ) | $ | (0.35 | ) | ||
|
|
|
|
Voting Common Stock
|
Non-Voting
Common
Stock |
Additional
Paid-in
Capital |
Accumulated
Deficit |
Total
Stockholders’ Equity (Deficit) |
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||
Balance as of December 31, 2018
|
8,667,296 | 1 | — | $ | — | $ | — | $ | (334 | ) | $ | (333 | ) | |||||||||||||||
Issuance of common stock
|
2,516,283 | — | — | — | 4,500 | — | 4,500 | |||||||||||||||||||||
Share redemption
|
(891,891 | ) | — | — | — | (149 | ) | — | (149 | ) | ||||||||||||||||||
Net loss
|
— | — | — | — | — | (3,406 | ) | (3,406 | ) | |||||||||||||||||||
Stock-based compensation
|
— | — | — | — | 1,942 | — | 1,942 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance as of December 31, 2019
|
10,291,688 | 1 | — | — | 6,293 | (3,740 | ) | 2,554 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Issuance of common stock
|
— | — | 1,799,811 | — | — | — | — | |||||||||||||||||||||
Share redemption
|
(405,405 | ) | — | — | — | (11 | ) | — | (11 | ) | ||||||||||||||||||
Net loss
|
— | — | — | — | — | (8,409 | ) | (8,409 | ) | |||||||||||||||||||
Stock-based compensation
|
— | — | — | — | 3,295 | — | 3,295 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance as of December 31, 2020
|
9,886,283 | $ | 1 | 1,799,811 | $ | — | $ | 9,577 | $ | (12,149 | ) | $ | (2,571 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended
December 31, |
||||||||
2020
|
2019
|
|||||||
Cash flows from operating activities
|
||||||||
Net loss
|
$ | (8,409 | ) | $ | (3,406 | ) | ||
Adjustments to reconcile net loss to cash used in operating activities:
|
||||||||
Depreciation
|
287 | — | ||||||
Stock-based compensation expense
|
3,295 | 1,942 | ||||||
Bad debt allowance
|
— | — | ||||||
Inventory allowance
|
— | — | ||||||
Changes in assets and liabilities:
|
||||||||
Accounts receivable
|
(11 | ) | — | |||||
Accounts receivable—related party
|
(322 | ) | — | |||||
Inventory
|
(243 | ) | — | |||||
Prepaid assets
|
1 | (8 | ) | |||||
Other assets
|
(51 | ) | — | |||||
Accounts payable
|
29 | 147 | ||||||
Accrued liabilities
|
1,095 | 198 | ||||||
Accrued liabilities—related party
|
491 | 8 | ||||||
|
|
|
|
|||||
Net cash used in operating activities
|
(3,838 | ) | (1,119 | ) | ||||
|
|
|
|
|||||
Cash flows from investing activities
|
||||||||
Purchases of property and equipment
|
(3,422 | ) | (3,743 | ) | ||||
|
|
|
|
|||||
Net cash used in investing activities
|
(3,422 | ) | (3,743 | ) | ||||
|
|
|
|
|||||
Cash flows from financing activities
|
||||||||
Proceeds from issuance of common stock
|
— | 4,501 | ||||||
Redemption of common stock
|
(80 | ) | — | |||||
Proceeds from issuance of debt
|
453 | 4,561 | ||||||
Repayment of debt
|
(2,880 | ) | (2,063 | ) | ||||
Proceeds from financing obligations—related party
|
7,675 | — | ||||||
|
|
|
|
|||||
Net cash provided by financing activities
|
5,168 | 6,999 | ||||||
|
|
|
|
|||||
Net (decrease) increase in cash and cash equivalents
|
(2,092 | ) | 2,137 | |||||
Cash and cash equivalents at beginning of period
|
2,137 | — | ||||||
|
|
|
|
|||||
Cash and cash equivalents at end of period
|
$ | 45 | $ | 2,137 | ||||
|
|
|
|
|||||
Supplemental disclosures of cash flow information
|
||||||||
Cash paid for income taxes
|
$ | — | $ | — | ||||
Cash paid for interest
|
$ | (49 | ) | $ | (41 | ) | ||
Non-cash
investing and financing activities:
|
||||||||
Non-cash
purchases of property and equipment
|
$ | 1,541 | $ | — | ||||
Non-cash
redemption of common stock
|
$ | 11 | $ | 149 |
• |
Greenhouse facility: 30 years
|
• |
Equipment: 5 years
|
As of December 31,
|
||||||||
2020
|
2019
|
|||||||
Raw materials
|
$ | 21 | $ | — | ||||
Work-in-process
|
83 | — | ||||||
Finished goods
|
5 | — | ||||||
Packaging
|
182 | — | ||||||
Consignment
|
21 | |||||||
|
|
|
|
|||||
Inventory allowance
|
(69 | ) | — | |||||
|
|
|
|
|||||
Total inventory, net
|
$ | 243 | $ | — | ||||
|
|
|
|
As of December 31,
|
||||||||
2020
|
2019
|
|||||||
Greenhouse facility
|
5,203 | — | ||||||
Equipment
|
1,621 | 20 | ||||||
Land
|
345 | 345 | ||||||
Construction-in-progress
|
1,541 | 3,378 | ||||||
|
|
|
|
|||||
Less: Accumulated depreciation
|
(287 | ) | — | |||||
|
|
|
|
|||||
Property and equipment, net
|
$ | 8,423 | $ | 3,743 | ||||
|
|
|
|
As of December 31,
|
||||||||
2020
|
2019
|
|||||||
Accrued payroll
|
$ | 1,125 | $ | 18 | ||||
Accrued shareholder settlement
|
— | 149 | ||||||
Accrued legal fees
|
— | 58 | ||||||
Accrued agriculture expenses
|
125 | 101 | ||||||
Accrued software fees
|
44 | — | ||||||
Other accrued expenses
|
— | 22 | ||||||
|
|
|
|
|||||
Total accrued liabilities
|
$ | 1,294 | $ | 348 | ||||
|
|
|
|
As of December 31,
|
||||||||
2020
|
2019
|
|||||||
Promissory notes
|
$ | — | $ | 2,497 | ||||
PPP loan
|
104 | — | ||||||
Share settlement note
|
50 | — | ||||||
|
|
|
|
|||||
Total debt
|
154 | $ | 2,497 | |||||
|
|
|
|
|||||
Less: current portion
|
(50 | ) | — | |||||
|
|
|
|
|||||
Long-term debt, less current portion
|
$ | 104 | $ | 2,497 | ||||
|
|
|
|
For the year ended
December 31, |
||||
2020
|
||||
Financing obligation:
|
||||
Amortization of financing obligation assets
|
$ | 215 | ||
Interest on financing liabilities
|
475 | |||
|
|
|||
Total financing obligations
|
$ | 690 | ||
|
|
As of December 31, |
Finance
Obligation |
|||
2021
|
$ | 763 | ||
2022
|
779 | |||
2023
|
823 | |||
2024
|
862 | |||
2025
|
879 | |||
Thereafter
|
14,608 | |||
|
|
|||
Total financing obligation payments
|
18,714 | |||
Amount representing interest
|
(13,599 | ) | ||
Net financing obligation and asset at end of term
|
2,071 | |||
|
|
|||
Financing obligation liability
|
7,186 | |||
CIP obligation
|
2,030 | |||
|
|
|||
Total financing obligation
|
$ | 9,216 | ||
|
|
• |
Voting Common Stock
|
• |
Nonvoting Common Stock
|
For the year ended
December 31, |
||||||||
2020
|
2019
|
|||||||
Currently reportable expense
|
||||||||
Federal
|
$ | — | $ | — | ||||
State
|
— | — | ||||||
|
|
|
|
|||||
— | — | |||||||
Deferred benefit:
|
||||||||
Federal
|
1,841 | 288 | ||||||
State
|
591 | 92 | ||||||
|
|
|
|
|||||
2,432 | 380 | |||||||
Less valuation allowance
|
(2,432 | ) | (380 | ) | ||||
|
|
|
|
|||||
Total provision for income tax expense
|
$ | — | $ | — | ||||
|
|
|
|
As of December, 31
|
||||||||
2020
|
2019
|
|||||||
Gross deferred tax assets arising from:
|
||||||||
Net operating loss carryforwards
|
1,990 | $ | 380 | |||||
ASC 842
right-of-use
|
979 | — | ||||||
|
|
|
|
|||||
2,969 | $ | 380 | ||||||
Deferred tax liabilities arising from:
|
||||||||
Depreciation
|
(156 | ) | — | |||||
|
|
|
|
|||||
Net deferred tax assets before valuation allowance
|
2,813 | $ | 380 | |||||
Less valuation allowance
|
(2,813 | ) | (380 | ) | ||||
|
|
|
|
|||||
Net deferred tax assets
|
$ | — | $ | — | ||||
|
|
|
|
For the year ended
December 31, |
||||||||
2020
|
2019
|
|||||||
Net loss
|
$ | (8,409 | ) | $ | (3,406 | ) | ||
Weighted average common stock outstanding, basic and diluted
|
9,997,049 | 9,798,949 | ||||||
|
|
|
|
|||||
Net loss per common share, basic and diluted
|
$ | (0.84 | ) | $ | (0.35 | ) | ||
|
|
|
|
As of
June 30, 2021 |
As of
December 31, 2020 |
|||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$ | 23,144 | $ | 45 | ||||
Accounts receivable, net of allowance
|
47 | 11 | ||||||
Accounts receivable—related party
|
14 | 322 | ||||||
Inventory, net of allowance
|
411 | 243 | ||||||
Prepaid assets
|
3,609 | 7 | ||||||
|
|
|
|
|||||
Total current assets
|
27,225 | 628 | ||||||
Property and equipment, net
|
16,260 | 8,423 | ||||||
Other assets
|
40 | 51 | ||||||
|
|
|
|
|||||
Total assets
|
$ | 43,525 | $ | 9,102 | ||||
|
|
|
|
|||||
Liabilities and stockholders’ equity (deficit)
|
||||||||
Current liabilities
|
||||||||
Accounts payable
|
$ | 1,890 | $ | 176 | ||||
Accrued liabilities
|
4,510 | 1,294 | ||||||
Accrued liabilities—related party
|
— | 833 | ||||||
Share settlement note
|
— | 50 | ||||||
Term loan, net of deferred financing costs
|
8,864 | — | ||||||
|
|
|
|
|||||
Total current liabilities
|
15,264 | 2,353 | ||||||
Long-term debt
|
— | 104 | ||||||
Convertible notes
|
29,034 | — | ||||||
Warrant liability
|
1,418 | — | ||||||
Financing obligation
|
12,426 | 9,216 | ||||||
|
|
|
|
|||||
Total liabilities
|
58,142 | 11,673 | ||||||
Stockholders’ equity (deficit)
|
||||||||
Voting common stock, 0.0001 par value, 20,000,000 shares authorized, 9,886,283 issued and outstanding as of June 30, 2021 and December 31, 2020
|
1 | 1 | ||||||
Nonvoting common stock, 0.0001 par value, 2,219,724 shares authorized, 2,219,724 and 1,799,881 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively
|
— | — | ||||||
Additional paid in capital
|
14,519 | 9,577 | ||||||
Accumulated deficit
|
(29,137 | ) | (12,149 | ) | ||||
|
|
|
|
|||||
Total stockholders’ deficit
|
(14,617 | ) | (2,571 | ) | ||||
|
|
|
|
|||||
Total liabilities and stockholders’ deficit
|
$ | 43,525 | $ | 9,102 | ||||
|
|
|
|
For the six
months ended
June 30, |
||||||||
2021
|
2020
|
|||||||
Sales
|
$ | 165 | $ | — | ||||
Cost of goods sold
|
126 | — | ||||||
|
|
|
|
|||||
Gross profit
|
39 | — | ||||||
Operating expenses:
|
||||||||
Research and development
|
1,155 | — | ||||||
Selling, general and administrative
|
11,006 | 2,948 | ||||||
Depreciation
|
250 | 41 | ||||||
|
|
|
|
|||||
Total operating expenses
|
12,411 | 2,989 | ||||||
|
|
|
|
|||||
Loss from operations
|
(12,372 | ) | (2,989 | ) | ||||
Other income (expense):
|
||||||||
Management fee income
|
44 | 8 | ||||||
Convertible notes fair value adjustment
|
(2,984 | ) | — | |||||
Warrants fair value adjustment
|
(3 | ) | — | |||||
Interest expense, net
|
(1,673 | ) | (114 | ) | ||||
|
|
|
|
|||||
Loss before income taxes
|
(16,988 | ) | (3,095 | ) | ||||
Income tax expense
|
— | — | ||||||
|
|
|
|
|||||
Net loss
|
(16,988 | ) | (3,095 | ) | ||||
|
|
|
|
|||||
Net loss attributable to stockholders (Note 12):
|
||||||||
Basic and diluted
|
$ | (1.72 | ) | $ | (0.31 | ) | ||
|
|
|
|
Voting Common Stock
|
Non-Voting
Common Stock |
Additional
Paid-in Capital |
Accumulated
Deficit |
Total
Stockholders’ Equity (Deficit) |
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||
Balance as of December 31, 2020
|
9,886,283 | $ | 1 | 1,799,811 | $ | — | $ | 9,577 | $ | (12,149 | ) | $ | (2,571 | ) | ||||||||||||||
Issuance of common stock
|
— | — | 419,913 | — | — | — | — | |||||||||||||||||||||
Net loss
|
— | — | — | — | — | (16,988 | ) | (16,988 | ) | |||||||||||||||||||
Stock-based compensation
|
— | — | — | — | 4,942 | — | 4,942 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance as of June 30, 2021
|
9,886,283 | $ | 1 | 2,219,724 | $ | — | $ | 14,519 | $ | (29,137 | ) | $ | (14,617 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voting Common Stock
|
Non-Voting
Common Stock |
Additional
Paid-in Capital |
Accumulated
Deficit |
Total
Stockholders’ Equity (Deficit) |
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||
Balance as of December 31, 2019
|
10,291,688 | $ | 1 | — | $ | — | $ | 6,293 | $ | (3,740 | ) | $ | 2,554 | |||||||||||||||
Issuance of common stock
|
— | — | — | — | — | — | — | |||||||||||||||||||||
Share redemption
|
(405,405 | ) | — | — | — | (11 | ) | — | (11 | ) | ||||||||||||||||||
Net loss
|
— | — | — | — | — | (3,095 | ) | (3,095 | ) | |||||||||||||||||||
Stock-based compensation
|
— | — | — | — | 1,647 | — | 1,647 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance as of June 30, 2020
|
9,886,283 | $ | 1 | — | $ | — | $ | 7,929 | $ | (6,835 | ) | $ | 1,095 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six
months ended
June 30, |
||||||||
2021
|
2020
|
|||||||
Cash flows from operating activities
|
||||||||
Net loss
|
$ | (16,988 | ) | $ | (3,095 | ) | ||
Adjustments to reconcile net loss to cash used in operating activities:
|
||||||||
Depreciation
|
250 | 41 | ||||||
Stock-based compensation expense
|
4,942 | 1,647 | ||||||
Bad debt allowance
|
(8 | ) | — | |||||
Inventory allowance
|
8 | — | ||||||
Change in Fair Value - Convertible Notes
|
2,984 | — | ||||||
Change in Fair Value -Warrants
|
3 | — | ||||||
Amortization of debt issuance costs
|
429 | — | ||||||
Change in assets and liabilities:
|
||||||||
Accounts receivable
|
(28 | ) | (10 | ) | ||||
Accounts receivable - related party
|
308 | (1,183 | ) | |||||
Inventory
|
(176 | ) | (68 | ) | ||||
Prepaid assets
|
(3,602 | ) | (18 | ) | ||||
Other assets
|
11 | (62 | ) | |||||
Accounts payable
|
1,714 | 359 | ||||||
Accrued liabilities
|
3,266 | (18 | ) | |||||
Accrued liabilities - related party
|
(833 | ) | 169 | |||||
|
|
|
|
|||||
Net cash used in operating activities
|
(7,720 | ) | (2,238 | ) | ||||
Cash flows from investing activities
|
||||||||
Purchases of property and equipment
|
(8,087 | ) | (3,654 | ) | ||||
|
|
|
|
|||||
Net cash used in investing activities
|
(8,087 | ) | (3,654 | ) | ||||
Cash flows from financing activities
|
||||||||
Proceeds from issuance of debt
|
10,500 | 537 | ||||||
Payment of debt issuance costs
|
(150 | ) | — | |||||
Proceeds from issuance of convertible notes
|
26,000 | — | ||||||
Repayment of debt
|
(654 | ) | (2,850 | ) | ||||
Payments of share settlement
|
— | (11 | ) | |||||
Proceeds from financing obligations
|
3,210 | 6,954 | ||||||
|
|
|
|
|||||
Net cash provided by financing activities
|
38,906 | 4,630 | ||||||
Net increase (decrease) in cash and cash equivalents
|
23,099 | (1,262 | ) | |||||
Cash and cash equivalents at beginning of period
|
45 | 2,137 | ||||||
|
|
|
|
|||||
Cash and cash equivalents at end of period
|
$ | 23,144 | $ | 875 | ||||
|
|
|
|
|||||
Non-cash financing activities:
|
||||||||
Non-cash proceeds from issuance of convertible notes for services provided
|
$ | 50 | $ | — |
As of
June 30,
2021
|
As of
December 31,
2020
|
|||||||
Raw materials
|
$ | 70 | $ | 21 | ||||
Work-in-process
|
85 | 83 | ||||||
Finished goods
|
14 | 5 | ||||||
Packaging
|
262 | 182 | ||||||
Consignment
|
40 | 21 | ||||||
|
|
|
|
|||||
Inventory allowance
|
(60 | ) | (69 | ) | ||||
|
|
|
|
|||||
Total inventory, net
|
$ | 411 | $ | 243 | ||||
|
|
|
|
As of
June 30,
2021
|
As of
December 31,
2020
|
|||||||
Greenhouse facility
|
$ | 5,203 | $ | 5,203 | ||||
Equipment
|
1,661 | 1,621 | ||||||
Land
|
3,451 | 345 | ||||||
Construction-in-progress
|
6,482 | 1,541 | ||||||
|
|
|
|
|||||
Less: Accumulated depreciation
|
(537 | ) | (287 | ) | ||||
|
|
|
|
|||||
Property and equipment, net
|
$ | 16,260 | $ | 8,423 | ||||
|
|
|
|
As of
June 30,
2021
|
As of
December 31,
2020
|
|||||||
Accrued payroll
|
$ | 2,580 | $ | 1,125 | ||||
Accrued interest
|
770 | — | ||||||
Accrued construction expenses
|
595 | — | ||||||
Other accrued expenses
|
565 | 169 | ||||||
|
|
|
|
|||||
Total accrued liabilities
|
$ | 4,510 | $ | 1,294 | ||||
|
|
|
|
As of
June 30, 2021 |
As of
December 31, 2020 |
|||||||
PPP loan
|
$ | — | $ | 104 | ||||
Share settlement note
|
— | 50 | ||||||
Term loan
|
10,000 | — | ||||||
Unamortized deferred financing costs, Term loan
|
(1,136 | ) | — | |||||
Convertible notes with fair value adjustment ($26,050 thousand in face value)
|
29,034 | — | ||||||
|
|
|
|
|||||
Total debt
|
37,898 | 154 | ||||||
Share settlement note
|
— | (50 | ) | |||||
Term loan, net of deferred financing costs & warrant liability, current portion
|
(8,864 | ) | — | |||||
Convertible notes with fair value adjustment ($26,050 thousand in face value)
|
(29,034 | ) | — | |||||
|
|
|
|
|||||
Long-term debt, less current portion and convertible notes
|
$ | — | $ | 104 | ||||
|
|
|
|
As of June 30, 2021
|
||||||||||||
Level 1
|
Level 2
|
Level 3
|
||||||||||
Recurring fair value measurements
|
||||||||||||
Assets:
|
||||||||||||
Money market funds
|
$ | 23,015 | $ | — | $ | — | ||||||
|
|
|
|
|
|
|||||||
Total
|
$ | 23,015 | $ | — | $ | — | ||||||
|
|
|
|
|
|
|||||||
Liabilities:
|
||||||||||||
Convertible notes
|
$ | — | $ | — | $ | 29,034 | ||||||
Warrant liability
|
$ | — | $ | — | 1,418 | |||||||
|
|
|
|
|
|
|||||||
Total
|
$ | — | $ | — | $ | 30,452 | ||||||
|
|
|
|
|
|
• |
the timing of potential events (like in initial public offering or SPAC transaction) and their probability of occurring,
|
• |
the selection of guideline public company multiples,
|
• |
a discount for the lack of marketability of the preferred and common stock,
|
• |
the projected future cash flows, and
|
• |
the discount rate used to calculate the present-value of the estimated equity value allocated to each share class.
|
Six months ended June 30,
|
2021
|
|||
Implied Yield
|
21.73%-26.08
|
% | ||
Time from Valuation to Maturity (Years)
|
1.61 | |||
Time from Valuation to SPAC Merger (Years)
|
0.50 | |||
Time from Valuation to Qualified Financing (Years)
|
1.08 |
Six months ended June 30,
|
2021
|
|||
Risk Free Rate
|
0.96%-1.05
|
% | ||
Warrant Term (Years)
|
5.00 | |||
Dividend Yield
|
0.00 | % | ||
Class Volatility
|
50.00 | % | ||
Time to Issuance (Years)
|
0.50-1.08 |
For the six months
ended June 30, 2021
|
||||||||
Convertible
notes |
Warrant
liability |
|||||||
Balance (beginning of period)
|
$ | — | $ | — | ||||
Additions
|
26,050 | 1,415 | ||||||
Fair value measurement adjustments
|
2,984 | 3 | ||||||
|
|
|
|
|||||
Balance (end of period)
|
$ | 29,034 | $ | 1,418 | ||||
|
|
|
|
• |
Voting Common Stock
|
• |
Nonvoting Common Stock
|
For the six months ended
June 30,
|
||||||||
2021
|
2020
|
|||||||
Net loss
|
$ | (16,988 | ) | $ | (3,095 | ) | ||
Weighted average common stock outstanding, basic and diluted
|
9,886,283 | 10,106,806 | ||||||
|
|
|
|
|||||
Net loss per common share, basic and diluted
|
$ | (1.72 | ) | $ | (0.31 | ) | ||
|
|
|
|
For the six
months ended
June 30, |
||||||||
2021
|
2020
|
|||||||
CIC Restricted Stock
|
2,219,724 | — | ||||||
Convertible notes
|
636,638 | — | ||||||
Warrants
|
59,853 | — |
Page
|
||||||
ARTICLE I THE CLOSING TRANSACTIONS
|
|
A-3
|
|
|||
Section 1.1
|
The Mergers
|
A-3 | ||||
Section 1.2
|
Effective Times
|
A-4 | ||||
Section 1.3
|
Governing Documents
|
A-4 | ||||
Section 1.4
|
Directors and Officers of the Surviving Corporation and the Surviving Company
|
A-4 | ||||
ARTICLE II MERGER CONSIDERATION; EFFECTS OF THE MERGERS
|
|
A-5
|
|
|||
Section 2.1
|
Closing Date Statement
|
A-5 | ||||
Section 2.2
|
Merger Consideration
|
A-6 | ||||
Section 2.3
|
Effect of the First Merger
|
A-6 | ||||
Section 2.4
|
Effect of the Second Merger
|
A-7 | ||||
Section 2.5
|
Delivery of the Merger Consideration
|
A-7 | ||||
Section 2.6
|
Exchange Procedures for Company Stockholders
|
A-8 | ||||
Section 2.7
|
Conversion of Company Convertible Debt
|
A-10 | ||||
Section 2.8
|
Company RSUs
|
A-10 | ||||
Section 2.9
|
Exercise or Assumption of Company Warrants
|
A-10 | ||||
Section 2.10
|
Earnout Shares
|
A-11 | ||||
Section 2.11
|
Withholding Rights
|
A-12 | ||||
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE GROUP COMPANIES
|
|
A-13
|
|
|||
Section 3.1
|
Organization
|
A-13 | ||||
Section 3.2
|
Authorization
|
A-13 | ||||
Section 3.3
|
Capitalization
|
A-13 | ||||
Section 3.4
|
Company Subsidiaries
|
A-15 | ||||
Section 3.5
|
Consents and Approvals; No Violations
|
A-15 | ||||
Section 3.6
|
Financial Statements
|
A-15 | ||||
Section 3.7
|
No Undisclosed Liabilities
|
A-17 | ||||
Section 3.8
|
Absence of Certain Changes
|
A-17 | ||||
Section 3.9
|
Real Estate
|
A-17 | ||||
Section 3.10
|
Intellectual Property
|
A-19 | ||||
Section 3.11
|
Litigation
|
A-20 | ||||
Section 3.12
|
Company Material Contracts
|
A-20 | ||||
Section 3.13
|
Tax Returns; Taxes
|
A-22 | ||||
Section 3.14
|
Environmental Matters
|
A-23 | ||||
Section 3.15
|
Licenses and Permits; Regulatory Compliance
|
A-24 | ||||
Section 3.16
|
Company Benefit Plans
|
A-24 | ||||
Section 3.17
|
Labor Relationships
|
A-26 | ||||
Section 3.18
|
International Trade & Anti-Corruption Matters
|
A-27 | ||||
Section 3.19
|
Brokerage
|
A-28 | ||||
Section 3.20
|
Insurance Policies
|
A-28 | ||||
Section 3.21
|
Affiliate Transactions
|
A-28 | ||||
Section 3.22
|
Information Supplied
|
A-28 | ||||
Section 3.23
|
Material Customers and Material Suppliers
|
A-29 | ||||
Section 3.24
|
Compliance with Laws
|
A-29 | ||||
Section 3.25
|
Assets
|
A-29 | ||||
Section 3.26
|
No Other Representations or Warranties; Schedules
|
A-29 | ||||
Section 3.27
|
Solvency
|
A-30 | ||||
Section 3.28
|
Independent Investigation; No Reliance
|
A-30 | ||||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT, MERGER SUB I AND MERGER SUB II
|
|
A-30
|
|
|||
Section 4.1
|
Organization
|
A-30 |
Page
|
||||||
Section 4.2
|
Authorization
|
A-31 | ||||
Section 4.3
|
Capitalization
|
A-31 | ||||
Section 4.4
|
Consents and Approvals; No Violations
|
A-32 | ||||
Section 4.5
|
Financial Statements
|
A-32 | ||||
Section 4.6
|
PIPE Financing
|
A-33 | ||||
Section 4.7
|
Litigation
|
A-33 | ||||
Section 4.8
|
Tax Returns; Taxes
|
A-33 | ||||
Section 4.9
|
Compliance with Laws
|
A-34 | ||||
Section 4.10
|
Brokerage
|
A-34 | ||||
Section 4.11
|
Subsidiaries; Organization of Merger Sub I and Merger Sub II
|
A-34 | ||||
Section 4.12
|
Parent SEC Documents
|
A-35 | ||||
Section 4.13
|
Information Supplied; SEC Filings
|
A-35 | ||||
Section 4.14
|
Listing
|
A-35 | ||||
Section 4.15
|
Investment Company
|
A-35 | ||||
Section 4.16
|
Board Approval; Shareholder Vote
|
A-35 | ||||
Section 4.17
|
Trust Account
|
A-36 | ||||
Section 4.18
|
Affiliate Transactions
|
A-36 | ||||
Section 4.19
|
Indebtedness
|
A-36 | ||||
Section 4.20
|
Title to Property
|
A-36 | ||||
Section 4.21
|
Parent Material Contracts
|
A-36 | ||||
Section 4.22
|
Sponsor Agreement
|
A-36 | ||||
Section 4.23
|
Absence of Certain Changes or Events
|
A-37 | ||||
Section 4.24
|
No Other Representations or Warranties; Schedules
|
A-37 | ||||
Section 4.25
|
Independent Investigation; No Reliance
|
A-37 | ||||
ARTICLE V COVENANTS
|
|
A-38
|
|
|||
Section 5.1
|
Interim Operations of the Company
|
A-38 | ||||
Section 5.2
|
Interim Operations of Parent, Merger Sub I and Merger Sub II
|
A-41 | ||||
Section 5.3
|
Trust Account & Closing Funding
|
A-42 | ||||
Section 5.4
|
Reasonable Best Efforts; Consents
|
A-42 | ||||
Section 5.5
|
Public Announcements
|
A-43 | ||||
Section 5.6
|
Access to Information; Confidentiality
|
A-43 | ||||
Section 5.7
|
Interim Financial Statements
|
A-44 | ||||
Section 5.8
|
Tax Matters
|
A-45 | ||||
Section 5.9
|
Directors’ and Officers’ Indemnification
|
A-46 | ||||
Section 5.10
|
Communications; SEC Filings
|
A-48 | ||||
Section 5.11
|
Parent Shareholder Meeting
|
A-50 | ||||
Section 5.12
|
Section 16 of the Exchange Act
|
A-51 | ||||
Section 5.13
|
Termination of Agreements
|
A-51 | ||||
Section 5.14
|
Written Consent
|
A-51 | ||||
Section 5.15
|
Registration Rights Agreement
|
A-51 | ||||
Section 5.16
|
Domestication
|
A-51 | ||||
Section 5.17
|
Parent Warrants
|
A-52 | ||||
Section 5.18
|
Exclusivity
|
A-52 | ||||
Section 5.19
|
PIPE Financing
|
A-53 | ||||
Section 5.20
|
Release
|
A-54 | ||||
Section 5.21
|
Director and Officer Appointments
|
A-54 | ||||
Section 5.22
|
NYSE Listing
|
A-55 | ||||
Section 5.23
|
Transfers of Ownership
|
A-55 | ||||
Section 5.24
|
Employment Agreements
|
A-55 | ||||
Section 5.25
|
Warrant Agreement Amendments
|
A-55 |
Page
|
||||||
Section 5.26
|
Convertible Debt Redemption
|
A-55 | ||||
Section 5.27
|
Credit Facilities
|
A-55 | ||||
Section 5.28
|
Owned Real Property
|
A-56 | ||||
ARTICLE VI CONDITIONS TO OBLIGATIONS OF THE PARTIES
|
|
A-56
|
|
|||
Section 6.1
|
Conditions to Each Party’s Obligations
|
A-56 | ||||
Section 6.2
|
Conditions to Obligations of the Company
|
A-56 | ||||
Section 6.3
|
Conditions to Obligations of Parent and Merger Subs
|
A-57 | ||||
Section 6.4
|
Frustration of Closing Conditions
|
A-58 | ||||
ARTICLE VII CLOSING
|
|
A-58
|
|
|||
Section 7.1
|
Closing
|
A-58 | ||||
Section 7.2
|
Deliveries by the Company
|
A-58 | ||||
Section 7.3
|
Deliveries by Parent
|
A-59 | ||||
Section 7.4
|
Other Closing Deliveries
|
A-60 | ||||
ARTICLE VIII TERMINATION
|
|
A-60
|
|
|||
Section 8.1
|
Termination
|
A-60 | ||||
Section 8.2
|
Effect of Termination
|
A-61 | ||||
ARTICLE IX MISCELLANEOUS
|
|
A-61
|
|
|||
Section 9.1
|
Fees and Expenses
|
A-61 | ||||
Section 9.2
|
Notices
|
A-61 | ||||
Section 9.3
|
Severability
|
A-62 | ||||
Section 9.4
|
Binding Effect; Assignment
|
A-62 | ||||
Section 9.5
|
No Third Party Beneficiaries
|
A-63 | ||||
Section 9.6
|
Section Headings; Defined Terms
|
A-63 | ||||
Section 9.7
|
Consent to Jurisdiction, Etc
|
A-63 | ||||
Section 9.8
|
Entire Agreement
|
A-64 | ||||
Section 9.9
|
No Strict Construction
|
A-64 | ||||
Section 9.10
|
Governing Law
|
A-64 | ||||
Section 9.11
|
Specific Performance
|
A-64 | ||||
Section 9.12
|
Prevailing Party
|
A-64 | ||||
Section 9.13
|
Counterparts
|
A-65 | ||||
Section 9.14
|
Amendment; Modification
|
A-65 | ||||
Section 9.15
|
Time of Essence
|
A-65 | ||||
Section 9.16
|
Schedules
|
A-65 | ||||
Section 9.17
|
No Recourse
|
A-65 | ||||
Section 9.18
|
Interpretation
|
A-65 | ||||
Section 9.19
|
Non-Survival
|
A-66 | ||||
Section 9.20
|
Trust Account Waiver
|
A-66 | ||||
Section 9.21
|
Legal Representations
|
A-67 |
Exhibit A | Definitions | |
Exhibit B | Form of Parent Certificate of Incorporation | |
Exhibit C | Form Parent Bylaws | |
Exhibit D | Form Subscription Agreement | |
Exhibit E | Form of Company Stockholder Support Agreement | |
Exhibit F |
Form of
Lock-Up
Agreement
|
|
Exhibit G | Form of Registration Rights Agreement | |
Exhibit H | Form of Sponsor Agreement | |
Exhibit I | Form of Letter of Transmittal | |
Exhibit J | Form of Surviving Company Governing Documents |
Schedule A | Stockholder Agreements | |
Schedule B | Key Company Stockholders |
PARENT
:
|
||||
LEO HOLDINGS III CORP | ||||
By: |
/s/ Lyndon Lea
|
|||
Name: | Lyndon Lea | |||
Title: | President and Chief Executive Officer | |||
MERGER SUB I
:
|
||||
LONGLEAF MERGER SUB, INC. | ||||
By: |
/s/ Lyndon Lea
|
|||
Name: | Lyndon Lea | |||
Title: | President | |||
MERGER SUB II
:
|
||||
LONGLEAF MERGER SUB II, LLC | ||||
By: |
/s/ Lyndon Lea
|
|||
Name: | Lyndon Lea | |||
Title: | President |
COMPANY
:
|
||||
LOCAL BOUNTI CORPORATION | ||||
By: |
/s/ Craig Hurlbert
|
|||
Name: | Craig Hurlbert | |||
Title: | Chief Executive Officer |
Term
|
Section
|
|
$13.00 Earnout Milestone | Section 2.10(a) | |
$13.00 Earnout Shares | Section 2.10(a) | |
$15.00 Earnout Milestone | Section 2.10(b) | |
$15.00 Earnout Shares | Section 2.10(b) | |
$17.00 Earnout Milestone | Section 2.10(c) | |
$17.00 Earnout Shares | Section 2.10(c) | |
Acceleration Event | Section 2.10 | |
Additional Parent Filings | Section 5.10(d) | |
Agreement | Preamble | |
Alternative Financing | Section 5.19(c) | |
Alternative Financing Source | Section 5.19(c) | |
CBA | Section 3.17(a) | |
Certificates of Merger | Section 1.2(c) | |
Change in Recommendation | Section 5.11 | |
Closing | Section 7.1 | |
Closing Date | Section 7.1 | |
Closing Date Capitalization Statement | Section 2.1(a) | |
Closing Form
8-K
|
Section 5.10(e) | |
Closing Press Release | Section 5.10(e) | |
Closing Statement | Section 2.1(b) |
Term
|
Section
|
|
Code | Recitals | |
Company | Preamble | |
Company Affiliate Agreement | Section 3.21 | |
Company Closing Certificate | Section 6.3(e) | |
Company Intellectual Property | Section 3.10(c) | |
Company IP Agreements | Section 3.10(d) | |
Company Material Contracts | Section 3.12(b) | |
Company Material Trademarks | Section 3.10(b) | |
Company Released Parties | Section 5.20(a) | |
Company Stockholder Support Agreements | Recitals | |
Company Systems | Section 3.10(i) | |
Competing Buyer | Section 5.18 | |
Debt Repayment Amount | Section 7.4(b) | |
DGCL | Recitals | |
DLLCA | Recitals | |
Domestication | Recitals | |
Draft Closing Date Capitalization Statement | Section 2.1(a) | |
Earnout Company Stockholders | Section 2.1(a) | |
Earnout Shares | Section 2.10(c) | |
Effective Time | Section 1.2 | |
Employment Agreements | Section 5.24 | |
Exchange Agent | Section 2.6(a) | |
Exchange Agent Agreement | Section 2.6(a) | |
Exchange Agent Fund | Section 2.5(a) | |
FDA | Section 3.24(b) | |
Financial Statements | Section 3.6 | |
First Certificate of Merger | Section 1.2(b) | |
First Merger | Recitals | |
Food Laws | Section 3.24(b) | |
Fractional Share Cash Amount | Section 2.3(a) | |
FTC | Section 3.24(b) | |
GAP Standard | Section 3.24(b) | |
Indemnified Persons | Section 5.9(a) | |
Insurance Policies | Section 3.20 | |
Intended Tax Treatment | Recitals | |
Interim Period | Section 5.1(a) | |
Investors | Recitals | |
IRS | Section 3.16(b)(iv) | |
Key Employees | Section 5.24 | |
Lease | Section 3.9(c) | |
Leases | Section 3.9(c) | |
Leased Real Property | Section 3.9(b) | |
Leased Real Properties | Section 3.9(b) | |
Letter of Transmittal | Section 2.6(b) | |
Lock-Up
Agreement
|
Recitals | |
Mergers | Recitals | |
Merger Consideration | Section 2.2 | |
Merger Sub I | Preamble | |
Merger Sub II | Preamble | |
Merger Subs | Preamble | |
Milestones | Section 2.10(c) |
Term
|
Section
|
|
Nonparty Affiliates | Section 9.17 | |
Outside Date | Section 8.1(e) | |
Parent | Preamble | |
Parent Board Recommendation | Section 5.11 | |
Parent Closing Certificate | Section 6.2(c) | |
Parent Closing Statement | Section 2.1(a) | |
Parent Competing Transaction | Section 5.18(b) | |
Parent Disclosure Schedule | Article IV | |
Parent Material Contracts | Section 4.21 | |
Parent Public Securities | Section 4.14 | |
Parent RSU | Section 2.8 | |
Parent SEC Document | Section 4.12 | |
Parent Shareholder Meeting | Section 5.11 | |
Parent Transaction Expenses | Section 9.1 | |
Parties | Preamble | |
Party | Preamble | |
PCAOB Financial Statements | Section 5.10(f) | |
Previously Paid Company Transaction Expenses | Section 7.2(j) | |
Privileged Communications | Section 9.21 | |
Prospectus | Section 9.20 | |
Registration Rights Agreement | Recitals | |
Restrictive Covenant Agreements | Recitals | |
Schedules | Article III | |
SEC Accounting Guidance | Article IV | |
Second Certificate of Merger | Section 1.2(c) | |
Second Effective Time | Section 1.2 | |
Second Merger | Recitals | |
Section 16 | Section 5.12 | |
Separate Indemnitor | Section 5.9(g) | |
Signing Form
8-K
|
Section 5.10(a) | |
Signing Press Release | Section 5.10(a) | |
Sponsor Agreement | Recitals | |
Sponsor Parties | Recitals | |
Subscription Agreements | Recitals | |
Surviving Company | Recitals | |
Surviving Company Governing Documents | Section 1.4 | |
Surviving Corporation | Recitals | |
Terminating Company Breach | Section 8.1(c) | |
Terminating Parent Breach | Section 8.1(d) | |
Trade Control Laws | Section 3.18(a) | |
Trust Account | Section 4.17 | |
Trust Amount | Section 4.17 | |
Unaudited Financial Statements | Section 3.6(a)(i) | |
Waiving Parties | Section 9.21 | |
Waiving Party Group | Section 9.21 | |
Warrant Agreement Amendments | Section 9.21 5.25 | |
WARN Act | Section 3.17(c) |
1 |
The name of the Company is
Leo Holdings III Corp
|
2 |
The Registered Office of the Company shall be at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman,
KY1-1104,
Cayman Islands, or at such other place within the Cayman Islands as the Directors may decide.
|
3 |
The objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by the laws of the Cayman Islands.
|
4 |
The liability of each Member is limited to the amount unpaid on such Member’s shares.
|
5 |
The share capital of the Company is US$55,500 divided into 500,000,000 Class A ordinary shares of a par value of US$0.0001 each, 50,000,000 Class B ordinary shares of a par value of US$0.0001 each and 5,000,000 preference shares of a par value of US$0.0001 each.
|
6 |
The Company has power to register by way of continuation as a body corporate limited by shares under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.
|
7 |
Capitalised terms that are not defined in this Memorandum of Association bear the respective meanings given to them in the Articles of Association of the Company.
|
Signature and Address of Subscriber
|
Number of Shares Taken
|
|
Maples Corporate Services Limited
of PO Box 309, Ugland House
Grand Cayman
KY1-1104
Cayman Islands
acting by:
/s/ Ruth Grizzel
Ruth Grizzel
/s/ Jessica Bent
Jessica Bent
Witness to the above signature
|
One Class B Ordinary Share |
1
|
Interpretation
|
1.1 |
In the Articles Table A in the First Schedule to the Statute does not apply and, unless there is something in the subject or context inconsistent therewith:
|
“Articles”
|
means these articles of association of the Company. | |
“Auditor”
|
means the person for the time being performing the duties of auditor of the Company (if any). | |
“Business Combination”
|
means a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganisation or similar business combination involving the Company, with one or more businesses or entities (the “
target business
|
|
“Class A Share”
|
means a Class A ordinary share of a par value of US$0.0001 in the share capital of the Company. | |
“Class B Share”
|
means a Class B ordinary share of a par value of US$0.0001 in the share capital of the Company. | |
“Company”
|
means the above named company. | |
“Directors”
|
means the directors for the time being of the Company. | |
“Dividend”
|
means any dividend (whether interim or final) resolved to be paid on Shares pursuant to the Articles. | |
“Electronic Record”
|
has the same meaning as in the Electronic Transactions Act. | |
“Electronic Transactions Act”
|
means the Electronic Transactions Act (2003 Revision) of the Cayman Islands. | |
“Equity-linked Securities”
|
means any debt or equity securities that are convertible, exercisable or exchangeable for Class A Shares issued in a financing transaction in connection with a Business Combination, including but not limited to a private placement of equity or debt. |
“IPO”
|
means the Company’s initial public offering of securities. | |
“Member”
|
has the same meaning as in the Statute. | |
“Memorandum”
|
means the memorandum of association of the Company. | |
“Ordinary Resolution”
|
means a resolution passed by a simple majority of the Members as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting, and includes a unanimous written resolution. In computing the majority when a poll is demanded regard shall be had to the number of votes to which each Member is entitled by the Articles. | |
“Preference Share”
|
means a preference share of a par value of US$0.0001 in the share capital of the Company. | |
“Register of Members”
|
means the register of Members maintained in accordance with the Statute and includes (except where otherwise stated) any branch or duplicate register of Members. | |
“Registered Office”
|
means the registered office for the time being of the Company. | |
“Seal”
|
means the common seal of the Company and includes every duplicate seal. | |
“Share”
|
means a Class A Share, a Class B Share or a Preference Share and includes a fraction of a share in the Company. | |
“Special Resolution”
|
has the same meaning as in the Statute, and includes a unanimous written resolution. | |
“Statute”
|
means the Companies Act (2020 Revision) of the Cayman Islands. | |
“Subscriber”
|
means the subscriber to the Memorandum. | |
“Treasury Share”
|
means a Share held in the name of the Company as a treasury share in accordance with the Statute. | |
“Trust Account”
|
means the trust account established by the Company upon the consummation of its IPO and into which a certain amount of the net proceeds of the IPO, together with a certain amount of the proceeds of a private placement of warrants simultaneously with the closing date of the IPO, will be deposited. |
1.2 |
In the Articles:
|
(a) |
words importing the singular number include the plural number and vice versa;
|
(b) |
words importing the masculine gender include the feminine gender;
|
(c) |
words importing persons include corporations as well as any other legal or natural person;
|
(d) |
“written” and “in writing” include all modes of representing or reproducing words in visible form, including in the form of an Electronic Record;
|
(e) |
“shall” shall be construed as imperative and “may” shall be construed as permissive;
|
(f) |
references to provisions of any law or regulation shall be construed as references to those provisions as amended, modified,
re-enacted
or replaced;
|
(g) |
any phrase introduced by the terms “including”, “include”, “in particular” or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms;
|
(h) |
the term “and/or” is used herein to mean both “and” as well as “or.” The use of “and/or” in certain contexts in no respects qualifies or modifies the use of the terms “and” or “or” in others. The term “or” shall not be interpreted to be exclusive and the term “and” shall not be interpreted to require the conjunctive (in each case, unless the context otherwise requires);
|
(i) |
headings are inserted for reference only and shall be ignored in construing the Articles;
|
(j) |
any requirements as to delivery under the Articles include delivery in the form of an Electronic Record;
|
(k) |
any requirements as to execution or signature under the Articles including the execution of the Articles themselves can be satisfied in the form of an electronic signature as defined in the Electronic Transactions Act;
|
(l) |
sections 8 and 19(3) of the Electronic Transactions Act shall not apply;
|
(m) |
the term “clear days” in relation to the period of a notice means that period excluding the day when the notice is received or deemed to be received and the day for which it is given or on which it is to take effect; and
|
(n) |
the term “holder” in relation to a Share means a person whose name is entered in the Register of Members as the holder of such Share.
|
2
|
Commencement of Business
|
2.1 |
The business of the Company may be commenced as soon after incorporation of the Company as the Directors shall see fit.
|
2.2 |
The Directors may pay, out of the capital or any other monies of the Company, all expenses incurred in or about the formation and establishment of the Company, including the expenses of registration.
|
3
|
Issue of Shares and other Securities
|
3.1 |
Subject to the provisions, if any, in the Memorandum (and to any direction that may be given by the Company in general meeting) and without prejudice to any rights attached to any existing Shares, the Directors may allot, issue, grant options over or otherwise dispose of Shares (including fractions of a Share) with or without preferred, deferred or other rights or restrictions, whether in regard to Dividend or other distribution, voting, return of capital or otherwise and to such persons, at such times and on such other terms as they think proper, and may also (subject to the Statute and the Articles) vary such rights, save that the Directors shall not allot, issue, grant options over or otherwise dispose of Shares (including fractions of a Share) to the extent that it may affect the ability of the Company to carry out a Class B Share Conversion set out in the Articles.
|
3.2 |
The Company may issue rights, options, warrants or convertible securities or securities of similar nature conferring the right upon the holders thereof to subscribe for, purchase or receive any class of Shares or other securities in the Company on such terms as the Directors may from time to time determine.
|
3.3 |
The Company may issue units of securities in the Company, which may be comprised of whole or fractional Shares, rights, options, warrants or convertible securities or securities of similar nature conferring the right upon the holders thereof to subscribe for, purchase or receive any class of Shares or other securities in the Company, upon such terms as the Directors may from time to time determine.
|
3.4 |
The Company shall not issue Shares to bearer.
|
4
|
Register of Members
|
4.1 |
The Company shall maintain or cause to be maintained the Register of Members in accordance with the Statute.
|
4.2 |
The Directors may determine that the Company shall maintain one or more branch registers of Members in accordance with the Statute. The Directors may also determine which register of Members shall constitute the principal register and which shall constitute the branch register or registers, and to vary such determination from time to time.
|
5
|
Closing Register of Members or Fixing Record Date
|
5.1 |
For the purpose of determining Members entitled to notice of, or to vote at any meeting of Members or any adjournment thereof, or Members entitled to receive payment of any Dividend or other distribution, or in order to make a determination of Members for any other purpose, the Directors may provide that the Register of Members shall be closed for transfers for a stated period which shall not in any case exceed forty days.
|
5.2 |
In lieu of, or apart from, closing the Register of Members, the Directors may fix in advance or arrears a date as the record date for any such determination of Members entitled to notice of, or to vote at any meeting of the Members or any adjournment thereof, or for the purpose of determining the Members entitled to receive payment of any Dividend or other distribution, or in order to make a determination of Members for any other purpose.
|
5.3 |
If the Register of Members is not so closed and no record date is fixed for the determination of Members entitled to notice of, or to vote at, a meeting of Members or Members entitled to receive payment of a Dividend or other distribution, the date on which notice of the meeting is sent or the date on which the resolution of the Directors resolving to pay such Dividend or other distribution is passed, as the case may be, shall be the record date for such determination of Members. When a determination of Members entitled to vote at any meeting of Members has been made as provided in this Article, such determination shall apply to any adjournment thereof.
|
6
|
Certificates for Shares
|
6.1 |
A Member shall only be entitled to a share certificate if the Directors resolve that share certificates shall be issued. Share certificates representing Shares, if any, shall be in such form as the Directors may determine. Share certificates shall be signed by one or more Directors or other person authorised by the Directors. The Directors may authorise certificates to be issued with the authorised signature(s) affixed by mechanical process. All certificates for Shares shall be consecutively numbered or otherwise identified and shall specify the Shares to which they relate. All certificates surrendered to the Company for transfer shall be cancelled and subject to the Articles no new certificate shall be issued until the former certificate representing a like number of relevant Shares shall have been surrendered and cancelled.
|
6.2 |
The Company shall not be bound to issue more than one certificate for Shares held jointly by more than one person and delivery of a certificate to one joint holder shall be a sufficient delivery to all of them.
|
6.3 |
If a share certificate is defaced, worn out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and indemnity and on the payment of such expenses reasonably incurred by the Company in
|
investigating evidence, as the Directors may prescribe, and (in the case of defacement or wearing out) upon delivery of the old certificate. |
6.4 |
Every share certificate sent in accordance with the Articles will be sent at the risk of the Member or other person entitled to the certificate. The Company will not be responsible for any share certificate lost or delayed in the course of delivery.
|
7
|
Transfer of Shares
|
7.1 |
Subject to Article 3.1, Shares are transferable subject to the approval of the Directors by resolution who may, in their absolute discretion, decline to register any transfer of Shares without giving any reason. If the Directors refuse to register a transfer they shall notify the transferee within two months of such refusal.
|
7.2 |
The instrument of transfer of any Share shall be in writing and shall be executed by or on behalf of the transferor (and if the Directors so require, signed by or on behalf of the transferee). The transferor shall be deemed to remain the holder of a Share until the name of the transferee is entered in the Register of Members.
|
8
|
Redemption, Repurchase and Surrender of Shares
|
8.1 |
Subject to the provisions of the Statute the Company may issue Shares that are to be redeemed or are liable to be redeemed at the option of the Member or the Company. The redemption of such Shares shall be effected in such manner and upon such other terms as the Company may, by Special Resolution, determine before the issue of the Shares.
|
8.2 |
Subject to the provisions of the Statute, the Company may purchase its own Shares (including any redeemable Shares) in such manner and on such other terms as the Directors may agree with the relevant Member.
|
8.3 |
The Company may make a payment in respect of the redemption or purchase of its own Shares in any manner permitted by the Statute, including out of capital.
|
8.4 |
The Directors may accept the surrender for no consideration of any fully paid Share.
|
9
|
Treasury Shares
|
9.1 |
The Directors may, prior to the purchase, redemption or surrender of any Share, determine that such Share shall be held as a Treasury Share.
|
9.2 |
The Directors may determine to cancel a Treasury Share or transfer a Treasury Share on such terms as they think proper (including, without limitation, for nil consideration).
|
10
|
Variation of Rights of Shares
|
10.1 |
If at any time the share capital of the Company is divided into different classes of Shares, all or any of the rights attached to any class (unless otherwise provided by the terms of issue of the Shares of that class) may, whether or not the Company is being wound up, be varied without the consent of the holders of the issued Shares of that class where such variation is considered by the Directors not to have a material adverse effect upon such rights; otherwise, any such variation shall be made only with the consent in writing of the holders of not less than two thirds of the issued Shares of that class, or with the approval of a resolution passed by a majority of not less than two thirds of the votes cast at a separate meeting of the holders of the Shares of that class. For the avoidance of doubt, the Directors reserve the right, notwithstanding that any such variation may not have a material adverse effect, to obtain consent from the holders of Shares of the relevant class. To any such meeting all the provisions of the Articles relating to
|
general meetings shall apply
mutatis mutandis
|
10.2 |
For the purposes of a separate class meeting, the Directors may treat two or more or all the classes of Shares as forming one class of Shares if the Directors consider that such class of Shares would be affected in the same way by the proposals under consideration, but in any other case shall treat them as separate classes of Shares.
|
10.3 |
The rights conferred upon the holders of the Shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the Shares of that class, be deemed to be varied by the creation or issue of further Shares ranking pari passu therewith.
|
11
|
Commission on Sale of Shares
|
12
|
Non Recognition of Trusts
|
13
|
Lien on Shares
|
13.1 |
The Company shall have a first and paramount lien on all Shares (whether fully
paid-up
or not) registered in the name of a Member (whether solely or jointly with others) for all debts, liabilities or engagements to or with the Company (whether presently payable or not) by such Member or his estate, either alone or jointly with any other person, whether a Member or not, but the Directors may at any time declare any Share to be wholly or in part exempt from the provisions of this Article. The registration of a transfer of any such Share shall operate as a waiver of the Company’s lien thereon. The Company’s lien on a Share shall also extend to any amount payable in respect of that Share.
|
13.2 |
The Company may sell, in such manner as the Directors think fit, any Shares on which the Company has a lien, if a sum in respect of which the lien exists is presently payable, and is not paid within fourteen clear days after notice has been received or deemed to have been received by the holder of the Shares, or to the person entitled to it in consequence of the death or bankruptcy of the holder, demanding payment and stating that if the notice is not complied with the Shares may be sold.
|
13.3 |
To give effect to any such sale the Directors may authorise any person to execute an instrument of transfer of the Shares sold to, or in accordance with the directions of, the purchaser. The purchaser or his nominee shall be registered as the holder of the Shares comprised in any such transfer, and he shall not be bound to see to the application of the purchase money, nor shall his title to the Shares be affected by any irregularity or invalidity in the sale or the exercise of the Company’s power of sale under the Articles.
|
13.4 |
The net proceeds of such sale after payment of costs, shall be applied in payment of such part of the amount in respect of which the lien exists as is presently payable and any balance shall (subject to a like lien for sums not presently payable as existed upon the Shares before the sale) be paid to the person entitled to the Shares at the date of the sale.
|
14
|
Call on Shares
|
14.1 |
Subject to the terms of the allotment and issue of any Shares, the Directors may make calls upon the Members in respect of any monies unpaid on their Shares (whether in respect of par value or premium), and each Member shall (subject to receiving at least fourteen clear days’ notice specifying the time or times of payment) pay to the Company at the time or times so specified the amount called on the Shares. A call may be revoked or postponed, in whole or in part, as the Directors may determine. A call may be required to be paid by instalments. A person upon whom a call is made shall remain liable for calls made upon him notwithstanding the subsequent transfer of the Shares in respect of which the call was made.
|
14.2 |
A call shall be deemed to have been made at the time when the resolution of the Directors authorising such call was passed.
|
14.3 |
The joint holders of a Share shall be jointly and severally liable to pay all calls in respect thereof.
|
14.4 |
If a call remains unpaid after it has become due and payable, the person from whom it is due shall pay interest on the amount unpaid from the day it became due and payable until it is paid at such rate as the Directors may determine (and in addition all expenses that have been incurred by the Company by reason of such
non-payment),
but the Directors may waive payment of the interest or expenses wholly or in part.
|
14.5 |
An amount payable in respect of a Share on issue or allotment or at any fixed date, whether on account of the par value of the Share or premium or otherwise, shall be deemed to be a call and if it is not paid all the provisions of the Articles shall apply as if that amount had become due and payable by virtue of a call.
|
14.6 |
The Directors may issue Shares with different terms as to the amount and times of payment of calls, or the interest to be paid.
|
14.7 |
The Directors may, if they think fit, receive an amount from any Member willing to advance all or any part of the monies uncalled and unpaid upon any Shares held by him, and may (until the amount would otherwise become payable) pay interest at such rate as may be agreed upon between the Directors and the Member paying such amount in advance.
|
14.8 |
No such amount paid in advance of calls shall entitle the Member paying such amount to any portion of a Dividend or other distribution payable in respect of any period prior to the date upon which such amount would, but for such payment, become payable.
|
15
|
Forfeiture of Shares
|
15.1 |
If a call or instalment of a call remains unpaid after it has become due and payable the Directors may give to the person from whom it is due not less than fourteen clear days’ notice requiring payment of the amount unpaid together with any interest which may have accrued and any expenses incurred by the Company by reason of such
non-payment.
The notice shall specify where payment is to be made and shall state that if the notice is not complied with the Shares in respect of which the call was made will be liable to be forfeited.
|
15.2 |
If the notice is not complied with, any Share in respect of which it was given may, before the payment required by the notice has been made, be forfeited by a resolution of the Directors. Such forfeiture shall include all Dividends, other distributions or other monies payable in respect of the forfeited Share and not paid before the forfeiture.
|
15.3 |
A forfeited Share may be sold,
re-allotted
or otherwise disposed of on such terms and in such manner as the Directors think fit and at any time before a sale,
re-allotment
or disposition the forfeiture may be cancelled on such terms as the Directors think fit. Where for the purposes of its disposal a forfeited Share is to be transferred to any person the Directors may authorise some person to execute an instrument of transfer of the Share in favour of that person.
|
15.4 |
A person any of whose Shares have been forfeited shall cease to be a Member in respect of them and shall surrender to the Company for cancellation the certificate for the Shares forfeited and shall remain liable to
|
pay to the Company all monies which at the date of forfeiture were payable by him to the Company in respect of those Shares together with interest at such rate as the Directors may determine, but his liability shall cease if and when the Company shall have received payment in full of all monies due and payable by him in respect of those Shares. |
15.5 |
A certificate in writing under the hand of one Director or officer of the Company that a Share has been forfeited on a specified date shall be conclusive evidence of the facts stated in it as against all persons claiming to be entitled to the Share. The certificate shall (subject to the execution of an instrument of transfer) constitute a good title to the Share and the person to whom the Share is sold or otherwise disposed of shall not be bound to see to the application of the purchase money, if any, nor shall his title to the Share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the Share.
|
15.6 |
The provisions of the Articles as to forfeiture shall apply in the case of non payment of any sum which, by the terms of issue of a Share, becomes payable at a fixed time, whether on account of the par value of the Share or by way of premium as if it had been payable by virtue of a call duly made and notified.
|
16
|
Transmission of Shares
|
16.1 |
If a Member dies the survivor or survivors (where he was a joint holder) or his legal personal representatives (where he was a sole holder), shall be the only persons recognised by the Company as having any title to his Shares. The estate of a deceased Member is not thereby released from any liability in respect of any Share, for which he was a joint or sole holder.
|
16.2 |
Any person becoming entitled to a Share in consequence of the death or bankruptcy or liquidation or dissolution of a Member (or in any other way than by transfer) may, upon such evidence being produced as may be required by the Directors, elect, by a notice in writing sent by him to the Company, either to become the holder of such Share or to have some person nominated by him registered as the holder of such Share. If he elects to have another person registered as the holder of such Share he shall sign an instrument of transfer of that Share to that person. The Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the relevant Member before his death or bankruptcy or liquidation or dissolution, as the case may be.
|
16.3 |
A person becoming entitled to a Share by reason of the death or bankruptcy or liquidation or dissolution of a Member (or in any other case than by transfer) shall be entitled to the same Dividends, other distributions and other advantages to which he would be entitled if he were the holder of such Share. However, he shall not, before becoming a Member in respect of a Share, be entitled in respect of it to exercise any right conferred by membership in relation to general meetings of the Company and the Directors may at any time give notice requiring any such person to elect either to be registered himself or to have some person nominated by him be registered as the holder of the Share (but the Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by the relevant Member before his death or bankruptcy or liquidation or dissolution or any other case than by transfer, as the case may be). If the notice is not complied with within ninety days of being received or deemed to be received (as determined pursuant to the Articles) the Directors may thereafter withhold payment of all Dividends, other distributions, bonuses or other monies payable in respect of the Share until the requirements of the notice have been complied with.
|
17
|
Class B Ordinary Share Conversion
|
17.1 |
The rights attaching to all Shares shall rank
pari passu
|
17.2 |
Class B Shares shall automatically convert into Class A Shares on a
one-for-one
Initial Conversion Ratio
|
17.3 |
Notwithstanding the Initial Conversion Ratio, in the case that additional Class A Shares or any other Equity-linked Securities, are issued or deemed issued in excess of the amounts offered in the IPO and related to the closing of a Business Combination, all Class B Shares in issue shall automatically convert into Class A Shares at the time of the closing of a Business Combination at a ratio for which the Class B Shares shall convert into Class A Shares will be adjusted (unless the holders of a majority of the Class B Shares in issue agree to waive such anti-dilution adjustment with respect to any such issuance or deemed issuance) so that the number of Class A Shares issuable upon conversion of all Class B Shares will equal, in the aggregate, 20 per cent of the sum of all Class A Shares and Class B Shares in issue upon completion of the IPO plus all Class A Shares and Equity-linked Securities issued or deemed issued in connection with a Business Combination, excluding any Shares or Equity-linked Securities issued, or to be issued, to any seller in a Business Combination.
|
17.4 |
Notwithstanding anything to the contrary contained herein, the foregoing adjustment to the Initial Conversion Ratio may be waived as to any particular issuance or deemed issuance of additional Class A Shares or Equity-linked Securities by the written consent or agreement of holders of a majority of the Class B Shares then in issue consenting or agreeing separately as a separate class in the manner provided in the Variation of Rights of Shares Article hereof.
|
17.5 |
The foregoing conversion ratio shall also be adjusted to account for any subdivision (by share split, subdivision, exchange, capitalisation, rights issue, reclassification, recapitalisation or otherwise) or combination (by reverse share split, share consolidation, exchange, reclassification, recapitalisation or otherwise) or similar reclassification or recapitalisation of the Class A Shares in issue into a greater or lesser number of shares occurring after the original filing of the Articles without a proportionate and corresponding subdivision, combination or similar reclassification or recapitalisation of the Class B Shares in issue.
|
17.6 |
Each Class B Share shall convert into its pro rata number of Class A Shares pursuant to this Article. The pro rata share for each holder of Class B Shares will be determined as follows: each Class B Share shall convert into such number of Class A Shares as is equal to the product of 1 multiplied by a fraction, the numerator of which shall be the total number of Class A Shares into which all of the Class B Shares in issue shall be converted pursuant to this Article and the denominator of which shall be the total number of Class B Shares in issue at the time of conversion.
|
17.7 |
References in this Article to “
converted
conversion
exchange
|
17.8 |
Notwithstanding anything to the contrary in this Article, in no event may any Class B Share convert into Class A Shares at a ratio that is less than
one-for-one.
|
18
|
Amendments of Memorandum and Articles of Association and Alteration of Capital
|
18.1 |
The Company may by Ordinary Resolution:
|
(a) |
increase its share capital by such sum as the Ordinary Resolution shall prescribe and with such rights, priorities and privileges annexed thereto, as the Company in general meeting may determine;
|
(b) |
consolidate and divide all or any of its share capital into Shares of larger amount than its existing Shares;
|
(c) |
convert all or any of its
paid-up
Shares into stock, and reconvert that stock into
paid-up
Shares of any denomination;
|
(d) |
by subdivision of its existing Shares or any of them divide the whole or any part of its share capital into Shares of smaller amount than is fixed by the Memorandum or into Shares without par value; and
|
(e) |
cancel any Shares that at the date of the passing of the Ordinary Resolution have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the Shares so cancelled.
|
18.2 |
All new Shares created in accordance with the provisions of the preceding Article shall be subject to the same provisions of the Articles with reference to the payment of calls, liens, transfer, transmission, forfeiture and otherwise as the Shares in the original share capital.
|
18.3 |
Subject to the provisions of the Statute and the provisions of the Articles as regards the matters to be dealt with by Ordinary Resolution, the Company may by Special Resolution:
|
(a) |
change its name;
|
(b) |
alter or add to the Articles;
|
(c) |
alter or add to the Memorandum with respect to any objects, powers or other matters specified therein; and
|
(d) |
reduce its share capital or any capital redemption reserve fund.
|
19
|
Offices and Places of Business
|
20
|
General Meetings
|
20.1 |
All general meetings other than annual general meetings shall be called extraordinary general meetings.
|
20.2 |
The Company may, but shall not (unless required by the Statute) be obliged to, in each year hold a general meeting as its annual general meeting, and shall specify the meeting as such in the notices calling it. Any annual general meeting shall be held at such time and place as the Directors shall appoint and if no other time and place is prescribed by them, it shall be held at the Registered Office on the second Wednesday in December of each year at ten o’clock in the morning. At these meetings the report of the Directors (if any) shall be presented.
|
20.3 |
The Directors may call general meetings, and they shall on a Members’ requisition forthwith proceed to convene an extraordinary general meeting of the Company.
|
20.4 |
A Members’ requisition is a requisition of Members holding at the date of deposit of the requisition not less than ten per cent. in par value of the issued Shares which as at that date carry the right to vote at general meetings of the Company.
|
20.5 |
The Members’ requisition must state the objects of the meeting and must be signed by the requisitionists and deposited at the Registered Office, and may consist of several documents in like form each signed by one or more requisitionists.
|
20.6 |
If there are no Directors as at the date of the deposit of the Members’ requisition or if the Directors do not within
twenty-one
days from the date of the deposit of the Members’ requisition duly proceed to convene a general meeting to be held within a further
twenty-one
days, the requisitionists, or any of them representing more than
one-half
of the total voting rights of all of the requisitionists, may themselves convene a general meeting, but any meeting so convened shall be held no later than the day which falls three months after the expiration of the said
twenty-one
day period.
|
20.7 |
A general meeting convened as aforesaid by requisitionists shall be convened in the same manner as nearly as possible as that in which general meetings are to be convened by Directors.
|
21
|
Notice of General Meetings
|
21.1 |
At least five clear days’ notice shall be given of any general meeting. Every notice shall specify the place, the day and the hour of the meeting and the general nature of the business to be conducted at the general meeting and shall be given in the manner hereinafter mentioned or in such other manner if any as may be prescribed by the Company, provided that a general meeting of the Company shall, whether or not the notice specified in this Article has been given and whether or not the provisions of the Articles regarding general meetings have been complied with, be deemed to have been duly convened if it is so agreed:
|
(a) |
in the case of an annual general meeting, by all of the Members entitled to attend and vote thereat; and
|
(b) |
in the case of an extraordinary general meeting, by a majority in number of the Members having a right to attend and vote at the meeting, together holding not less than ninety five per cent. in par value of the Shares giving that right.
|
21.2 |
The accidental omission to give notice of a general meeting to, or the non receipt of notice of a general meeting by, any person entitled to receive such notice shall not invalidate the proceedings of that general meeting.
|
22
|
Proceedings at General Meetings
|
22.1 |
No business shall be transacted at any general meeting unless a quorum is present. Two Members being individuals present in person or by proxy or if a corporation or other
non-natural
person by its duly authorised representative or proxy shall be a quorum unless the Company has only one Member entitled to vote at such general meeting in which case the quorum shall be that one Member present in person or by proxy or (in the case of a corporation or other
non-natural
person) by its duly authorised representative or proxy.
|
22.2 |
A person may participate at a general meeting by conference telephone or other communications equipment by means of which all the persons participating in the meeting can communicate with each other. Participation by a person in a general meeting in this manner is treated as presence in person at that meeting.
|
22.3 |
A resolution (including a Special Resolution) in writing (in one or more counterparts) signed by or on behalf of all of the Members for the time being entitled to receive notice of and to attend and vote at general meetings (or, being corporations or other
non-natural
persons, signed by their duly authorised representatives) shall be as valid and effective as if the resolution had been passed at a general meeting of the Company duly convened and held.
|
22.4 |
If a quorum is not present within half an hour from the time appointed for the meeting to commence or if during such a meeting a quorum ceases to be present, the meeting, if convened upon a Members’ requisition, shall be dissolved and in any other case it shall stand adjourned to the same day in the next week at the same time and/or place or to such other day, time and/or place as the Directors may determine, and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting to commence, the Members present shall be a quorum.
|
22.5 |
The Directors may, at any time prior to the time appointed for the meeting to commence, appoint any person to act as chairman of a general meeting of the Company or, if the Directors do not make any such appointment, the chairman, if any, of the board of Directors shall preside as chairman at such general meeting. If there is no such chairman, or if he shall not be present within fifteen minutes after the time appointed for the meeting to commence, or is unwilling to act, the Directors present shall elect one of their number to be chairman of the meeting.
|
22.6 |
If no Director is willing to act as chairman or if no Director is present within fifteen minutes after the time appointed for the meeting to commence, the Members present shall choose one of their number to be chairman of the meeting.
|
22.7 |
The chairman may, with the consent of a meeting at which a quorum is present (and shall if so directed by the meeting) adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.
|
22.8 |
When a general meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Otherwise it shall not be necessary to give any such notice of an adjourned meeting.
|
22.9 |
A resolution put to the vote of the meeting shall be decided on a show of hands unless before, or on the declaration of the result of, the show of hands, the chairman demands a poll, or any other Member or Members collectively present in person or by proxy (or in the case of a corporation or other
non-natural
person, by its duly authorised representative or proxy) and holding at least ten per cent. in par value of the Shares giving a right to attend and vote at the meeting demand a poll.
|
22.10 |
Unless a poll is duly demanded and the demand is not withdrawn a declaration by the chairman that a resolution has been carried or carried unanimously, or by a particular majority, or lost or not carried by a particular majority, an entry to that effect in the minutes of the proceedings of the meeting shall be conclusive evidence of that fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.
|
22.11 |
The demand for a poll may be withdrawn.
|
22.12 |
Except on a poll demanded on the election of a chairman or on a question of adjournment, a poll shall be taken as the chairman directs, and the result of the poll shall be deemed to be the resolution of the general meeting at which the poll was demanded.
|
22.13 |
A poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such date, time and place as the chairman of the general meeting directs, and any business other than that upon which a poll has been demanded or is contingent thereon may proceed pending the taking of the poll.
|
22.14 |
In the case of an equality of votes, whether on a show of hands or on a poll, the chairman shall be entitled to a second or casting vote.
|
23
|
Votes of Members
|
23.1 |
Subject to any rights or restrictions attached to any Shares, on a show of hands every Member who (being an individual) is present in person or by proxy or, if a corporation or other
non-natural
person is present by its duly authorised representative or by proxy, shall have one vote and on a poll every Member present in any such manner shall have one vote for every Share of which he is the holder.
|
23.2 |
In the case of joint holders the vote of the senior holder who tenders a vote, whether in person or by proxy (or, in the case of a corporation or other
non-natural
person, by its duly authorised representative or proxy), shall be accepted to the exclusion of the votes of the other joint holders, and seniority shall be determined by the order in which the names of the holders stand in the Register of Members.
|
23.3 |
A Member of unsound mind, or in respect of whom an order has been made by any court, having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee, receiver, curator bonis, or other person on such Member’s behalf appointed by that court, and any such committee, receiver, curator bonis or other person may vote by proxy.
|
23.4 |
No person shall be entitled to vote at any general meeting unless he is registered as a Member on the record date for such meeting nor unless all calls or other monies then payable by him in respect of Shares have been paid.
|
23.5 |
No objection shall be raised as to the qualification of any voter except at the general meeting or adjourned general meeting at which the vote objected to is given or tendered and every vote not disallowed at the meeting shall be valid. Any objection made in due time in accordance with this Article shall be referred to the chairman whose decision shall be final and conclusive.
|
23.6 |
On a poll or on a show of hands votes may be cast either personally or by proxy (or in the case of a corporation or other
non-natural
person by its duly authorised representative or proxy). A Member may appoint more than one proxy or the same proxy under one or more instruments to attend and vote at a meeting. Where a Member appoints more than one proxy the instrument of proxy shall state which proxy is entitled to vote on a show of hands and shall specify the number of Shares in respect of which each proxy is entitled to exercise the related votes.
|
23.7 |
On a poll, a Member holding more than one Share need not cast the votes in respect of his Shares in the same way on any resolution and therefore may vote a Share or some or all such Shares either for or against a resolution and/or abstain from voting a Share or some or all of the Shares and, subject to the terms of the instrument appointing him, a proxy appointed under one or more instruments may vote a Share or some or all of the Shares in respect of which he is appointed either for or against a resolution and/or abstain from voting a Share or some or all of the Shares in respect of which he is appointed.
|
24
|
Proxies
|
24.1 |
The instrument appointing a proxy shall be in writing and shall be executed under the hand of the appointor or of his attorney duly authorised in writing, or, if the appointor is a corporation or other non natural person, under the hand of its duly authorised representative. A proxy need not be a Member.
|
24.2 |
The Directors may, in the notice convening any meeting or adjourned meeting, or in an instrument of proxy sent out by the Company, specify the manner by which the instrument appointing a proxy shall be deposited and the place and the time (being not later than the time appointed for the commencement of the meeting or adjourned meeting to which the proxy relates) at which the instrument appointing a proxy shall be deposited. In the absence of any such direction from the Directors in the notice convening any meeting or adjourned meeting or in an instrument of proxy sent out by the Company, the instrument appointing a proxy shall be deposited physically at the Registered Office not less than 48 hours before the time appointed for the meeting or adjourned meeting to commence at which the person named in the instrument proposes to vote.
|
24.3 |
The chairman may in any event at his discretion declare that an instrument of proxy shall be deemed to have been duly deposited. An instrument of proxy that is not deposited in the manner permitted, or which has not been declared to have been duly deposited by the chairman, shall be invalid.
|
24.4 |
The instrument appointing a proxy may be in any usual or common form (or such other form as the Directors may approve) and may be expressed to be for a particular meeting or any adjournment thereof or generally until revoked. An instrument appointing a proxy shall be deemed to include the power to demand or join or concur in demanding a poll.
|
24.5 |
Votes given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the Share in respect of which the proxy is given unless notice in writing of such death, insanity, revocation or transfer was received by the Company at the Registered Office before the commencement of the general meeting, or adjourned meeting at which it is sought to use the proxy.
|
25
|
Corporate Members
|
26
|
Shares that May Not be Voted
|
27
|
Directors
|
28
|
Powers of Directors
|
28.1 |
Subject to the provisions of the Statute, the Memorandum and the Articles and to any directions given by Special Resolution, the business of the Company shall be managed by the Directors who may exercise all the powers of the Company. No alteration of the Memorandum or Articles and no such direction shall invalidate any prior act of the Directors which would have been valid if that alteration had not been made or that direction had not been given. A duly convened meeting of Directors at which a quorum is present may exercise all powers exercisable by the Directors.
|
28.2 |
All cheques, promissory notes, drafts, bills of exchange and other negotiable or transferable instruments and all receipts for monies paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed as the case may be in such manner as the Directors shall determine by resolution.
|
28.3 |
The Directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any Director who has held any other salaried office or place of profit with the Company or to his widow or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.
|
28.4 |
The Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and assets (present and future) and uncalled capital or any part thereof and to issue debentures, debenture stock, mortgages, bonds and other such securities whether outright or as security for any debt, liability or obligation of the Company or of any third party.
|
29
|
Appointment and Removal of Directors
|
29.1 |
The Company may by Ordinary Resolution appoint any person to be a Director or may by Ordinary Resolution remove any Director.
|
29.2 |
The Directors may appoint any person to be a Director, either to fill a vacancy or as an additional Director provided that the appointment does not cause the number of Directors to exceed any number fixed by or in accordance with the Articles as the maximum number of Directors.
|
30
|
Vacation of Office of Director
|
(a) |
the Director gives notice in writing to the Company that he resigns the office of Director; or
|
(b) |
the Director absents himself (for the avoidance of doubt, without being represented by proxy or an alternate Director appointed by him) from three consecutive meetings of the board of Directors without special leave of absence from the Directors, and the Directors pass a resolution that he has by reason of such absence vacated office; or
|
(c) |
the Director dies, becomes bankrupt or makes any arrangement or composition with his creditors generally; or
|
(d) |
the Director is found to be or becomes of unsound mind; or
|
(e) |
all of the other Directors (being not less than two in number) determine that he should be removed as a Director, either by a resolution passed by all of the other Directors at a meeting of the Directors duly convened and held in accordance with the Articles or by a resolution in writing signed by all of the other Directors.
|
31
|
Proceedings of Directors
|
31.1 |
The quorum for the transaction of the business of the Directors may be fixed by the Directors, and unless so fixed shall be two if there are two or more Directors, and shall be one if there is only one Director. A person who holds office as an alternate Director shall, if his appointor is not present, be counted in the quorum. A Director who also acts as an alternate Director shall, if his appointor is not present, count twice towards the quorum.
|
31.2 |
Subject to the provisions of the Articles, the Directors may regulate their proceedings as they think fit. Questions arising at any meeting shall be decided by a majority of votes. In the case of an equality of votes, the chairman shall have a second or casting vote. A Director who is also an alternate Director shall be entitled in the absence of his appointor to a separate vote on behalf of his appointor in addition to his own vote.
|
31.3 |
A person may participate in a meeting of the Directors or any committee of Directors by conference telephone or other communications equipment by means of which all the persons participating in the meeting can communicate with each other at the same time. Participation by a person in a meeting in this manner is treated as presence in person at that meeting. Unless otherwise determined by the Directors the meeting shall be deemed to be held at the place where the chairman is located at the start of the meeting.
|
31.4 |
A resolution in writing (in one or more counterparts) signed by all the Directors or all the members of a committee of the Directors or, in the case of a resolution in writing relating to the removal of any Director or the vacation of office by any Director, all of the Directors other than the Director who is the subject of such resolution (an alternate Director being entitled to sign such a resolution on behalf of his appointor and if such alternate Director is also a Director, being entitled to sign such resolution both on behalf of his appointer and in his capacity as a Director) shall be as valid and effectual as if it had been passed at a meeting of the Directors, or committee of Directors as the case may be, duly convened and held.
|
31.5 |
A Director or alternate Director may, or other officer of the Company on the direction of a Director or alternate Director shall, call a meeting of the Directors by at least two days’ notice in writing to every Director and alternate Director which notice shall set forth the general nature of the business to be considered unless notice is waived by all the Directors (or their alternates) either at, before or after the meeting is held. To any such notice of a meeting of the Directors all the provisions of the Articles relating to the giving of notices by the Company to the Members shall apply
mutatis mutandis.
|
31.6 |
The continuing Directors (or a sole continuing Director, as the case may be) may act notwithstanding any vacancy in their body, but if and so long as their number is reduced below the number fixed by or pursuant to the Articles as the necessary quorum of Directors the continuing Directors or Director may act for the purpose of increasing the number of Directors to be equal to such fixed number, or of summoning a general meeting of the Company, but for no other purpose.
|
31.7 |
The Directors may elect a chairman of their board and determine the period for which he is to hold office; but if no such chairman is elected, or if at any meeting the chairman is not present within five minutes after the time appointed for the meeting to commence, the Directors present may choose one of their number to be chairman of the meeting.
|
31.8 |
All acts done by any meeting of the Directors or of a committee of the Directors (including any person acting as an alternate Director) shall, notwithstanding that it is afterwards discovered that there was some defect in the appointment of any Director or alternate Director, and/or that they or any of them were disqualified, and/or had vacated their office and/or were not entitled to vote, be as valid as if every such person had been duly appointed and/or not disqualified to be a Director or alternate Director and/or had not vacated their office and/or had been entitled to vote, as the case may be.
|
31.9 |
A Director but not an alternate Director may be represented at any meetings of the board of Directors by a proxy appointed in writing by him. The proxy shall count towards the quorum and the vote of the proxy shall for all purposes be deemed to be that of the appointing Director.
|
32
|
Presumption of Assent
|
33
|
Directors’ Interests
|
33.1 |
A Director or alternate Director may hold any other office or place of profit under the Company (other than the office of Auditor) in conjunction with his office of Director for such period and on such terms as to remuneration and otherwise as the Directors may determine.
|
33.2 |
A Director or alternate Director may act by himself or by, through or on behalf of his firm in a professional capacity for the Company and he or his firm shall be entitled to remuneration for professional services as if he were not a Director or alternate Director.
|
33.3 |
A Director or alternate Director may be or become a director or other officer of or otherwise interested in any company promoted by the Company or in which the Company may be interested as a shareholder, a contracting party or otherwise, and no such Director or alternate Director shall be accountable to the Company for any remuneration or other benefits received by him as a director or officer of, or from his interest in, such other company.
|
33.4 |
No person shall be disqualified from the office of Director or alternate Director or prevented by such office from contracting with the Company, either as vendor, purchaser or otherwise, nor shall any such contract or any contract or transaction entered into by or on behalf of the Company in which any Director or alternate Director shall be in any way interested be or be liable to be avoided, nor shall any Director or alternate Director so contracting or being so interested be liable to account to the Company for any profit realised by or arising in connection with any such contract or transaction by reason of such Director or alternate Director holding office or of the fiduciary relationship thereby established. A Director (or his alternate Director in his absence) shall be at liberty to vote in respect of any contract or transaction in which he is interested provided that the nature of the interest of any Director or alternate Director in any such contract or transaction shall be disclosed by him at or prior to its consideration and any vote thereon.
|
33.5 |
A general notice that a Director or alternate Director is a shareholder, director, officer or employee of any specified firm or company and is to be regarded as interested in any transaction with such firm or company shall be sufficient disclosure for the purposes of voting on a resolution in respect of a contract or transaction in which he has an interest, and after such general notice it shall not be necessary to give special notice relating to any particular transaction.
|
34
|
Minutes
|
35
|
Delegation of Directors’ Powers
|
35.1 |
The Directors may delegate any of their powers, authorities and discretions, including the power to
sub-delegate,
to any committee consisting of one or more Directors. They may also delegate to any managing director or any Director holding any other executive office such of their powers, authorities and discretions as they consider desirable to be exercised by him provided that an alternate Director may not act as managing director and the appointment of a managing director shall be revoked forthwith if he ceases to be a Director. Any such delegation may be made subject to any conditions the Directors may impose and either collaterally with or to the exclusion of their own powers and any such delegation may be revoked or altered by the Directors. Subject to any such conditions, the proceedings of a committee of Directors shall be governed by the Articles regulating the proceedings of Directors, so far as they are capable of applying.
|
35.2 |
The Directors may establish any committees, local boards or agencies or appoint any person to be a manager or agent for managing the affairs of the Company and may appoint any person to be a member of such committees, local boards or agencies. Any such appointment may be made subject to any conditions the Directors may impose, and either collaterally with or to the exclusion of their own powers and any such appointment may be revoked or altered by the Directors. Subject to any such conditions, the proceedings of any such committee, local board or agency shall be governed by the Articles regulating the proceedings of Directors, so far as they are capable of applying.
|
35.3 |
The Directors may by power of attorney or otherwise appoint any person to be the agent of the Company on such conditions as the Directors may determine, provided that the delegation is not to the exclusion of their own powers and may be revoked by the Directors at any time.
|
35.4 |
The Directors may by power of attorney or otherwise appoint any company, firm, person or body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or authorised signatory of the Company for such purpose and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under the Articles) and for such period and subject to such conditions as they may think fit, and any such powers of attorney or other appointment may contain such provisions for the protection and convenience of persons dealing with any such attorneys or authorised signatories as the Directors may think fit and may also authorise any such attorney or authorised signatory to delegate all or any of the powers, authorities and discretions vested in him.
|
35.5 |
The Directors may appoint such officers of the Company (including, for the avoidance of doubt and without limitation, any secretary) as they consider necessary on such terms, at such remuneration and to perform such duties, and subject to such provisions as to disqualification and removal as the Directors may think fit. Unless otherwise specified in the terms of his appointment an officer of the Company may be removed by resolution of the Directors or Members. An officer of the Company may vacate his office at any time if he gives notice in writing to the Company that he resigns his office.
|
36
|
Alternate Directors
|
36.1 |
Any Director (but not an alternate Director) may by writing appoint any other Director, or any other person willing to act, to be an alternate Director and by writing may remove from office an alternate Director so appointed by him.
|
36.2 |
An alternate Director shall be entitled to receive notice of all meetings of Directors and of all meetings of committees of Directors of which his appointor is a member, to attend and vote at every such meeting at
|
which the Director appointing him is not personally present, to sign any written resolution of the Directors, and generally to perform all the functions of his appointor as a Director in his absence. |
36.3 |
An alternate Director shall cease to be an alternate Director if his appointor ceases to be a Director.
|
36.4 |
Any appointment or removal of an alternate Director shall be by notice to the Company signed by the Director making or revoking the appointment or in any other manner approved by the Directors.
|
36.5 |
Subject to the provisions of the Articles, an alternate Director shall be deemed for all purposes to be a Director and shall alone be responsible for his own acts and defaults and shall not be deemed to be the agent of the Director appointing him.
|
37
|
No Minimum Shareholding
|
38
|
Remuneration of Directors
|
38.1 |
The remuneration to be paid to the Directors, if any, shall be such remuneration as the Directors shall determine. The Directors shall also be entitled to be paid all travelling, hotel and other expenses properly incurred by them in connection with their attendance at meetings of Directors or committees of Directors, or general meetings of the Company, or separate meetings of the holders of any class of Shares or debentures of the Company, or otherwise in connection with the business of the Company or the discharge of their duties as a Director, or to receive a fixed allowance in respect thereof as may be determined by the Directors, or a combination partly of one such method and partly the other.
|
38.2 |
The Directors may by resolution approve additional remuneration to any Director for any services which in the opinion of the Directors go beyond his ordinary routine work as a Director. Any fees paid to a Director who is also counsel, attorney or solicitor to the Company, or otherwise serves it in a professional capacity shall be in addition to his remuneration as a Director.
|
39
|
Seal
|
39.1 |
The Company may, if the Directors so determine, have a Seal. The Seal shall only be used by the authority of the Directors or of a committee of the Directors authorised by the Directors. Every instrument to which the Seal has been affixed shall be signed by at least one person who shall be either a Director or some officer of the Company or other person appointed by the Directors for the purpose.
|
39.2 |
The Company may have for use in any place or places outside the Cayman Islands a duplicate Seal or Seals each of which shall be a facsimile of the common Seal of the Company and, if the Directors so determine, with the addition on its face of the name of every place where it is to be used.
|
39.3 |
A Director or officer, representative or attorney of the Company may without further authority of the Directors affix the Seal over his signature alone to any document of the Company required to be authenticated by him under seal or to be filed with the Registrar of Companies in the Cayman Islands or elsewhere wheresoever.
|
40
|
Dividends, Distributions and Reserve
|
40.1 |
Subject to the Statute and this Article and except as otherwise provided by the rights attached to any Shares, the Directors may resolve to pay Dividends and other distributions on Shares in issue and authorise payment of the Dividends or other distributions out of the funds of the Company lawfully available therefor. A Dividend shall be deemed to be an interim Dividend unless the terms of the resolution pursuant to which the Directors resolve to pay such Dividend specifically state that such Dividend shall be a final Dividend. No Dividend or other distribution shall be paid except out of the realised or unrealised profits of the Company, out of the share premium account or as otherwise permitted by law.
|
40.2 |
Except as otherwise provided by the rights attached to any Shares, all Dividends and other distributions shall be paid according to the par value of the Shares that a Member holds. If any Share is issued on terms providing that it shall rank for Dividend as from a particular date, that Share shall rank for Dividend accordingly.
|
40.3 |
The Directors may deduct from any Dividend or other distribution payable to any Member all sums of money (if any) then payable by him to the Company on account of calls or otherwise.
|
40.4 |
The Directors may resolve that any Dividend or other distribution be paid wholly or partly by the distribution of specific assets and in particular (but without limitation) by the distribution of shares, debentures, or securities of any other company or in any one or more of such ways and where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in particular may issue fractional Shares and may fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any Members upon the basis of the value so fixed in order to adjust the rights of all Members and may vest any such specific assets in trustees in such manner as may seem expedient to the Directors.
|
40.5 |
Except as otherwise provided by the rights attached to any Shares, Dividends and other distributions may be paid in any currency. The Directors may determine the basis of conversion for any currency conversions that may be required and how any costs involved are to be met.
|
40.6 |
The Directors may, before resolving to pay any Dividend or other distribution, set aside such sums as they think proper as a reserve or reserves which shall, at the discretion of the Directors, be applicable for any purpose of the Company and pending such application may, at the discretion of the Directors, be employed in the business of the Company.
|
40.7 |
Any Dividend, other distribution, interest or other monies payable in cash in respect of Shares may be paid by wire transfer to the holder or by cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the registered address of the holder who is first named on the Register of Members or to such person and to such address as such holder or joint holders may in writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. Any one of two or more joint holders may give effectual receipts for any Dividends, other distributions, bonuses, or other monies payable in respect of the Share held by them as joint holders.
|
40.8 |
No Dividend or other distribution shall bear interest against the Company.
|
40.9 |
Any Dividend or other distribution which cannot be paid to a Member and/or which remains unclaimed after six months from the date on which such Dividend or other distribution becomes payable may, in the discretion of the Directors, be paid into a separate account in the Company’s name, provided that the Company shall not be constituted as a trustee in respect of that account and the Dividend or other distribution shall remain as a debt due to the Member. Any Dividend or other distribution which remains unclaimed after a period of six years from the date on which such Dividend or other distribution becomes payable shall be forfeited and shall revert to the Company.
|
41
|
Capitalisation
|
42
|
Books of Account
|
42.1 |
The Directors shall cause proper books of account (including, where applicable, material underlying documentation including contracts and invoices) to be kept with respect to all sums of money received and expended by the Company and the matters in respect of which the receipt or expenditure takes place, all sales and purchases of goods by the Company and the assets and liabilities of the Company. Such books of account must be retained for a minimum period of five years from the date on which they are prepared. Proper books shall not be deemed to be kept if there are not kept such books of account as are necessary to give a true and fair view of the state of the Company’s affairs and to explain its transactions.
|
42.2 |
The Directors shall determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Members not being Directors and no Member (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by Statute or authorised by the Directors or by the Company in general meeting.
|
42.3 |
The Directors may cause to be prepared and to be laid before the Company in general meeting profit and loss accounts, balance sheets, group accounts (if any) and such other reports and accounts as may be required by law.
|
43
|
Audit
|
43.1 |
The Directors may appoint an Auditor of the Company who shall hold office on such terms as the Directors determine.
|
43.2 |
Every Auditor of the Company shall have a right of access at all times to the books and accounts and vouchers of the Company and shall be entitled to require from the Directors and officers of the Company such information and explanation as may be necessary for the performance of the duties of the Auditor.
|
43.3 |
Auditors shall, if so required by the Directors, make a report on the accounts of the Company during their tenure of office at the next annual general meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an ordinary company, and at the next extraordinary general meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an exempted company, and at any other time during their term of office, upon request of the Directors or any general meeting of the Members.
|
44
|
Notices
|
44.1 |
Notices shall be in writing and may be given by the Company to any Member either personally or by sending it by courier, post, cable, telex, fax or
e-mail
to him or to his address as shown in the Register of Members (or where the notice is given by
e-mail
by sending it to the
e-mail
address provided by such Member). Any notice, if posted from one country to another, is to be sent by airmail.
|
44.2 |
Where a notice is sent by courier, service of the notice shall be deemed to be effected by delivery of the notice to a courier company, and shall be deemed to have been received on the third day (not including Saturdays or Sundays or public holidays) following the day on which the notice was delivered to the courier. Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, pre paying and posting a letter containing the notice, and shall be deemed to have been received on the fifth day (not including Saturdays or Sundays or public holidays in the Cayman Islands) following the day on which the notice was posted. Where a notice is sent by cable, telex or fax, service of
|
the notice shall be deemed to be effected by properly addressing and sending such notice and shall be deemed to have been received on the same day that it was transmitted. Where a notice is given by
e-mail
service shall be deemed to be effected by transmitting the
e-mail
to the
e-mail
address provided by the intended recipient and shall be deemed to have been received on the same day that it was sent, and it shall not be necessary for the receipt of the
e-mail
to be acknowledged by the recipient.
|
44.3 |
A notice may be given by the Company to the person or persons which the Company has been advised are entitled to a Share or Shares in consequence of the death or bankruptcy of a Member in the same manner as other notices which are required to be given under the Articles and shall be addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt, or by any like description at the address supplied for that purpose by the persons claiming to be so entitled, or at the option of the Company by giving the notice in any manner in which the same might have been given if the death or bankruptcy had not occurred.
|
44.4 |
Notice of every general meeting shall be given in any manner authorised by the Articles to every holder of Shares carrying an entitlement to receive such notice on the record date for such meeting except that in the case of joint holders the notice shall be sufficient if given to the joint holder first named in the Register of Members and every person upon whom the ownership of a Share devolves by reason of his being a legal personal representative or a trustee in bankruptcy of a Member where the Member but for his death or bankruptcy would be entitled to receive notice of the meeting, and no other person shall be entitled to receive notices of general meetings.
|
45
|
Winding Up
|
45.1 |
If the Company shall be wound up the liquidator shall apply the assets of the Company in satisfaction of creditors’ claims in such manner and order as such liquidator thinks fit. Subject to the rights attaching to any Shares, in a winding up:
|
(a) |
if the assets available for distribution amongst the Members shall be insufficient to repay the whole of the Company’s issued share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the Members in proportion to the par value of the Shares held by them; or
|
(b) |
if the assets available for distribution amongst the Members shall be more than sufficient to repay the whole of the Company’s issued share capital at the commencement of the winding up, the surplus shall be distributed amongst the Members in proportion to the par value of the Shares held by them at the commencement of the winding up subject to a deduction from those Shares in respect of which there are monies due, of all monies payable to the Company for unpaid calls or otherwise.
|
45.2 |
If the Company shall be wound up the liquidator may, subject to the rights attaching to any Shares and with the approval of a Special Resolution of the Company and any other approval required by the Statute, divide amongst the Members in kind the whole or any part of the assets of the Company (whether such assets shall consist of property of the same kind or not) and may for that purpose value any assets and determine how the division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like approval, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Members as the liquidator, with the like approval, shall think fit, but so that no Member shall be compelled to accept any asset upon which there is a liability.
|
46
|
Indemnity and Insurance
|
46.1 |
Every Director and officer of the Company (which for the avoidance of doubt, shall not include auditors of the Company), together with every former Director and former officer of the Company (each an “
Indemnified Person
|
such liability (if any) that they may incur by reason of their own actual fraud or wilful default. No Indemnified Person shall be liable to the Company for any loss or damage incurred by the Company as a result (whether direct or indirect) of the carrying out of their functions unless that liability arises through the actual fraud or wilful default of such Indemnified Person. No person shall be found to have committed actual fraud or wilful default under this Article unless or until a court of competent jurisdiction shall have made a finding to that effect. |
46.2 |
The Company shall advance to each Indemnified Person reasonable attorneys’ fees and other costs and expenses incurred in connection with the defence of any action, suit, proceeding or investigation involving such Indemnified Person for which indemnity will or could be sought. In connection with any advance of any expenses hereunder, the Indemnified Person shall execute an undertaking to repay the advanced amount to the Company if it shall be determined by final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification pursuant to this Article. If it shall be determined by a final judgment or other final adjudication that such Indemnified Person was not entitled to indemnification with respect to such judgment, costs or expenses, then such party shall not be indemnified with respect to such judgment, costs or expenses and any advancement shall be returned to the Company (without interest) by the Indemnified Person.
|
46.3 |
The Directors, on behalf of the Company, may purchase and maintain insurance for the benefit of any Director or other officer of the Company against any liability which, by virtue of any rule of law, would otherwise attach to such person in respect of any negligence, default, breach of duty or breach of trust of which such person may be guilty in relation to the Company.
|
47
|
Financial Year
|
48
|
Transfer by Way of Continuation
|
49
|
Mergers and Consolidations
|
Page
|
||||||
ARTICLE I STOCKHOLDERS
|
D-1 | |||||
1.1
|
Annual Meetings
|
D-1 | ||||
1.2
|
Special Meetings
|
D-1 | ||||
1.3
|
Notice of Meetings
|
D-1 | ||||
1.4
|
Adjournments
|
D-1 | ||||
1.5
|
Quorum
|
D-2 | ||||
1.6
|
Organization
|
D-2 | ||||
1.7
|
Voting; Proxies
|
D-2 | ||||
1.8
|
Fixing Date for Determination of Stockholders of Record
|
D-3 | ||||
1.9
|
List of Stockholders Entitled to Vote
|
D-3 | ||||
1.10
|
Inspectors of Elections
|
D-3 | ||||
1.11
|
Notice of Stockholder Business; Nominations
|
D-4 | ||||
ARTICLE II BOARD OF DIRECTORS
|
D-10 | |||||
2.1
|
Number; Qualifications
|
D-10 | ||||
2.2
|
Election; Resignation; Removal; Vacancies
|
D-10 | ||||
2.3
|
Regular Meetings
|
D-10 | ||||
2.4
|
Special Meetings
|
D-11 | ||||
2.5
|
Remote Meetings Permitted
|
D-11 | ||||
2.6
|
Quorum; Vote Required for Action
|
D-11 | ||||
2.7
|
Organization
|
D-11 | ||||
2.8
|
Unanimous Action by Directors in Lieu of a Meeting
|
D-11 | ||||
2.9
|
Powers
|
D-11 | ||||
2.10
|
Compensation of Directors
|
D-11 | ||||
2.11
|
Confidentiality
|
D-11 | ||||
ARTICLE III COMMITTEES
|
D-12 | |||||
3.1
|
Committees
|
D-12 | ||||
3.2
|
Committee Rules
|
D-12 | ||||
ARTICLE IV OFFICERS; CHAIRPERSON; LEAD INDEPENDENT DIRECTOR
|
D-12 | |||||
4.1
|
Generally
|
D-12 | ||||
4.2
|
Chief Executive Officer
|
D-13 | ||||
4.3
|
Chairperson of the Board
|
D-13 | ||||
4.4
|
Lead Independent Director
|
D-13 | ||||
4.5
|
President
|
D-13 | ||||
4.6
|
Chief Financial Officer
|
D-14 | ||||
4.7
|
Treasurer
|
D-14 | ||||
4.8
|
Vice President
|
D-14 | ||||
4.9
|
Secretary
|
D-14 | ||||
4.10
|
Delegation of Authority
|
D-14 | ||||
4.11
|
Removal
|
D-14 | ||||
ARTICLE V STOCK
|
D-14 | |||||
5.1
|
Certificates; Uncertificated Shares
|
D-14 | ||||
5.2
|
Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates or Uncertificated Shares
|
D-15 | ||||
5.3
|
Other Regulations
|
D-15 |
Page
|
||||||
ARTICLE VI INDEMNIFICATION
|
D-15 | |||||
6.1
|
Indemnification of Officers and Directors
|
D-16 | ||||
6.2
|
Advance of Expenses
|
D-16 | ||||
6.3
|
Non-Exclusivity
of Rights
|
D-16 | ||||
6.4
|
Indemnification Contracts
|
D-16 | ||||
6.5
|
Right of Indemnitee to Bring Suit
|
D-16 | ||||
6.6
|
Nature of Rights
|
D-17 | ||||
6.7
|
Insurance
|
D-17 | ||||
ARTICLE VII NOTICES
|
D-17 | |||||
7.1
|
Notice
|
D-17 | ||||
7.2
|
Waiver of Notice
|
D-18 | ||||
ARTICLE VIII INTERESTED DIRECTORS
|
D-18 | |||||
8.1
|
Interested Directors
|
D-18 | ||||
8.2
|
Quorum
|
D-18 | ||||
ARTICLE IX MISCELLANEOUS
|
D-19 | |||||
9.1
|
Fiscal Year
|
D-19 | ||||
9.2
|
Seal
|
D-19 | ||||
9.3
|
Form of Records
|
D-19 | ||||
9.4
|
Reliance Upon Books and Records
|
D-19 | ||||
9.5
|
Certificate of Incorporation Governs
|
D-19 | ||||
9.6
|
Severability
|
D-19 | ||||
9.7
|
Time Periods
|
D-19 | ||||
ARTICLE X AMENDMENT
|
D-20 |
Dated: [•], 2021
|
|
|||
[
|
||||
[Secretary]
|
Notices to Parent prior to the Closing
:
|
with a copy to (which shall not constitute notice)
:
|
|
Leo Holdings III Corp | Kirkland & Ellis LLP | |
21 Grosvenor Place | 601 Lexington Avenue | |
London SW1X 7HF, United Kingdom | New York, NY 10022 | |
Attention: Lyndon Lea | Attention: Christian O. Nagler | |
Robert Darwent | Damon R. Fisher, P.C. | |
Edward Forst | Michael Taufner | |
E-mail:
lea@leo.holdings
|
Jennifer Yapp | |
darwent@leo.holdings |
E-mail:
christian.nagler@kirkland.com
|
|
forst@leo.holdings | damon.fisher@kirkland.com | |
michael.taufner@kirkland.com | ||
jennifer.yapp@kirkland.com | ||
Notices to the Company (or the Surviving Company)
:
|
with a copy to (which shall not constitute notice)
:
|
|
Local Bounti Corporation | Orrick, Herrington & Sutcliffe LLP | |
220 W Main St, | 1000 Marsh Rd. | |
Hamilton, MT 59840 | Menlo Park, CA 94025 | |
Attention: Travis M. Joyner | Attention: Matthew Gemello | |
Craig Hurlbert | Albert Vanderlaan |
E-mail:
travis@localbounti.com
|
Email: mgemello@orrick.com | |
craig@localbounti.com | avanderlaan@orrick.com | |
Notices to the Sponsor
:
|
with a copy to (which shall not constitute notice)
:
|
|
Leo Investors III LP | Kirkland & Ellis LLP | |
21 Grosvenor Place | 601 Lexington Avenue | |
London SW1X 7HF | New York, NY 10022 | |
United Kingdom | Attention: Christian O. Nagler | |
Attention: Simon Brown | Damon R. Fisher, P.C. | |
E-mail:
brown@leo.holdings
|
Brooks W. Antweil | |
Jennifer Yapp | ||
E-mail:
christian.nagler@kirkland.com
|
||
damon.fisher@kirkland.com | ||
brooks.antweil@kirkland.com | ||
jennifer.yapp@kirkland.com | ||
Notices to Bush, Minnick
|
with a copy to (which shall not constitute notice)
:
|
|
Masinter, Flanders, Khan and McNealy
:
|
||
Kirkland & Ellis LLP | ||
601 Lexington Avenue | ||
New York, NY 10022 | ||
Address on file with the Sponsor | Attention: Christian O. Nagler | |
Damon R. Fisher, P.C. | ||
Brooks W. Antweil | ||
Jennifer Yapp | ||
E-mail:
christian.nagler@kirkland.com
|
||
damon.fisher@kirkland.com | ||
brooks.antweil@kirkland.com | ||
jennifer.yapp@kirkland.com |
PARENT
|
||
LEO HOLDINGS III CORP
|
||
By: |
/s/ Lyndon Lea
|
|
Name: | Lyndon Lea | |
Title: | President and Chief Executive Officer |
COMPANY
|
||
LOCAL BOUNTI CORPORATION
|
||
By: |
/s/ Craig Hurlbert
|
|
Name: | Craig Hurlbert | |
Title: | Chief Executive Officer |
SPONSOR PARTIES
|
||
LEO INVESTORS III LP
|
||
By: Leo Investors GP III Ltd., its general partner | ||
By: |
/s/ Simon Brown
|
|
Name: | Simon Brown | |
Title: | Director | |
/s/ Lori Bush
|
||
Lori Bush | ||
/s/ Mary E. Minnick
|
||
Mary E. Minnick | ||
/s/ Mark Masinter
|
||
Mark Masinter | ||
/s/ Scott Flanders
|
||
Scott Flanders | ||
/s/ Imran Khan
|
||
Imran Khan | ||
/s/ Scott McNealy
|
||
Scott McNealy |
Pre-Closing
|
Post-Closing
|
|||
Sponsor Party
|
Total Parent
Class B Ordinary Shares Held |
Total Parent
Common Stock Held |
||
Leo Investors III LP
|
6,770,000 | 6,770,000 | ||
Bush
|
20,000 | 20,000 | ||
Minnick
|
20,000 | 20,000 | ||
Masinter
|
20,000 | 20,000 | ||
Flanders
|
15,000 | 15,000 | ||
Khan
|
15,000 | 15,000 | ||
McNealy
|
15,000 | 15,000 | ||
TOTAL
|
6,875,000
|
6,875,000
|
*
|
In place of the above, the below will be included for mutual funds:
|
LEO HOLDINGS III CORP | ||
By: |
|
|
Name: | ||
Title: | ||
Address for purpose of notice: | ||
|
||
|
A. |
QUALIFIED INSTITUTIONAL BUYER STATUS
|
B. |
ACCREDITED INVESTOR STATUS
|
1. |
☐ The Investor is an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act or an entity in which all of the equity holders are accredited investors within the meaning of Rule 501(a) under the Securities Act), and have marked and initialed the appropriate box on the following page indicating the provision under which it qualifies as an “accredited investor.”
|
2. |
☐ The Investor is not a natural person.
|
C. |
NON-U.S.
PERSON STATUS
|
COMPANY: LOCAL BOUNTI CORPORATION
|
||
By: |
|
|
Name: | ||
Title: |
NEW INVESTOR:
|
||
[ ]
|
||
By: |
|
|
Name: | ||
Title: | ||
[ ]
|
||
By: |
|
|
Name: | ||
Title: | ||
ORIGINAL INVESTOR:
|
||
[ ]
|
||
By: |
|
|
Name: | ||
Title: | ||
[ ]
|
||
By: |
|
|
Name: | ||
Title: |
NEW HOLDER:
|
ACCEPTED AND AGREED: | |||||||
Print Name: |
|
COMPANY
|
||||||
By: |
|
By: |
|
|||||
Address: |
|
|||||||
• |
Leo Investors III LP
|
• |
Lori Bush
|
• |
Mark Masinter
|
• |
Mary E. Minnick
|
• |
Scott Flanders
|
• |
Imran Khan
|
• |
Scott McNealy
|
• |
Wheat Wind Farms, LLC
|
• |
McLeod Management Co., LLC
|
• |
Live Oak Ventures, LLC
|
• |
Charles R. Schwab & Helen O. Schwab TTEE The Charles & Helen Schwab Living Trust U/A DTD 11/22/1985
|
• |
Charles R. Schwab & Helen O. Schwab TTEE The Charles & Helen Schwab Living Trust U/A DTD 11/22/1986McLeod Management Co., LLC
|
• |
Craig Hurlbert
|
• |
Travis Joyner
|
• |
Pam Brewster
|
• |
Mark Nelson
|
• |
Kathleen Valiasek
|
Parent
:
|
||
LEO HOLDINGS III CORP | ||
By: |
|
|
Name: | ||
Title: |
COMPANY STOCKHOLDER
:
|
||
|
||
[NAME]
|
||
/// | ||
[NAME]
|
||
By: |
|
|
Name: | ||
Title: | ||
ADDRESS
:
|
||
[ ] | ||
[ ] | ||
[ ] | ||
Attention: [ ] | ||
Facsimile: [ ] | ||
Email: [ ] |
Company Stockholder
|
Class, Number and Type of Equity Interests
|
|
[●] | [●] |
PUBCO:
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LOCAL BOUNTI CORPORATION
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By:
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Name:
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Title:
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||
HOLDER
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Name:
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Address:
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[ ]
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[ ]
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[ ]
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Email: [ ]
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[TRANSFEROR]
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By:
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Name:
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Title:
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[TRANSFEREE] |
By:
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Name:
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Title:
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Address for notices:
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1
|
Please confirm whether this covers all anticipated metrics, including any industry-specific performance goals.
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2
|
Number will equal 14% of the aggregate number of shares of common stock issued and outstanding immediately after the Closing (after giving effect to stockholder redemptions, if any).
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3
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Ten years minus one day from when approved by the Leo Holdings III board.
|
1
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Number will equal 1.5% of the aggregate number of shares of common stock issued and outstanding immediately after the Closing (after giving effect to stockholder redemptions, if any).
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2
|
Number will equal 1.5% of the aggregate number of shares of common stock issued and outstanding immediately after the Closing (after giving effect to stockholder redemptions, if any).
|
Redemption Date
(period to expiration of
warrants)
|
Fair Market Value of ClassA Ordinary Shares
|
|||||||||||||||||||||||||||||||||||
£
$10.00
|
$11.00
|
$12.00
|
$13.00
|
$14.00
|
$15.00
|
$16.00
|
$17.00
|
³
$18.00
|
||||||||||||||||||||||||||||
60 months
|
|
0.261
|
|
0.281
|
|
0.297
|
|
0.311
|
|
0.324
|
|
0.337
|
|
0.348
|
|
0.358
|
|
0.361
|
||||||||||||||||||
57 months
|
|
0.257
|
|
0.277
|
|
0.294
|
|
0.310
|
|
0.324
|
|
0.337
|
|
0.348
|
|
0.358
|
|
0.361
|
||||||||||||||||||
54 months
|
|
0.252
|
|
0.272
|
|
0.291
|
|
0.307
|
|
0.322
|
|
0.335
|
|
0.347
|
|
0.357
|
|
0.361
|
||||||||||||||||||
51 months
|
|
0.246
|
|
0.268
|
|
0.287
|
|
0.304
|
|
0.320
|
|
0.333
|
|
0.346
|
|
0.357
|
|
0.361
|
||||||||||||||||||
48 months
|
|
0.241
|
|
0.263
|
|
0.283
|
|
0.301
|
|
0.317
|
|
0.332
|
|
0.344
|
|
0.356
|
|
0.361
|
||||||||||||||||||
45 months
|
|
0.235
|
|
0.258
|
|
0.279
|
|
0.298
|
|
0.315
|
|
0.330
|
|
0.343
|
|
0.356
|
|
0.361
|
||||||||||||||||||
42 months
|
|
0.228
|
|
0.252
|
|
0.274
|
|
0.294
|
|
0.312
|
|
0.328
|
|
0.342
|
|
0.355
|
|
0.361
|
||||||||||||||||||
39 months
|
|
0.221
|
|
0.246
|
|
0.269
|
|
0.290
|
|
0.309
|
|
0.325
|
|
0.340
|
|
0.354
|
|
0.361
|
||||||||||||||||||
36 months
|
|
0.213
|
|
0.239
|
|
0.263
|
|
0.285
|
|
0.305
|
|
0.323
|
|
0.339
|
|
0.353
|
|
0.361
|
||||||||||||||||||
33 months
|
|
0.205
|
|
0.232
|
|
0.257
|
|
0.280
|
|
0.301
|
|
0.320
|
|
0.337
|
|
0.352
|
|
0.361
|
||||||||||||||||||
30 months
|
|
0.196
|
|
0.224
|
|
0.250
|
|
0.274
|
|
0.297
|
|
0.316
|
|
0.335
|
|
0.351
|
|
0.361
|
||||||||||||||||||
27 months
|
|
0.185
|
|
0.214
|
|
0.242
|
|
0.268
|
|
0.291
|
|
0.313
|
|
0.332
|
|
0.350
|
|
0.361
|
||||||||||||||||||
24 months
|
|
0.173
|
|
0.204
|
|
0.233
|
|
0.260
|
|
0.285
|
|
0.308
|
|
0.329
|
|
0.348
|
|
0.361
|
||||||||||||||||||
21 months
|
|
0.161
|
|
0.193
|
|
0.223
|
|
0.252
|
|
0.279
|
|
0.304
|
|
0.326
|
|
0.347
|
|
0.361
|
||||||||||||||||||
18 months
|
|
0.146
|
|
0.179
|
|
0.211
|
|
0.242
|
|
0.271
|
|
0.298
|
|
0.322
|
|
0.345
|
|
0.361
|
||||||||||||||||||
15 months
|
|
0.130
|
|
0.164
|
|
0.197
|
|
0.230
|
|
0.262
|
|
0.291
|
|
0.317
|
|
0.342
|
|
0.361
|
||||||||||||||||||
12 months
|
|
0.111
|
|
0.146
|
|
0.181
|
|
0.216
|
|
0.250
|
|
0.282
|
|
0.312
|
|
0.339
|
|
0.361
|
||||||||||||||||||
9 months
|
|
0.090
|
|
0.125
|
|
0.162
|
|
0.199
|
|
0.237
|
|
0.272
|
|
0.305
|
|
0.336
|
|
0.361
|
||||||||||||||||||
6 months
|
|
0.065
|
|
0.099
|
|
0.137
|
|
0.178
|
|
0.219
|
|
0.259
|
|
0.296
|
|
0.331
|
|
0.361
|
||||||||||||||||||
3 months
|
|
0.034
|
|
0.065
|
|
0.104
|
|
0.150
|
|
0.197
|
|
0.243
|
|
0.286
|
|
0.326
|
|
0.361
|
||||||||||||||||||
0 months
|
|
—
|
|
—
|
|
0.042
|
|
0.115
|
|
0.179
|
|
0.233
|
|
0.281
|
|
0.323
|
|
0.361
|
LEO HOLDINGS III CORP | ||
By: |
/s/ Simon Brown
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Name:
Simon Brown
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Title:
Secretary
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||
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Warrant Agent | ||
By: |
/s/ Isaac Kagan
|
|
Name:
Isaac Kagan
|
||
Title:
Vice President
|
LEO HOLDINGS III CORP | ||
By: |
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Name: | ||
Title: | ||
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Warrant Agent | ||
By: |
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Name: | ||
Title: |
(Signature) |
|
|
|
(Address) |
|
(Tax Identification Number) |
Item 20.
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Indemnification of directors and officers
|
Item 21.
|
Exhibits and Financial Statements Schedules
|
* |
Previously filed.
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** |
To be filed by amendment.
|
† |
Schedules and exhibits to this Exhibit omitted pursuant to Regulation
S-K
Item 601(b)(2). The Registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.
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(a) |
To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
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(i) |
To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
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(ii) |
To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
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(iii) |
To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement.
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(b) |
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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(c) |
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
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(d) |
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
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(e) |
That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications,
|
(i) |
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
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(ii) |
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
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(iii) |
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
|
(iv) |
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
|
LEO HOLDINGS III CORP
|
||
By: |
/s/ Lyndon Lea
|
|
Name: | Lyndon Lea | |
Title: | President and Chief Executive Officer |
NAME
|
POSITION
|
DATE
|
||
*
|
Chairman of the Board of Directors | September 3, 2021 | ||
Edward C. Forst | ||||
/s/ Lyndon Lea
|
President, Chief Executive Officer and Authorized Representative | September 3, 2021 | ||
Lyndon Lea |
(
Principal Executive Officer
|
|||
*
|
Chief Financial Officer and Director | September 3, 2021 | ||
Robert Darwent |
(
Principal Financial and Accounting Officer
|
|||
*
|
Director | September 3, 2021 | ||
Lori Bush | ||||
*
|
Director | September 3, 2021 | ||
Mary E. Minnick | ||||
*
|
Director | September 3, 2021 | ||
Mark Masinter |
EXHIBIT 8.1
601 Lexington Avenue New York, NY 10022 United States
+1 212 446 4800
www.kirkland.com |
Facsimile:
+1 212 446 4900 |
September 3, 2021
Leo Holdings III Corp
Albany Financial Center, South Ocean Blvd, Suite #507
P.O. Box SP-63158
New Providence, Nassau, The Bahamas
Ladies and Gentlemen:
We are United States tax counsel to Leo Holdings III Corp, a Cayman Islands exempted company (Leo), in connection with the preparation of the registration statement on Form S-4 (as amended, and together with the Joint Proxy Statement/Prospectus filed therewith, the Registration Statement) (Registration No. 333-257997) originally filed with the Securities and Exchange Commission (the Commission) on July 19, 2021, under the Securities Act of 1933, as amended (the Securities Act), by Leo. The Registration Statement relates to the registration of 99,809,606 shares of common stock and 11,539,216 warrants of Leo (after giving effect to the Domestication, which will be renamed Local Bounti Corporation (New Local Bounti) in connection therewith).
The Registration Statement is being filed in connection with the transactions contemplated by the Agreement and Plan of Merger, dated as of June 17, 2021 (the Merger Agreement), by and among Leo, Longleaf Merger Sub, Inc., a Delaware corporation, Longleaf Merger Sub II, LLC, a Delaware limited liability company, and Local Bounti Corporation, a Delaware corporation (Local Bounti) (such transactions, including the Domestication, the Business Combination).
Capitalized terms not otherwise defined herein shall have the same meanings attributed to such terms in the Registration Statement.
You have requested our opinion concerning the discussion of the Domestication set forth in the section entitled Material U.S. Federal Income Tax Consequences of the Domestication to Leo ShareholdersU.S. HoldersTax Consequences of the Domestication to U.S. Holders of Leo Public Shares and Public Warrants in the Registration Statement. In providing this opinion, we have assumed (without any independent investigation or review thereof) that:
a. All original documents submitted to us (including signatures thereto) are authentic, all documents submitted to us as copies conform to the original documents, all such documents have been duly and validly executed and delivered where due execution and delivery are a prerequisite to the effectiveness thereof, and all parties to such documents had or will have, as
Beijing Boston Chicago Dallas Hong Kong Houston London Los Angeles Munich Palo Alto Paris
San Francisco Shanghai Washington, D.C.
|
Leo
September 3, 2021
Page 2
applicable, the requisite corporate powers and authority to enter into such documents and to undertake and consummate the Business Combination;
b. All factual representations, warranties and statements made or agreed to by the parties to the Business Combination Agreement, the Sponsor Agreement, and the other agreements referred to in each of the foregoing (collectively, the Agreements and, together with the Registration Statement, the Documents), and in the representation letter provided to us by Leo, are true, correct and complete as of the date hereof and will remain true, correct and complete through the consummation of Transactions (as defined below), in each case without regard to any qualification as to knowledge, belief, materiality, or otherwise;
c. The descriptions of Leo in the Registration Statement, the registration statement filed in connection with Leos initial public offering, and Leos other public filings are true, accurate and complete;
d. The description of the Business Combination and other transactions related to the Business Combination (together, the Transactions) in the Registration Statement is and will remain true, accurate and complete, the Business Combination will be consummated in accordance with such description and with the Business Combination Agreement and the other Agreements, without any waiver or breach of any material provision thereof, and the Business Combination will be effective under applicable corporate law as described in the Business Combination Agreement and the other Agreements; and
e. The Documents represent the entire understanding of the parties with respect to the Business Combination and other Transactions, there are no other written or oral agreements regarding the Transactions other than the Agreements, and none of the material terms and conditions thereof have been or will be waived or modified.
This opinion is based on current provisions of the U.S. Internal Revenue Code of 1986, as amended (the Code), the U.S. Treasury Regulations promulgated thereunder, and the interpretation of the Code and such regulations by the courts and the U.S. Internal Revenue Service, in each case, as they are in effect and exist at the date of this opinion. It should be noted that statutes, regulations, judicial decisions and administrative interpretations are subject to change at any time and, in some circumstances, with retroactive effect. Any change that is made after the date hereof in any of the foregoing bases for our opinion, or any inaccuracy in the facts or assumptions on which we have relied in issuing our opinion, could adversely affect our conclusion. We assume no responsibility to inform you of any such change or inaccuracy that may occur or come to our attention or to supplement or revise our opinion to reflect any legal developments or factual matters arising subsequent to the date hereof. No opinion is expressed as to any transactions other than the Domestication in connection with the Business Combination, or any matter other than those specifically covered by this opinion. In particular, this opinion is limited to the matters
Leo
September 3, 2021
Page 3
discussed in the section entitled Material U.S. Federal Income Tax Consequences of the Domestication to Leo ShareholdersU.S. HoldersTax Consequences of the Domestication to U.S. Holders of Leo Public Shares and Public Warrants in the Registration Statement, subject to the assumptions, limitations and qualifications stated in the section entitled Material U.S. Federal Income Tax Consequences of the Domestication to Leo Shareholders in the Registration Statement (the Tax Disclosure), and, as further described in the Tax Disclosure, does not address (i) the U.S. federal income tax treatment of any shareholder subject to special rules under the Code or the Treasury Regulations, as further described in the Tax Disclosure, (ii) any matter arising in connection with Section 367 of the Code, or (iii) any matter arising in connection with the passive foreign investment company rules of Sections 1291-1297 of the Code.
The U.S. federal income tax consequences of the transactions described in the Registration Statement are complex and are subject to varying interpretations. Our opinion is not binding on the U.S. Internal Revenue Service or any court, and there can be no assurance or guarantee that either will agree with our conclusions. Indeed, the U.S. Internal Revenue Service may challenge one or more of the conclusions contained herein and the U.S. Internal Revenue Service may take a position that is inconsistent with the views expressed herein. There can be no assurance or guarantee that a court would, if presented with the issues addressed herein, reach the same or similar conclusions as we have reached.
Based upon and subject to the foregoing, we confirm that the statements set forth in the Registration Statement under the heading Material U.S. Federal Income Tax Consequences of the Domestication to Leo ShareholdersU.S. HoldersTax Consequences of the Domestication to U.S. Holders of Leo Public Shares and Public Warrants, insofar as they address the material U.S. federal income tax considerations for beneficial owners of Leo public shares and public warrants of the Domestication, and discuss matters of U.S. federal income tax law and regulations or legal conclusions with respect thereto, and except to the extent stated otherwise therein, are our opinion, subject to the assumptions, qualifications and limitations stated herein and therein.
This opinion is furnished to you solely for use in connection with the Registration Statement. This opinion is based on facts and circumstances existing on the date hereof. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving such consent, we do not thereby concede that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/Kirkland & Ellis LLP |
Kirkland & Ellis LLP |
Exhibit 10.9
LEASE
(Single Tenant; Gross)
BETWEEN
GROW BITTERROOT, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
AND
BOUNTI BITTERROOT, LLC,
A DELAWARE LIMITED LIABILITY COMPANY
LEASE
(Single Tenant; Gross)
THIS LEASE (Lease) is made and entered into this 12th day of June, 2020, by and between GROW BITTERROOT, LLC, a Delaware limited liability company (Landlord) and BOUNTI BITTERROOT, LLC, a Delaware limited liability company (Tenant).
ARTICLE I. BASIC LEASE PROVISIONS
Each reference in this Lease to the Basic Lease Provisions shall mean and refer to the following collective terms, the application of which shall be governed by the provisions in the remaining Articles of this Lease.
1. |
Premises: Approximately 28.52 acres of land (the Land) situated in the City of Hamilton, Ravalli County, Montana, more particularly described on Exhibit A attached hereto, and as shown on the Site Plan attached hereto as Exhibit B, upon which is constructed (or is being constructed) greenhouse buildings and appurtenant structures (the Buildings), and other improvements (collectively, the Improvements, and together with the Land, the Premises). |
2. |
Use of Premises: Operation of hydroponic agriculture business operations, and related uses. |
3. |
Commencement Date: June 1, 2020, subject to Section 2.3 below. |
4. |
Term: One hundred twenty (120) months from and after the Commencement Date, subject to extension as provided in Section 3.2, or earlier termination as provided herein, but subject to adjustment as set forth in Section 4.1(b). |
5. |
Basic Rent: |
Months 1-3 |
No Rent Payable | |||
Months 4-15 |
$ | 67,261.00 | ||
Commencing in Month 15 and on each anniversary thereafter for the remainder of the initial Term, Basic Rent shall increase by two percent (2%). |
|
6. |
Security Deposit: $0 |
7. |
Broker(s): None |
8. |
Payments and Notices: |
LANDLORD
Grow Bitterroot, LLC 220 W. Main Street Hamilton, MT 59840 Attn: Travis Joyner |
TENANT
Bounti Bitterroot, LLC P.O. Box 1736 Hamilton, MT 59840 Attn: Brian Bigej |
1
ARTICLE II. PREMISES
SECTION 2.1. PREMISES. Landlord hereby leases the Premises to Tenant and Tenant hereby leases the Premises from Landlord, on the terms and conditions set forth in this Lease.
SECTION 2.2. ACCEPTANCE OF PREMISES. Tenant acknowledges that neither Landlord nor any representative of Landlord has made any representation or warranty with respect to the Premises or its suitability or fitness for any purpose, including without limitation any representations or warranties regarding the compliance of Tenants use of the Premises with the applicable zoning or regarding any other land use matters, and Tenant shall be solely responsible as to such matters. As of the Commencement Date, Tenant shall be conclusively deemed to have accepted the Premises in its as-is condition.
SECTION 2.3. CONSTRUCTION BY LANDLORD. Landlord and Tenant both acknowledge that certain Improvements to the Premises will be under construction on the Commencement Date. The scope of such construction work is set forth in the Plans and Specifications described in Exhibit D attached hereto (as amended, the Plans), which are separated into Phase I, Phase II and Phase III. Phases I and II construction must be substantially completed before the Commencement Date set forth in Article 1 above, and if not, then the Commencement Date shall be extended until substantial completion is achieved. For the purposes of this Section 2.3, substantial completion shall mean that the Improvements shown in the Plans for Phase I and II have been sufficiently completed to the point where the Tenant can use the Improvements for the intended purposes, including Landlord obtaining a certificate of occupancy from the applicable governmental authority. If the Commencement Date is extended, the Term of this Lease shall be extended for a like period. All costs of the Phase I and Phase II construction work shall be performed and paid for by Landlord.
Phase III is for future Improvements to be constructed at a time designated by Landlord in a notice to Tenant. Phase III construction work will also be performed and paid for by Landlord. Commencing three (3) months after substantial completion of the Improvements for Phase III, the Basic Rent shall increase to $126,572.00/month. The target date for substantial completion of the Improvements for Phase III shall be December 31, 2020.
All work of construction shall be performed by reputable, licensed and insured contractors, and in a good and workmanlike manner. No material changes shall be made to the Plans without the prior written approval of both Landlord and Tenant, which shall not be unreasonably withheld.
ARTICLE III. TERM
SECTION 3.1. GENERAL. The term of this Lease (Term) shall be for the period shown in Item 4 of the Basic Lease Provisions. The Term shall commence on the Commencement Date. The date on which this Lease is scheduled to terminate is referred to as the Expiration Date. For the purposes of this Lease, the term Lease Year means each twelve (12) month period during the Term, commencing on the Commencement Date, subject to adjustment as set forth in Section 4(b).
3
SECTION 3.2. RIGHT TO EXTEND THE TERM.
(a) Provided that Tenant is not in default (beyond any applicable notice and cure period) under any provision of this Lease at the time of exercise of the extension right granted herein or as of the commencement of the extension period, Tenant may extend the Term of this Lease for three (3) periods of sixty (60) months each (each, an Extension Period). Tenant shall exercise its right to extend the Term by delivering to Landlord, not less than nine (9) months prior to the then-scheduled Expiration Date, Tenants written notice of its election to extend the Term. The Basic Rent payable under this Lease during each Extension Period shall be as set forth on Exhibit E attached hereto.
(b) If Tenant fails to timely exercise its extension right under subsection (a) above within the time periods set forth above, Tenants right to extend the Term shall be extinguished and this Lease shall automatically terminate on the then Scheduled Expiration Date. Notwithstanding the foregoing, Tenants right to extend the Term shall not be extinguished if Tenant fails to timely exercise the extension right, unless Landlord has first given Tenant notice of its right to extend, and Tenant fails to give notice of its election to extend the Term within ten (10) business days thereafter.
ARTICLE IV. BASIC RENT AND PROPERTY TAXES
SECTION 4.1. BASIC RENT.
(a) Commencing on the Commencement Date, Tenant shall pay to Landlord, without deduction or offset, the amount of Basic Rent shown in Item 5 of the Basic Lease Provisions (or if the Term is extended, the Basic Rent shown in Section 3.2 above). The Basic Rent shall be due and payable monthly in advance commencing on the Commencement Date and continuing thereafter on the same day of each successive calendar month of the Term. No demand, notice or invoice shall be required.
(b) Notwithstanding the foregoing, at the option of Landlord, upon notice to Tenant on or prior to the Commencement Date, Basic Rent shall be due and payable on the first day of each month during the Term. In such event, the Basic Rent payable on the Commencement Date shall be prorated and shall cover the period from the Commencement Date through the end of the month in which the Commencement Date occurs (the Proration Period) with the next payment of Basic Rent due on the first day of the immediately following month. Further, in such event, the initial Term of this Lease shall run one hundred eighty (180) months from the first day of the month following the end of the Proration Period, and the first Lease Year shall include the Proration Period.
SECTION 4.2. PROPERTY TAXES.
(a) Landlord shall pay all Property Taxes (as defined below) due or accruing during the Term.
(b) The term Property Taxes as used herein shall include any form of federal, state, county or local government or municipal taxes, fees, charges or other impositions of every kind (whether general, special, ordinary or extraordinary) related to the ownership, leasing or
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operation of the Premises, including without limitation, the following: (i) all real estate taxes or personal property taxes levied against the Premises, as such property taxes may be reassessed from time to time; and (ii) other taxes, charges and assessments which are levied with respect to this Lease or to the improvements, fixtures and equipment and other property of Landlord located on the Premises, (iii) all assessments and fees for public improvements, services, and facilities and impacts thereon; (iv) any tax, surcharge or assessment which shall be levied in addition to or in lieu of real estate or personal property taxes, other than taxes covered by Article VIII; (v) taxes based on the receipt of rent (including gross receipts or sales taxes applicable to the receipt of rent) and (vi) costs and expenses incurred in contesting the amount or validity of any Property Tax by appropriate proceedings.
SECTION 4.3. RENT. All monetary obligations of Tenant to Landlord under this Lease are deemed to be rent.
ARTICLE V. USE
SECTION 5.1. PERMITTED USE. Tenant shall use the Premises only for the purposes stated in Item 2 of the Basic Lease Provisions, or any other use reasonably related thereto (the Permitted Use). Tenant shall not use or allow the Premises to be used for any unlawful purpose, nor shall Tenant permit any nuisance or commit any waste on the Premises. Tenant shall comply, at its expense, with all present and future laws, statutes, ordinances and requirements of all governmental authorities that pertain to the Premises, Tenant or its specific use of the Premises (collectively, Applicable Law). However, Tenants obligation under the immediately preceding sentence shall not require Tenant to make any structural repairs to any Improvements, or to clean up or remediate any Hazardous Materials in, on, under or about the Premises, except (i) as required under Section 5.3 below, or (ii) to the extent necessitated by (a) Tenants specific use of the Premises, or (b) Alterations (as defined herein) performed by or on behalf of Tenant.
SECTION 5.2. SIGNS. Tenant shall have the exclusive right to install (at Tenants expense) any signage on the exterior of the Building that Tenant desires, subject only to compliance with Applicable Law. Tenant shall maintain and repair any such signs, and shall remove same from the Building upon the expiration or earlier termination of this Lease (and shall repair any damage caused by such removal).
SECTION 5.3. HAZARDOUS MATERIALS.
(a) For purposes of this Lease, the term Hazardous Materials means (i) any hazardous or toxic substance, material or waste including, without limitation, substances defined as hazardous substances, hazardous materials, hazardous waste, or toxic substances under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and the Montana Comprehensive Environmental Cleanup and Responsibility Act, or which contain gasoline, oil, diesel fuel or other petroleum products, asbestos, polychlorinated biphenyls (PCBs), are radioactive or which otherwise require investigation, reporting or remediation under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and the Montana Comprehensive Environmental Cleanup and Responsibility Act, (ii) hydrocarbons, polychlorinated biphenyls or asbestos, and (iii) any toxic
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or hazardous materials, substances, wastes or materials which are regulated by any other applicable state, federal or local law or regulation because they are potentially hazardous to the health, safety or welfare of humans or the environment.
(b) Tenant shall not cause or permit any Hazardous Materials to be brought upon, stored, used, generated, released or disposed of on, under, from or about the Premises (including without limitation the soil and groundwater thereunder) without the prior written consent of Landlord, which consent may be given or withheld in Landlords sole and absolute discretion. Notwithstanding the foregoing, Tenant shall have the right, without obtaining prior written consent of Landlord, to utilize within the Premises (i) a reasonable quantity of standard cleaning products and (ii) pesticides and similar products commonly used in agricultural operations, each of which may contain Hazardous Materials, provided however, that Tenant shall comply with all Applicable Laws with respect to such products, and all of the other terms and provisions of this Section 5.3 shall apply with respect to Tenants storage, use and disposal of all such products. Landlord may place such reasonable conditions as Landlord deems appropriate (giving due consideration to Tenants business operations) with respect to Tenants use, storage and/or disposal of any Hazardous Materials requiring Landlords consent.
(c) Landlord and its agents shall have the right, but not the obligation (at Landlords expense unless Tenant is determined to be in breach of this Lease in connection with Hazardous Materials), to inspect, sample and/or monitor the Premises and/or the soil or groundwater thereunder at any reasonable time with reasonable prior notice to determine whether Tenant is complying with the terms of this Section 5.3, and in connection therewith Tenant shall provide Landlord with full access to all facilities, records and personnel related thereto (except for attorney-client privileged communications or documents otherwise protected as provided in this Section 5.3(c)). If Tenant is not in compliance with any of the provisions of this Section 5.3, or in the event of a release of any Hazardous Material on, under, from or about the Premises caused or permitted by Tenant, its agents, employees, contractors, licensees or invitees, Landlord and its agents shall have the right, but not the obligation, after reasonable advance notice affording Tenant a reasonable opportunity to cure or correct the condition, without limitation upon any of Landlords other rights and remedies under this Lease, to immediately enter upon the Premises and to discharge Tenants obligations under this Section 5.3 at Tenants expense, including without limitation the taking of emergency or long-term remedial action. Landlord and its agents shall endeavor to minimize interference with Tenants business in connection therewith, but shall not be liable for any such interference. In addition, Landlord, at Tenants expense, shall have the right, but not the obligation, to join and participate in any legal proceedings or actions initiated in connection with any claims arising out of the storage, generation, use, release and/or disposal by Tenant or its agents, employees, contractors, licensees or invitees of Hazardous Materials on, under, from or about the Premises.
(d) If the presence of any Hazardous Materials on, under, from or about the Premises or caused or permitted by Tenant or its agents, employees, contractors, licensees or invitees results in (i) injury to any person, (ii) injury to or any contamination of the Premises, or (iii) injury to or contamination of any real or personal property wherever situated, Tenant, at its expense (using contractors and/or consultants selected by Tenant but reasonably acceptable to Landlord), shall promptly take all actions necessary to return the Premises and the Project and any other affected real or personal property owned by Landlord or otherwise to the Required
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Condition (as hereinafter defined), and to remedy or repair any such injury or contamination, including without limitation, any cleanup, remediation, removal, disposal, neutralization or other treatment of any such Hazardous Materials (subject to the conditions set forth in this Section 5.3(d)). Notwithstanding the foregoing, Tenant shall not, without Landlords prior written consent, which consent shall not be unreasonably withheld, take any remedial action in response to the presence of any Hazardous Materials on, under, from or about the Premises or any other affected real or personal property owned by Landlord or enter into any similar agreement, consent, decree or other compromise with any governmental agency with respect to any Hazardous Materials claims; provided however, Landlords prior written consent shall not be necessary in the event that the presence of Hazardous Materials on, under, from or about the Premises or any other affected real or personal property owned by Landlord (i) imposes an immediate threat to the health, safety or welfare of any individual and (ii) is of such a nature that an immediate remedial response is necessary and it is not possible to obtain Landlords consent before taking such action. As used herein, Required Condition shall mean returning the Premises and any other directly affected real or personal property owned by Landlord to a condition that is both (A) required by applicable federal, state or local law, regulation or order, including without limitation, performing any required cleanup, remediation, removal, disposal, neutralization or other treatment of Hazardous Materials, and (B) consistent with Landlords operation, use and leasing of the Premises (and any other directly affected real or personal property owned by Landlord) for those uses described in Item 2 of the Basic Lease Provisions. To the fullest extent permitted by law, Tenant shall indemnify, hold harmless, protect and defend (with attorneys reasonably acceptable to Landlord) Landlord and any successors to all or any portion of Landlords interest in the Premises and any other real or personal property owned by Landlord from and against any and all liabilities, losses, damages, diminution in value, judgments, fines, demands, claims, recoveries, deficiencies, costs and expenses (including without limitation attorneys fees, court costs and other professional expenses), whether foreseeable or unforeseeable, arising directly or indirectly out of the use, generation, storage, treatment, release, on- or off-site disposal or transportation of Hazardous Materials on, into, from, under or about the Premises and any other real or personal property owned by Landlord or any other party caused or permitted by Tenant, its agents, employees, contractors, subtenants, licensees or invitees. Such indemnity obligation shall specifically include, without limitation, the cost of any required or necessary repair, restoration, cleanup or detoxification of the Premises, and any other real or personal property owned by Landlord, the preparation of any closure or other required plans, whether such action is required or necessary during the Term or after the expiration of this Lease and any loss of rental due to the inability to lease the Premises as a result of such Hazardous Materials the remediation thereof or any repair, restoration or cleanup related thereto. If it is at any time discovered that Tenant or its agents, employees, contractors, subtenants, licensees or invitees may have caused or permitted the release of any Hazardous Materials on, under, from or about the Premises, or any other real or personal property owned by Landlord, Tenant shall, at Landlords request, immediately prepare and submit to Landlord a comprehensive plan, subject to Landlords approval (which shall not be unreasonably withheld), specifying the actions to be taken by Tenant to return the Premises, or any other real or personal property owned by Landlord to the Required Condition. Upon Landlords approval of such plan, Tenant shall, at its expense, and without limitation of any rights and remedies of Landlord under this Lease or at law or in equity, immediately implement such plan and proceed to cleanup, remediate and/or remove all such Hazardous Materials in
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accordance with all applicable laws and as required by such plan and this Lease. The provisions of this Section 5.3(d) shall expressly survive the expiration or sooner termination of this Lease, but Landlord agrees to allow Tenant reasonable entry rights to the Premises, and to otherwise cooperate with Tenant but at no cost or expense to Landlord, to the extent that clean up or remediation work is required after the expiration of or termination of this Lease.
(e) Inasmuch as Tenant was the prior owner and occupant of the Premises, it is understood and agreed that Tenant shall be responsible for the cleanup or remediation of any Hazardous Materials which exist in, on, under or about the Premises on the Commencement Date, but Tenant shall not be liable to Landlord, or otherwise responsible under this Lease for the cleanup or remediation of (i) any Hazardous Materials which may migrate onto the Premises during the Term from real property owned by any person or entity other than Tenant (unless due to the acts of Tenant or anyone acting on behalf of Tenant); or (ii) any Hazardous Materials which are caused or permitted to exist in, on, under or about the Premises by Landlord or anyone acting on behalf of Landlord.
ARTICLE VI. UTILITIES AND SERVICES
SECTION 6.1. UTILITIES AND SERVICES. Tenant shall be responsible for and shall pay promptly, directly to the appropriate supplier, all charges for water, gas, electricity, sewer, telephone and telecommunications service, refuse or trash disposal, and all other utilities and services furnished directly to Tenant or the Premises or used by Tenant in, on or about the Premises during the Term, together with any taxes thereon. Notwithstanding the foregoing, snow and ice removal services, and landscape maintenance, shall be performed by Landlord at its expense.
ARTICLE VII. MAINTENANCE AND REPAIRS
SECTION 7.1. BY LANDLORD.
(a) Landlord, at its sole expense, shall maintain, repair and replace (to the extent required hereunder) the entire Premises, including, but not limited to, the foundations, footings, load bearing walls and other structural elements of the Buildings (including the polycarbonate siding and roofs of the greenhouses, and the roofs of other Buildings), the parking areas and the Building Systems (hereinafter defined), so as to keep same in substantially the same condition that existed on the Commencement Date (or the date of construction, if later), ordinary wear and tear excepted. As used in this Section 7.1(a), the obligation to repair and maintain includes the obligation to replace any item which is determined to have outlived its useful life and is no longer capable of being repaired to its normal functionality, or the cost to repair exceeds fifty percent (50%) of the cost of replacing such item. Notwithstanding anything contained herein, Tenant shall be solely responsible for the cost of any of the foregoing occasioned by the misuse or negligence of Tenant or its agents, employees, contractors, licensees or invitees.
(b) Except as provided in Section 11.1(c) and Section 12.1 below, there shall be no abatement of rent and no liability of Landlord by reason of any injury to or interference with Tenants business arising from the making of any repairs, Alterations or improvements to any portion of the Premises, nor shall any related activity by Landlord constitute an actual or
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constructive eviction; provided, however, that in making repairs, Alterations or improvements, Landlord shall interfere as little as reasonably practicable with the conduct of Tenants business in the Premises.
SECTION 7.2. BY TENANT. Tenant shall have no obligation to maintain, repair or replace the Premises, or any portion thereof, except as required under the last sentence in Section 7.1(a).
SECTION 7.3. ALTERATIONS. Except for Improvements described in Section 2.3 above, Tenant shall make no alterations, additions or improvements (collectively and individually, Alterations) to the Premises or any Buildings without the prior written consent of Landlord, which will not be unreasonably withheld, provided Landlords consent will not be required (a) if the proposed Alterations will not affect the structure of the Premises or the heating, air conditioning, ventilating systems, mechanical, electrical, plumbing or life safety systems of the Building (collectively, the Building Systems) and the cost of the proposed Alterations does not exceed fifty thousand dollars ($50,000) in any instance and one hundred thousand dollars ($100,000.00) in the aggregate during the Term, or (b) for cosmetic Alterations (such as painting, floor or wall covering). In all cases, Tenant shall provide Landlord with written notice prior to performing any Alteration. All Alterations affixed to the Premises (excluding trade fixtures) shall become the property of Landlord and shall be surrendered with the Premises at the end of the Term, unless Landlord notifies Tenant that such Alterations must be removed by written notice delivered to Tenant at the time that Landlord approves of such Alterations or, in the event Landlords approval of such Alterations is not required hereunder, within thirty (30) days following the date on which Tenant provides Landlord with written notice of such Alterations.
SECTION 7.4. MECHANICS LIENS. Tenant shall keep the Premises free from any liens arising out of any work performed, materials furnished, or obligations incurred by or for Tenant. Upon request by Landlord, Tenant shall promptly cause any such lien to be released by payment or posting a bond in accordance with applicable law. In the event that Tenant shall not, within thirty (30) days following the imposition of any lien, cause the lien to be released of record by payment or posting of a proper bond pursuant to the Applicable Law, Landlord shall have, in addition to all other available remedies, the right to cause the lien to be released by any reasonable means it deems proper, including payment of or defense against the claim giving rise to the lien. All reasonable expenses so incurred by Landlord, including Landlords reasonable attorneys fees, shall be reimbursed by Tenant within thirty (30) days following Landlords demand. Tenant shall give Landlord no less than twenty (20) days prior notice in writing before commencing construction of any kind on the Premises so that Landlord may post and maintain notices of nonresponsibility on the Premises.
SECTION 7.5. ENTRY AND INSPECTION. Landlord shall at all reasonable times, upon not less than two (2) business days prior written notice (except in emergencies, in which event no such notice shall be required), have the right to enter the Premises to inspect them, to perform its maintenance and repair obligations in accordance with this Lease, and to submit the Premises to prospective or actual purchasers or encumbrance holders (or, during the last one hundred and eighty (180) days of the Term, to prospective tenants), all without being deemed to have caused an eviction of Tenant and without abatement of rent except Tenant shall have the
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right to accompany Landlord during any such entry (provided that the unavailability or lack of cooperation of a representative of Tenant shall not limit Landlords rights to exercise its rights or perform its obligations under this Section 7.5). Notwithstanding the foregoing, Landlord shall endeavor to coordinate any entry onto the Premises with Tenant so that it does not unreasonably interfere with Tenants business.
ARTICLE VIII. TAXES AND ASSESSMENTS ON TENANTS PROPERTY
Tenant shall be liable for and shall pay before delinquency, all taxes and assessments levied against all personal property (including trade fixtures) of Tenant located on the Premises. When possible, Tenant shall cause its personal property to be assessed and billed separately from the real property of which the Premises form a part. If any taxes on Tenants personal property are levied against Landlord or Landlords property and if Landlord pays the same, or if the assessed value of Landlords property is increased by the inclusion of a value placed upon the personal property of Tenant and if Landlord pays the taxes based upon the increased assessment, Tenant shall pay to Landlord within ten (10) days after written demand therefor the taxes so levied against Landlord or the proportion of the taxes resulting from the increase in the assessment.
ARTICLE IX. ASSIGNMENT AND SUBLETTING
SECTION 9.1. RIGHTS OF PARTIES.
(a) Notwithstanding any provision of this Lease to the contrary, but except as provided in subsection (e) below, Tenant will not, either voluntarily or by operation of law, assign, sublet, encumber, or otherwise transfer (any or all of which are sometimes referenced to herein as a Transfer) all or any part of Tenants interest in this Lease, or permit the Premises to be occupied by anyone other than Tenant, without Landlords prior written consent, which consent shall not unreasonably be withheld in accordance with the provisions of Section 9.1(c). No assignment (whether voluntary, involuntary or by operation of law) and no subletting shall be valid or effective without Landlords prior written consent and, at Landlords election, shall constitute a material default of this Lease. To the extent not prohibited by provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq. (the Bankruptcy Code), including Section 365(f)(1), Tenant on behalf of itself and its creditors, administrators and assigns waives the applicability of Section 365(e) of the Bankruptcy Code unless the proposed assignee of the Trustee for the estate of the bankrupt meets Landlords standard for consent as set forth in Section 9.1(c) of this Lease. If this Lease is assigned to any person or entity pursuant to the provisions of the Bankruptcy Code, any and all monies or other consideration to be delivered in connection with the assignment shall be delivered to Landlord, shall be and remain the exclusive property of Landlord and shall not constitute property of Tenant or of the estate of Tenant within the meaning of the Bankruptcy Code. Any person or entity to which this Lease is assigned pursuant to the provisions of the Bankruptcy Code shall be deemed to have assumed all of the obligations arising under this Lease on and after the date of the assignment, and shall upon demand execute and deliver to Landlord an instrument confirming that assumption.
(b) If Tenant is a corporation, or is an unincorporated association, partnership or limited liability company (other than a publicly-traded corporation or other entity), the transfer of
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any stock or ownership interest in the corporation, association, partnership or limited liability company which results in a change in the voting control of Tenant shall be deemed a Transfer within the meaning and provisions of this Article IX.
(c) If Tenant desires to enter into a Transfer, it shall first notify Landlord of its desire and shall submit in writing to Landlord: (i) the name and address of the proposed assignee or sublessee; (ii) the nature of any proposed assignees or sublessees business to be carried on in the Premises; and (iii) the terms and provisions of any proposed sublease or assignment. Except as provided in subsection (d) below, Landlord shall not unreasonably withhold its consent, provided: (1) the use of the Premises will be consistent with the provisions of this Lease (but Landlord will not unreasonably withhold its consent to a proposed change in use as long as the proposed change is permitted under applicable zoning ordinances); and (2) any proposed subtenant or assignee demonstrates that it is financially responsible by submission to Landlord of all reasonable information as Landlord may request concerning the proposed subtenant or assignee, including, but not limited to, a balance sheet of the proposed subtenant or assignee as of a date within ninety (90) days of the request for Landlords consent and statements of income or profit and loss of the proposed subtenant or assignee for the one-year period preceding the request for Landlords consent. If Landlord consents to the proposed Transfer, Tenant may within sixty (60) days after the date of the consent effect the Transfer upon the terms described in the information furnished to Landlord; provided that any material change in the terms shall be subject to Landlords consent as set forth in this Section 9.1. Landlord shall approve or disapprove any requested Transfer within fifteen (15) business days following receipt of Tenants written request and the information set forth above. Tenant shall reimburse Landlord for its reasonable out of pocket expenses incurred in the evaluation of Tenants request for Landlords consent to a Transfer, if and when any Transfer requested by Tenant is approved.
(d) Notwithstanding the provisions of subsection (c) above, in lieu of consenting to a proposed assignment of this Lease or to a subletting of all or substantially all of the Premises for all or substantially the remainder of the Term (other than an assignment or subletting to a Tenant Affiliate pursuant to subsection (e) below), Landlord may elect to (i) sublease the Premises (or the portion proposed to be so subleased), or take an assignment of Tenants interest in this Lease, upon the same terms as offered to the proposed subtenant or assignee, or (ii) terminate this Lease as to the portion of the Premises proposed to be subleased or assigned with a proportionate abatement in the rent payable under this Lease, effective on the date that the proposed sublease or assignment would have become effective. Landlord may thereafter, at its option, assign or re-let any space so recaptured to any third party, including without limitation the proposed transferee of Tenant. Should Landlord elect to exercise its rights under this subsection (d), then Tenant shall have the right, by written notice to Landlord given within five (5) business days following such election by Landlord, to rescind its request to effect an assignment or subletting, in which event Tenants proposed assignment or subletting shall not be consummated and Landlords recapture election shall be null and void.
(e) Provided (i) Tenant is not in material default hereunder, and (ii) no such transaction is undertaken with the intent of circumventing the Transfer restrictions under this Section 9.1, Tenant may, without Landlords consent but with prior written notice to Landlord, assign this Lease or sublease all or any portion of the Premises to (a) any entity resulting from a merger or consolidation with Tenant, (b) any entity succeeding to the business and assets of
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Tenant (including a sale of stock or other ownership interests of Tenant to such successor entity), or (c) any entity controlling, controlled by, or under common control with, Tenant, or the principal owners (shareholders, partners, members, etc.) of Tenant (collectively, a Tenant Affiliate) effecting such Transfer.
SECTION 9.2. EFFECT OF TRANSFER. No Transfer, even with the consent of Landlord, shall relieve Tenant, or any successor-in-interest to Tenant hereunder, of its obligation to pay rent and to perform all its other obligations under this Lease. Moreover, Tenant shall indemnify and hold Landlord harmless, as provided in Section 10.3, for any act or omission by an assignee or subtenant. Each assignee shall be deemed to assume all obligations of Tenant under this Lease and shall be liable jointly and severally with Tenant for the payment of all rent, and for the due performance of all of Tenants obligations, under this Lease. Such joint and several liability shall not be discharged or impaired by any subsequent modification or extension of this Lease. No Transfer shall be binding on Landlord unless any document memorializing the Transfer is delivered to Landlord and, except with respect to a Transfer to a Tenant Affiliate, both the assignee/subtenant and Tenant deliver to Landlord an executed consent to Transfer instrument prepared by Landlord and consistent with the requirements of this Article IX. The acceptance by Landlord of any payment due under this Lease from any other person shall not be deemed to be a waiver by Landlord of any provision of this Lease or to be a consent to any Transfer. Consent by Landlord to one or more Transfers shall not operate as a waiver or estoppel to the future enforcement by Landlord of its rights under this Lease.
SECTION 9.3. SUBLEASE REQUIREMENTS. The following terms and conditions shall apply to any subletting by Tenant of all or any part of the Premises:
(a) Tenant hereby irrevocably assigns to Landlord all of Tenants interest in all rentals and income arising from any sublease of the Premises, and Landlord may collect such rent and income and apply same toward Tenants obligations under this Lease; provided, however, that until a default occurs in the performance of Tenants obligations under this Lease, Tenant shall have the right to receive and collect the sublease rentals. Landlord shall not, by reason of this assignment or the collection of sublease rentals, be deemed liable to the subtenant for the performance of any of Tenants obligations under the sublease. Tenant hereby irrevocably authorizes and directs any subtenant, upon receipt of a written notice from Landlord stating that an uncured default exists in the performance of Tenants obligations under this Lease, to pay to Landlord all sums then and thereafter due under the sublease. Tenant agrees that the subtenant may rely on that notice without any duty of further inquiry and notwithstanding any notice or claim by Tenant to the contrary. Tenant shall have no right or claim against the subtenant or Landlord for any rentals so paid to Landlord. In the event Landlord collects amounts from subtenants that exceed the total amount then due from Tenant hereunder, Landlord shall promptly remit the excess to Tenant.
(b) In the event of the termination of this Lease, Landlord may, at its sole option, take over Tenants entire interest in any sublease and, upon notice from Landlord, the subtenant shall attorn to Landlord. In no event, however, shall Landlord be liable for any previous act or omission by Tenant under the sublease or for the return of any advance
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rental payments or deposits under the sublease that have not been actually delivered to Landlord, nor shall Landlord be bound by any sublease modification executed without Landlords consent or for any advance rental payment by the subtenant in excess of one months rent. The general provisions of this Lease, including without limitation those pertaining to insurance and indemnification, shall be deemed incorporated by reference into the sublease despite the termination of this Lease.
ARTICLE X. INSURANCE AND INDEMNITY
SECTION 10.1. TENANTS INSURANCE. Tenant, at its sole cost and expense, shall provide and maintain in effect during the Term the insurance described in Exhibit C. Evidence of such insurance must be delivered to Landlord prior to the Commencement Date, and upon each renewal date of the applicable policies.
SECTION 10.2. LANDLORDS INSURANCE. Landlord shall obtain and maintain in effect during the Term, at Landlords expense:
(a) Property insurance, subject to standard exclusions, covering the full replacement value of the Premises, and such other risks as Landlord or its mortgagees may from time to time reasonably deem appropriate, with commercially reasonable deductible amounts. Landlord shall not be required to carry insurance of any kind on Tenants trade fixtures or other items of personal property, and except as provided in Section 10.3(b) shall not be obligated to repair or replace such trade fixtures or personal property should damage occur.
(b) A policy insuring the loss of Basic Rent for twelve (12) months, which policy shall contain an actual loss sustained provision in lieu of any coinsurance clause.
(c) Commercial general liability insurance with a per occurrence and annual aggregate limit of liability of at least Five Million Dollars ($5,000,000).
(d) All proceeds of insurance maintained by Landlord upon the Improvements shall be the property of Landlord, whether or not Landlord is obligated to or elects to make any repairs.
SECTION 10.3. INDEMNITY.
(a) To the fullest extent permitted by law, Tenant shall defend, indemnify and hold harmless Landlord, its agents, lenders, and any and all affiliates of Landlord, from and against any and all claims, liabilities, costs or expenses arising on or after the Commencement Date from Tenants use or occupancy of the Premises, or from the conduct of its business, or from any activity, work, or thing done, permitted or suffered by Tenant or its agents, employees, subtenants, invitees or licensees in or about the Premises, or from any default in the performance of any obligation on Tenants part to be performed under this Lease, or from any negligence or willful misconduct of Tenant or its agents, employees, invitees or licensees. Landlord may, at its option, require Tenant to assume Landlords defense in any action covered by this Section 10.3.
(b) To the fullest extent permitted by law, but subject to Section 10.4, Landlord shall indemnify and hold harmless Tenant from and against any and all claims, liabilities, costs or expenses arising on or after the Commencement Date from the negligence or willful misconduct of Landlord or anyone acting on behalf of or under the direction of Landlord.
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(c) Unless otherwise expressly provided in this Lease, neither Landlord nor Tenant will be liable for punitive damages, consequential damages or special damages (it being expressly acknowledged and agreed that any damages incurred by a party hereto arising out of third party claims for which indemnification is required pursuant to this Lease shall be deemed actual damages of the party which incurs them and not subject to the foregoing exclusion).
(d) The terms of this Section 10.3 shall survive the expiration or earlier termination of this Lease.
SECTION 10.4. LANDLORDS NONLIABILITY. Except only to the extent arising from the negligence (which includes, without limitation, the negligent failure to comply with Applicable Laws) or willful misconduct of Landlord or its employees or agents, Landlord shall not be liable to Tenant, its employees, agents and invitees, and Tenant hereby waives all claims against Landlord, its employees and agents for loss of or damage to any property, or any injury to any person, resulting from fire, explosion, falling plaster, steam, gas, electricity, water or rain which may leak or flow from or into any part of the Premises or from the breakage, leakage, obstruction or other defects of the pipes, sprinklers, wires, appliances, plumbing, air conditioning, electrical works or other fixtures in the Premises, whether the damage or injury results from conditions arising in the Premises, it being agreed that Tenant shall be responsible for obtaining appropriate insurance to protect its interests.
SECTION 10.5. WAIVER OF SUBROGATION. Landlord and Tenant each hereby waives all rights of recovery against the other on account of loss and damage occasioned to the property of such waiving party to the extent that the waiving party is or would be entitled to proceeds for such loss and damage under any property insurance policies carried or otherwise required to be carried by this Lease, provided that the foregoing waiver shall not apply to Tenants obligation to pay for the deductibles under any such policies. By this waiver it is the intent of the parties that neither Landlord nor Tenant shall be liable to any insurance company (by way of subrogation or otherwise) insuring the other party for any loss or damage insured against under any property insurance policies, even though such loss or damage might be occasioned by the negligence of such party, its agents, employees, contractors or invitees.
ARTICLE XI. DAMAGE OR DESTRUCTION
SECTION 11.1. RESTORATION.
(a) If any Buildings are damaged as the result of an event of casualty, Landlord shall repair that damage (at Landlords sole cost and expense and without seeking reimbursement from Tenant; provided however, that Landlord may elect to terminate the Lease if: (i) Landlord reasonably determines that the cost of repair would exceed ten percent (10%) of the full replacement cost of all of the Buildings (Replacement Cost) and the damage is not covered by Landlords fire and extended coverage insurance (or by a normal extended coverage policy should Landlord fail to carry that insurance); or (ii) Landlord reasonably determines that the cost of repair would exceed twenty-five percent (25%) of the Replacement Cost; or (iii) Landlord reasonably determines that the cost of repair would exceed ten percent (10%) of the Replacement Cost and the damage occurs during the final twelve (12) months of the Term (unless Tenant has exercised, or exercises within ten (10) business days after receipt of a Casualty Notice (as
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defined herein), its right to extend the Term). Should Landlord elect not to repair the damage for one of the preceding reasons, Landlord shall so notify Tenant in the Casualty Notice (as defined below), and this Lease shall terminate as of the date of delivery of that notice. Notwithstanding the foregoing, if Tenant commits to pay the cost repair in excess of available insurance proceeds, by giving notice to Landlord within ten (10) business days after receipt of the Casualty Notice, then this Lease shall not terminate but shall continue in full force and effect, subject to Section 11.1(c) and Section 11.1(d).
(b) As soon as reasonably practicable following Landlord receiving knowledge of the casualty event, but not later than thirty (30) days thereafter, Landlord shall notify Tenant in writing (Casualty Notice) of Landlords election, if applicable, to terminate this Lease. If this Lease is not so terminated, the Casualty Notice shall set forth the anticipated period for repairing the casualty damage. If the anticipated repair period exceeds two hundred forty (240) days following the casualty event (the Maximum Period) and if the damage is so extensive as to substantially interfere with Tenants use and enjoyment of the Premises, then Tenant may elect to terminate this Lease by written notice to Landlord within ten (10) business days following delivery of the Casualty Notice. Upon termination, Basic Rent shall be apportioned as of the date of the damage and, provided Tenant is not in default, all prepaid Basic Rent shall be repaid to Tenant.
(c) From and after the date of the casualty event, the Basic Rent to be paid under this Lease shall be abated in the same proportion that the floor area of the Premises that is rendered unusable by the damage from time to time bears to the total floor area of the Premises.
(d) Notwithstanding the provisions of subsections (a), (b) and (c) of this Section 11.1, the cost of any repairs shall be borne by Tenant, and Tenant shall not be entitled to rental abatement or termination rights, if the damage is caused by the negligence or willful misconduct of Tenant or its employees, subtenants, invitees or representatives.
SECTION 11.2. LEASE GOVERNS. Tenant agrees that the provisions of this Lease, including without limitation Section 11.1, shall govern any damage or destruction and shall accordingly supersede any contrary Applicable Law.
ARTICLE XII. EMINENT DOMAIN
SECTION 12.1. TOTAL OR PARTIAL TAKING. If all or a material portion of the Premises is taken by any lawful authority by exercise of the right of eminent domain, or sold to prevent a taking, or if a taking or sale in lieu thereof occurs which substantially interferes with Tenants use and enjoyment of the Premises, either Tenant or Landlord may terminate this Lease by notice to the other party prior to the date possession is required to be surrendered to the authority and effective as of the date of such surrender of possession. In the event neither party has the right to or has elected to terminate this Lease as provided above, then Landlord shall promptly proceed to restore the Premises to substantially its condition prior to the taking (at Landlords sole cost and expense), but excluding any Alterations made by Tenant, and a proportionate abatement of rent shall be made to Tenant for the rent corresponding to the time during which, and to the part of the Premises of which, Tenant is deprived on account of the taking and restoration. In the event of a taking, Landlord shall be entitled to the entire amount of
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the condemnation award without deduction for any estate or interest of Tenant; provided that nothing in this Section 12.1 shall be deemed to give Landlord any interest in, or prevent Tenant from seeking any award against the taking authority for, the taking of personal property and trade fixtures belonging to Tenant or for relocation or business interruption expenses recoverable from the taking authority, or for any other claim for which Tenant is entitled to compensation by the taking authority under Applicable Law.
SECTION 12.2. TEMPORARY TAKING. No temporary taking of the Premises shall terminate this Lease, but any award specifically attributable to a temporary taking of the Premises shall belong entirely to Tenant. A temporary taking shall be deemed to be a taking of the use or occupancy of the Premises for a period of not to exceed ninety (90) days.
ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE
SECTION 13.1. SUBORDINATION. At the option of Landlord or any of its mortgagees/trust indenture beneficiaries, this Lease shall be either superior or subordinate to all ground or underlying leases, mortgages and deeds of trust, if any, which may hereafter affect the Premises, and to all renewals, modifications, consolidations, replacements and extensions thereof; provided, that so long as Tenant is not in default under this Lease, this Lease shall not be terminated or Tenants quiet enjoyment of the Premises disturbed in the event of termination of any such ground or underlying lease, or the foreclosure of any such mortgage or trust indenture, to which Tenant has subordinated this Lease pursuant to this Section 13.1. In the event of a termination or foreclosure, Tenant shall become a tenant of and attorn to the successor-in-interest to Landlord upon the same terms and conditions as are contained in this Lease, and shall promptly execute any reasonable instrument required by Landlords successor for that purpose. Tenant shall also, within ten (10) business days following written request of Landlord (or the beneficiary under any trust indenture encumbering the Premises), execute and deliver all reasonable instruments as may be required from time to time by Landlord or such beneficiary (including without limitation any commercially reasonable subordination, nondisturbance and attornment agreement) to subordinate this Lease and the rights of Tenant under this Lease to any ground or underlying lease or to the lien of any mortgage or trust indenture; provided, however, that any such beneficiary may, by written notice to Tenant given at any time, subordinate the lien of its trust indenture to this Lease. Notwithstanding this Section 13.1, Tenant shall only be obligated to subordinate its leasehold interest to any mortgage, trust indenture, or underlying lease now or hereafter placed upon the Premises if the instrument evidencing such subordination does not require Tenant to increase its leasehold obligations and if the holder of such mortgage or trust indenture or the landlord under such underlying lease will grant to Tenant a commercially reasonable non-disturbance agreement, which will provide that Tenant, notwithstanding any default of Landlord hereunder, shall have the right to remain in possession of the Premises in accordance with the terms and provisions of this Lease for so long as Tenant shall not be in default under this Lease. Tenant acknowledges that Landlords mortgagees and successors-in-interest and all beneficiaries under deeds of trust encumbering the Premises are intended third party beneficiaries of this Section 13.1.
SECTION 13.2. ESTOPPEL CERTIFICATE. Tenant shall, at any time upon not less than ten (10) business days prior written notice from Landlord, execute, acknowledge and deliver to Landlord a commercially reasonable form of estoppel certificate (i) certifying that this Lease
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is unmodified and in full force and effect (or, if modified, stating the nature of the modification and certifying that this Lease, as modified, is in full force and effect) and the dates to which the rental, additional rent and other charges have been paid in advance, if any, and (ii) acknowledging that, to Tenants actual best knowledge, there are no material uncured defaults on the part of Landlord, or specifying each default if any are claimed, and (iii) acknowledging, to Tenants best knowledge, such further factual information that Landlord may reasonably request, provided Tenant is not thereby required to increase its obligations under this Lease. Tenants statement may be relied upon by any prospective purchaser or encumbrancer of all or any portion of the Premises.
SECTION 13.3. MEMORANDUM OF LEASE. At the request of either Landlord or Tenant, a memorandum of lease shall be executed by both parties, which shall be recorded (at the expense of the requesting party) in the offices of the Recorder of Ravalli County, Montana.
ARTICLE XIV. DEFAULTS AND REMEDIES
SECTION 14.1. TENANTS DEFAULTS. The occurrence of any one or more of the following events shall constitute a default by Tenant:
(a) The failure by Tenant to make any payment of Basic Rent or any other payments of rent required to be made by Tenant, as and when due, where the failure continues for a period of five (5) business days after written notice from Landlord to Tenant; provided, however, that any such notice shall be in lieu of, and not in addition to, any notice required under Applicable Law.
(b) Any Transfer of this Lease by Tenant, either voluntarily or by operation of law, whether by judgment, execution, transfer by intestacy or testacy, or other means, in violation of Article IX above.
(c) The failure or inability by Tenant to observe or perform any of the covenants or provisions of this Lease to be observed or performed by Tenant, other than as specified in any other subsection of this Section 14.1, where the failure continues for a period of thirty (30) days after written notice from Landlord to Tenant; provided, however, that any such notice shall be in lieu of, and not in addition to, any notice required under Applicable Law. However, if the nature of the failure is such that more than thirty (30) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant commences the cure within thirty (30) days, thereafter diligently pursues the cure to completion.
(d) (i) The making by Tenant of any general assignment for the benefit of creditors; (ii) the filing by or against Tenant of a petition to have Tenant adjudged a Chapter 7 debtor under the Bankruptcy Code or to have debts discharged or a petition for reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against Tenant, the same is dismissed within sixty (60) days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Tenants assets located at the Premises or of Tenants interest in this Lease, if possession is not restored to Tenant within sixty (60) days; (iv) the attachment, execution or other judicial seizure of substantially all of Tenants assets located at the Premises or of Tenants interest in this Lease, where the seizure is not discharged within sixty (60) days;
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or (v) Tenants convening of a meeting of its creditors for the purpose of effecting a moratorium upon or composition of its debts. In the event that any provision of this subsection (d) is contrary to the Bankruptcy Code or any other Applicable Law, the provision shall be of no force or effect.
SECTION 14.2. LANDLORDS REMEDIES.
(a) In the event of any default by Tenant, then in addition to any other remedies available to Landlord at law or equity, Landlord may exercise the following remedies:
(i) Landlord may terminate Tenants right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Tenant shall immediately surrender possession of the Premises to Landlord. Such termination shall not affect any accrued obligations of Tenant under this Lease. Upon termination, Landlord shall have the right to reenter the Premises and remove all persons and property. Landlord shall also be entitled to recover from Tenant:
(1) The worth at the time of award of the unpaid rent and additional rent which had been earned at the time of termination;
(2) The worth at the time of award of the amount by which the unpaid rent and additional rent which would have been earned after termination until the time of award exceeds the amount of such loss that Tenant proves could have been reasonably avoided;
(3) The worth at the time of award of the amount by which the unpaid rent and additional rent for the balance of the Term after the time of award exceeds the amount of such loss that Tenant proves could be reasonably avoided;
(4) Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenants failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result from Tenants default, including, but not limited to, the cost of recovering possession of the Premises, commissions and other expenses of reletting, including necessary and reasonable repair, renovation, improvement and alteration of the Premises for a new tenant, the unamortized portion of any tenant improvements and brokerage commissions funded by Landlord in connection with this Lease, reasonable attorneys fees, and any other reasonable costs; and
(5) At Landlords election, all other amounts in addition to or in lieu of the foregoing as may be permitted by Applicable Law. As used in subparagraphs (1) and (2) above, the worth at the time of award shall be computed by allowing interest at the rate of five percent (5%) per annum. As used in subparagraph (3) above, the worth at the time of award shall be computed by discounting the amount at the discount rate of the Federal Reserve Bank of Minneapolis at the time of award plus one percent (1%).
(ii) Landlord may elect not to terminate Tenants right to possession of the Premises, in which event Landlord may continue to enforce all of its rights and remedies under this Lease, including the right to collect all rent as it becomes due. Efforts by the Landlord to maintain, preserve or relet the Premises, or the appointment of a receiver to protect the
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Landlords interests under this Lease, shall not constitute a termination of the Tenants right to possession of the Premises. In the event that Landlord elects to avail itself of the remedy provided by this subsection (ii), Landlord shall not unreasonably withhold its consent to an assignment or subletting of the Premises subject to the reasonable standards for Landlords consent as are contained in this Lease.
(b) The various rights and remedies reserved to Landlord in this Lease or otherwise shall be cumulative and, except as otherwise provided by Montana law, Landlord may pursue any or all of its rights and remedies at the same time. No delay or omission of Landlord to exercise any right or remedy shall be construed as a waiver of the right or remedy or of any default by Tenant. The acceptance by Landlord of rent shall not be a (i) waiver of any preceding breach or default by Tenant of any provision of this Lease, other than the failure of Tenant to pay the particular rent accepted, regardless of Landlords knowledge of the preceding breach or default at the time of acceptance of rent, or (ii) a waiver of Landlords right to exercise any remedy available to Landlord by virtue of the breach or default. The acceptance of any payment from a debtor in possession, a trustee, a receiver or any other person acting on behalf of Tenant or Tenants estate shall not waive or cure a default under Section 14.1. No payment by Tenant or receipt by Landlord of a lesser amount than the rent required by this Lease shall be deemed to be other than a partial payment on account of the earliest due stipulated rent, nor shall any endorsement or statement on any check or letter be deemed an accord and satisfaction and Landlord shall accept the check or payment without prejudice to Landlords right to recover the balance of the rent or pursue any other remedy available to it. No act or thing done by Landlord or Landlords agents during the Term shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept a surrender shall be valid unless in writing and signed by Landlord. No employee of Landlord or of Landlords agents shall have any power to accept the keys to the Premises prior to the termination of this Lease, and the delivery of the keys to any employee shall not operate as a termination of the Lease or a surrender of the Premises.
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SECTION 14.3. LATE PAYMENTS.
(a) Any Basic Rent due under this Lease that is not paid to Landlord within ten (10) days of the date when due shall bear interest at the rate of five percent (5%) per annum from the date due until fully paid. The payment of interest shall not cure any default by Tenant under this Lease. In addition, Tenant acknowledges that the late payment by Tenant to Landlord of rent will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult and impracticable to ascertain. Those costs may include, but are not limited to, administrative, processing and accounting charges, and late charges which may be imposed on Landlord by the terms of any ground lease, mortgage or trust deed covering the Premises. Accordingly, if any Basic Rent from Tenant shall not be received by Landlord within ten (10) days after the date due, then Tenant shall pay to Landlord, in addition to the interest provided above, a late charge in the amount of five hundred dollars ($500.00) for each delinquent payment after the first delinquent payment during each Lease Year. Acceptance of a late charge by Landlord shall not constitute a waiver of Tenants default with respect to the overdue amount, nor shall it prevent Landlord from exercising any of its other rights and remedies.
SECTION 14.4. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be performed by Tenant under this Lease shall be performed at Tenants sole cost and expense and without any abatement of rent or right of set-off. If Tenant fails to pay any sum of money, or fails to perform any other act on its part to be performed under this Lease, and the failure continues beyond any applicable notice and cure period, then in addition to any other available remedies, Landlord may, at its election make the payment or perform the other act on Tenants part. Landlords election to make the payment or perform the act on Tenants part shall not give rise to any responsibility of Landlord to continue making the same or similar payments or performing the same or similar acts. Tenant shall, within thirty (30) days following demand by Landlord, reimburse Landlord for all sums paid by Landlord.
SECTION 14.5. DEFAULT BY LANDLORD. Except as otherwise specifically provided in this Lease, Landlord shall not be deemed to be in default in the performance of any obligation under this Lease unless and until it has failed to perform the obligation within thirty (30) days after written notice by Tenant to Landlord specifying in reasonable detail the nature and extent of the failure; provided, however, that if the nature of Landlords obligation is such that more than thirty (30) days are required for its performance, then Landlord shall not be deemed to be in default if it commences performance within the thirty (30) day period and thereafter diligently pursues the cure to completion. In the event of a default by Landlord beyond any applicable notice and cure period, Tenant shall have all rights and remedies at law and in equity. Furthermore, in the event Landlord defaults in the performance of any of its obligations under Section 7.1(a) of this Lease (collectively, Landlord Repair Obligations), Tenant, may elect to perform such obligations (Tenants Self-Help Remedy). In the event that Tenant properly elects Tenants Self-Help Remedy, Landlord shall reimburse Tenant for one hundred five percent (105%) of the third-party costs and expenses actually incurred and paid by Tenant to perform any Landlord Repair Obligations with respect to which Landlord has defaulted within ten (10) days after Landlords receipt of a statement of such reasonable costs and expenses and paid receipts for such work and the completion of such work. Any work performed by Tenant pursuant to its election of Tenants Self-Help Remedy shall comply with all
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applicable requirements and standards relating to any repairs, replacements or additions to the Premises set forth in this Lease.
SECTION 14.6. EXPENSES AND LEGAL FEES. Should either Landlord or Tenant bring any legal action in connection with the interpretation or enforcement of this Lease, the prevailing party shall be entitled to recover from the non-prevailing party its reasonable attorneys fees and costs.
ARTICLE XV. END OF TERM
SECTION 15.1. HOLDING OVER. This Lease shall terminate without further notice upon the expiration of the Term, and any holding over by Tenant after the expiration shall not constitute a renewal or extension of this Lease, or give Tenant any rights under this Lease, except when in writing signed by both parties. If Tenant holds over for any period after the expiration (or earlier termination) of the Term, Landlord may, at its option, treat Tenant as a tenant at sufferance only, commencing on the first (1st) day following the termination of this Lease. Any hold-over by Tenant shall be subject to all of the terms of this Lease, except that the monthly rental shall be one hundred twenty-five percent (125%) of the Basic Rent for the month immediately preceding the date of termination for the first month and one hundred fifty percent (150%) of the Basic Rent thereafter. Acceptance by Landlord of rent after the termination shall not constitute a consent to a holdover or result in a renewal of this Lease. The foregoing provisions of this Section 15.1 are in addition to and do not affect Landlords right of re-entry or any other rights of Landlord under this Lease or at law.
SECTION 15.2. MERGER ON TERMINATION. The voluntary or other surrender of this Lease by Tenant, or a mutual termination of this Lease, shall terminate any or all existing subleases unless Landlord, at its option, elects in writing to treat the surrender or termination as an assignment to it of any or all subleases affecting the Premises.
SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Upon the Expiration Date or upon any earlier termination of this Lease, Tenant shall quit and surrender possession of the Premises to Landlord in good order, condition and repair, reasonable wear and tear and repairs which are Landlords obligation under this Lease excepted, and shall, without expense to Landlord, remove or cause to be removed all trade fixtures and personal property, except for any items that Landlord may by written authorization allow to remain. Tenant shall also remove those Alterations made by Tenant during the Term which are required by Landlord to be removed pursuant to Section 7.3 of this Lease. Tenant shall repair all damage to the Premises resulting from any removal performed pursuant to this Section 15.3, which repair shall include the patching and filling of holes and repair of structural damage, provided that Landlord may instead elect to repair any structural damage at Tenants expense. If Tenant shall fail to comply with the provisions of this Section 15.3, Landlord may effect the removal and/or make any repairs, and the cost to Landlord shall be payable by Tenant upon demand.
ARTICLE XVI. PAYMENTS AND NOTICES
All sums payable by Tenant to Landlord shall be paid, without deduction or offset, in lawful money of the United States to Landlord at its address set forth in Item 13 of the Basic
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Lease Provisions, or at any other place as Landlord may designate in writing with at least ten (10) days prior notice. Unless this Lease expressly provides otherwise, all payments shall be due and payable within thirty (30) days after demand. All payments requiring proration shall be prorated on the basis of the number of days in the pertinent calendar month or year, as applicable. Any notice, election, demand, consent, approval or other communication to be given or other document to be delivered by either party to the other may be delivered to the other party, at the address set forth in Item 8 of the Basic Lease Provisions, by personal service, or by any courier or overnight express mailing service, or may be deposited in the United States mail, certified mail, postage prepaid. Either party may, by at least ten (10) days written notice to the other, served in the manner provided in this Article, designate a different address. Service of notices shall be deemed effective upon delivery, except that if any notice or other document is sent by mail, it shall be deemed served or delivered upon actual receipt or upon attempted delivery during normal business hours.
ARTICLE XVII. NO BROKERS
Each party warrants that it has had no dealings with any real estate broker or agent who is entitled to a commission in connection with the negotiation or execution of this Lease, and agrees to indemnify and hold the other party harmless from any cost, expense or liability (including reasonable attorneys fees) for any compensation, commissions or charges claimed by any other real estate broker or agent employed or claiming to represent or to have been employed by the indemnifying party in connection with the negotiation and execution of this Lease. The foregoing agreement shall survive the termination of this Lease.
ARTICLE XVIII. TRANSFER OF LANDLORDS INTEREST
In the event of any transfer of Landlords interest in the Premises, the transferor shall be automatically relieved of all obligations on the part of Landlord accruing under this Lease from and after the date of the transfer, provided that the transferee assumes (in writing) the obligations of Landlord hereunder accruing from and after the date of the transfer. Tenant shall be promptly notified of any such transfer. It is intended that the covenants and obligations contained in this Lease on the part of Landlord shall, subject to the foregoing, be binding on Landlord, its successors and assigns, only during and in respect to their respective successive periods of ownership. None of Landlords covenants, undertakings or agreements under this Lease is made or intended as personal covenants, undertakings or agreements by Landlord, or by any of Landlords shareholders, directors, officers, trustees or constituent partners. All liability for damage or breach or nonperformance by Landlord shall be collectible only out of Landlords interest from time to time in the Premises, and no personal liability is assumed by nor at any time may be asserted against Landlord or any of Landlords shareholders, directors, officers, trustees or constituent partners.
ARTICLE XIX. INTERPRETATION
SECTION 19.1. GENDER AND NUMBER. Whenever the context of this Lease requires, the words Landlord and Tenant shall include the plural as well as the singular, and words used in neuter, masculine or feminine genders shall include the others.
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SECTION 19.2. HEADINGS. The captions and headings of the articles and sections of this Lease are for convenience only, are not a part of this Lease and shall have no effect upon its construction or interpretation.
SECTION 19.3. SUCCESSORS. Subject to Articles IX and XVII, all rights and liabilities given to or imposed upon Landlord and Tenant shall extend to and bind their respective heirs, executors, administrators, successors and assigns. Nothing contained in this Section 19.3 is intended, or shall be construed, to grant to any person other than Landlord and Tenant and their successors and assigns any rights or remedies under this Lease.
SECTION 19.4. TIME OF ESSENCE. Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor.
SECTION 19.5. CONTROLLING LAW. This Lease shall be governed by and interpreted in accordance with the laws of the State of Montana.
SECTION 19.6. SEVERABILITY. If any term or provision of this Lease, the deletion of which would not adversely affect the receipt of any material benefit by either party or the deletion of which is consented to by the party adversely affected, shall be held invalid or unenforceable to any extent, the remainder of this Lease shall not be affected and each term and provision of this Lease shall be valid and enforceable to the fullest extent permitted by Applicable Law.
SECTION 19.7. WAIVER. One or more waivers by Landlord or Tenant of any default under any term, covenant or condition contained in this Lease shall not be a waiver of any subsequent default of the same or any other term, covenant or condition. Consent to any act by one of the parties shall not be deemed to render unnecessary the obtaining of that partys consent to any subsequent act. No default or other provision of this Lease shall be deemed to have been waived unless the waiver is in a writing and signed by the waiving party.
SECTION 19.8. INABILITY TO PERFORM. In the event that either party shall be delayed or hindered in or prevented from the performance of any work or in performing any act required under this Lease by reason of any cause beyond the reasonable control of that party, then the performance of the work or the doing of the act shall be excused for the period of the delay and the time for performance shall be extended for a period equivalent to the period of the delay. The provisions of this Section 19.8 shall not operate to excuse either party from the prompt payment of a monetary obligation.
SECTION 19.9. ENTIRE AGREEMENT. This Lease and its exhibits and other attachments cover in full each and every agreement of every kind between the parties concerning the Premises, and all preliminary negotiations, oral agreements, understandings and/or practices, except those contained in this Lease, are superseded and of no further effect. Tenant waives its rights to rely on any representations or promises made by Landlord or others which are not contained in this Lease. No verbal agreement or implied covenant shall be held to modify the provisions of this Lease, any statute, law, or custom to the contrary notwithstanding.
SECTION 19.10. QUIET ENJOYMENT. Upon the observance and performance of all the covenants, terms and conditions on Tenants part to be observed and performed, and subject
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to the other provisions of this Lease, Tenant shall peaceably and quietly hold and enjoy the Premises for the Term without hindrance or interruption by Landlord or any other person claiming by or through Landlord.
SECTION 19.11. SURVIVAL. All covenants of Landlord or Tenant which are expressly stated to, or which reasonably would be intended to survive the expiration or sooner termination of this Lease, including without limitation any warranty or indemnity hereunder, shall so survive and continue to be binding upon and inure to the benefit of the respective parties and their successors and assigns.
ARTICLE XX. EXECUTION AND RECORDING
SECTION 20.1. COUNTERPARTS. This Lease may be executed in one or more counterparts, each of which shall constitute an original and all of which shall be one and the same agreement.
SECTION 20.2. CORPORATE AND PARTNERSHIP AUTHORITY. If Tenant is a corporation or partnership, each individual executing this Lease on behalf of the corporation or partnership represents and warrants that he is duly authorized to execute and deliver this Lease on behalf of the corporation or partnership, and that this Lease is binding upon the corporation or partnership in accordance with its terms.
SECTION 20.3. AMENDMENTS. No amendment or mutual termination of this Lease shall be effective unless in writing signed by authorized signatories of Tenant and Landlord, or by their respective successors in interest. No actions, policies, oral or informal arrangements, business dealings or other course of conduct by or between the parties shall be deemed to modify this Lease in any respect.
SECTION 20.4. OFAC. Tenant represents and warrants to and covenants with Landlord that (i) neither Tenant nor any Tenant Affiliates, nor to the best of Tenants knowledge any of Tenants or Tenant Affiliates officers, directors, members, partners, shareholders or other equity interest holders currently is, nor shall any of them be, at any time during the Term, in violation of any laws relating to terrorism or money laundering that may now or hereafter be in effect (collectively, the Anti-Terrorism Laws), including, without limitation, Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, any regulations of the U.S. Treasury Departments Office of Foreign Assets Control (OFAC) related to Specially Designated Nationals and Blocked Persons that may now or hereafter be in effect, and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56) (as heretofore or hereafter amended, the USA Patriot Act); (ii) none of Tenant or the Tenant Affiliates is nor shall any of them be, during the Term, a Prohibited Person. A Prohibited Person is (1) a person or entity owned or controlled by, affiliated with, or acting for or on behalf of, any person or entity that is identified as a Specially Designated National on the then most current list published by OFAC at its official website, http://www.treas.gov/offices/enforcement/ofac/sdn/t11sdn.pdf, or at any replacement website or other replacement official publication of such list, or (2) a person or entity who is identified as, or affiliated with, a person or entity designated as a terrorist, or associated with terrorism or money laundering, pursuant to regulations promulgated in
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connection with the USA Patriot Act); and (iii) Tenant has taken, and shall continue to take during the Term, reasonably appropriate steps to understand its legal obligations under the Anti-Terrorism Laws and has implemented, and shall continue to implement during the Term, appropriate procedures to assure its continued compliance with the above-referenced laws. Tenant hereby defends, indemnifies, and holds harmless Landlord and its affiliates and their respective officers, directors, members, partners, shareholders and other equity interest holders from and against any and all claims, losses, costs, liabilities, damages and expenses suffered or incurred by any or all of Landlord or any of such other indemnitees arising from, or related to, any breach of the foregoing representations, warranties and covenants. At any time and from time to time during the Term, Tenant shall deliver to Landlord, within ten (10) business days after receipt of a written request therefor, a written certification and such other evidence as Landlord may reasonably request evidencing and confirming Tenants compliance with this Section 20.4. It is understood that the foregoing representations only applies to Tenant and not to any of Tenants shareholders, or the constituents of any of Tenants shareholders.
ARTICLE XXI. LIMITATION ON LANDLORD LIABILITY
Notwithstanding anything to the contrary contained in this Lease, it is expressly understood and agreed by and between the parties hereto that: (a) the recourse of Tenant or its successors or assigns against Landlord (and the liability of Landlord to Tenant, its successor and assigns) with respect to: (i) any actual or alleged breach or breaches by or on the part of Landlord of any of Landlords obligations under this Lease, or (ii) any matter relating to Tenants use or occupancy of the Premises shall be limited to Landlords equity interest in the Premises, and Landlords interest in all available sale, insurance, condemnation and rental proceeds therefrom; (b) Tenant shall have no recourse against any other assets of Landlord or any of its members; (c) neither Landlord, nor any of its members, shall be personally liable, and only Landlord shall be sued or named as a party in any suit or action; (d) the obligations under this Lease do not constitute personal obligations of any person or entity other than Landlord, and Tenant shall not seek any recourse against any person or entity other than Landlord.
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EXHIBIT A
LEGAL DESCRIPTION OF PREMISES
A tract of land located in the SE 1⁄4 SW 1⁄4 of Section 5, Township 5 North, Range 20 West, P.M.M., Ravalli County, Montana, being more particularly described as Parcel B Certificate of Survey No. 5129-R.
EXHIBIT A
EXHIBIT B
SITE PLAN
EXHIBIT B
EXHIBIT C
TENANTS INSURANCE
The following are Tenants insurance requirements. Tenant agrees to present evidence to Landlord that it has fully complied with the insurance requirements.
1. Tenant shall, at its sole cost and expense, commencing on the Commencement Date and continuing during the entire Term, obtain and keep in full force and effect: (i) a combination of commercial general liability and umbrella liability insurance with respect to the Premises and the operations of or on behalf of Tenant in, on or about the Premises, including but not limited to personal injury, owned and nonowned automobile, blanket contractual, independent contractors, broad form property damage, fire legal liability, products liability (if a product is sold from the Premises), and cross liability and severability of interest clauses, which policy(ies) shall be written on an occurrence basis and for not less than $5,000,000 combined single limit (with a $50,000 minimum limit on fire legal liability) per occurrence for bodily injury, death, and property damage liability, or the current limit of liability carried by Tenant, whichever is greater, provided that such liability limit may be subject to increase in an amount reasonably requested by Landlord if and when Tenant renews the Term of this Lease; (ii) workers compensation insurance coverage as required by Applicable Law, together with employers liability insurance coverage for not less than limits of $1,000,000 each accident, $1,000,000 disease policy limit and $1,000,000 disease each employee; and (iii) with respect to improvements, alterations, and the like required or permitted to be made by Tenant under this Lease, builders all-risk insurance, in amounts reasonably satisfactory to Landlord; (iv) insurance against fire, vandalism, malicious mischief and such other additional perils as may be included in a standard all risk form, insuring the leasehold improvements, trade fixtures, furnishings, equipment and items of personal property in the Premises, in an amount equal to not less than ninety percent (90%) of their actual replacement cost (with replacement cost endorsement). In no event shall the limits of any policy be considered as limiting the liability of Tenant under this Lease.
2. All policies of insurance required to be carried by Tenant pursuant to this Exhibit shall be written by responsible insurance companies authorized to do business in the State of Montana and with a general policyholder rating of not less than A-,VIII in the most current Bests Insurance Report. Any insurance required of Tenant may be furnished by Tenant under any blanket policy carried by it or under a separate policy. A certificate of insurance or policy information form, certifying that the policy has been issued, provides the coverage required by this Exhibit and contains the required provisions, and the additional insured provisions required under Paragraph 3 below, shall be delivered by Tenant to Landlord prior to the date Tenant is given the right of possession of the Premises. Proper evidence of the renewal of any insurance coverage shall also be delivered by Tenant to Landlord not later than three weeks following the expiration of the coverage.
3. Unless otherwise provided below, each policy evidencing insurance required to be carried by Tenant pursuant to this Exhibit C shall contain the following provisions and/or clauses satisfactory to Landlord: (i) with respect to Tenants commercial general liability and umbrella liability insurance, a provision that the policy and the coverage provided shall be
EXHIBIT C
primary and that any coverage carried by Landlord shall be excess and noncontributory, together with a provision including Landlord and any other parties in interest designated by Landlord as additional insureds. Tenant will promptly notify Landlord in the event of any change or cancellation in coverage provided by any of the policies required herein.
EXHIBIT C
EXHIBIT D
PLANS AND SPECIFICATIONS
(See attached Plat)
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Phases 1&2 (Sale Leaseback): |
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Site (28.52 acres) |
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Driveway/existing improvements |
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Warehouse West (10,000 square feet): |
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On-site office, break room, and restrooms |
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Utility/IT Room |
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Clean room |
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Harvesting/packaging room: |
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Harvesting equipment |
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Packaging equipment |
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Transport channel equipment |
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Cooler storage |
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Loading dock |
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Nursery #1 |
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Nursery #2 |
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Transplanting room: |
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Transplanting equipment |
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Germination equipment |
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Open warehouse: |
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Seeding equipment |
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Hydroponic growing equipment |
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Fertigation equipment |
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Tray washing equipment |
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Storage |
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Greenhouses 1-5 (29,050 square feet) |
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5 individual greenhouses |
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Walking corridor |
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Hydroponic growing equipment |
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Transport Channel (West) |
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Phase 3 (Build-to-Suit): |
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Warehouse East Expansion (5,000 square feet): |
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Additional office space |
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Open Warehouse: |
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Hydroponic Growing |
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Fertigation Equipment |
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Storage |
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Warehouse North Expansion (1,600 square feet): |
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Nursery #3 |
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Nursery #4 |
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Greenhouses 6-12 (37,310 square feet) |
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7 individual greenhouses |
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Walking corridor south extension |
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Hydroponic growing equipment |
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Transport Channel (East and South) |
EXHIBIT D
EXHIBIT D
EXHIBIT E
EXTENSION PERIOD RENT
A. On the first day of each Extension Period, the Basic Rent shall be adjusted to the Market Rental Value (MRV) of the Premises, as follows:
1. Four (4) months prior to the commencement of each Extension Period, the parties shall attempt to agree upon what the new MRV will be. If agreement cannot be reached, within thirty (30) days, then:
(a) Landlord and Tenant shall immediately appoint a mutually acceptable independent appraiser or broker (who shall have at least ten (10) years experience in leasing commercial real estate in the area) to establish the new MRV within the next thirty (30) days. Any associated costs will be split equally between the parties; or
(b) Both Landlord and Tenant shall each immediately make a reasonable determination of the MRV and submit such determination, in writing, to arbitration in accordance with the following provisions:
(i) Within fifteen (15) days thereafter, Landlord and Tenant shall each select an independent third-party appraiser or broker (Consultant) of their choice to act as an arbitrator. The two arbitrators so appointed shall immediately select a third mutually acceptable Consultant to act as a third arbitrator.
(ii) The three (3) arbitrators shall, within thirty (30) days of the appointment of the third arbitrator, reach a decision as to what the actual MRV for the Premises is, and whether Landlords or Tenants submitted MRV is the closest thereto. The decision of a majority of the arbitrators shall be binding on the parties. The submitted MRV which is determined to be the closest to the actual MRV shall thereafter be used by the parties.
(iii) If either of the parties fails to appoint an arbitrator within the specified fifteen (15) days, the arbitrator timely appointed by one of them shall reach a decision on his or her own, and said decision shall be binding on the parties.
(iv) The entire cost of such arbitration shall be paid by the party whose submitted MRV is not selected, i.e., the one that is not the closest to the actual MRV.
2. When determining MRV, the Landlord, Tenant and Consultants shall consider the terms of comparable market transactions which shall include, but not limited to, rent, annual rental adjustments, lease term and financial condition of tenants.
3. Notwithstanding the foregoing, the new Basic Rent shall not be less than the Basic Rent payable for the month immediately preceding the rent adjustment.
B. Upon the establishment of each new MRV, the new MRV will become the new Basic Rent for the purpose of calculating any further Adjustments.
EXHIBIT E
Exhibit 10.10
FIRST AMENDMENT
TO
LEASE
This First Amendment to Lease (this Amendment) is made and entered into as of the 12 day of April, 2021, by and between GROW BITTERROOT, LLC, a Delaware limited liability company (Landlord) and BOUNTI BITTERROOT, LLC, a Delaware limited liability company (Tenant).
RECITALS
A. Landlord and Tenant entered into a certain lease (single tenant-gross) dated June 12, 2020 (the Lease) for approximately 28.52 acres of land in the City of Hamilton, Ravalli County, Montana, as more particularly described therein (the Premises).
B. The parties desire to amend the lease to extend the Term, on the terms and conditions set forth in this Amendment.
NOW THEREFORE, for a good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. The Term of the Lease is hereby extended so that the Expiration Date shall be October 22, 2040.
2. For clarification, Basic Rent for the extended Term (after month 15) shall be as set forth in Paragraph 5 of the Basic Lease Provisions (2% annual increases).
3. Except as amended hereby, the Lease remains in full force and effect as originally written.
4. Capitalized terms used but not otherwise defined in this Amendment shall have the meanings set forth in the Lease.
5. This Amendment may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Electronically generated and delivered (pdf format or DocuSign) signatures on this Amendment shall have the same force and effect as original (wet ink) signatures.
[Signatures on next page]
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written.
LANDLORD: | TENANT: | |||||||
GROW BITTERROOT, LLC, a Delaware limited liability company | BOUTI BITTERROOT, LLC, a Delaware limited liability company |
By: |
/s/ Brian Bigej |
By: |
/s/ Dave Vosburg |
Its: |
President |
Its: | Dave Vosburg, COO |
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Exhibit 10.11
EXECUTION VERSION
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this Agreement), is made and entered into as of March 22, 2021 (the Effective Date), by and between Local Bounti Corporation, a Delaware corporation (the Company), and Cargill Financial Services International, Inc., a Delaware corporation (Holder).
Recitals
In order to induce Holder to enter into that certain Credit Agreement, dated as of March 22, 2021 (the Credit Agreement), between the Company, as Borrower, and Holder, as Lender, the Company has agreed to issue to Holder, upon the earliest to occur of a Qualified Equity Financing (as defined below), a Qualified SPAC Transaction (as defined below) or an Acquisition (as defined below), a Warrant (as defined below) to purchase such type/series (the Class) and number of shares of the Company (the Warrant Shares and, together with such Warrant and all shares of Common Stock (as defined below) or other securities, if any, issuable upon conversion of the Warrant, the Securities), and at such exercise price (the Warrant Price), as determined pursuant to this Agreement.
Terms
1. Definitions. Terms used in this Agreement and not otherwise defined shall have the meaning given to them in the Credit Agreement. In addition to terms separately defined in this Agreement, as used in this Agreement, the following terms have the following meanings:
Acquisition means any transaction or series of related transactions involving: (i) the sale, lease, exclusive license, or other disposition of all or substantially all of the assets of the Company on a consolidated basis; (ii) any merger or consolidation of the Company into or with another person or entity (other than a merger or consolidation effected exclusively to change the Companys domicile), or any other corporate reorganization, in which the stockholders of the Company in their capacity as such immediately prior to such merger, consolidation or reorganization, own less than a majority of the Companys (or the surviving or successor entitys or, if the surviving or successor entity is a wholly-owned subsidiary, its parents) outstanding voting power immediately after such merger, consolidation or reorganization; or (iii) any sale or other transfer by the stockholders of the Company of shares representing at least a majority of the Companys then-total outstanding combined voting power; provided, however, that an Acquisition shall not include a Qualified SPAC Transaction.
Affiliate means with respect to any specified entity, any other entity that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the specified entity, where the term control, controlled, or controlling as used in this definition means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract or otherwise.
Applicable Loan Amount means $2,500,000.
Qualified Equity Financing means an equity financing pursuant to which the Company issues and sells shares of its equity securities to investors in an arms-length transaction for the principal purpose of raising capital and resulting in aggregate gross proceeds to the Company of not less than $35,000,000.
Qualified SPAC Transaction means a SPAC Transaction resulting in minimum cash to the balance sheet of the successor company of the SPAC Transaction, after the payment of transaction costs and expenses, of not less than $35,000,000.
SPAC Transaction means a transaction or series of transactions (whether by merger, consolidation, or transfer or issuance of Equity Interests or otherwise) whereby a special purpose acquisition company acquires all of the Equity Interests of the Company (or any surviving or resulting company).
Warrant means a warrant to purchase Warrant Shares issued by the Company pursuant to this Agreement and in the form set forth on Exhibit A.
2. Issuance of Warrant upon a Qualified Equity Financing, Qualified SPAC Transaction or Acquisition
(a) Issuance of Warrant. The Company shall issue a Warrant reflecting the Holders right to purchase such Class and number of Warrant Shares, and at such Warrant Price, as determined pursuant to Section 2(b) of this Agreement, following the earliest to occur of (the earliest date on which such event occurs being the Issue Date):
(i) The consummation of the first Qualified Equity Financing after the Effective Date;
(ii) Immediately prior to the consummation of a Qualified SPAC Transaction; or
(iii) Immediately prior to the consummation of any Acquisition other than a Qualified SPAC Transaction.
(b) Class; Shares; Exercise Price
(i) Qualified Equity Financing. If the Issue Date is determined pursuant to Section 2(a)(i), then:
(A) The Class of the Warrant Shares shall be the class of equity securities issued in the Qualified Equity Financing;
(B) The number of Warrant Shares shall be calculated by dividing (x) the Applicable Loan Amount by (y) 85% multiplied by cash price paid per share for the equity securities by the investors in the Qualified Equity Financing; and
(C) The Warrant Price per Warrant Share shall be equal to the amount provided for in clause (y) of Section 2(b)(i)(B).
(ii) Qualified SPAC Transaction. If the Issue Date is determined pursuant to Section 2(a)(ii), then:
(A) The Class of the Warrant Shares shall be common stock of the Company, par value $0.001 per share (the Common Stock);
(B) The number of Warrant Shares shall be calculated by dividing (x) the Applicable Loan Amount by (y) 85% multiplied by the value assigned to each share of Common Stock in such Qualified SPAC Transaction; and
(C) The Warrant Price per Warrant Share shall be equal to the amount provided for in clause (y) of Section 2(b)(ii)(B).
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(iii) Acquisition. If the Issue Date is determined pursuant to Section 2(a)(iii), then:
(A) The Class of the Warrant Shares shall be Common Stock;
(B) The number of Warrant Shares shall be calculated by dividing (x) the Applicable Loan Amount by (y) 85% multiplied by the value assigned to each share of Common Stock in such Acquisition; and
(C) The Warrant Price per Warrant Share shall be equal to the amount provided for in clause (y) of Section 2(b)(iii)(B).
(c) Warrant Closing; Deliveries. The closing of the Warrant issuance (the Warrant Closing) shall take place remotely via exchange of documents. At the Warrant Closing, the Company shall deliver the original Warrant dated as of the date of the Warrant Closing, duly executed by an authorized officer of the Company.
3. Representations and Warranties of the Company. The Company represents and warrants to, and agrees with, the Holder as follows:
(a) The Warrant Shares and all shares of Common Stock or other securities, if any, issuable upon conversion of the Warrant Shares shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws. The Company covenants that it shall, if applicable, at all times following the Issue Date described in Section 2(a) of this Agreement, cause to be reserved and kept available out of its authorized and unissued capital stock such number of shares of the Class, Common Stock and other securities as will be sufficient to permit the exercise in full of the Warrant and the conversion of the Warrant Shares into Common Stock or such other securities.
(b) If the issuance of any of the Securities require approvals or registrations under applicable state blue sky or federal securities laws, the Company will use its commercially reasonable efforts to obtain such approvals or registrations as may be appropriate.
(c) Any corporate action required to be taken by the Board of Directors and/or stockholders of the Company in order to authorize the Company to enter into this Agreement and the Warrant, and to issue the applicable Securities has been taken or, with respect to the Securities, will be taken prior to the date of issuance of such Securities. All action on the part of the officers of the Company necessary for the execution and delivery of this Agreement and the Warrant and the performance of all respective obligations of the Company thereunder has been taken or, in the case of the Warrant, will be taken prior to date of issuance of the Warrant. This Agreement constitutes, and the Warrant will constitute, valid and legally binding obligations of the Company, enforceable against the Company in accordance with their respective terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.
(d) Assuming the accuracy of the Holders representations and warranties in Section 4 of this Agreement, the execution, delivery and performance of the Agreement will not result in any violation or be in conflict with or constitute, with or without the passage of time and giving of notice, (i) a default under any law applicable to the Company or any instrument, judgment, order, writ, decree, contract or
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agreement to which the Company is a party or by which its assets are bound except such defaults as would not reasonably be expected to materially and adversely affect the Company; or (ii) an event which results in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, forfeiture, or nonrenewal of any material permit or license applicable to the Company.
4. Representations and Warranties of Holder. Holder represents and warrants to the Company as of the date hereof, and as of the date of issuance of the Warrant, as follows:
(a) Purchase for Own Account. The applicable Securities are being acquired for investment for Holders account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the U.S. Securities Act of 1933, as amended (the Securities Act). Holder also represents that it has not been formed for the specific purpose of acquiring any of the Securities.
(b) Disclosure of Information. Holder is aware of the Companys business affairs and financial condition and has received or has had access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of the applicable Securities. Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the applicable Securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.
(c) Investment Experience. Holder understands that the purchase of the Securities involves substantial risk. Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holders investment in the Securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in the applicable Securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons.
(d) Accredited Investor Status. Holder is an accredited investor within the meaning of Regulation D promulgated under the Securities Act.
(e) The Securities Act. Holder understands that the applicable Securities will not be registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holders investment intent as expressed herein. Holder understands any Securities issued must be held indefinitely unless subsequently registered under the Securities Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are otherwise available.
5. Restrictive Legends.
(a) Legend. Holder understands that any certificates representing the Securities shall be stamped or imprinted with a legend substantially similar to the following (in addition to any other legend required by applicable law):
[THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER AND ANY SHARES ISSUABLE UPON CONVERSION THEREOF][THESE SECURITIES] HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR THE SECURITIES LAWS OF ANY STATE AND[, EXCEPT AS SET FORTH IN SECTION 5.2 BELOW,] MAY NOT BE OFFERED, SOLD, PLEDGED OR
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OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
(b) Instructions Regarding Transfer Restrictions. Holder consents to the Company making a notation on its records and giving instructions to any transfer agent, if applicable, in order to implement the restrictions on transfer established in Section 5(a) of this Agreement.
(c) Removal of Legend. The legend identified in Section 5(a) of this Agreement stamped or imprinted on any certificate evidencing any Securities and any stock transfer instructions and record notations with respect to such Securities, if applicable, shall be removed and the Company shall issue a certificate without such legend to the holder of such Securities if (i) such Securities are registered under the Securities Act, or (ii) such holder provides the Company with an opinion of counsel reasonably satisfactory to the Company to the effect that a sale or transfer of such Securities may be made without registration or qualification. The Company agrees that it shall not require an opinion of counsel if (x) there is no material question as to the availability of Rule 144 promulgated under the Securities Act or (y) the transfer is to an Affiliate of Holder, provided that any such transferee is an accredited investor as defined in Regulation D promulgated under the Securities Act.
6. Transfer of the Securities.
(a) Compliance with Securities Laws on Transfer. The Securities may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws by the transferor and the transferee.
(b) Transfer Procedure. The Warrant shall not be transferable without the prior written consent of the Company, except that Holder may transfer the Warrant to any Affiliate of Holder without the Companys prior written consent. Subject to the foregoing sentence, with respect to any proposed offer, sale or other disposition of the Warrant to a non-Affiliate of Holder, Holder will give written notice to the Company prior thereto, describing briefly the manner thereof, including the name, address and taxpayer identification number of the transferee.
7. General Provisions.
(a) Entire Agreement. This Agreement (including the Exhibit) constitutes the entire agreement among the parties and supersedes and cancels any prior agreements, representations, warranties, or communications, whether oral or written, among the parties relating to the subject matter of, or the transactions contemplated by, this Agreement. Neither this Agreement nor any of its provisions may be modified, changed, waived, discharged, or terminated orally. This Agreement may only be modified, changed, waived, discharged, or terminated by an agreement in writing signed by the party against whom or which the enforcement of such modification, change, waiver, discharge, or termination is sought.
(b) Assignment, Successors and Assigns. The rights and obligations under this Agreement may be assigned by Holder only with the prior written consent of the Company, exercisable in its sole and absolute discretion, except that Holder may assign its rights and obligations under this Agreement to any Affiliate of Holder without the Companys prior written consent. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
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(c) Notices. All notifications, requests, demands, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed given when mailed (with return receipt requested), emailed, faxed (which is confirmed), or sent via a recognized overnight courier service such as Federal Express, to the parties at the addresses set forth on the signature page, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.
(d) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to its principles regarding conflicts of law.
(e) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including PDF) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
(f) Attorneys Fees. If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of this Agreement, the prevailing party in such shall be entitled to receive from the non-prevailing party the prevailing partys reasonable attorneys fees, costs and necessary disbursements in addition to any other relief to which it may be entitled.
(g) No Further Obligations. The Company acknowledges and agrees that the Holder has not made any representation, undertaking, commitment or agreement to provide or assist the Company in obtaining any financing, investment or other assistance, other than with regard to the Credit Agreement. In addition, the Company acknowledges and agrees that (i) no statements, whether written or oral, made by the Holder or its representatives on or after the date of this Agreement shall create an obligation, commitment or agreement to provide or assist the Company in obtaining any financing or investment, (ii) the Company shall not rely on any such statement by any the Holder or its representatives and (iii) an obligation, commitment or agreement to provide or assist the Company in obtaining any financing or investment may only be created by a written agreement, signed by the Holder and the Company, setting forth the terms and conditions of such financing or investment and stating that the parties intend for such writing to be a binding obligation or agreement. The Holder shall have the right, in its sole and absolute discretion, to refuse or decline to participate in any other financing of or investment in the Company, and shall have no obligation to assist or cooperate with the Company in obtaining any financing, investment or other assistance.
(h) Certain Remedies. Each party acknowledges and agrees that the other party would be damaged irreparably if this Agreement is not performed in accordance with its terms or otherwise is breached and that a party will be entitled to an injunction and other equitable relief (without posting any bond or other security) to prevent breaches hereof and to enforce specifically this Agreement and its terms in addition to any other remedy to which such party may be entitled hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the duly authorized representatives of the parties have executed and delivered this Agreement as of the Effective Date.
LOCAL BOUNTI CORPORATION | ||
By: |
/s/ Dave Vosburg |
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Name: | Dave Vosburg | |
Title: | Acting Chief Financial Officer and Chief Operating Officer |
Address per Section 7(c): | ||
490 Foley Lane Hamilton, MT 59840 Attn: Dave Vosburg Email: dave@localbounti.com |
CARGILL FINANCIAL SERVICES INTERNATIONAL, INC. | ||
By: |
/s/ Jennifer Campbell |
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Name: | Jennifer Campbell | |
Title: | Trade Finance Specialist |
Address per Section 7(c): | ||
9320 Excelsior Boulevard, MS 142 Hopkins, MN 55343 Attn: Erik Haugen Tel. No.: (952) 984-0574 Fax No.: (952) 249-4416 Email: Erik_Haugen@cargill.com |
[Signature Page to Warrant Agreement]
EXHIBIT A
Form of Warrant to Purchase Stock
(see attached)
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER AND ANY SHARES ISSUABLE UPON CONVERSION THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN SECTION 5.2 BELOW, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
FORM OF WARRANT TO PURCHASE STOCK
Company: Local Bounti Corporation, a Delaware corporation
Number of Shares: [ ]1, subject to adjustment as provided in this Warrant
Type/Series of Stock: [ ]2, subject to adjustment as provided in this Warrant
Warrant Price: [ ]3, subject to adjustment as provided in this Warrant
Issue Date: [ ]
Expiration Date: Five years following the Issue Date. See also Sections 1.7(a) and 5.1(a).
Background: This Warrant to Purchase Stock (Warrant) is issued in connection with that certain Warrant Agreement, dated as of March 22, 2021 (the Warrant Agreement), between the Company and Holder (as defined below)
THIS WARRANT CERTIFIES THAT, for good and valuable consideration, Cargill Financial Services International, Inc. (together with any successor or permitted assignee or transferee of this Warrant or of any shares issued upon exercise hereof, Holder), is entitled to purchase up to the number of fully paid and non-assessable shares (the Shares) of the Type/Series of Stock (the Class) provided for above of Local Bounti Corporation, a Delaware corporation (the Company), at the Warrant Price provided for above, all as set forth in, as adjusted pursuant to, and upon the terms and conditions set forth in this Warrant.
SECTION 1. EXERCISE.
1.1 Vesting. As of the Issue Date of this Warrant set forth above, all of the Shares are vested and exercisable.
1.2 Method of Exercise. Holder may, from time to time, during the Exercise Period (as defined below), exercise this Warrant, in whole or in part, by delivering to the Company the original of this Warrant together with a duly executed Notice of Exercise in substantially the form attached hereto as Appendix 1 and, unless Holder is exercising this Warrant pursuant to a cashless exercise set forth in Section 1.3, a check, wire transfer of same-day funds (to an account designated by the Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for the Shares being purchased.
1.3 Cashless Exercise. On any exercise of this Warrant, in lieu of payment of the aggregate Warrant Price in the manner as specified in Section 1.2 above, but otherwise in accordance with the
1 |
To be determined pursuant to Section 2(b) of the Warrant Agreement. |
2 |
To be determined pursuant to Section 2(b) of the Warrant Agreement |
3 |
To be determined pursuant to Section 2(b) of the Warrant Agreement. |
requirements of Section 1.2, Holder may elect to receive Shares equal to the value of this Warrant, or portion hereof as to which this Warrant is being exercised. Thereupon, the Company shall issue to the Holder such number of fully paid and non-assessable Shares as are computed using the following formula:
X= | Y(A-B)/A |
where:
X= | the number of Shares to be issued to the Holder; | |||
Y= | the number of Shares with respect to which this Warrant is being exercised (inclusive of the Shares surrendered to the Company in payment of the aggregate Warrant Price); | |||
A= | the Fair Market Value (as determined pursuant to Section 1.4 below) of one Share; and | |||
B= | the Warrant Price. |
1.4 Fair Market Value. If the Common Stock is then traded on a nationally recognized securities exchange (a Trading Market) and the Class is Common Stock, then the fair market value of a Share shall be the closing price or last sale price of a share of the Common Stock reported for the trading day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company. If the Common Stock is then traded on a Trading Market and the Class is convertible into Common Stock, then the fair market value of a Share shall be the closing price or last sale price of a share of the Common Stock reported for the trading day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company multiplied by the number of shares of Common Stock into which a Share is then convertible. If the Common Stock is not traded in a Trading Market, then the Board of Directors of the Company (the Board) shall determine the fair market value of a Share in its reasonable good faith judgment.
1.5 Delivery of Certificate and New Warrant. Within a reasonable time after Holder exercises this Warrant in the manner set forth in Section 1.2 or 1.3 above, the Company shall deliver to Holder a certificate representing the Shares issued to Holder upon such exercise and, if this Warrant has not been fully exercised and has not expired, a new warrant of like tenor representing the Shares not so acquired.
1.6 Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company or, in the case of mutilation, on surrender of this Warrant to the Company for cancellation, the Company shall, within a reasonable time, execute and deliver to Holder, in lieu of this Warrant, a new warrant of like tenor and amount.
1.7 Mandatory Exercise Transactions; Other Acquisitions.
(a) Mandatory Exercise Transactions. So long as this Warrant is outstanding, if the Company proposes to enter into a Mandatory Exercise Transaction (as defined below), then this Warrant shall automatically be deemed to be Cashless Exercised pursuant to Section 1.3 above as to all Shares effective immediately prior to, and contingent upon, the consummation of such Mandatory Exercise Transaction. In connection with such Cashless Exercise, Holder shall be deemed to have restated each of the representations and warranties in Section 4 of the Warrant as the date thereof and the Company shall
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promptly notify the Holder of the number of Shares (or such other securities) issued upon exercise. In the event of a Mandatory Exercise Transaction where the fair market value of one Share as determined in accordance with Section 1.4 above would be less than the Warrant Price in effect immediately prior to such Mandatory Exercise Transaction, then this Warrant will expire immediately prior to the consummation of such Mandatory Exercise Transaction. Notwithstanding anything set forth in Section 1.5, no certificate representing the Shares shall be required to be delivered to the extent that such Mandatory Exercise Transaction will result in all of the outstanding shares of the Class being reclassified, exchanged, combined, substituted, or replaced for, into, with or by securities of a different class and/or series and Holder shall instead participate in such Mandatory Exercise Transaction on the same terms as other holders of outstanding shares of the Class.
(b) Certain Definitions. For the purposes of this Warrant:
(i) Acquisition means any transaction or series of related transactions involving: (i) the sale, lease, exclusive license, or other disposition of all or substantially all of the assets of the Company on a consolidated basis; (ii) any merger or consolidation of the Company into or with another person or entity (other than a merger or consolidation effected exclusively to change the Companys domicile), or any other corporate reorganization, in which the stockholders of the Company in their capacity as such immediately prior to such merger, consolidation or reorganization, own less than a majority of the Companys (or the surviving or successor entitys or, if the surviving or successor entity is a wholly-owned subsidiary, its parents) outstanding voting power immediately after such merger, consolidation or reorganization; or (iii) any sale or other transfer by the stockholders of the Company of shares representing at least a majority of the Companys then-total outstanding combined voting power; provided, however, that an Acquisition shall not include a Qualified SPAC Transaction.
(ii) Mandatory Exercise Transaction means the occurrence of any of the following: (x) the consummation of an Acquisition in which the consideration to be received by the Companys stockholders consists solely of cash (a Cash Acquisition); or (y) the consummation by the Company of a plan of complete liquidation or dissolution of such the Company.
(c) Treatment on Other Acquisitions. Upon the closing of a Qualified SPAC Transaction or any other Acquisition other than a Cash Acquisition, the acquiring, surviving or successor entity shall assume the obligations of this Warrant, and this Warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this Warrant.
1.8 Stockholder Agreements. As a condition precedent to any exercise of this Warrant into or for the Shares, Holder (or such other person or persons in whose name(s) any certificate(s) representing the Shares shall be issuable upon exercise of this Warrant) shall be required to execute and become a party to any voting agreement, investors rights agreement, registration rights agreement, right of first refusal and co-sale agreement of the Company that the holders of the Class who are financial investors are then generally a party thereto, unless such Holder is already a party thereto.
SECTION 2. ADJUSTMENTS TO THE SHARES AND WARRANT PRICE.
2.1 Stock Dividends, Splits, Etc. If, on or after the Issue Date, the Company declares or pays a dividend or distribution on the outstanding shares of the Class payable in common stock or other securities or property (other than cash), then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without additional cost to Holder, the total number and kind of securities and property which Holder
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would have received had Holder owned the Shares of record as of the date the dividend or distribution occurred. If, on or after the Issue Date, the Company subdivides the outstanding shares of the Class by reclassification or otherwise into a greater number of shares, the number of Shares purchasable hereunder shall be proportionately increased and the Warrant Price shall be proportionately decreased. If, on or after the Issue Date, the outstanding shares of the Class are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares shall be proportionately decreased.
2.2 Reclassification, Exchange, Combinations or Substitution. Upon any event whereby all of the outstanding shares of the Class are reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different class and/or series, then from and after the consummation of such event, this Warrant will be exercisable for the number, class and series of Company securities that Holder would have received had the Shares been outstanding on and as of the consummation of such event, and subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant. The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, combinations, substitutions, replacements or other similar events.
2.3 Conversion of Preferred Stock. If the Class is a class and series of the Companys preferred stock that is convertible into Common Stock, if all outstanding shares of the Class are converted, automatically or by action of the holders thereof, into Common Stock pursuant to the provisions of the Companys Certificate of Incorporation, including in connection with the Companys initial, underwritten public offering and sale of Common Stock pursuant to an effective registration statement under the Act (the IPO), then from and after the date on which all outstanding shares of the Class have been so converted (and to the extent a Mandatory Exercise Transaction shall not have occurred), this Warrant shall be exercisable for such number of shares of Common Stock into which the Shares would have been converted had the Shares been outstanding on the date of such conversion, and the Warrant Price shall equal the Warrant Price in effect as of immediately prior to such conversion divided by the number of shares of Common Stock into which one Share would have been converted, all subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant.
2.4 Adjustments for Diluting Issuances. Without duplication of any adjustment otherwise provided for in this Section 2, the number of shares of Common Stock issuable upon conversion of the Shares shall be subject to anti-dilution adjustment from time to time in the manner as may be set forth in the Companys Certificate of Incorporation as if the Shares were issued and outstanding on and as of the date of any such required adjustment.
2.5 No Fractional Share. No fractional Share shall be issuable upon exercise of this Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share. If a fractional Share interest arises upon any exercise of the Warrant, the Company shall eliminate such fractional Share interest by paying Holder in cash the amount computed by multiplying the fractional interest by (i) the fair market value (as determined in accordance with Section 1.4 above) of a full Share, less (ii) the then-effective Warrant Price.
2.6 Notice/Certificate as to Determinations and Adjustments. Upon each determination or adjustment of the Warrant Price, Class and/or number of Shares, the Company, at the Companys expense, shall notify Holder in writing within seven (7) Business Days (as defined in the Credit Agreement) setting forth the determinations or adjustments to the Warrant Price, Class and/or number of Shares and facts upon which such determination or adjustment is based. The Company shall, upon written request from Holder, furnish Holder with a certificate of its Chief Financial Officer, including computations of such determination or adjustment and the Warrant Price, Class and number of Shares in effect upon the date of such determination or adjustment.
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SECTION 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company represents and warrants to, and agrees with, the Holder as follows:
(a) All Shares which may be issued upon the exercise of this Warrant, and all securities, if any, issuable upon conversion of the Shares, shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws. The Company covenants that it shall at all times cause to be reserved and kept available out of its authorized and unissued capital stock such number of shares of the Class, Common Stock and other securities as will be sufficient to permit the exercise in full of this Warrant and the conversion of the Shares into Common Stock or such other securities.
(b) If any securities to be reserved for the purpose of exercise of this Warrant require approvals or registrations under applicable state blue sky or federal securities laws, the Company will use its commercially reasonable efforts to obtain such approvals or registrations as may be appropriate.
(c) All corporate action required to be taken by the Board and stockholders in order to authorize the Company to enter into this Warrant, and to issue this Warrant and Shares which may be issued upon the exercise of this Warrant acquirable upon exercise hereof, and any securities issuable upon conversion of such Shares, has been taken or will be taken prior to the Issue Date. All action on the part of the officers of the Company necessary for the execution and delivery of this Warrant and the performance of all obligations of the Company hereunder has been taken. This Warrant constitutes a valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.
(d) Assuming the accuracy of the Holders representations and warranties in Section 4, the execution, delivery and performance of this Warrant will not result in any violation or be in conflict with or constitute, with or without the passage of time and giving of notice, (i) a default under any law applicable to the Company or any instrument, judgment, order, writ, decree, contract or agreement to which the Company is a party or by which its assets are bound except such defaults as would not reasonably be expected to materially and adversely affect the Company; or (ii) an event which results in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, forfeiture, or nonrenewal of any material permit or license applicable to the Company.
3.2 Notice of Certain Events. If the Company proposes at any time to:
(a) declare any dividend or distribution upon the outstanding shares of the Class or the Common Stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend;
(b) offer for subscription or sale pro rata to the holders of the outstanding shares of the Class any additional shares of any class or series of the Companys stock (other than pursuant to contractual pre-emptive rights);
(c) effect any reclassification, exchange, combination, substitution, reorganization or recapitalization of the outstanding shares of the Class;
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(d) effect a Qualified SPAC Transaction or any other Acquisition or to liquidate, dissolve or wind up; or
(e) effect an IPO;
then, in connection with each such event, the Company shall give Holder:
(1) in the case of the matters referred to in (a) and (b) above, at least seven (7) Business Days prior written notice of the earlier to occur of the effective date thereof or the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of outstanding shares of the Class will be entitled thereto) or for determining rights to vote, if any;
(2) in the case of the matters referred to in (c) and (d) above at least seven (7) Business Days prior written notice of the date when the same will take place (and specifying the date on which the holders of outstanding shares of the Class will be entitled to exchange their shares for the securities or other property deliverable upon the occurrence of such event and such reasonable information as Holder may reasonably require regarding the treatment of this Warrant in connection with such event giving rise to the notice); and
(3) with respect to the IPO, at least seven (7) Business Days prior written notice of the date on which the Company proposes to file its registration statement in connection therewith.
The Company will also provide information requested by Holder that is reasonably necessary to enable Holder to comply with Holders accounting or reporting requirements.
SECTION 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER.
The Holder represents and warrants to the Company as follows:
4.1 Purchase for Own Account. This Warrant and the securities to be acquired upon exercise of this Warrant and any securities to be acquired upon conversion thereof by Holder are being acquired for investment for Holders account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Act. Holder also represents that it has not been formed for the specific purpose of acquiring this Warrant or the Shares.
4.2 Disclosure of Information. Holder is aware of the Companys business affairs and financial condition and has received or has had access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities. Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.
4.3 Investment Experience. Holder understands that the purchase of this Warrant and its underlying securities involves substantial risk. Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holders investment in this Warrant and its underlying securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in this Warrant and its underlying securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons.
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4.4 Accredited Investor Status. Holder is an accredited investor within the meaning of Regulation D promulgated under the Act.
4.5 The Act. Holder understands that this Warrant and the Shares issuable upon exercise hereof and any securities exercisable upon conversion thereof have not been registered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holders investment intent as expressed herein. Holder understands that this Warrant and the Shares issued upon any exercise hereof and any securities exercisable upon conversion thereof must be held indefinitely unless subsequently registered under the Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are otherwise available.
4.6 No Stockholder Rights. Without limiting any term or provision of this Warrant, Holder agrees that, as a Holder of this Warrant, it will not have any rights as a stockholder in respect of the Shares issuable on exercise hereof until the exercise of this Warrant.
SECTION 5. MISCELLANEOUS.
5.1 Term; Automatic Cashless Exercise Upon Expiration.
(a) Term. Subject to the provisions of Section 1.7 above, this Warrant is exercisable in whole or in part at any time and from time to time on or after Issue Date and on or before 5:00 PM, Central time, on the Expiration Date (such period being the Exercise Period) and shall be void after the end of the Exercise Period.
(b) Automatic Cashless Exercise upon Expiration. In the event that, upon the Expiration Date, the fair market value of one Share (or other security issuable upon the exercise hereof) as determined in accordance with Section 1.4 above is greater than the Warrant Price in effect on such date, then this Warrant shall automatically be deemed on and as of such date to be exercised pursuant to Section 1.3 above as to all Shares (or such other securities) for which it shall not previously have been exercised, and the Company shall, within a reasonable time, deliver a certificate representing the Shares (or such other securities) issued upon such exercise to Holder.
5.2 Transfer Procedure. Sections 5 and 6 of the Warrant Agreement shall govern the transfer of all or part of this Warrant by the Holder. In connection with any proposed transfer, the Holder will give the Company notice of the portion of the Warrant proposed to be transferred (which shall be in the form attached hereto as Appendix 2 and shall be accompanied by surrender of this Warrant for reissuance to the transferee(s) (and Holder if applicable)).
5.3 Notices. All notices and other communications hereunder from the Company to the Holder, or vice versa, shall be deemed delivered and effective (i) when given personally, (ii) on the third (3rd) Business Day after being mailed by first-class registered or certified mail, postage prepaid, (iii) upon actual receipt if given by facsimile or electronic mail and such receipt is confirmed in writing by the recipient, or (iv) on the first Business Day following delivery to a reliable overnight courier service, courier fee prepaid, in any case at such address as may have been furnished to the Company or Holder, as the case may be, in writing by the Company or such Holder from time to time in accordance with the provisions of this Section 5.3. All notices to the Holder shall be addressed as follows until the Company receives notice of a change in address:
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Cargill Financial Services International, Inc.
Attn: Erik Haugen
9320 Excelsior Boulevard
MS 142
Hopkins, MN 55343
Telephone: 952-984-0574
Facsimile: 952-249-4416
Email: Erik_Haugen@cargill.com
Notice to the Company shall be addressed as follows until Holder receives notice of a change in address:
Local Bounti Corporation
Attn: Dave Vosburg
490 Foley Lane
Hamilton, MT 59840
Telephone: (650) 713-7086
Email: dave@localbounti.com
with a copy to:
King & Spalding LLP
Attention: Jonathan M.A. Melmed
1185 Avenue of the Americas
New York, NY,
Attention Telephone: (212) 556-2344;
Email: jmelmed@kslaw
5.4 Waiver. This Warrant and any term hereof may be changed, waived, discharged or terminated (either generally or in a particular instance and either retroactively or prospectively) only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.
5.5 Attorneys Fees. In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys fees.
5.6 Counterparts; Facsimile/Electronic Signatures. This Warrant may be executed in counterparts, all of which together shall constitute one and the same agreement. Any signature page delivered electronically or by facsimile shall be binding to the same extent as an original signature page with regards to any agreement subject to the terms hereof or any amendment thereto.
5.7 Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to its principles regarding conflicts of law.
5.8 Headings. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant.
5.9 Definitions; Interpretation. Capitalized terms used and not defined herein have the respective meanings given to such terms in the Warrant Agreement (or, if not specifically defined therein, in the Credit Agreement). In the event that the last day for performance of an act or the exercise of a right hereunder falls on a day other than a Business Day, then the last day for such performance shall be the first Business Day immediately following the otherwise last day for such performance or such exercise.
[Remainder of page left blank intentionally; signature page follows]
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IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Stock to be executed by their duly authorized representatives effective as of the Issue Date written above.
COMPANY | ||
LOCAL BOUNTI CORPORATION | ||
By: |
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Name: |
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(Print) | ||
Title: | ||
HOLDER | ||
CARGILL FINANCIAL SERVICES INTERNATIONAL, INC. | ||
By: |
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Name: |
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(Print) | ||
Title: |
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned Holder hereby exercises its right to purchase shares of the [insert Type/Class] of Local Bounti Corporation (the Company) in accordance with the attached Warrant to Purchase Stock, and tenders payment of the aggregate Warrant Price for such shares as follows:
☐ |
check in the amount of $ payable to order of the Company enclosed herewith |
☐ |
Wire transfer of immediately available funds to the Companys account |
☐ |
Cashless Exercise pursuant to Section 1.3 of the Warrant |
☐ |
Other [Describe] |
2. Please issue a certificate or certificates representing the Shares in the name specified below:
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Holders Name | ||
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(Address) |
3. By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties in Section 4 of the Warrant to Purchase Stock as of the date hereof.
HOLDER: | ||
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By: | ||
Name: |
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Title: |
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(Date): |
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APPENDIX 1
APPENDIX 2
FORM OF TRANSFER
(To be signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto the right represented by the attached Warrant to purchase shares of the [insert Type/Class] of Local Bounti Corporation (the Company) to which the attached Warrant relates, and appoints Attorney to transfer such right on the books of the Company, with full power of substitution in the premises.
Dated: |
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(Signature must conform in all respects to name of Holder as specified on the face of the Warrant) | ||||||||
Address: | ||||||||
Signed in the presence of: |
APPENDIX 2
Exhibit 10.12
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this Agreement), is made and entered into as of September 3, 2021 (the Effective Date), by and between Local Bounti Corporation, a Delaware corporation (the Company), and Cargill Financial Services International, Inc., a Delaware corporation (Holder).
Recitals
In order to induce Holder to enter into that certain Credit Agreement, dated on or about the Effective Date (the Credit Agreement), between the Company and certain Subsidiaries of the Company, as Borrowers, and Holder, as Lender, and that certain Subordinated Credit Agreement, dated on or about the Effective Date, between the Company and certain Subsidiaries of the Company, as Borrowers, and Holder, as Lender (the Subordinated Credit Agreement), the Company has agreed to issue to Holder, upon the earliest to occur of a Qualified Equity Financing (as defined below), a Qualified SPAC Transaction (as defined in the Credit Agreement) or an Acquisition (as defined below), a Warrant (as defined below) to purchase such type/series (the Class) and number of shares of the Company (the Warrant Shares and, together with such Warrant and all shares of Common Stock (as defined below) or other securities, if any, issuable upon conversion of the Warrant, the Securities), and at such exercise price (the Warrant Price), as determined pursuant to this Agreement.
Terms
1. Definitions. Terms used in this Agreement and not otherwise defined shall have the meaning given to them in the Credit Agreement. In addition to terms separately defined in this Agreement, as used in this Agreement, the following terms have the following meanings:
Acquisition means any transaction or series of related transactions involving: (i) the sale, lease, exclusive license, or other disposition of all or substantially all of the assets of the Company on a consolidated basis; (ii) any merger or consolidation of the Company into or with another person or entity (other than a merger or consolidation effected exclusively to change the Companys domicile), or any other corporate reorganization, in which the stockholders of the Company in their capacity as such immediately prior to such merger, consolidation or reorganization, own less than a majority of the Companys (or the surviving or successor entitys or, if the surviving or successor entity is a wholly-owned subsidiary, its parents) outstanding voting power immediately after such merger, consolidation or reorganization; or (iii) any sale or other transfer by the stockholders of the Company of shares representing at least a majority of the Companys then-total outstanding combined voting power; provided, however, that an Acquisition shall not include a Qualified SPAC Transaction.
Affiliate means with respect to any specified entity, any other entity that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the specified entity, where the term control, controlled, or controlling as used in this definition means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract or otherwise.
Applicable Loan Amount means $3,500,000.
Qualified Equity Financing means an equity financing pursuant to which the Company issues and sells shares of its equity securities to investors in an arms-length transaction for the principal purpose of raising capital and resulting in aggregate gross proceeds to the Company of not less than $35,000,000.
Warrant means a warrant to purchase Warrant Shares issued by the Company pursuant to this Agreement and in the form set forth on Exhibit A.
2. Issuance of Warrant upon a Qualified Equity Financing, Qualified SPAC Transaction or Acquisition
(a) Issuance of Warrant. The Company shall issue a Warrant reflecting the Holders right to purchase such Class and number of Warrant Shares, and at such Warrant Price, as determined pursuant to Section 2(b) of this Agreement, following the earliest to occur of (the earliest date on which such event occurs being the Issue Date):
(i) |
The consummation of the first Qualified Equity Financing after the Effective Date; |
(ii) |
Immediately prior to the consummation of a Qualified SPAC Transaction; or |
(iii) |
Immediately prior to the consummation of any Acquisition other than a Qualified SPAC Transaction. |
(b) Class; Shares; Exercise Price
(i) Qualified Equity Financing. If the Issue Date is determined pursuant to Section 2(a)(i), then:
(A) The Class of the Warrant Shares shall be the class of equity securities issued in the Qualified Equity Financing;
(B) The number of Warrant Shares shall be calculated by dividing (x) the Applicable Loan Amount by (y) 85% multiplied by cash price paid per share for the equity securities by the investors in the Qualified Equity Financing; and
(C) The Warrant Price per Warrant Share shall be equal to the amount provided for in clause (y) of Section 2(b)(i)(B).
(ii) Qualified SPAC Transaction. If the Issue Date is determined pursuant to Section 2(a)(ii), then:
(A) The Class of the Warrant Shares shall be common stock of the Company, par value $0.001 per share (the Common Stock);
(B) The number of Warrant Shares shall be calculated by dividing (x) the Applicable Loan Amount by (y) 85% multiplied by the value assigned to each share of Common Stock in such Qualified SPAC Transaction; and
(C) The Warrant Price per Warrant Share shall be equal to the amount provided for in clause (y) of Section 2(b)(ii)(B).
(iii) Acquisition. If the Issue Date is determined pursuant to Section 2(a)(iii), then:
(A) The Class of the Warrant Shares shall be Common Stock;
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(B) The number of Warrant Shares shall be calculated by dividing (x) the Applicable Loan Amount by (y) 85% multiplied by the value assigned to each share of Common Stock in such Acquisition; and
(C) The Warrant Price per Warrant Share shall be equal to the amount provided for in clause (y) of Section 2(b)(iii)(B).
(c) Warrant Closing; Deliveries. The closing of the Warrant issuance (the Warrant Closing) shall take place remotely via exchange of documents. At the Warrant Closing, the Company shall deliver the original Warrant dated as of the date of the Warrant Closing, duly executed by an authorized officer of the Company.
3. Representations and Warranties of the Company. The Company represents and warrants to, and agrees with, the Holder as follows:
(a) The Warrant Shares and all shares of Common Stock or other securities, if any, issuable upon conversion of the Warrant Shares shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws. The Company covenants that it shall, if applicable, at all times following the Issue Date described in Section 2(a) of this Agreement, cause to be reserved and kept available out of its authorized and unissued capital stock such number of shares of the Class, Common Stock and other securities as will be sufficient to permit the exercise in full of the Warrant and the conversion of the Warrant Shares into Common Stock or such other securities.
(b) If the issuance of any of the Securities require approvals or registrations under applicable state blue sky or federal securities laws, the Company will use its commercially reasonable efforts to obtain such approvals or registrations as may be appropriate.
(c) Any corporate action required to be taken by the Board of Directors and/or stockholders of the Company in order to authorize the Company to enter into this Agreement and the Warrant, and to issue the applicable Securities has been taken or, with respect to the Securities, will be taken prior to the date of issuance of such Securities. All action on the part of the officers of the Company necessary for the execution and delivery of this Agreement and the Warrant and the performance of all respective obligations of the Company thereunder has been taken or, in the case of the Warrant, will be taken prior to date of issuance of the Warrant. This Agreement constitutes, and the Warrant will constitute, valid and legally binding obligations of the Company, enforceable against the Company in accordance with their respective terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.
(d) Assuming the accuracy of the Holders representations and warranties in Section 4 of this Agreement, the execution, delivery and performance of the Agreement will not result in any violation or be in conflict with or constitute, with or without the passage of time and giving of notice, (i) a default under any law applicable to the Company or any instrument, judgment, order, writ, decree, contract or agreement to which the Company is a party or by which its assets are bound except such defaults as would not reasonably be expected to materially and adversely affect the Company; or (ii) an event which results in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, forfeiture, or nonrenewal of any material permit or license applicable to the Company.
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4. Representations and Warranties of Holder. Holder represents and warrants to the Company as of the date hereof, and as of the date of issuance of the Warrant, as follows:
(a) Purchase for Own Account. The applicable Securities are being acquired for investment for Holders account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the U.S. Securities Act of 1933, as amended (the Securities Act). Holder also represents that it has not been formed for the specific purpose of acquiring any of the Securities.
(b) Disclosure of Information. Holder is aware of the Companys business affairs and financial condition and has received or has had access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of the applicable Securities. Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the applicable Securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.
(c) Investment Experience. Holder understands that the purchase of the Securities involves substantial risk. Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holders investment in the Securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in the applicable Securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons.
(d) Accredited Investor Status. Holder is an accredited investor within the meaning of Regulation D promulgated under the Securities Act.
(e) The Securities Act. Holder understands that the applicable Securities will not be registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holders investment intent as expressed herein. Holder understands any Securities issued must be held indefinitely unless subsequently registered under the Securities Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are otherwise available.
5. Restrictive Legends.
(a) Legend. Holder understands that any certificates representing the Securities shall be stamped or imprinted with a legend substantially similar to the following (in addition to any other legend required by applicable law):
[THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER AND ANY SHARES ISSUABLE UPON CONVERSION THEREOF][THESE SECURITIES] HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR THE SECURITIES LAWS OF ANY STATE AND[, EXCEPT AS SET FORTH IN SECTION 5.2 BELOW,] MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
4
(b) Instructions Regarding Transfer Restrictions. Holder consents to the Company making a notation on its records and giving instructions to any transfer agent, if applicable, in order to implement the restrictions on transfer established in Section 5(a) of this Agreement.
(c) Removal of Legend. The legend identified in Section 5(a) of this Agreement stamped or imprinted on any certificate evidencing any Securities and any stock transfer instructions and record notations with respect to such Securities, if applicable, shall be removed and the Company shall issue a certificate without such legend to the holder of such Securities if (i) such Securities are registered under the Securities Act, or (ii) such holder provides the Company with an opinion of counsel reasonably satisfactory to the Company to the effect that a sale or transfer of such Securities may be made without registration or qualification. The Company agrees that it shall not require an opinion of counsel if (x) there is no material question as to the availability of Rule 144 promulgated under the Securities Act or (y) the transfer is to an Affiliate of Holder, provided that any such transferee is an accredited investor as defined in Regulation D promulgated under the Securities Act.
6. Transfer of the Securities.
(a) Compliance with Securities Laws on Transfer. The Securities may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws by the transferor and the transferee.
(b) Transfer Procedure. The Warrant shall not be transferable without the prior written consent of the Company, except that Holder may transfer the Warrant to any Affiliate of Holder without the Companys prior written consent. Subject to the foregoing sentence, with respect to any proposed offer, sale or other disposition of the Warrant to a non-Affiliate of Holder, Holder will give written notice to the Company prior thereto, describing briefly the manner thereof, including the name, address and taxpayer identification number of the transferee.
7. General Provisions.
(a) Entire Agreement. This Agreement (including the Exhibit) constitutes the entire agreement among the parties and supersedes and cancels any prior agreements, representations, warranties, or communications, whether oral or written, among the parties relating to the subject matter of, or the transactions contemplated by, this Agreement. Neither this Agreement nor any of its provisions may be modified, changed, waived, discharged, or terminated orally. This Agreement may only be modified, changed, waived, discharged, or terminated by an agreement in writing signed by the party against whom or which the enforcement of such modification, change, waiver, discharge, or termination is sought.
(b) Assignment, Successors and Assigns. The rights and obligations under this Agreement may be assigned by Holder only with the prior written consent of the Company, exercisable in its sole and absolute discretion, except that Holder may assign its rights and obligations under this Agreement to any Affiliate of Holder without the Companys prior written consent. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
(c) Notices. All notifications, requests, demands, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed given when mailed (with return receipt requested), emailed, faxed (which is confirmed), or sent via a recognized overnight courier service such as Federal Express, to the parties at the addresses set forth on the signature page, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.
5
(d) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to its principles regarding conflicts of law.
(e) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including PDF) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
(f) Attorneys Fees. If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of this Agreement, the prevailing party in such shall be entitled to receive from the non-prevailing party the prevailing partys reasonable attorneys fees, costs and necessary disbursements in addition to any other relief to which it may be entitled.
(g) No Further Obligations. The Company acknowledges and agrees that the Holder has not made any representation, undertaking, commitment or agreement to provide or assist the Company in obtaining any financing, investment or other assistance, other than with regard to the Credit Agreement and the Subordinated Credit Agreement. In addition, the Company acknowledges and agrees that (i) no statements, whether written or oral, made by the Holder or its representatives on or after the date of this Agreement shall create an obligation, commitment or agreement to provide or assist the Company in obtaining any financing or investment, (ii) the Company shall not rely on any such statement by any the Holder or its representatives and (iii) an obligation, commitment or agreement to provide or assist the Company in obtaining any financing or investment may only be created by a written agreement, signed by the Holder and the Company, setting forth the terms and conditions of such financing or investment and stating that the parties intend for such writing to be a binding obligation or agreement. The Holder shall have the right, in its sole and absolute discretion, to refuse or decline to participate in any other financing of or investment in the Company, and shall have no obligation to assist or cooperate with the Company in obtaining any financing, investment or other assistance.
(h) Certain Remedies. Each party acknowledges and agrees that the other party would be damaged irreparably if this Agreement is not performed in accordance with its terms or otherwise is breached and that a party will be entitled to an injunction and other equitable relief (without posting any bond or other security) to prevent breaches hereof and to enforce specifically this Agreement and its terms in addition to any other remedy to which such party may be entitled hereunder.
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IN WITNESS WHEREOF, the duly authorized representatives of the parties have executed and delivered this Agreement as of the Effective Date.
LOCAL BOUNTI CORPORATION | ||
By: |
|
|
Name: | ||
Title: | ||
Address per Section 7(c): | ||
490 Foley Lane Hamilton, MT 59840 |
||
Attn: Kathleen Valiasek | ||
Email: kathy@localbounti.com | ||
CARGILL FINANCIAL SERVICES INTERNATIONAL, INC. | ||
By: |
|
|
Name: | ||
Title: | ||
Address per Section 7(c): | ||
9320 Excelsior Boulevard, MS 142 Hopkins, MN 55343 Attn: Erik Haugen Tel. No.: (952) 984-0574 Fax No.: (952) 249-4416 Email: erik_haugen@cargill.com |
7
EXHIBIT A
Form of Warrant to Purchase Stock
(see attached)
Exhibit 10.13
CREDIT AGREEMENT
dated as of
September 3, 2021
between
LOCAL BOUNTI CORPORATION
and
CERTAIN SUBSIDIARIES THEREOF,
as Borrowers,
and
CARGILL FINANCIAL SERVICES INTERNATIONAL, INC.,
as Lender
TABLE OF CONTENTS
ARTICLE I DEFINITIONS |
1 | |||||
Section 1.1 |
Defined Terms |
1 | ||||
Section 1.2 |
Terms Generally |
28 | ||||
Section 1.3 |
Accounting Terms; Changes in GAAP |
29 | ||||
Section 1.4 |
Time |
29 | ||||
Section 1.5 |
Divisions |
29 | ||||
Section 1.6 |
Interest Rates |
29 | ||||
ARTICLE II TERMS OF THE TERM LOAN FACILITY |
30 | |||||
Section 2.1 |
Term Loan Facility |
30 | ||||
Section 2.2 |
Interest on the Term Loans | 30 | ||||
Section 2.3 |
Payment of Principal and Interest | 31 | ||||
Section 2.4 |
Voluntary Prepayments | 31 | ||||
Section 2.5 |
Lender Discretionary Prepayment | 32 | ||||
Section 2.6 |
Fees | 33 | ||||
Section 2.7 |
Evidence of Debt | 33 | ||||
Section 2.8 |
Payments Generally | 33 | ||||
Section 2.9 |
Increased Costs | 34 | ||||
Section 2.10 |
Specified Fees | 35 | ||||
Section 2.11 |
Benchmark Replacement Setting | 36 | ||||
ARTICLE III REPRESENTATIONS AND WARRANTIES |
37 | |||||
Section 3.1 |
Existence, Qualification and Power; Subsidiaries | 37 | ||||
Section 3.2 |
Authorization; No Contravention | 38 | ||||
Section 3.3 |
Governmental Authorization; Other Consents | 38 | ||||
Section 3.4 |
Execution and Delivery; Binding Effect | 38 | ||||
Section 3.5 |
Financial Statements; No Material Adverse Effect | 38 | ||||
Section 3.6 |
Outstanding Indebtedness | 38 | ||||
Section 3.7 |
Litigation | 38 | ||||
Section 3.8 |
No Material Adverse Effect; No Default | 39 | ||||
Section 3.9 |
Property; Licenses; Margin Regulations | 39 | ||||
Section 3.10 |
Taxes | 40 | ||||
Section 3.11 |
Disclosure | 40 | ||||
Section 3.12 |
Compliance with Laws | 40 | ||||
Section 3.13 |
ERISA Compliance | 40 | ||||
Section 3.14 |
Environmental Matters; Hazardous Materials | 40 | ||||
Section 3.15 |
Investment Company Act | 41 | ||||
Section 3.16 |
Insurance | 41 | ||||
Section 3.17 |
Sanctions and Anti-Terrorism; Anti-Corruption | 41 | ||||
Section 3.18 |
Solvency | 42 | ||||
Section 3.19 |
Material Agreements | 42 | ||||
Section 3.20 |
Employee and Labor Matters | 42 | ||||
Section 3.21 |
Compliance with Food Security Act and Agricultural Lien Statutes; Agricultural Lien Notices | 42 | ||||
Section 3.22 |
Agricultural Licenses | 43 | ||||
Section 3.23 |
The Farm Projects | 43 | ||||
ARTICLE IV CONDITIONS |
44 | |||||
Section 4.1 |
Conditions Precedent to Effectiveness | 44 |
i
Section 4.2 |
Additional Conditions to Initial Credit Extension | 46 | ||||
Section 4.3 |
Additional Conditions to each Term Loan | 46 | ||||
ARTICLE V AFFIRMATIVE COVENANTS |
50 | |||||
Section 5.1 |
Financial Statements | 50 | ||||
Section 5.2 |
Certificates; Other Information | 51 | ||||
Section 5.3 |
Notices | 52 | ||||
Section 5.4 |
Preservation of Existence, Etc. | 53 | ||||
Section 5.5 |
Maintenance of Properties | 54 | ||||
Section 5.6 |
Maintenance of Insurance | 54 | ||||
Section 5.7 |
Payment of Obligations | 54 | ||||
Section 5.8 |
Compliance with Laws | 54 | ||||
Section 5.9 |
Environmental Matters | 54 | ||||
Section 5.10 |
Books and Records | 55 | ||||
Section 5.11 |
Inspection Rights | 55 | ||||
Section 5.12 |
Use of Proceeds | 55 | ||||
Section 5.13 |
Sanctions and Anti-Terrorism Laws; Anti-Corruption Laws | 55 | ||||
Section 5.14 |
Additional Subsidiaries; Holdings as Guarantor | 56 | ||||
Section 5.15 |
Real Property | 57 | ||||
Section 5.16 |
Further Assurances | 58 | ||||
Section 5.17 |
Debt Service Reserve Account | 58 | ||||
Section 5.18 |
Farm Project Construction | 58 | ||||
Section 5.19 |
Post-Closing Requirements | 60 | ||||
ARTICLE VI NEGATIVE COVENANTS |
60 | |||||
Section 6.1 |
Indebtedness | 60 | ||||
Section 6.2 |
Liens | 61 | ||||
Section 6.3 |
Fundamental Changes | 62 | ||||
Section 6.4 |
Dispositions | 63 | ||||
Section 6.5 |
Restricted Payments; Payments of Subordinated Indebtedness | 63 | ||||
Section 6.6 |
Investments | 64 | ||||
Section 6.7 |
Transactions with Affiliates; Management Fees | 64 | ||||
Section 6.8 |
Financial Covenants | 65 | ||||
Section 6.9 |
Certain Restrictive Agreements | 65 | ||||
Section 6.10 |
Changes in Fiscal Periods; Accounting Methods | 66 | ||||
Section 6.11 |
Changes in Nature of Business | 66 | ||||
Section 6.12 |
Organizational Documents | 66 | ||||
Section 6.13 |
Material Agreements; Change Orders | 66 | ||||
Section 6.14 |
Subsidiaries, Joint Ventures | 67 | ||||
Section 6.15 |
Sanctions and Anti-Terrorism; Anti-Corruption Use of Proceeds | 67 | ||||
Section 6.16 |
ERISA | 67 | ||||
Section 6.17 |
Sale-Leasebacks | 67 | ||||
Section 6.18 |
Operating Leases | 67 | ||||
ARTICLE VII EVENTS OF DEFAULT |
68 | |||||
Section 7.1 |
Events of Default | 68 | ||||
Section 7.2 |
Application of Payments | 73 | ||||
ARTICLE VIII MISCELLANEOUS |
73 | |||||
Section 8.1 |
Notices | 73 | ||||
Section 8.2 |
Amendments; Waivers | 73 |
ii
Section 8.3 |
Expenses; Indemnity; Damage Waiver | 73 | ||||
Section 8.4 |
Engagement of Project Consultant, Other Agents | 75 | ||||
Section 8.5 |
Successors and Assigns | 75 | ||||
Section 8.6 |
Survival | 75 | ||||
Section 8.7 |
Counterparts; Integration; Effectiveness | 75 | ||||
Section 8.8 |
Severability | 75 | ||||
Section 8.9 |
Governing Law; Jurisdiction; Etc. | 76 | ||||
Section 8.10 |
WAIVER OF JURY TRIAL | 76 | ||||
Section 8.11 |
Headings | 77 | ||||
Section 8.12 |
PATRIOT Act | 77 | ||||
Section 8.13 |
Interest Rate Limitation | 77 | ||||
Section 8.14 |
Payments Set Aside; Reinstatement of Liens | 77 | ||||
Section 8.15 |
Joint and Several Liability | 77 | ||||
Section 8.16 |
The Company as Agent for Borrowers | 78 | ||||
Section 8.17 |
No Advisory or Fiduciary Responsibility | 78 |
Exhibits |
||||||
Exhibit A |
- |
Form of Term Loan Note |
||||
Exhibit B |
- |
Form of Loan Request |
||||
Exhibit C |
- |
Form of Compliance Certificate |
||||
Exhibit D |
- |
Form of Officers Certificate (Project Costs) |
||||
Exhibit E |
- |
Form of Final Completion Certificate |
||||
Schedules |
||||||
Schedule A |
- |
Closing Date Convertible Notes |
||||
Schedule B |
- |
Excluded Subsidiaries |
||||
Schedule 3.1 |
- |
Subsidiaries |
||||
Schedule 3.14(b) |
- |
Environmental Disclosures |
iii
CREDIT AGREEMENT
This Agreement is entered into as of September 3, 2021 by and among LOCAL BOUNTI CORPORATION, a Delaware corporation which, as of the Qualified SPAC Transaction Effective Date (and after giving effect to the mergers contemplated under the SPAC Merger Agreement), will be renamed Local Bounti Operating Company LLC, a Delaware limited liability company (the Company), each Subsidiary of the Company identified as a Borrower on the signature pages hereto (each such Subsidiary, a Subsidiary Borrower; all Subsidiary Borrowers, together with the Company and with any Person subsequently joining in this Agreement as a borrower pursuant to Section 5.14 hereof, collectively, the Borrowers), and CARGILL FINANCIAL SERVICES INTERNATIONAL, INC., a Delaware corporation (the Lender).
The Borrowers have requested that the Lender make a multiple-advance term loan to the Borrowers, and the Lender is willing to do so on the terms and conditions set forth herein. In consideration of the mutual covenants and agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. As used in this Agreement, the following terms have the meanings specified below:
ABR means, for any day, a rate per annum equal to the highest of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 0.50%. Any change in the ABR due to a change in the Prime Rate or the Federal Funds Effective shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.
ABR Loan means a Term Loan that bears interest based on the ABR.
Acceptable Buyer has the meaning specified in Section 6.8(d)(i).
Account Control Agreement means, with respect to any deposit, securities or commodity account of any Loan Party or any Subsidiary, an account control agreement (including any blocked account agreement) in favor of and in form and substance acceptable to the Lender, duly executed by the parties thereto.
Affiliate means, with respect to a specified Person, another Person that directly or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified; provided that, except with respect to Section 6.7, the term Affiliate (with respect to any Loan Party) shall not include any private equity funds owned or managed by Lion Capital LLP, an English limited liability partnership, or any unrelated portfolio companies of such funds or Lion Capital LLP (other than the Loan Parties and their Subsidiaries).
Agreement means this Credit Agreement.
Agricultural License means each License held (or required to be held) by a Loan Party pursuant to any Agricultural Lien Statutes applicable to such Loan Party.
Agricultural Lien Statutes means, collectively, PACA, PASA, the Food Security Act and all other Applicable Laws that could create or give rise to any Lien, trust, charge, encumbrance or claim, including without limitation any agricultural lien (as defined in the UCC), in or against (a) any portion
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of the farm products (as defined in the UCC) or any other agricultural products purchased, stored or otherwise handled by any Loan Party, by any Person from whom any Loan Party purchases goods or by any other Person from whom such first Person purchases or otherwise receives goods in the ordinary course of business, or (b) any products, proceeds or derivatives of any such farm product or other agricultural product (including, without limitation, any accounts receivable arising from the sale of any such farm product, other agricultural product or any products, proceeds or derivatives thereof).
Anti-Corruption Laws means the FCPA, the U.K. Bribery Act 2010, and any other anti-bribery or anti-corruption laws, regulations or ordinances in any jurisdiction in which any Loan Party or any of its Subsidiaries is located or doing business.
Anti-Terrorism Laws means any Laws relating to terrorism, Sanctions or other trade sanctions programs and embargoes, import/export licensing, money laundering or bribery and corruption (including the PATRIOT Act), and any regulation, order, or directive promulgated, issued or enforced pursuant to such Laws.
Applicable Food and Feed Safety Law means each Applicable Law with respect to the safety of food and feed products, including without limitation the FDA Food Safety Modernization Act, Pub. L. No. 111-353, 124 Stat. 3885 (2011) and corresponding rules and regulations, each as amended from time to time.
Applicable Interest Rate means a rate per annum equal to the LIBO Rate plus the Applicable Margin.
Applicable Law means, as to any Person, all applicable Laws binding upon such Person or to which such Person is subject.
Applicable Margin means, as applicable:
(a) the percentage spread to be added to LIBO Rate Loans, as set forth in the Pricing Grid based on the then-current Consolidated Senior Net Leverage Ratio; or
(b) the percentage spread to be added to ABR Loans, as set forth in the Pricing Grid based on the then-current Consolidated Senior Net Leverage Ratio.
Approved Budget means, at any time, the budget most recently submitted to the Lender pursuant to Section 5.2(c), but only so long as such budget has been approved by the Lender in its reasonable discretion in writing.
Approved Long-Term Supply Agreement means each offtake agreement entered into by the Company with an Acceptable Buyer that satisfies the requirements set forth in subclause (i) or subclause (ii) of Section 6.8(d).
Approved USDA Lender means Live Oak Banking Company or another Person approved by the Lender in writing in its reasonable discretion.
Attributable Indebtedness means, as of any date of determination, (a) in respect of any Capitalized Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.
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Available Tenor means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if the then-current Benchmark is a term rate, any tenor for such Benchmark that is or may be used for determining the length of an Interest Period or (y) otherwise, any payment period for interest calculated with reference to such Benchmark, as applicable, pursuant to this Agreement as of such date.
Benchmark means, initially, USD LIBOR; provided that if a replacement of the Benchmark has occurred pursuant to Section 2.11, then Benchmark means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate. Any reference to Benchmark shall include, as applicable, the published component used in the calculation thereof.
Benchmark Replacement means, for any Available Tenor:
(1) For purposes of Section 2.11(a), the first alternative set forth below that can be determined by the Lender (in consultation with the Company):
(a) the sum of: (i) Term SOFR and (ii) 0.11448% (11.448 basis points) for an Available Tenor of one-months duration, 0.26161% (26.161 basis points) for an Available Tenor of three-months duration, and 0.42826% (42.826 basis points) for an Available Tenor of six-months duration, or
(b) the sum of: (i) Daily Simple SOFR and (ii) the spread adjustment selected or recommended by the Relevant Governmental Body for the replacement of the tenor of the LIBO Rate with a SOFR-based rate having approximately the same length as the interest payment period specified in Section 2.11(a); and
(2) For purposes of Section 2.11(b), the sum of (a) the alternate benchmark rate and (b) an adjustment (which may be a positive or negative value or zero), in each case, that has been selected by the Lender as the replacement for such Available Tenor of such Benchmark giving due consideration to any evolving or then-prevailing market convention, including any applicable recommendations made by the Relevant Governmental Body, for Dollar-denominated syndicated or bilateral credit facilities at such time;
provided that, if the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
Benchmark Replacement Conforming Changes means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of ABR, the definition of Business Day, the definition of Interest Period, timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Lender (in consultation with the Company) decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Lender in a manner substantially consistent with market practice (or, if the Lender decides that adoption of any portion of such market practice is not administratively feasible or if the Lender determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Lender (in consultation with the Company) decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
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Benchmark Transition Event means, with respect to any then-current Benchmark other than the LIBO Rate, the occurrence of a public statement or publication of information by or on behalf of the administrator of the then-current Benchmark, the regulatory supervisor for the administrator of such Benchmark, the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark, a resolution authority with jurisdiction over the administrator for such Benchmark or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark, announcing or stating that (a) such administrator has ceased or will cease on a specified date to provide all Available Tenors of such Benchmark, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark or (b) all Available Tenors of such Benchmark are or will no longer be representative of the underlying market and economic reality that such Benchmark is intended to measure and that representativeness will not be restored.
Beneficial Ownership Certification has the meaning specified in Section 8.12.
Beneficial Ownership Regulation shall mean 31 C.F.R. § 1010.230.
Bitterroot Lease Agreement means the Lease (Single Tenant; Gross) dated as of June 12, 2020, between Grow Bitterroot, LLC, as landlord, and Bounti Bitterroot, as tenant.
Borrowers has the meaning specified in the preamble.
Bounti Bitterroot means Bounti Bitterroot LLC, a Delaware limited liability company.
Business Day means any day that is not a Saturday, Sunday or other day that is a legal holiday under the laws of the State of New York or Minnesota or is a day on which banking institutions in such state are authorized or required by Law to close.
Capitalized Lease means each lease that has been or is required to be, in accordance with GAAP, recorded as a capital or finance lease.
Cash Equivalents means:
(a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from a Credit Rating Agency;
(c) investments in certificates of deposit, bankers acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any state thereof that has a combined capital and surplus and undivided profits of not less than $500,000,000;
(d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; and
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(e) money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA and Aaa (or equivalent rating) by at least two Credit Rating Agencies and (iii) have portfolio assets of at least $5,000,000,000.
Change in Law means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any Law, rule, regulation or treaty, (b) any change in any Law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of Law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a Change in Law, regardless of the date enacted, adopted or issued.
Change of Control means any event, circumstance or occurrence that results in:
(a) at any time prior to the Qualified SPAC Transaction Effective Date, (i) the Closing Date Holders failing to own and Control, directly or indirectly, 75% of the Equity Interests of the Company; (ii) the Company failing to own and Control, directly or indirectly, 100% of the Equity Interests of each Subsidiary (other than the Northwest SPV) (it being agreed that a Change of Control shall not occur to the extent an immaterial Subsidiary no longer useful in the business of the Company dissolves or merges into a Loan Party in accordance with Section 6.3, with such Loan Party continuing as the surviving entity), (iii) the Company failing to own and Control, directly or indirectly, at least 99% of the Equity Interests of the Northwest SPV (except pursuant to a transaction permitted by Section 6.4(f)), or (iv) a change in the composition of the Governing Board of the Company such that Continuing Directors cease to constitute 50% or more of the Companys Governing Board.
(b) at any time after the Qualified SPAC Transaction Effective Date, (i) Holdings failing to own and Control, directly or indirectly, 100% of the Equity Interests of the Company, free and clear of all Liens other than Liens in favor of the Lender, (ii) the Company failing to own and Control, directly or indirectly, 100% of the Equity Interests of each other Loan Party (other than the Northwest SPV), free and clear of all Liens other than Liens in favor of the Lender (it being agreed that a Change of Control shall not occur to the extent an immaterial Loan Party no longer useful in the business of the Company dissolves or merges into another Loan Party in accordance with Section 6.3), (iii) the Company failing to own and Control, directly or indirectly, at least 99% of the Equity Interests of the Northwest SPV (except pursuant to a transaction permitted by Section 6.4(f)), free and clear of all Liens other than Liens in favor of the Lender, (iv) any person or group (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have beneficial ownership of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an option right)), directly or indirectly, of 30% or more of the Equity Interests of Holdings entitled to vote for members of the Governing Board of Holdings on a fully diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right), or (v) a change in the composition of the Governing Board of Holdings, the Company or any Subsidiary Borrower such that Continuing Directors cease to constitute 50% or more of such Persons Governing Board.
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For the avoidance of doubt, the occurrence of the First Merger (as defined in the SPAC Merger Agreement) shall not result in any Change of Control hereunder so long as such First Merger (i) is consummated in accordance with the terms and conditions of the SPAC Merger Agreement and (ii) occurs substantially concurrently with the Second Merger (as defined in the SPAC Merger Agreement).
Closing Date means the date of this Agreement.
Closing Date Convertible Notes means the unsecured Convertible Promissory Notes outstanding on the Closing Date and listed on Schedule A hereto.
Closing Date Holders means, collectively, the beneficial owners of all Equity Interests of the Company as of the Closing Date as listed in the Perfection Certificate delivered to the Lender pursuant to Section 4.1(f).
Closing Date Letter Agreement means Letter Agreement dated as of the Closing Date between the Company and the Lender.
Code means the Internal Revenue Code of 1986, as amended.
Collateral means any and all assets on which a Lien is granted to the Lender to secure any or all of the Obligations.
Collateral Assignment means:
(a) with respect to any Material Project Document, a collateral assignment in favor of and in form and substance reasonably acceptable to the Lender, duly executed by the applicable parties thereto and consented to and acknowledged by (x) with respect to any GC Contract, the applicable General Contractor, and (y) with respect to any other Material Project Document, to the extent reasonably requested by the Lender, the Material Project Participant party to such Material Project Document; provided that, solely with respect to Project Licenses, the Loan Parties shall only be required to use commercially reasonable efforts to deliver consents and acknowledgments of collateral assignments in respect of Project Licenses under this clause (a)(y); and
(b) with respect to any Material Agreement (other than a Material Project Document), when reasonably requested by the Lender, (x) a collateral assignment in favor of and in form and substance reasonably acceptable to the Lender, duly executed by the applicable Loan Party or Subsidiary and (y) consented to and acknowledged by each other Person party to or other Person who has an interest in such Material Agreement; provided that, except in the case of Third-Party Farm Lease Agreements, the Loan Parties shall only be required to use commercially reasonable efforts to deliver consents and acknowledgments of collateral assignments from third parties under this clause (b)(y).
Collateral Documents means, collectively, the Security Agreement, each Account Control Agreement, each Mortgage, each Collateral Assignment, each Lien Waiver Agreement and each other instrument, certificate or document pursuant to which any Borrower or any other Loan Party has granted a Lien to the Lender to secure any or all of the Obligations.
Commodity Exchange Act means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.
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Completion means, with respect to a Farm Project, (a) the completion of such Farm Project in accordance with the terms of the applicable Project Documents and the Loan Documents and the requirements of all Applicable Laws and third-party and governmental consents and approvals; (b) without limiting the foregoing, construction of such Farm Project has been certified as complete by the applicable General Contractor, the other Material Project Contractors and the Project Consultant; (c) the Borrowers have delivered to the Lender evidence that a valid notice of completion has been recorded to establish commencement of the shortest statutory period in the filing of mechanics and materialmens Liens, if applicable; (d) full and final unconditional waivers of mechanics Liens from all contractors engaged in connection with such Farm Project shall have been delivered to the Lender; (e) a final, unconditional certificate of occupancy or other applicable approval from the appropriate Governmental Authority permitting occupancy of the applicable Farm shall have been issued as to the applicable Farm; and (f) the Company has delivered to the Lender a duly executed Final Completion Certificate. Complete shall have a correlative meaning.
Completion Deadline means, with respect to each Farm Project, the date determined by the Borrowers and reasonably acceptable to the Lender by which Completion of such Farm Project must occur, which date will be set forth in the Construction Budget (including the Initial Construction Budget) and Construction Schedule applicable to such Farm Project.
Compliance Certificate means a certificate substantially in the form of Exhibit C attached hereto or such other form approved by the Lender.
Consolidated Adjusted EBITDA means, with respect to the Consolidated Group, for the applicable Covenant Computation Period, Consolidated Net Income for such period plus, without duplication and to the extent deducted in determining Consolidated Net Income for such period, the sum of (a) Consolidated Interest Expense, (b) provision for Taxes based on income, (c) depreciation expense, (d) amortization expense, (e) unusual or non-recurring charges, expenses or losses and (f) other non-cash charges, expenses or losses (excluding any such non-cash charge to the extent it represents an accrual or reserve for potential cash charge in any future period or amortization of a prepaid cash charge that was paid in a prior period), minus, to the extent included in determining Consolidated Net Income for such period, the sum of (i) unusual or non-recurring gains and non-cash income, (ii) any other non-cash income or gains increasing Consolidated Net Income for such period (excluding any such non-cash gain to the extent it represents the reversal of an accrual or reserve for potential cash charge in any prior period) and (iii) any gains realized from the disposition of property outside of the ordinary course of business, all as determined on a consolidated basis.
Consolidated Group means, prior to the Qualified SPAC Transaction Effective Date, the Company and the other Loan Parties, and after the Qualified SPAC Transaction Effective Date, Holdings, the Company and the other Loan Parties, in each case, including, but not limited to, each Borrower.
Consolidated Interest Coverage Ratio means, as of any date of determination, the ratio of (a) Consolidated Adjusted EBITDA for the most recently completed Covenant Computation Period, to (b) Consolidated Interest Expense for the most recently completed Covenant Computation Period.
Consolidated Interest Expense means, with respect to the applicable Covenant Computation Period, total interest expense (including that attributable to Capitalized Leases) net of total interest income of the Consolidated Group on a consolidated basis for such period with respect to all outstanding Indebtedness of the Consolidated Group (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers acceptance financing and net costs under Swap Contracts to the extent that such net costs are allocable to such period).
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Consolidated Net Income means, with respect to the applicable Covenant Computation Period, the consolidated net income (or loss) of the Consolidated Group on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of a Loan Party or is merged into or consolidated with a Loan Party or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary of a Loan Party) in which a Loan Party or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by such Loan Party or such Subsidiary in the form of dividends or similar distributions, and (c) the undistributed earnings of any Subsidiary of a Loan Party to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligation (other than under any Loan Document) or requirement of Law applicable to such Subsidiary.
Consolidated Senior Funded Indebtedness means, as of any date of determination, the sum of (1) the aggregate amount of Indebtedness of the Consolidated Group outstanding on such date, determined on a consolidated basis in accordance with GAAP, consisting only of Indebtedness included in clauses (a), (b) (but with respect to earn-out obligations, only to the extent due and payable), (c) (but with respect to letters of credit, only to the extent of any drawn and unreimbursed amounts in respect thereof), (e), (f), (g) and (k) (only with respect to guarantees of Indebtedness otherwise included in this definition) of the definition of Indebtedness, less (2) the aggregate amount of Junior Debt of the Consolidated Group outstanding on such date, less (3) the aggregate amount of USDA Loans under Section 6.1(i) outstanding on such date. For the avoidance of doubt, it is understood and agreed that Indebtedness with respect to lease or rental obligations are excluded from this definition.
Consolidated Senior Net Leverage Ratio means, as of any date of determination, the ratio of (a) Consolidated Senior Funded Indebtedness as of such date, minus Unrestricted Cash of the Loan Parties as of such date in an amount not to exceed $30,000,000, to (b) Consolidated Adjusted EBITDA for the most recently completed Covenant Computation Period.
Continuing Directors means, as of any date, (a) those members of the Governing Board of a Person who assumed office prior to such date, and (b) those members of the Governing Board of a Person who assumed office after such date and whose appointment or nomination for election by such Persons members was approved by the Governing Board of such Person in accordance with such Persons Organizational Documents.
Construction Budget means, with respect to a Farm Project, a budget in form and substance reasonably satisfactory to the Lender (and, in the discretion of the Lender, after consultation with the Project Consultant), which may be revised from time to time by the Borrowers in accordance with the terms and conditions of this Agreement, and which sets forth all anticipated Project Costs, including, but not limited to, all construction and non-construction costs, all interest, fees and other carrying costs relating to such Farm Project, and all applicable contingency reserves. Each Construction Budget shall contain a statement of sources and uses of proceeds, broken down as to separate construction phases and components, including line item costs breakdowns for all costs by trade, job and subcontractor.
Construction Schedule means, with respect to a Farm Project, a progress schedule in form and substance reasonably satisfactory to the Lender (and, in the discretion of the Lender, after consultation with the Project Consultant), showing the estimated commencement and completion dates for each material phase of such Farm Project, including the construction, equipping and completion of such Farm Project, and setting forth the estimated Final Completion Date with respect to such Farm Project, as such progress schedule may be revised from time to time by the Borrowers in accordance with the terms and conditions of this Agreement.
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Contractual Obligation means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
Control means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. Controlling and Controlled have meanings analogous thereto.
Controlled Environment means Controlled Environment Property Company, LLC, a Delaware limited liability company and a wholly owned Subsidiary of the Company.
Corresponding Tenor with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
Covenant Compliance Date means the last day of each calendar quarter.
Covenant Computation Period means the four consecutive calendar quarters immediately preceding and ending on a Covenant Compliance Date.
Credit Rating Agency means a nationally recognized credit rating agency that evaluates the financial condition of issuers of debt instruments and then assigns a rating that reflects its assessment of the issuers ability to make debt payments.
CRM means Cargill Risk Management, a division of Cargill, Incorporated, or any Affiliate thereof.
Daily Simple SOFR means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Lender in accordance with the conventions for this rate recommended by the Relevant Governmental Body for determining Daily Simple SOFR for syndicated or bilateral business loans; provided, that if the Lender decides that any such convention is not administratively feasible for the Lender, then the Lender may establish another convention in its reasonable discretion.
Debtor Relief Laws means the Bankruptcy Code of the United States of America and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
Debt Service Coverage Ratio means, with respect to the Consolidated Group, for the applicable Covenant Computation Period, the ratio of (a) Consolidated Adjusted EBITDA during such period, to (b) the sum of (without duplication) (i) all scheduled principal payments on all Indebtedness for borrowed money (other than any such Indebtedness described in clause (j) of the definition thereof) due during such period or on demand, (ii) all interest paid in cash during such period, and (iii) all rental payments under leases of real or personal property, regardless of whether such leases are characterized as operating leases or a finance (or capital) leases, all determined in accordance with GAAP on a consolidated basis.
Debt Service Reserve Account means a deposit account established by the Company with a financial institution acceptable to the Lender and containing such minimum funds as required under Section 5.17.
Default means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
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Default Rate means, as of any date of determination, the following: (a) for each Term Loan, the Applicable Interest Rate plus 3.00% per annum; and (b) for all other Obligations, the Applicable Interest Rate plus 3.00%.
Delaware Code means the Delaware Code as defined in 1 Del. C. § 101, as amended from time to time.
Disbursing Agent means First American Title Insurance Company or such other title insurance company to the Lender in its sole discretion.
Disbursing Agreement means the Disbursing Agreement of even date herewith among the Company, the Lender and the Disbursing Agent.
Disposition or Dispose means the sale, transfer, license, lease or other disposition of any property or asset by any Person, including, but not limited to, any sale and leaseback transaction, any division under the Delaware Code, any issuance of Equity Interests by a Subsidiary of such Person, or any sale, discounting, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.
Disqualified Equity Interest means any Equity Interest that, by its terms (or the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Equity Interests that are not Disqualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior Payment in Full of all Obligations), (b) is redeemable at the option of the holder thereof, in whole or in part, (c) provides for scheduled payments of dividends in cash, or (d) is or becomes convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is 91 days after the Maturity Date; provided that if such Equity Interests are issued in the ordinary course of business pursuant to a plan for the benefit of employees of the Company or any of its Subsidiaries or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Equity Interests solely because they may be required to be repurchased by the Company or any of its Subsidiaries in order to satisfy applicable statutory or regulatory obligations.
Dollar, Dollars, U.S. Dollars and $ mean lawful money of the United States.
DSRA Shortfall has the meaning specified in Section 5.17(b).
Early Opt-in Effective Date means, with respect to any Early Opt-in Election, the sixth (6th) Business Day after the date notice of such Early Opt-in Election is provided to the Borrowers.
Early Opt-in Election means the occurrence of:
(1) a determination by the Lender that at least five (5) currently outstanding Dollar-denominated syndicated or bilateral credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate, and
(2) the election by the Lender to trigger a fallback from the LIBO Rate and the provision by the Lender of written notice of such election to the Borrowers.
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Environmental Indemnity means the Environmental Indemnity Agreement of even date herewith by the Borrowers in favor of the Lender.
Environmental Laws means any and all federal, state, local and foreign statutes, Laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions, including all common law, relating to pollution or the protection of health, safety or the environment or the release of any materials into the environment, including those related to Hazardous Materials, air emissions, discharges to waste or public systems and health and safety matters.
Environmental Liability means any liability or obligation, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), directly or indirectly, resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment, disposal or permitting or arranging for the disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
EPA means the United States Environmental Protection Agency or any successor agency thereto, whether acting through a local, state, federal or other office.
Equity Interests means, as to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
ERISA Affiliate means any trade or business (whether or not incorporated) under common control with the Borrowers or another Loan Party within the meaning of Sections 414(b), (c), (m) and (o) of the Code or Section 4001(a) of ERISA.
Event of Default has the meaning specified in Article VII.
Excluded Accounts has the meaning assigned to such term in the Security Agreement.
Excluded Contractor or Subcontractor means each contractor or subcontractor engaged to furnish materials or services in connection with a Farm Project pursuant to contracts, purchase orders or other agreements that in the aggregate are less than $50,000 (or such greater amount as the Disbursing Agent and the Lender may agree to in writing) with respect to each such contractor or subcontractor.
Excluded Subsidiary means any Subsidiary that satisfies the following conditions: (a) such Subsidiary is identified on Schedule B hereto (as such schedule may be amended or supplemented from time to time with the Lenders prior written consent (not to be unreasonably withheld)), (b) all of the tangible assets of such Subsidiary are located in a qualified opportunity zone as defined in Section 1400Z-1(a) of the Code, and (c) such Subsidiary at no time received or receives, directly or indirectly, any proceeds of any Term Loan made hereunder.
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Excluded Swap Obligations means with respect to any Guarantor, any obligations in respect of Swap Obligations if, and to the extent that, all or a portion of the guaranty of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligations (or any guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the United States Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantors failure for any reason not to constitute an eligible contract participant as defined in the Commodity Exchange Act at the time the guaranty of such Guarantor becomes effective with respect to such related Swap Obligations. For purposes of this definition, Swap Obligations means, with respect to any Guarantor, any obligations to pay or perform under any agreement, contract or transaction that constitutes a swap within the meaning of section 1a(47) of the Commodity Exchange Act.
Excluded Taxes means any of the following Taxes imposed on or with respect to the Lender or required to be withheld or deducted from a payment to the Lender: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of the Lender being organized under the laws of, or having its principal office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of the Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of the Lender with respect to an applicable interest in the Term Loan pursuant to a Law in effect on the date on which the Lender acquires such interest in the Term Loan, and (c) any withholding Taxes imposed under FATCA.
Existing Bridge Indebtedness means the Indebtedness under the Credit Agreement dated as of March 22, 2021 between the Company and the Lender (as defined therein).
Exiting Lenders means, as of the Closing Date, the holders of any Indebtedness of any Loan Party (other than Permitted Indebtedness).
Farm means a greenhouse facility and associated infrastructure.
Farm Lease Agreement means each lease agreement in respect of a Farm Project Site.
Farm Project means the development, design, construction, equipping, testing and completion of a Farm in accordance with the terms of the relevant Project Documents, including (a) all equipment, buildings, structures, improvements, fixtures, attachments, appliances, machinery and systems in connection with such Farm and (b) all Project Documents and other contracts and agreements related thereto.
Farm Project Site means the real property in which a Loan Party has a fee simple or leasehold interest and upon which a Farm Project or Farm is or will be located.
FATCA means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.
FCPA means the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations promulgated thereunder.
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Federal Funds Effective Rate means, for any day, the greater of (a) the rate calculated by the Federal Reserve Bank of New York based on such days Federal funds transactions by depositary institutions (as determined in such manner as the Federal Reserve Bank of New York shall set forth on its public website from time to time) and published on the next succeeding Business Day by the Federal Reserve Bank of New York as the Federal funds effective rate and (b) 0%.
Federal Reserve Board means the Board of Governors of the Federal Reserve System of the United States.
Fee Determination Date means the earlier of (a) the Maturity Date, (b) the date on which any of the Obligations are prepaid pursuant to Section 2.4 or 2.5, and (c) the date on which any Obligations are accelerated pursuant to the Loan Documents or Applicable Law.
Fee Letter means the Fee Letter dated as of the Closing Date among the Borrowers and the Lender and each separate agreement entered into from time to time by and between the Borrowers or any other Loan Party and the Lender, in each case setting forth certain fees to be paid by the Borrowers or such other Loan Party to the Lender, as more fully set forth therein.
Final Completion Certificate means a certificate of a Responsible Officer of the Company in the form of Exhibit E attached hereto.
Final Completion Date means the date of Completion.
Financial Officer means, as to any Person, the chief financial officer, principal accounting officer, treasurer or controller of such Person.
Fiscal Year means, with respect to the Borrowers or any Subsidiary, a calendar year ending December 31.
Flood Laws means, collectively, (a) the National Flood Insurance Act of 1968, (b) the Flood Disaster Protection Act of 1973, (c) the National Flood Insurance Reform Act of 1994 and (d) the Biggert-Waters Flood Insurance Act of 2012, in each case, as now or hereinafter in effect, and any successor statute thereto, and all such other Applicable Laws related thereto.
Floor means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the LIBO Rate.
Food Security Act means 7 U.S.C. Section 1631, and any successor statute thereto, together with each law establishing a central filing system (as defined in 7 U.S.C. Section 1631) that has been certified by the Secretary of the United States Department of Agriculture.
GAAP means, subject to Section 1.3, United States generally accepted accounting principles as in effect as of the date of determination thereof.
GC Contract means, with respect to a Farm Project, an agreement for general contract services entered into between the General Contractor engaged for such Farm Project, on the one hand, and any Borrower or any other Loan Party or Subsidiary, on the other hand.
General Contractor means, with respect to a Farm Project, a Person engaged by any Borrower or any other Loan Party or Subsidiary to act as the general contractor for such Farm Project, which Person shall in each case be acceptable to the Lender in its reasonable discretion.
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Governing Board means, with respect to any corporation, limited liability company or similar Person, the board of directors, board of governors or other body or entity that sets overall institutional direction for such Person (including, with respect to any trust, the trustees thereof).
Governmental Authority means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
Guarantor means each Person guarantying the payment of the Obligations pursuant to a Guaranty.
guaranty means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guarantying or having the economic effect of guarantying any Indebtedness or other obligation payable or performable by another Person (the primary obligor) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part) or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien); provided that the term guaranty shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any guaranty shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such guaranty is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guarantying Person in good faith. The term guaranty as a verb has a corresponding meaning.
Guaranty means each guaranty, in form and substance acceptable to the Lender, guarantying the payment of the Obligations.
Hazardous Materials means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes, and any other substance or wastes defined as a hazardous waste, hazardous material, hazardous substance, extremely hazardous waste, restricted hazardous waste, toxic waste or toxic substance pursuant to any Environmental Law.
Holdings means, following the Qualified SPAC Transaction Effective Date, Local Bounti Corporation, a Delaware corporation, as successor to Leo Holdings III Corp., a Cayman Islands exempted company which shall have domesticated as a Delaware corporation in accordance with the terms of the SPAC Merger Agreement.
IBA has the meaning specified in Section 1.6.
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Indebtedness means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:
(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;
(b) all obligations of such Person for the deferred purchase price of property, assets or services (other than trade payables, in each case to the extent payable in the ordinary course of business);
(c) all direct or contingent obligations of such Person arising under (i) letters of credit (including standby and commercial), bankers acceptances and bank guaranties and (ii) surety bonds, performance bonds and similar instruments issued or created by or for the account of such Person;
(d) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements);
(e) all obligations, contingent or otherwise, of such Person in connection with any securitization of any products, receivables or other property or assets which obligations are recourse to such Person or such Persons property or assets;
(f) all obligations of such Person under factoring agreements or similar arrangements;
(g) all Attributable Indebtedness;
(h) all obligations of such Person in respect of Disqualified Equity Interests;
(i) all other obligations of such Person which are required to be reflected in, or are reflected in, such Persons financial statements recorded or treated as indebtedness under GAAP;
(j) net obligations of such Person under any Swap Contract; and
(k) all guaranties of such Person in respect of any of the foregoing.
For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any Indebtedness of any Person for purposes of clause (d) that is expressly made non-recourse or limited-recourse (limited solely to the assets securing such Indebtedness) to such Person shall be deemed to be equal to the lesser of (i) the aggregate principal amount of such Indebtedness and (ii) the fair market value of the property encumbered thereby as determined by such Person in good faith. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.
Indemnified Taxes means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of the Obligations under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.
Indemnitee has the meaning specified in Section 8.3(b).
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Initial Construction Budget means, with respect to each Farm Project, the initial Construction Budget delivered to the Lender in respect of such Farm Project.
Initial Senior Funding Date means the date on which the initial Term Loan hereunder is funded to the Borrowers.
Interest Period means, with respect to any Term Loan, the period commencing on the last Business Day of a calendar quarter and ending on the last day of the immediately succeeding calendar quarter; provided that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar quarter, in which case such Interest Period shall end on the next preceding Business Day, and (ii) no Interest Period shall extend beyond the Maturity Date. Notwithstanding the foregoing or anything herein to the contrary, however, (A) the initial Interest Period with respect to any Term Loan (other than a Term Loan made on the last Business Day of a calendar quarter) shall be the period commencing on the date on which such Term Loan is made and ending on the last Business Day of the calendar quarter in which such Term Loan is made..
Interpolated Rate means, with respect to any applicable Interest Period, the rate per annum determined by the Lender (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the rate as displayed on Bloomberg Financial Markets system (or other authoritative source selected by the Lender in its reasonable discretion) (the Screen Rate) providing quotations of interest rates applicable to dollar deposits in the London interbank market for the longest period (for which that Screen Rate is available) that is shorter than such Interest Period and (b) the Screen Rate for the shortest period (for which that Screen Rate is available) that exceeds such Interest Period, in each case, at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period.
Investment means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests or debt or other securities of another Person, (b) a loan, advance or capital contribution to, guaranty or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor incurs Indebtedness of the type referred to in clause (k) of the definition of Indebtedness in respect of such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of all or substantially all of the property and assets or business of another Person or assets constituting a business unit, line of business or division of such Person. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment but giving effect to any returns or distributions of capital or repayment of principal actually received in cash by such Person with respect thereto.
ISDA Definitions means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.
Junior Debt means unsecured Indebtedness, the Subordinated Indebtedness and any other Indebtedness that (a) is secured by Liens on Collateral that have a priority that is junior to the Liens on Collateral that secure the Obligations, and/or (b) by its terms, is contractually subordinated in right of payment to the Obligations.
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Laws means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.
Lender has the meaning specified in the preamble.
Lender Discretionary Prepayment Event has the meaning specified in Section 2.5.
LIBO Rate means, with respect to any Interest Period, a rate of interest equal to the per annum rate of interest quoted for Dollar deposits with a maturity comparable to such Interest Period in the London market at approximately 11:00 a.m. (London time) two (2) Business Days prior to such Interest Period, as displayed in the Bloomberg Financial Markets system (or other authoritative source selected by the Lender in its reasonable discretion). If such rate of interest is not available at such time for a period equal in length to such Interest Period, then the LIBO Rate for such Interest Period shall be the applicable Interpolated Rate. If the LIBO Rate (as determined without regard to this sentence) would at any time be less than 0%, then the LIBO Rate at such time shall be 0%. The Lenders determination of the LIBO Rate shall be conclusive, absent manifest error.
If the Bloomberg Financial Markets system is not available for any reason or is not providing the applicable quotations, the LIBO Rate shall be determined for any applicable period by reference to Reuters Reference LIBOR 01 for US$ as published by Thomson Reuters or if there is no such source by reference to the average of the rates quoted for such period by three (3) money center reference banks as reasonably selected by the Lender.
Provided that no Benchmark Transition Event shall have occurred at such time, if the Lender determines that, by reason of circumstances affecting the London interbank market, the LIBO Rate cannot be determined for any Interest Period pursuant to this definition or the Lender determines and notifies the Borrowers that the LIBO Rate for any Interest Period will not be adequate to cover the cost to the Lender of obtaining matching funds in the London interbank market for such Interest Period, then, in either case, and in any such event, the Lender shall give notice thereof to the Borrowers and determine (and shall certify from time to time in a certificate delivered to the Borrowers by the Lender setting forth in reasonable detail the basis of the computation of such amount) the rate basis reflecting the cost to the Lender of obtaining matching funds in the London interbank market for such Interest Period, default interest rate or comparable compensation with respect to the Term Loans, each determined in a commercially reasonable manner, which shall apply in lieu of the LIBO Rate for such affected Interest Period, default interest or comparable compensation (such determination to be conclusive and binding on the Borrowers in the absence of manifest error.
LIBO Rate Loan means a Term Loan that bears interest based on the LIBO Rate.
Licenses means all franchises, permits, licenses and other rights, including all governmental approvals, authorizations, consents, licenses and permits, that are necessary or required for the conduct of the businesses conducted by any Loan Party or any of its Subsidiaries, including, without limitation, the construction and operation of any Farm.
Lien means any mortgage, pledge, hypothecation, collateral assignment, deposit arrangement, encumbrance, lien (statutory or other, including, without limitation, mechanics liens), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).
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Lien Waiver Agreement means any landlords waiver, bailee waiver or other lien waiver or subordination agreement, in form and substance reasonably satisfactory to the Lender, duly executed by the parties thereto.
Liquidity means, as of any date of determination, the sum, without duplication, of (a) the amount at such time of all Unrestricted Cash of the Loan Parties, plus (b) the amount at such time of all cash held in the Debt Service Reserve Account, plus (without duplication) (c) the amount at such time of all cash held in the Interest Reserve Account (as defined in the Subordinated Credit Agreement) (it being understood and agreed, for the avoidance of doubt, that the Debt Service Reserve Account and the Interest Reserve Account may both be maintained in a single deposit account of the Company).
Loan Documents means, collectively, this Agreement, the Term Loan Note, the Collateral Documents, the Guaranty, the Subordination Agreement, the Disbursing Agreement, the Environmental Indemnity, the Perfection Certificate, the Closing Date Letter Agreement, each Fee Letter and each other instrument, certificate or document delivered in connection herewith or therewith.
Loan Parties means the Borrowers, any Guarantor and any other Person that grants a Lien on any of its assets to secure the Obligations.
Loan Request means a request for a Term Loan, in each case substantially in the form of Exhibit B hereto or any other form accepted by the Lender in its sole discretion.
Management Agreement has the meaning specified in Section 6.7(b).
Margin Stock means margin stock within the meaning of Regulation T, U or X of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof.
Material Adverse Effect means (a) a material adverse change in or a material adverse effect on the operations, business, properties or condition (financial or otherwise) of the Borrowers (taken as a whole) or of any other Loan Party (individually), or (b) a material adverse effect on (i) the ability of any Loan Party to punctually perform any of the Obligations, (ii) the legality, validity, binding effect or enforceability of any Loan Document or (iii) the rights, remedies and benefits available to, or conferred upon, the Lender under any Loan Documents.
Material Agreement means (a) the SPAC Merger Agreement, (b) each Material Project Document, (c) each Farm Lease Agreement, (d) each Approved Long-Term Supply Agreement, (e) the Bitterroot Lease Agreement and each other Farm Lease Agreement, (f) the Warrant Agreement, (g) each agreement, contract, note, bond, debenture or other instrument evidencing Indebtedness of any Loan Party or Subsidiary in an aggregate principal amount in excess of $2,000,000; and (h) without limiting the foregoing, each other agreement, contract, License or instrument (including any supply, sales, input or offtake agreement) binding on any Loan Party or Subsidiary pursuant to which either (x) such Person shall pay or receive more than $2,000,000 per annum in the aggregate, or (y) the cancellation, termination or suspension of which, or the failure of any party thereto to perform its obligations thereunder, could reasonably be expected to have a Material Adverse Effect. Notwithstanding the foregoing, however, in no event will any Loan Document or any Subordinated Indebtedness Document constitute a Material Agreement for purposes of this Agreement.
Material Project Contractor means, with respect to a Farm Project, the General Contractor engaged for such Farm Project and any contractor whose work, equipment and/or supplies provided with respect to such Farm Project exceeds $500,000 in the aggregate.
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Material Project Documents means, with respect to a Farm Project, the applicable Project Plans, Project Licenses, GC Contract, Construction Budget, Construction Schedule, construction payment and performance bonds, insurance certificates, and each contract or supply agreement entered into by any Borrower, any other Loan Party or Subsidiary in connection with such Farm Project pursuant to which such Person shall pay or receive more than $500,000 per annum in the aggregate.
Material Project Participants means, collectively, any Borrower, each other Loan Party and each other Person that is from time to time a party to a Material Project Document.
Maturity Date means September 3, 2028.
Maximum Rate has the meaning specified in Section 8.13.
Minimum Interest Amount means an amount equal to the greater of (a) $0 and (b) the sum of all interest payments due and payable by the Borrowers in respect of Term Loans outstanding during the period commencing on the Initial Senior Funding Date and ending on the last Business Day of the calendar quarter ending September 30, 2023; provided, to the extent the aggregate principal balance of outstanding Term Loans during such period is at any time less than $80,000,000, the Minimum Interest Amount shall be determined assuming that aggregate principal balance of outstanding Term Loans is $80,000,000.
Minimum Liquidity Step-up Date means the earlier to occur of (a) the Qualified SPAC Transaction Effective Date and (b) December 31, 2021.
Minimum P&I Amount means, as of any date of determination occurring during the periods described in the table below, the amount set forth opposite each such applicable period:
Period |
Minimum P&I Amount |
|
The period commencing on the Initial Senior Funding Date and ending on December 31, 2021 | The Minimum Interest Amount (as such amount may be reduced from time to time as a result of the application of funds in the Debt Service Reserve Account to the payment of interest in accordance with Sections 2.3(a) and 2.3(d)) | |
The period commencing on January 1, 2022 and ending on September 30, 2023 | The Minimum Interest Amount (as such amount may be reduced from time to time as a result of the application of funds in the Debt Service Reserve Account to the payment of interest in accordance with Sections 2.3(a) and 2.3(d)), plus the amount of principal payments that would be required pursuant to Section 2.3(b) for two (2) calendar quarters, calculated based on the greater of (i) the aggregate principal balance of outstanding Term Loans during such period and (ii) $80,000,000 | |
The period commencing on October 1, 2023 and at all times thereafter | An amount equal to the sum of interest and principal payments that would be required pursuant to Section 2.3 for two (2) calendar quarters, calculated based on the outstanding principal balance of the Term Loans as of the Term Loan Commitment Termination Date (or, if such date has not yet occurred, as of September 30, 2023) |
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Montana Property means the real property and related improvements leased by Bounti Bitterroot in Hamilton, Montana pursuant to the Bitterroot Lease Agreement.
Mortgage means a mortgage (including a leasehold mortgage), deed of trust or similar security instrument from a Loan Party, pursuant to which such Loan Party grants the Lender a Lien on real property and related improvements to secure payment of the Obligations.
Net Proceeds means (a) with respect to any Disposition, the cash and Cash Equivalent proceeds thereof received by any Borrower, any other Loan Party or Subsidiary, net of reasonable and documented brokerage, legal, accounting and other fees and expenses, to the extent actually paid from such gross proceeds to Persons other than Affiliates of any Loan Party, (b) with respect to any issuance or incurrence of Indebtedness or Equity Interests, the cash and Cash Equivalent proceeds thereof, net of reasonable and documented fees, commissions, costs, underwriting discounts and other fees and expenses incurred in connection therewith, and (c) with respect to any casualty or condemnation event, the cash and Cash Equivalent proceeds thereof received by any Loan Party or Subsidiary, net of reasonable and documented legal, accounting and other fees and expenses, to the extent actually paid from such gross proceeds to Persons other than Affiliates of any Loan Party. If any proceeds are received in a form other than cash or Cash Equivalents and subsequently converted into cash or Cash Equivalents, then such proceeds shall be treated as Net Proceeds for purposes of this definition at such time as they are converted into cash or Cash Equivalents.
Northwest SPV Grow Bounti NorthWest, LLC, a Delaware limited liability company and a wholly owned Subsidiary of Controlled Environment, formed solely for the purpose of developing a Farm Project in the State of Washington.
Obligations means (a) all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document, and (b) all Swap Obligations, and other obligations with respect to any Swap Contract, of any Loan Party to a Swap Party, in each case (whether under the foregoing clause (a) or clause (b)) direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding. Without limiting the foregoing, the Obligations include (x) the obligation to pay principal, interest, charges, expenses, fees, indemnities and other amounts payable by any Loan Party or Subsidiary under any Loan Document and (y) the obligation of each Loan Party or Subsidiary to reimburse any amount in respect of any of the foregoing that the Lender, in each case in its sole discretion, may elect to pay or advance on behalf of the Borrowers. Notwithstanding the foregoing or the terms of any other Loan Document, the Obligations guaranteed by any Loan Party or secured by any Lien granted by any Loan Party shall exclude any obligations constituting Excluded Swap Obligations with respect to such Loan Party.
OFAC means the United States Department of the Treasurys Office of Foreign Assets Control.
Organizational Documents means (a) as to any corporation, the charter or certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction), (b) as to any limited liability company, the certificate or articles of formation or organization and operating or limited liability agreement and (c) as to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.
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Other Connection Taxes means, with respect to the Lender, Taxes imposed as a result of a present or former connection between the Lender and the jurisdiction imposing such Tax (other than connections arising from the Lender having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in the Term Loan or any Loan Document).
Other Taxes means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment.
PACA means the Perishable Agricultural Commodities Act, 1930, as amended (7 U.S.C. § 499(e)(c)(2) et. seq.), together with all rules and regulations relating thereto or promulgated thereunder by any Governmental Authority (including 7 C.F.R. § 46.1 et seq.).
PASA means the Packers and Stockyards Act, 1921, as amended (7 U.S.C. § 181) et. seq.), together with all rules and regulations relating thereto or promulgated thereunder (including 9 C.F.R. § 200 et seq.).
Pasco Property means the real property and related improvements owned by the Northwest SPV and described in Exhibit A attached to the Statutory Warranty Deed made by Snake River Agriculture, LLC, as grantor, in favor of the Northwest SPV, as grantee, dated as of June 3, 2021, recorded June 7, 2021 as document number 1940393 in the real estate records of Franklin County, Washington.
PATRIOT Act means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).
Payment in Full means, as of any date of determination, that (a) all commitments of the Lender with respect to the Term Loan Facility and all obligations of the Swap Parties in respect of Swap Contracts are terminated, and (b) the entire amount of principal of and interest on the Term Loans, and all other amounts of fees, payments and other Obligations under this Agreement and the other Loan Documents (including, without limitation, all obligations of the Loan Parties under Swap Contracts entered into with any Swap Party) are paid in full in cash (other than contingent indemnification obligations and reimbursement obligations in respect of which no claim for payment has yet been asserted by the Person entitled thereto). Paid in Full shall have a correlative meaning.
Perfection Certificate means a certificate in form and substance satisfactory to the Lender signed by a Responsible Officer of the Borrowers setting forth certain information with respect to the Borrowers, their Subsidiaries and their respective assets.
Permitted Going Concern Qualification means, solely with respect to the audited financial statements of the Company and its Subsidiaries (or, if delivered after the Qualified SPAC Transaction Effective Date, of the Consolidated Group) delivered to the Lender pursuant to Section 5.1(a) for the Fiscal Year ending December 31, 2021 and the Fiscal Year ending December 31, 2022, a going concern or like qualification, exception or explanatory paragraph.
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Permitted Indebtedness has the meaning specified in Section 6.1.
Permitted Liens has the meaning specified in Section 6.2.
Permitted Northwest Subordinated Loan means a loan made under the Subordinated Credit Agreement up to an aggregate principal amount not to exceed $8,750,000, the proceeds of which are invested in the Northwest SPV for the purpose of developing a Farm Project in the State of Washington.
Person means any natural Person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
Plan means any employee benefit plan (as such term is defined in Section 3(3) of ERISA) maintained for current or former employees, officers, members or directors of any Loan Party or any ERISA Affiliate, or any such plan to which any Loan Party or Subsidiary is required to contribute on behalf of any of its current or former employees or with respect to which such Loan Party or Subsidiary has any liability.
Pricing Grid means the table and text set forth below:
Level |
Consolidated Senior Net Leverage Ratio |
Applicable Margin
with respect to LIBO Rate Loans |
Applicable Margin
with respect to ABR Loans |
|||||||
I | Greater than 2.25 to 1.00 | 6.50 | % | 5.50 | % | |||||
II | Equal to or less than 2.25 to 1.00, but greater than 2.00 to 1.00 | 6.00 | % | 5.00 | % | |||||
III | Equal to or less than 2.00 to 1.00 | 5.50 | % | 4.50 | % |
For purposes of determining the Applicable Margin:
(a) The Applicable Margin shall be set at Level I until receipt of the Compliance Certificate for the calendar quarter ending September 30, 2021.
(b) Except as set forth above, the Applicable Margin shall be recomputed as of the end of each calendar quarter based on the Consolidated Senior Net Leverage Ratio as of such quarter end. Any increase or decrease in the Applicable Margin as of a calendar quarter end shall be effective no later than five (5) Business Days following the date on which the Compliance Certificate evidencing such computation is due to be delivered under Section 5.2(a). If a Compliance Certificate is not delivered when due in accordance with such Section 5.2(a), then the rates in Level I shall apply as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered and shall remain in effect until the date on which such Compliance Certificate is delivered.
(c) If, as a result of any restatement of or other adjustment to the financial statements of the Consolidated Group or for any other reason, the Borrowers or the Lender determine that (i) the Consolidated Senior Net Leverage Ratio as calculated by the Borrowers as of any applicable date was inaccurate and (ii) a proper calculation of the Consolidated Senior Net Leverage Ratio would have resulted in higher pricing for such period, the Borrowers shall immediately and retroactively be obligated to pay to the Lender, promptly on demand by the Lender (or, after the
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occurrence of an actual or deemed entry of an order for relief with respect to any Loan Party under the Bankruptcy Code of the United States, automatically and without further action by the Lender), an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period. In addition, upon the occurrence of any Event of Default, the Applicable Margin shall automatically be set at Level I until such Event of Default has been cured or waived as set forth in this Agreement. This paragraph shall not limit the rights of the Lender under Article VII or any other provision of any Loan Document or Applicable Law.
Prime Rate means the rate of interest per annum last quoted by The Wall Street Journal as the Prime Rate in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the bank prime loan rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Lender) or any similar release by the Federal Reserve Board (as determined by the Lender). Any change in the Prime Rate shall take effect at the opening of business on the day such change is publicly announced or quoted as being effective.
Producer means any producer, packer, processor, manufacturer, dealer, broker, agent, person engaged in farming operations, cooperative whose members consist of any such Persons or other seller of perishable agricultural products or other agricultural goods, including, without limitation, potatoes, corn, Meat Food Products, Livestock, Livestock Products, Poultry, Poultry Products (each as defined in PASA) and Perishable Agricultural Commodities (as defined in PACA).
Project Consultant means a project consultant appointed or retained by the Lender and approved by the Company (such approval not to be unreasonably withheld or delayed) to review, on behalf of the Lender, Construction Budgets, Construction Schedules, ongoing construction of any Farm Project, and/or other matters related to any Farm Project. To the extent a Project Consultant has not been appointed or retained, the references in this Agreement to Project Consultant and related provisions shall have no force and effect and any required approvals, consents or other actions of the Project Consultant which are required or to be performed shall be deemed given or performed, as the case may be.
Project Costs means the following costs and expenses incurred by the Borrowers or any other Loan Party or Subsidiary in connection with a Farm Project and set forth in the applicable Construction Budget or otherwise approved by the Lender (and, in the discretion of the Lender, after consultation with the Project Consultant): (a) costs incurred by a Borrower or any other Loan Party or Subsidiary under any Project Documents with respect to the acquisition (including the acquisition of a Farm Project Site), site preparation, design, engineering, procurement of equipment, construction, installation, start-up, mobilization and testing of a Farm Project (including costs associated with structural matters, piping, labor, electrical, design and management and contingency matters); (b) fees and expenses incurred by or on behalf of a Borrower or any other Loan Party or Subsidiary in connection with any Farm Project and the consummation of the transactions contemplated by this Agreement and the other Loan Documents with respect to financing such Farm Project, including financial, working capital, accounting, legal, surveying and consulting fees, and the costs of engineering; (c) interest and fees on the Term Loans with respect to a Farm Project; (d) insurance premiums with respect to any Mortgages for a Farm Project and as otherwise required pursuant to this Agreement; and (e) without duplication of the foregoing, Taxes, salaries, rent and general administrative and overhead costs that are incurred by a Borrower or any other Loan Party or Subsidiary in connection with a Farm Project.
Project Documents means the Material Project Documents, all other contracts or subcontracts entered into in connection with a Farm Project and any other agreement, instrument or document relating to the ownership, design, development, construction, lease, maintenance, repair, improvement, management, operation or use of a Farm.
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Project Licenses means the Licenses required for construction and operation of a Farm Project.
Project Plans means, with respect to a Farm Project, the plans and specifications for the construction and equipping of such Farm Project, as the same may be revised from time to time in accordance with the Project Documents and the Loan Documents.
Project Status Report means a reasonably detailed report signed by a Responsible Officer of the Company and setting forth (a) the aggregate amount of all Project Costs expended during the preceding calendar quarter and through the date of each such report; (b) an assessment of the overall construction progress of each Farm Project since the date of the last report and since the Closing Date, together with an assessment of how such progress compares to each applicable Construction Schedule; (c) the anticipated Final Completion Date of each Farm Project; (d) a detailed description of all material problems (including actual and anticipated cost overruns, if any, in excess of $500,000 in the aggregate) encountered or anticipated in connection with the construction of each Farm Project since the date of the last report, together with (i) an assessment of how such problems may impact the applicable Construction Schedule and the meeting of critical path dates thereunder and (ii) a detailed description of the proposed solutions to any such problems; (e) the delivery status of material equipment and the negative effect, if any, that the anticipated delivery dates of such equipment has on each applicable Construction Schedule; (f) any proposed or pending change orders in an amount exceeding $250,000; (g) a discussion of any material change in the status of any pending Project Licenses or, if there has been no such change in the status of such consents and approvals since the most recent report delivered pursuant to this clause, a statement that there has been no such change; and (h) an analysis of such other material matters related to each Farm Project as the Lender may reasonably request.
Properties has the meaning specified in Section 3.14(b)(i).
Purchase Money Security Interest means Liens upon fixed or capital assets or other tangible personal property securing loans to any Loan Party or Subsidiary of a Loan Party or deferred payments by such Loan Party or Subsidiary for the purchase of such fixed or capital assets or other tangible personal property.
Qualified SPAC Transaction means the transactions contemplated by that certain Agreement and Plan of Merger dated as of June 17, 2021 (the SPAC Merger Agreement), by and among Holdings, Longleaf Merger Sub, Inc., a Delaware corporation, Longleaf Merger Sub II, LLC, a Delaware limited liability company, and the Company, which shall result in minimum cash to the balance sheet of the Company, after the payment of transaction costs and expenses, of not less than $100,000,000.
Qualified SPAC Transaction Effective Date means the date on which the Closing (as defined in the SPAC Merger Agreement) has occurred in accordance with the terms and conditions of the SPAC Merger Agreement (and including, for the avoidance of doubt, the satisfaction or waiver of all conditions set forth in Article VI of the SPAC Merger Agreement).
Reference Time means, with respect to any setting of the then-current Benchmark, (1) if such Benchmark is the LIBO Rate, 11:00 a.m. (London time) on the day that is two (2) London banking days preceding the date of such setting, and (2) if such Benchmark is not the LIBO Rate, the time determined by the Lender in its reasonable discretion.
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Related Parties means, with respect to any Person, such Persons Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors, representatives, successors and assigns of such Person and of such Persons Affiliates.
Release means a release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment or into or out of any property, in each case, of Hazardous Materials through or in the air, soil, surface water, groundwater or property.
Relevant Governmental Body means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.
Responsible Officer means, with respect to any Loan Party, (a) the chief executive officer, president, executive vice president or a Financial Officer of such Person, and (b) solely for purposes of the delivery of incumbency certificates and certified Organizational Documents and resolutions, any vice president, secretary or assistant secretary of such Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
Restricted Payment means any dividend or other distribution (including a return of capital and whether in cash, securities or other property) with respect to any Equity Interest of any Person, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interest, or on account of any return of capital to such Persons shareholders, partners or members (or the equivalent Persons thereof).
Sanctions means all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and anti-terrorism laws imposed, administered or enforced from time to time by (a) the United States of America (including those administered by OFAC, the U.S. State Department, the U.S. Department of Commerce, or through any existing or future Executive Order), (b) the United Nations Security Council, (c) the European Union, (d) the United Kingdom or (e) any other Governmental Authority in any jurisdiction in which (i) any Loan Party is located or conducts business, (ii) in which any of the proceeds of the Term Loan will be used, or (iii) from which repayment of the Term Loan will be derived.
SEC means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
Security Agreement means a security agreement from one or more Loan Parties, pursuant to which such Loan Parties grant a Lien on any or all of their assets to secure payment of the Obligations in favor of the Lender and in form and substance acceptable to the Lender, duly executed by the parties thereto.
SOFR means a rate per annum equal to the secured overnight financing rate for such Business Day published by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate) on the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org (or any successor source for the secured overnight financing rate identified as such by the administrator of the secured overnight financing rate from time to time).
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Solvent means, as to any Person as of any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Persons ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Persons property would constitute an unreasonably small capital. The amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
SPAC Merger Agreement has the meaning specified therefor in the definition of Qualified SPAC Transaction.
Subordinated Credit Agreement means the Subordinated Credit Agreement of even date herewith among the Company, the Subsidiary Borrowers and the Subordinated Creditor, governing a subordinated multi-advance term loan facility.
Subordinated Creditor means the lender party to the Subordinated Credit Agreement.
Subordinated Indebtedness means all Indebtedness under the Subordinated Credit Agreement (including, for the avoidance of doubt, the Permitted Northwest Subordinated Loan).
Subordinated Indebtedness Documents means, collectively, the Subordinated Credit Agreement and all other Loan Documents (as defined in the Subordinated Credit Agreement).
Subordination Agreement means the Subordination Agreement of even date herewith among the Company, the Subordinated Creditor, and the Lender.
Subsidiary of a Person means a corporation, partnership, limited liability company, association or joint venture or other business entity of which a majority of the Equity Interests having ordinary voting power for the election of directors or other Governing Board (other than securities or interests having such power only by reason of the happening of a contingency) are at the time owned or the management of which is Controlled, directly, or indirectly through one or more intermediaries, by such Person. Unless otherwise specified, all references herein to a Subsidiary or to Subsidiaries shall refer to a Subsidiary or Subsidiaries of any Loan Party.
Swap Contract means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, that are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a Master Agreement), including any such obligations or liabilities under any Master Agreement.
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Swap Obligation means, with respect to any Person, any obligation to pay or perform under any agreement, contract or transaction that constitutes a swap within the meaning of section 1a(47) of the Commodity Exchange Act.
Swap Party means any party to a Swap Contract that is the Lender or any Affiliate of the Lender (including, without limitation, CRM).
Swap Termination Value means, as to any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include the Lender or any Affiliate of the Lender).
Synthetic Lease Obligation means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).
Taxes means all present or future taxes, levies, tariffs, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
Term Loan Amount means up to $150,000,000.
Term Loan Commitment Termination Date means the earlier of (a) September 30, 2023 and (b) the date on which any Obligations are accelerated pursuant to Article VII hereof or Applicable Law.
Term Loan Facility means the term loan facility being made available to the Borrowers by the Lender pursuant to Section 2.1.
Term Loan Note means a promissory note of the Borrowers payable to the Lender substantially in the form of Exhibit A, as such promissory note may be amended, extended or otherwise modified from time to time, and including each other promissory note accepted from time to time in substitution therefor or in renewal thereof.
Term Loans has the meaning specified in Section 2.1.
Term SOFR means, for the applicable corresponding tenor, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.
Third-Party Farm Lease Agreement means a Farm Lease Agreement in respect of real property not owned in fee by a Loan Party.
Treasury Rate means, as of any prepayment date, shall mean the yield to maturity at the time of computation of United States Treasury Securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519), which has become publicly available at least (2) two Business Days prior such prepayment (or, if such Statistical Release is no longer published, any publicly available source or similar market data) most nearly equal to the period from such
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prepayment date to the second anniversary of the Closing Date; provided, however, that if the period from such prepayment date to the second anniversary of the Closing Date, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one twelfth of a year) from the weekly average yields of United States Treasury Securities for which such yields are given.
UCC and Uniform Commercial Code means the Uniform Commercial Code as the same may, from time to time, be in effect in the State of New York (the NY UCC); provided, however, in the event that, by reason of mandatory provisions of law, any or all of the perfection or priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term UCC shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions related to such provisions.
Unadjusted Benchmark Replacement means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
United States and U.S. mean the United States of America.
Unrestricted Cash means, with respect to any Person, the aggregate amount of cash and Cash Equivalents reflected on the consolidated balance sheet of such Person and its Subsidiaries and over which the Lender has a perfected first priority security interest.
Unused Commitment Fee Rate means 1.25% per annum.
USDA means the United States Department of Agriculture, Office of Rural Development or any successor agency thereto, whether acting through a local, state, federal or other office.
USDA Loans has the meaning specified in Section 6.1(i).
Warrant Agreement means the Warrant Agreement dated as of the Closing Date made by the Company, as company, in favor of the Lender, as holder.
Section 1.2 Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words include, includes and including shall be deemed to be followed by the phrase without limitation. The word will shall be construed to have the same meaning and effect as the word shall. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Persons successors and assigns, (c) the words herein, hereof and hereunder, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (f) the words asset and property shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. All terms used in this Agreement which are defined in Article 8 or Article 9 of the NY UCC and which are not otherwise defined herein shall have the same meanings herein as set forth therein.
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Section 1.3 Accounting Terms; Changes in GAAP.
(a) Accounting Terms. Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall be construed in conformity with GAAP. Financial statements and other information required to be delivered by the Company pursuant to Sections 5.1(a) and 5.1(b) shall be prepared in accordance with GAAP as in effect at the time of such preparation. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Loan Parties and their Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded. Notwithstanding anything to the contrary contained in this Agreement, any lease that was or would have been treated as an operating lease under GAAP as in effect on December 1, 2018 that would become or be treated as a Capitalized Lease solely as a result of a change in GAAP after December 1, 2018 shall always be treated as an operating lease for purposes of determining compliance with the financial and other covenants set forth in this Agreement and the other Loan Documents.
(b) Changes in GAAP. If the Borrowers notify the Lender that the Borrowers request an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Lender notifies the Borrowers that it requests an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.
Section 1.4 Time. All references to times of day in this Agreement shall be references to Minnesota time unless otherwise specifically provided.
Section 1.5 Divisions. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdictions laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such time.
Section 1.6 Interest Rates. The interest rate on a Term Loan may be derived from an interest rate benchmark that is, or may in the future become, the subject of regulatory reform. Regulators have signaled the need to use alternative benchmark reference rates for some of these interest rate benchmarks and, as a result, such interest rate benchmarks may cease to comply with Applicable Laws, may be permanently discontinued, and/or the basis on which they are calculated may change. The London interbank offered rate is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. In July 2017, the U.K. Financial Conduct Authority announced that, after the end of 2021, it would no longer persuade or compel contributing banks to make rate submissions to the ICE Benchmark Administration (together with any successor to the ICE Benchmark Administrator, the IBA) for purposes of the IBA setting the London interbank offered rate. As a result, it is possible that commencing in 2022, the London interbank offered rate may no longer be available or may no longer be deemed an appropriate reference rate upon which to determine the interest rate on Term Loans bearing interest at the LIBO Rate. In light of this eventuality, public and private sector industry initiatives are currently underway to identify new or alternative reference rates to be used in place of the London interbank offered rate. The Lender does not warrant or accept any
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responsibility for, and shall not have any liability with respect to, (a) the administration, submission, calculation or any other matter related to any Benchmark, any component definition thereof or rates referenced in the definition thereof or any alternative, comparable or successor rate thereto (including any Benchmark Replacement), including whether the composition or characteristics of any such alternative, comparable or successor rate (including any Benchmark Replacement) will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, such Benchmark or any other Benchmark, or (b) the effect, implementation or composition of any Benchmark Replacement Conforming Changes.
ARTICLE II
TERMS OF THE TERM LOAN FACILITY
Section 2.1 Term Loan Facility.
(a) Term Loans. Subject to the terms and conditions herein set forth, including specifically satisfaction of all conditions set forth in Article IV, the Lender agrees to make one or more term loans (the Term Loans) to the Borrowers from time to time during the period from the Closing Date to and including the Term Loan Commitment Termination Date in an aggregate principal amount not to exceed the Term Loan Amount. Each request by the Borrowers for a Term Loan shall be deemed to be a representation by each Borrower that it shall be in compliance with the preceding sentence and with Article IV both before and after giving effect to the requested Term Loan. The Term Loan Facility is not a revolving credit facility; the Borrowers shall have no right to reborrow any portion of any Term Loan that has been repaid.
(b) Requests for Term Loans. The Company may from time to time prior to the Term Loan Commitment Termination Date request that the Lender make a Term Loan by delivering to the Lender, not later than 11:00 a.m. seven (7) Business Days prior to the proposed borrowing date, a duly completed Loan Request. No more than two (2) Loan Request for any Term Loan may be submitted each month (other than with respect to the funding of a Term Loan pursuant to Section 5.17(b)). Each Loan Request shall be irrevocable and shall specify the amount of the proposed Term Loan, which amount shall be not less than $5,000,000.
Section 2.2 Interest on the Term Loans. Interest shall accrue on the unpaid principal amount of the Term Loans for the period commencing on the Closing Date until the unpaid principal amount thereof is Paid in Full, in accordance with the following:
(a) Interest. Except as set forth in paragraph (b) below, the outstanding principal balance of each Term Loan shall bear interest from the date such Term Loan is made until the Term Loan Facility is Paid in Full at the Applicable Interest Rate.
(b) Default Interest. Notwithstanding paragraph (a), immediately and automatically upon the occurrence and during the continuation of an Event of Default under clauses (a), (b), (h), (i) or (j) of Section 7.1, or immediately after written notice by the Lender to the Company after the occurrence and during the continuation of any other Event of Default (and, to the extent specified in such notice, commencing as of the date of the occurrence of such Event of Default), all outstanding and unpaid Obligations shall bear interest at the Default Rate.
(c) Interest Computation. All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the ABR at times when the ABR is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day).
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(d) Continuation of LIBO Rate Loans. In the case of any LIBO Rate Loan, the Interest Period shall commence on the date of advance of such LIBO Rate Loan to the Borrowers and, in the case of immediately successive Interest Periods, each successive Interest Period shall automatically commence on the date on which the immediately preceding Interest Period expires.
Section 2.3 Payment of Principal and Interest.
(a) The Borrowers shall pay accrued interest on the Term Loans quarterly in arrears on the last Business Day of each calendar quarter, commencing the earlier of (i) the last Business Day of the calendar quarter in which the Qualified SPAC Transaction Effective Date occurs and (ii) December 31, 2021, and on the Maturity Date; provided, that during the period commencing on the Closing Date and ending on the last Business Day of the calendar quarter ending September 30, 2023 (without limiting the Borrowers obligation to pay any DSRA Shortfall in accordance with Section 5.17(b)), interest payments under this Section 2.3(a) may be paid by the Borrowers from the Debt Service Reserve Account.
(b) In addition to any prepayments made pursuant to Sections 2.4 and 2.5, commencing on the last Business Day of the calendar quarter ending December 31, 2023, and on the last Business Day of each calendar quarter thereafter, the Borrowers shall pay the outstanding principal balance of the Term Loans in equal consecutive quarterly installments, with such installments calculated by applying a (10)-year amortization schedule to the outstanding principal balance of the Term Loans as of the Term Loan Commitment Termination Date; provided, if not sooner paid, the outstanding principal balance of the Term Loans, all accrued interest thereon, any unpaid fees with respect thereto and all other Obligations shall be due and payable in full in cash on the Maturity Date.
(c) Without limiting the foregoing, interest accruing at the Default Rate hereunder shall be due and payable upon the Lenders demand. Likewise, interest on the principal amount of the Term Loan or other monetary Obligation shall be due and payable on demand after such principal amount or other monetary Obligation becomes due and payable (whether on the stated Maturity Date, upon an accelerated Maturity Date or otherwise).
(d) At the election of the Lender, all payments of principal, interest, fees, premiums, costs, expenses and other Obligations (including, without limitation, all fees, costs and expenses pursuant to Section 8.3), and other sums payable under the Loan Documents, may at any time be deducted by the Lender from the Debt Service Reserve Account or, following an Event of Default, any other deposit account of the Borrowers subject to an Account Control Agreement in favor of the Lender. Without limiting any other provision of this Agreement (including, but not limited to, the Borrowers payment obligations hereunder), the Borrowers hereby irrevocably authorize the Lender (but with absolutely no obligation) to charge the Debt Service Reserve Account and, following an Event of Default, any other deposit account of the Borrowers subject to an Account Control Agreement in favor of the Lender for each payment of principal, interest and fees as it becomes due hereunder or any other amount due under the Loan Documents.
Section 2.4 Voluntary Prepayments. The Borrowers may at any time upon at least five (5) days (or such shorter period as is acceptable to the Lender) prior written notice by the Borrowers to the Lender, prepay the Term Loans in whole or in part (provided, that any partial prepayment shall be in an amount greater than or equal to $10,000,000) without premium except as provided in Section 2.10. A prepayment notice delivered by the Borrowers to the Lender shall be irrevocable. An optional prepayment of the Term Loans scheduled or anticipated to occur during any month (x) shall be made and effected on the last day of the Interest Period applicable to the Term Loans being prepaid, (y) shall be
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accompanied by accrued but unpaid interest on the principal amount being prepaid and any Specified Fee, and (z) to the extent such optional prepayment prepays the Term Loans in whole, shall be accompanied by payment in full of all other Obligations. The proceeds of each optional partial prepayment of the Term Loans shall be applied to the principal repayment installments thereof in inverse order of maturity.
Section 2.5 Lender Discretionary Prepayment.
(a) Promptly (and in any event within two (2) Business Days) after the occurrence of any Lender Discretionary Prepayment Event, the Borrowers shall inform the Lender in writing of the occurrence of such Lender Discretionary Prepayment Event and, solely to the extent requested by the Lender in writing in its sole discretion, the Borrowers shall promptly (and in any event within two (2) Business Days after such request) remit to the Lender an amount equal to 100% of the Net Proceeds realized by any Borrower or any other Loan Party or Subsidiary from such Lender Discretionary Prepayment Event. For the purpose of this Section 2.5, a Lender Discretionary Prepayment Event means the receipt by any Borrower, any other Loan Party or Subsidiary of proceeds from:
(i) the Disposition of any assets by any Borrower, any other Loan Party or Subsidiary (except for Dispositions to the extent permitted by Section 6.4);
(ii) any casualty or other insurance maintained by any Borrower, any other Loan Party or Subsidiary in excess of $2,000,000 in the aggregate in any Fiscal Year (provided that such $2,000,000 minimum threshold shall not apply if any Default or Event of Default has occurred and is continuing); provided, however, that if (A) the Company shall deliver a certificate of a Financial Officer to the Lender at the time of receipt thereof setting forth the Borrowers intent to reinvest such proceeds in productive assets of a kind then used or usable in the business of the Company and its Subsidiaries (or to repair any property damaged in a casualty event) within 365 days of receipt of such proceeds and (B) no Default or Event of Default shall have occurred and shall be continuing at the time of such certificate or at the time of the application of such proceeds, such proceeds shall not constitute Net Proceeds except to the extent not so used at the end of such 365-day period, at which time such proceeds shall be deemed to be Net Proceeds; provided, further, if any Default or Event of Default shall have occurred and shall be continuing at the time of delivery of the foregoing certificate or at the time of the application of proceeds contemplated thereunder, then 100% of such proceeds (without giving effect to the $2,000,000 minimum threshold set forth above) shall be applied to the Obligations in accordance with Section 2.5(b);
(iii) any condemnation award with respect to property owned by any Borrower, any other Loan Party or Subsidiary in excess of $2,000,000 in the aggregate in any Fiscal Year (provided that such $2,000,000 minimum threshold shall not apply if any Default or Event of Default has occurred and is continuing); provided, however, that if (A) the Company shall deliver a certificate of a Financial Officer to the Lender at the time of receipt thereof setting forth the Borrowers intent to reinvest such proceeds in productive assets of a kind then used or usable in the business of the Company and its Subsidiaries within 365 days of receipt of such proceeds and (B) no Default or Event of Default shall have occurred and shall be continuing at the time of such certificate or at the time of the application of such proceeds, such proceeds shall not constitute Net Proceeds except to the extent not so used at the end of such 365-day period, at which time such proceeds shall be deemed to be Net Proceeds; provided, further, if any Default or Event of Default shall have occurred and shall be continuing at the time of delivery of the
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foregoing certificate or at the time of the application of proceeds contemplated thereunder, then 100% of such proceeds (without giving effect to the $2,000,000 minimum threshold set forth above) shall be applied to the Obligations in accordance with Section 2.5(b);
(iv) the issuance or incurrence of Indebtedness other than Indebtedness permitted by Section 6.1; and
(v) the issuance of any Equity Interests of any Loan Party or Subsidiary except for Equity Interests issued to the Company.
(b) All amounts (if any) remitted to the Lender under this Section 2.5 shall be applied by the Lender to the payment of the Obligations in such order of application as the Lender may in its sole discretion determine. All prepayments pursuant to this Section 2.5 shall be accompanied by accrued and unpaid interest upon the principal amount of each such prepayment and, to the extent applicable, the Specified Fee set forth in Section 2.10. Notwithstanding anything herein to the contrary, any such prepayment shall not constitute or be deemed to be a cure of any Default or Event of Default arising as a result of any Disposition, casualty or condemnation event or otherwise.
Section 2.6 Fees.
(a) Unused Commitment Fee. Accruing from the Closing Date until the Term Loan Commitment Termination Date, the Borrowers agree to pay to the Lender a nonrefundable unused commitment fee (the Unused Commitment Fee) equal to the Unused Commitment Fee Rate (computed on the basis of a year of 360 days and actual days elapsed) multiplied by the average daily difference between (i) the Term Loan Amount and (ii) the aggregate principal amount of Term Loans actually funded under the Term Loan Facility. All Unused Commitment Fees shall be payable quarterly in arrears on the last Business Day of each calendar quarter, commencing the last Business Day of the calendar quarter ending September 30, 2021.
(b) Other Fees. The Borrowers agree to pay to the Lender such other fees as agreed in the Fee Letters.
Section 2.7 Evidence of Debt. The Lender shall maintain in accordance with its usual practice records evidencing the Term Loans. The entries made in the records maintained pursuant to this Section shall be prima facie evidence absent manifest error of the existence and amounts of the obligations recorded therein. Any failure of the Lender to maintain such records or make any entry therein or any error therein shall not in any manner affect the obligations of the Borrowers under this Agreement and the other Loan Documents. Upon the request of the Lender at any time, the Borrowers shall prepare, execute and deliver to the Lender a Term Loan Note.
Section 2.8 Payments Generally.
(a) Payments by Borrowers. All payments to be made by the Borrowers hereunder and under the other Loan Documents shall be made on the date when due without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Borrowers, and without condition or deduction (except as required under Section 2.8(c)) for any counterclaim, defense, recoupment or setoff. All payments shall be made to the Lender in U.S. Dollars in immediately available funds not later than 2:00 p.m. on the date specified herein. All amounts received by the Lender after such time on any date shall be deemed to have been received on the next succeeding Business Day and any applicable interest or fees shall continue to
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accrue. If any payment to be made by the Borrowers shall fall due on a day that is not a Business Day, payment shall be made on the next succeeding Business Day and such extension of time shall be reflected in computing interest or fees, as the case may be; provided that, if such next succeeding Business Day would fall after the Maturity Date, payment shall be made on the immediately preceding Business Day.
(b) Application of Insufficient Payments. If at any time insufficient funds are received by and available to the Lender to pay fully all amounts of principal, interest, fees and other amounts then due hereunder, such funds shall be applied in such order of application as the Lender in its sole discretion determines.
(c) Taxes. Any and all payments by or on account of any Obligation shall be made free and clear of and without deduction or withholding for any Taxes, except as required by any Law. If payor shall be required by any Laws to deduct or withhold any Taxes from or in respect of any sum payable under any Obligation, (i) if the Tax in question is an Indemnified Tax or Other Tax, then the sum payable shall be increased as necessary so that after making all required deductions or withholding (including deductions or withholding applicable to additional sums payable under this Section 2.8(c)), each payee receives an amount equal to the sum it would have received had no such deductions or withholding been made, (ii) the payor shall make such deductions or withholding, (iii) the payor shall pay the full amount deducted or withheld to the relevant taxation authority or other authority in accordance with Applicable Laws, and (iv) within 30 days after the date of such payment (or, if receipts or evidence are not available within 30 days, as soon as possible thereafter), the payor shall furnish to such payee the original or a copy of a receipt evidencing payment thereof or other evidence acceptable to such payee. In addition, the Borrowers agree to pay any Other Taxes. If the Lender is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document, the Lender shall deliver to the Borrowers, at the time or times reasonably requested by the Borrowers, such properly completed and executed documentation reasonably requested by the Borrowers as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, if reasonably requested by the Borrowers, the Lender shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrowers as will enable the Borrowers to determine whether or not the Lender is subject to backup withholding or information reporting requirements. For purposes of this Section 2.8(c), the terms Law and Applicable Law shall include FATCA (and any amendments made thereto after the date of this Agreement).
(d) Tax Indemnity. The Borrowers and each Guarantor agree to indemnify the Lender for (i) the full amount of Indemnified Taxes and Other Taxes payable by the Lender (including Indemnified Taxes and Other Taxes imposed on or attributable to amounts payable under this Section 2.8(d)) and (ii) any expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability prepared in good faith and delivered by the Lender, accompanied by a written statement thereof setting forth in reasonable detail the basis and calculation of such amounts shall be conclusive absent manifest error.
Section 2.9 Increased Costs.
(a) Increased Costs Generally. If any Change in Law shall (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or
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participated in by, the Lender, (ii) subject the Lender to any Taxes (other than Indemnified Taxes and Excluded Taxes) on its loans, loan principal or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto, or (iii) impose on the Lender any other condition, cost or expense (other than Taxes) affecting this Agreement or the Term Loans made by the Lender; and the result of any of the foregoing shall be to increase the cost to the Lender of making, continuing or maintaining the Term Loans, or to reduce the amount of any sum received or receivable by the Lender hereunder (whether of principal, interest or any other amount) then, upon request of the Lender, the Borrowers will pay to the Lender such additional amount or amounts as will compensate the Lender for such additional costs incurred or reduction suffered.
(b) Capital Requirements. If the Lender determines that any Change in Law affecting the Lender regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on the Lenders capital as a consequence of this Agreement or the Term Loans to a level below that which the Lender could have achieved but for such Change in Law (taking into consideration the Lenders policies with respect to capital adequacy), then from time to time the Borrowers will pay to the Lender such additional amount or amounts as will compensate the Lender for any such reduction suffered.
(c) Certificates for Reimbursement. A certificate of the Lender setting forth the amount or amounts necessary to compensate the Lender as specified in this Section 2.9 and delivered to the Borrowers shall be conclusive absent manifest error. The Borrowers shall pay the Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of the Lender to demand compensation pursuant to this Section 2.9 shall not constitute a waiver of the Lenders right to demand such compensation, provided that the Borrowers shall not be required to compensate the Lender pursuant to this Section 2.9 for any increased costs incurred or reductions suffered more than nine (9) months prior to the date that the Lender notifies the Borrowers of the Change in Law giving rise to such increased costs or reductions and of the Lenders intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine (9)-month period referred to above shall be extended to include the period of retroactive effect thereof).
Section 2.10 Specified Fees. The Borrowers shall pay to the Lender:
(a) with respect to any Fee Determination Date occurring prior to the Term Loan Commitment Termination Date, a fee equal to the present value (such present value shall be computed using a discount rate equal to the Treasury Rate plus fifty (50) basis points) of the amount (to the extent positive) of interest that would have accrued on the Term Loan Facility in accordance with this Agreement had a principal balance equal to the Term Loan Amount remained outstanding during the period commencing on such Fee Determination Date and ending on the Maturity Date, taking into account all interest accrued and paid prior to such Fee Determination Date;
(b) with respect to any Fee Determination Date occurring on or after the Term Loan Commitment Termination Date but prior to the third (3rd) anniversary of the Closing Date, a fee equal to the present value (such present value shall be computed using a discount rate equal to the Treasury Rate plus fifty (50) basis points) of the amount (to the extent positive) of interest that would have accrued on such principal balance of the Term Loans in accordance with this Agreement had such principal balance remained outstanding during the period commencing on
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such Fee Determination Date and ending on the Maturity Date, taking into account all interest accrued and paid prior to such Fee Determination Date and the outstanding principal balance of the Term Loans as of the Fee Determination Date;
(c) with respect to any Fee Determination Date occurring on or after the third (3rd) anniversary of the Closing Date but prior to the fourth (4th) anniversary of the Closing Date, a fee equal to 5.00% of the aggregate principal amount of the Term Loans being prepaid as of such Fee Determination Date;
(d) with respect to any Fee Determination Date occurring on or after the fourth (4th) anniversary of the Closing Date but prior to the fifth (5th) anniversary of the Closing Date, a fee equal to 3.00% of the aggregate principal amount of the Term Loans being prepaid as of such Fee Determination Date; and
(e) with respect to any Fee Determination Date occurring on or after the fifth (5th) anniversary of the Closing Date but prior to the sixth (6th) anniversary of the Closing Date, a fee equal to 2.00% of the aggregate principal amount of the Term Loans being prepaid as of such Fee Determination Date;
(the fees described in the foregoing clauses (a), (b), (c), (d) and (e), the Specified Fees); provided, that no Specified Fee shall apply to prepayments of the Term Loans made on or after the sixth (6th) anniversary of the Closing Date. The Borrowers agree that each Specified Fee is a fee that, as of a Fee Determination Date, is deemed fully earned. Each Specified Fee shall be due and payable in full in immediately available funds on the applicable Fee Determination Date. Once paid, no Specified Fee or any portion thereof shall be refundable under any circumstance.
Section 2.11 Benchmark Replacement Setting. Notwithstanding anything to the contrary herein or in any other Loan Document:
(a) Replacing the LIBO Rate. On March 5, 2021 the Financial Conduct Authority (FCA), the regulatory supervisor of the IBA, announced in a public statement the future cessation or loss of representativeness of overnight/Spot Next, 1-month, 3-month, 6-month and 12-month LIBO Rate tenor settings. On the earlier of (i) the date that all Available Tenors of the LIBO Rate have either permanently or indefinitely ceased to be provided by IBA or have been announced by the FCA pursuant to public statement or publication of information to be no longer representative and (ii) the Early Opt-in Effective Date, if the then-current Benchmark is the LIBO Rate, the Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any setting of such Benchmark on such day and all subsequent settings without any amendment to, or further action or consent of any other party to this Agreement or any other Loan Document. If the Benchmark Replacement is Daily Simple SOFR, all interest payments will be payable on a quarterly basis.
(b) Replacing Future Benchmarks. Upon the occurrence of a Benchmark Transition Event, the Benchmark Replacement will replace the then-current Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Borrowers without any amendment to this Agreement or any other Loan Document, or further action or consent of the Borrowers. At any time that the administrator of the then-current Benchmark has permanently or indefinitely ceased to provide such Benchmark or such Benchmark has been announced by the regulatory supervisor for the administrator of such Benchmark pursuant to public statement or publication of information to be no longer representative of the underlying market and economic reality that such Benchmark is intended to
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measure and that representativeness will not be restored, the Borrowers may revoke any request for a borrowing of, conversion to or continuation of Term Loans to be made, converted or continued that would bear interest by reference to such Benchmark until the Borrowers receipt of notice from the Lender that a Benchmark Replacement has replaced such Benchmark, and, failing that, the Borrowers will be deemed to have converted any such request into a request for a borrowing of or conversion to ABR Loans. During the period referenced in the foregoing sentence, the component of ABR based upon the Benchmark (if any) will not be used in any determination of ABR.
(c) Benchmark Replacement Conforming Changes. In connection with the implementation and administration of a Benchmark Replacement, the Lender, in consultation with the Borrowers, will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement.
(d) Notices; Standards for Decisions and Determinations. The Lender will promptly notify the Borrowers of (i) the implementation of any Benchmark Replacement and (ii) the effectiveness of any Benchmark Replacement Conforming Changes. Any determination, decision or election that may be made by the Lender pursuant to this Section, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made in its sole discretion and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Section.
(e) Unavailability of Tenor of Benchmark. At any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR or USD LIBOR), then the Lender may remove any tenor of such Benchmark that is unavailable or non-representative for Benchmark (including Benchmark Replacement) settings and (ii) the Lender may reinstate any such previously removed tenor for Benchmark (including Benchmark Replacement) settings.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Lender that:
Section 3.1 Existence, Qualification and Power; Subsidiaries. Each Loan Party is a corporation or limited liability company, as applicable, duly formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization and each Loan Party and each Subsidiary thereof is duly formed, validly existing and in good standing under the Law of its jurisdiction of its incorporation or organization as set forth on Schedule 3.1 hereto. Each Loan Party and each Subsidiary (i) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (a) own or lease its assets and carry on its business and (b) execute, deliver and perform its obligations under the Loan Documents to which it is a party, and (ii) is duly qualified and is licensed and, if applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license, except, in the case of clause (ii), in jurisdictions where the failure to be so qualified or in good standing, individually or in the aggregate, has not had and could not reasonably be expected to result in a Material Adverse Effect.
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Section 3.2 Authorization; No Contravention. The execution, delivery and performance by each Loan Party of each Loan Document to which it is party have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of its Organizational Documents, (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under, (i) any Contractual Obligation (including, without limitation, any Material Agreement or any Contractual Obligation relating to borrowed money) to which any Loan Party or Subsidiary is a party or affecting any Loan Party or Subsidiary or the properties of any Loan Party or any Subsidiary or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which any Loan Party or Subsidiary or its property is subject, or (c) violate any Law other than any violation, in the case of this clause (c), that could not reasonably be expected to result in a Material Adverse Effect.
Section 3.3 Governmental Authorization; Other Consents. No material approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or the other Loan Document or is then necessary or required in connection with any Material Agreement, except for such approvals, consents, exemptions, authorizations or other actions, notices or filings that have already been duly obtained or made and that are in full force and effect.
Section 3.4 Execution and Delivery; Binding Effect. This Agreement has been, each other Loan Document, when delivered hereunder, will have been, and each Material Agreement has been, duly executed and delivered by the Loan Parties party thereto. Each Loan Document and each Material Agreement constitutes a legal, valid and binding obligation of the Loan Parties party thereto, enforceable against such Loan Parties in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other Laws affecting creditors rights generally and by general principles of equity.
Section 3.5 Financial Statements; No Material Adverse Effect.
(a) Financial Statements. The financial statements delivered to the Lender on or before the Closing Date in accordance with Section 4.1 and thereafter most recently delivered in accordance with Section 5.1 (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, (ii) fairly present in all material respects the financial condition of the Company and its Subsidiaries (or, following the Qualified SPAC Transaction Effective Date, of Holdings and its Subsidiaries) as of the date thereof and their results of operations and cash flows for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein and (iii) show all material Indebtedness and other liabilities, direct or contingent, of the Company and its Subsidiaries (or, following the Qualified SPAC Transaction Effective Date, of Holdings and its Subsidiaries) as of the date thereof, including liabilities for Taxes, material commitments and Indebtedness.
(b) No Material Adverse Effect. Since December 31, 2020, there has been no event or circumstance that, either individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect.
Section 3.6 Outstanding Indebtedness. Except for the Obligations and the other Permitted Indebtedness, no Loan Party nor any Subsidiary has any Indebtedness.
Section 3.7 Litigation. There are no actions, suits, proceedings, claims, disputes or investigations pending or, to the knowledge of the Borrowers, threatened in writing, at Law, in equity, in
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arbitration or before any Governmental Authority, by or against any Loan Party or Subsidiary or against any of their properties or revenues that (a) either individually or in the aggregate could reasonably be expected to have a Material Adverse Effect, (b) either individually or in the aggregate could reasonably be expected to result in losses, claims, damages, expenses or liabilities exceeding $2,000,000 or (c) purport to affect or pertain to this Agreement or any other Loan Document or any of the transactions contemplated hereby.
Section 3.8 No Material Adverse Effect; No Default. No Loan Party or Subsidiary is (a) in material default under or with respect to any Material Agreement or (b) in default under or with respect to any other Contractual Obligation that, in the case of this clause (b), either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.
Section 3.9 Property; Licenses; Margin Regulations.
(a) Ownership of Properties. Each Loan Party and Subsidiary has good legal and marketable title in fee simple (in the case of real property) and good title (in the case of personal property) to, or valid leasehold interests in, all real and personal property necessary in the ordinary conduct of its business, in each case free and clear of all Liens other than Liens in favor of the Lender and other Permitted Liens.
(b) Intellectual Property. Each Loan Party and Subsidiary owns, licenses or possesses the right to use all of the trademarks, tradenames, service marks, trade names, copyrights, patents, franchises, licenses and other intellectual property rights that are necessary for the operation of their respective businesses, as currently conducted, business, and the use thereof by the Loan Parties and Subsidiaries does not conflict with the rights of any other Person, except to the extent that such failure to own, license or possess or such conflicts, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. The conduct of the business of the Loan Parties and Subsidiaries as currently conducted or as contemplated to be conducted does not infringe upon or violate any rights held by any other Person, except to the extent that such infringements and violations, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. No claim or litigation regarding any of the foregoing is pending or, to the knowledge of the Borrowers, threatened in writing that could reasonably be expected to have a Material Adverse Effect.
(c) Licenses. Each Loan Party and Subsidiary is in compliance with, and has procured and is now in possession of, all Licenses then required by any Applicable Law for the operation of its business in each jurisdiction wherein it is now conducting or proposes to conduct business, and each such License then required to be issued has been validly issued to the relevant Loan Party or Subsidiary. No Loan Party or Subsidiary has any knowledge of any basis upon which the renewal of any material License would be denied in the future. Each Project License then required to be issued has been validly issued to the relevant Loan Party or Subsidiary and is in full force and effect, and no Loan Party nor any Subsidiary is in violation in any material respect of any such Project License. Each Loan Party and Subsidiary has posted such bonds then required to be posted under its Licenses (including its Project Licenses).
(d) Margin Regulations. None of the assets of any Loan Party or Subsidiary will be Margin Stock, and no part of the proceeds of the Term Loans hereunder will be used to buy or carry Margin Stock.
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Section 3.10 Taxes. Each Loan Party and Subsidiary has (a) filed all federal, state and other material tax returns and reports required by Applicable Law to be filed by any Loan Party or Subsidiary, or extensions have been obtained, and (b) paid all Taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except to the extent that (i) Taxes that are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves are being maintained in accordance with GAAP, (ii) no foreclosure or similar proceedings have been commenced or notice of Liens filed with respect thereto, and (iii) the failure to pay such Taxes, either individually or in the aggregate, could not reasonably be expected to result in liability in excess of $2,000,000.
Section 3.11 Disclosure. The Borrowers have disclosed to the Lender all agreements, instruments and corporate or other restrictions to which any Loan Party or Subsidiary is subject, and all other matters known to the Borrowers that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. The reports, financial statements, certificates and other written information (other than projected or pro forma financial information) furnished by or on behalf of the Loan Parties to the Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as amended, modified or supplemented by other information so furnished), when taken as a whole, do not contain any material misstatement of fact or omit to state any material fact necessary to make the statements therein (when taken as a whole), in the light of the circumstances under which they were made, not materially misleading; provided that, with respect to projected or pro forma financial information, the Borrowers represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time of preparation and delivery (it being understood that such projected information may vary from the actual results and that such variances may be material). The Perfection Certificate is true, complete and correct in all material respects, and, as of the Closing Date, the Beneficial Ownership Certification is true, complete and correct in all material respects.
Section 3.12 Compliance with Laws. Each Loan Party and Subsidiary is in compliance with the requirements of all Laws (including, without limitation, all Environmental Laws and all Applicable Food and Feed Safety Laws) and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to so comply, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. Each Plan is in compliance, in all material respects, with all applicable requirements of ERISA, the Code and other Laws.
Section 3.13 ERISA Compliance. No Loan Party or ERISA Affiliate sponsors, maintains, contributes to, or has an obligation to, or has contributed to or been obligated to contribute to at any time during the immediately preceding seven plan year, a Plan that is covered by Title IV of ERISA or subject to the funding standards of Section 412 of the Code. There are no pending or, to the knowledge of the Borrowers, threatened or contemplated claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that, either individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect.
Section 3.14 Environmental Matters; Hazardous Materials.
(a) Except with respect to any matters that, either individually or in the aggregate, could not reasonably be expected to result in liability in excess of $2,000,000 or have a Material Adverse Effect, no Loan Party or Subsidiary (a) has failed to comply with any Environmental
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Law or to obtain, maintain or comply with any License or other approval required under any Environmental Law, (b) knows of any basis for any License or other approval required under any Environmental Law to be revoked, canceled, limited, terminated, modified, appealed or otherwise challenged, (c) has or could reasonably be expected to become subject to any Environmental Liability, (d) has received notice of any claim, complaint, proceeding, investigation or inquiry with respect to any Environmental Liability (and no such claim, complaint, proceeding, investigation or inquiry is pending or, to the knowledge of the Borrowers, is threatened or contemplated) or (e) knows of any facts, events or circumstances that could give rise to any basis for any Environmental Liability of any Loan Party or Subsidiary.
(b) Except as disclosed on Schedule 3.14(b):
(i) All Farm Project Sites and the other facilities and properties currently or formerly owned, leased or operated by any Loan Party or Subsidiary (the Properties) do not contain any Hazardous Materials attributable to such Loan Partys or Subsidiarys ownership, lease or operation of the Properties in amounts or concentrations or stored or utilized which (A) constitute or constituted a violation of Environmental Laws, or (B) could reasonably be expected to give rise to any Environmental Liability, in each case, to the extent that such violation could reasonably be expected to give rise, either individually or in the aggregate, to any Environmental Liability in excess of $1,000,000; and
(ii) Hazardous Materials have not been transported or disposed of from the Properties (A) in violation of Environmental Law, or (B) in a manner or to a location which could reasonably be expected to give rise, either individually or in the aggregate, to any Environmental Liability in excess of $1,000,000 for the Loan Parties and their Subsidiaries, nor have any Hazardous Materials been generated, treated, stored or disposed of by or on behalf of any Loan Party or Subsidiary at, on or under any of the Properties in violation of Environmental Laws or in a manner that could reasonably be expected to give rise, either individually or in the aggregate, to any Environmental Liability in excess of $1,000,000.
Section 3.15 Investment Company Act. No Loan Party or Subsidiary is or is required to be registered as an investment company as defined in the Investment Company Act of 1940.
Section 3.16 Insurance. The properties of each Loan Party and each of its Subsidiaries are insured pursuant to policies and other bonds that are valid and in full force and effect and that provide coverage satisfying or surpassing the requirements set forth in Section 5.6.
Section 3.17 Sanctions and Anti-Terrorism; Anti-Corruption.
(a) No Loan Party or Subsidiary or director, officer, employee, agent or Affiliate of any Loan Party or Subsidiary is an individual or entity (person) that is, or is owned or controlled by persons that are, (i) the target of any Sanctions or Anti-Terrorism Laws, or (ii) located, organized or resident in a country or territory that is, or whose government is, the subject of Sanctions or Anti-Terrorism Laws (including, currently, Crimea, Cuba, Iran, North Korea and Syria).
(b) Each Loan Party and Subsidiary and their respective directors, officers and employees and, to the knowledge of the Borrowers, the agents of each Loan Party and Subsidiary are in compliance with all applicable Sanctions, Anti-Terrorism Laws and Anti-Corruption Laws. Each Loan Party and Subsidiary has instituted and maintains policies and procedures designed to ensure continued compliance with applicable Sanctions, Anti-Terrorism Laws and Anti-Corruption Laws.
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Section 3.18 Solvency. The Company, individually, is, and the Loan Parties, together with their Subsidiaries on a consolidated basis, are, Solvent.
Section 3.19 Material Agreements. The Borrowers have delivered to the Lender a true, correct and complete copy of each Material Agreement. No Material Agreement has been terminated or otherwise modified except in accordance with the terms thereof, and each Material Agreement (other than those terminated in accordance with their terms) remains in full force and effect. No material default or event of default has occurred and is continuing under any Material Agreement, and no condition or event has occurred and is continuing that would be likely to result in a material default or event of default with the giving notice, the lapse of time or both. The terms of each Material Agreement conform, in all material respects, to all applicable governmental and third-party consents and approvals and the requirements of Applicable Law. The Loan Parties and their Subsidiaries have all Material Agreements, material Licenses and other rights necessary to carry out their business as conducted.
Section 3.20 Employee and Labor Matters.
(a) There is no unfair labor practice complaint pending or, to the knowledge of the Borrowers, threatened against any Loan Party or its Subsidiaries before any Governmental Authority and no grievance or arbitration proceeding pending or threatened against any Loan Party or its Subsidiaries which arises out of or under any collective bargaining agreement and that could reasonably be expected to result in liability in excess of $2,000,000.
(b) There exists no strike, labor dispute, slowdown, stoppage or similar action or grievance pending or threatened in writing against any Loan Party or its Subsidiaries that could reasonably be expected to lead to an interruption of their respective operations at any location or result in liability in excess of $2,000,000. To the knowledge of the Borrowers, no union representation question existing with respect to the employees of any Loan Party or its Subsidiaries and no union organizing activity is taking place with respect to any of the employees of any Loan Party or its Subsidiaries. No Loan Party or any of its Subsidiaries has incurred any liability or obligation under the Worker Adjustment and Retraining Notification Act or similar state law, which remains unpaid or unsatisfied. The hours worked and payments made to employees of each Loan Party and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable legal requirements, except to the extent such violations could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. All material payments due from any Loan Party or its Subsidiaries on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of the Borrowers.
(c) The Loan Parties and their Subsidiaries are in material compliance with Applicable Laws respecting employment and employment practices (including employment insurance, employer health tax, employment standards, labor relations, occupational health and safety, human rights, workers compensation, employment equity and pay equity) and, to the knowledge of the Borrowers, there are no pending or threatened proceedings before any Governmental Authority or otherwise with respect to any of the foregoing that could reasonably be expected to result in liability in excess of $2,000,000.
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Section 3.21 Compliance with Food Security Act and Agricultural Lien Statutes; Agricultural Lien Notices.
(a) Each Loan Party (i) is in compliance in all material respects with the Food Security Act, as applicable to it, and has filed all appropriate notices and requests and otherwise taken all applicable steps, if any, that are required of it to register with the Central Filing System and subscribe to the portions of the master list covering effective financing statements related to farm products and other agricultural products purchased by such Loan Party, in each case established, maintained and distributed by the Secretary of State (or such other similar state agency) of each state that maintains a Central Filing System in accordance with the Food Security Act, and (ii) is in compliance in all material respects with all other applicable Agricultural Lien Statutes.
(b) (x) No Loan Party has received notice (written or otherwise) from any Producer, unpaid seller, supplier, agent or secured party indicating such Persons intent to claim or preserve the benefits of any trust under any Agricultural Lien Statute or of any Lien in any farm products (as defined in the UCC) under Applicable Law (other than any standard boiler-plate language included on invoices or similar documentation in the ordinary course of business), and (y) no action has been commenced against any Loan Party or any Subsidiary thereof by (i) any beneficiary of any such Lien to enforce such Lien or (ii) any Governmental Authority or any beneficiary of a trust created under any Agricultural Lien Statute to enforce payment from such trust.
Section 3.22 Agricultural Licenses. Each Loan Party and each Subsidiary thereof maintains all necessary and material Agricultural Licenses required to operate its business.
Section 3.23 The Farm Projects.
(a) The Borrowers have delivered to the Lender a true, correct, and complete copy of each Material Project Document entered into on or prior to the Closing Date, will promptly deliver to the Lender a true, correct, and complete copy of each Material Project Document entered into or obtained after the Closing Date, and none of the Material Project Documents that have been delivered to the Lender have been terminated or otherwise modified except in accordance with the terms hereof and remains in full force and effect.
(b) The Project Documents that have been or will be delivered to the Lender comprise substantially all of the material services, materials and property interests required for Completion of the applicable Farm Project.
(c) No material default or event of default has occurred under any Material Project Document, and no material condition or event has occurred that would result in such a default or event of default with the giving notice, the lapse of time or both.
(d) Each Farm Project is and will continue to be owned by a Loan Party, subject to a Lien in favor of the Lender (subject only to Permitted Liens), and developed, constructed and maintained in accordance with the Project Documents and Applicable Law in all material respects.
(e) The terms of each Material Project Document conform in all material respects to the applicable Project Licenses and any other applicable governmental and third-party consents and approvals and the requirements of Applicable Law.
(f) All material property interests, utility services, means of transportation, facilities and other material necessary for Completion and operation of the applicable Farm Project are, or will be when needed, available to such Farm Project.
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(g) Each Initial Construction Budget and each other Construction Budget is realistic and feasible for achievement of Completion on or prior to the applicable Completion Deadline.
ARTICLE IV
CONDITIONS
Section 4.1 Conditions Precedent to Effectiveness. The obligation of the Lender to make any Term Loan hereunder is subject to the condition precedent that, on or before the Closing Date, the Lender shall have received each of the following, each in form and substance satisfactory to the Lender:
(a) this Agreement, the Collateral Documents and the other Loan Documents to be entered into on the Closing Date, each signed by a Responsible Officer of each Loan Party and a duly authorized officer of each other party thereto, together with all other original items required to be delivered pursuant to the Collateral Documents or any other Loan Document;
(b) a certificate of a Responsible Officer of each Loan Party, attaching (i) the Organizational Documents of such Loan Party, (ii) resolutions or other action of the Governing Board of such Loan Party approving the transactions and other matters contemplated by the Loan Documents to which it is a party, and (iii) an incumbency certificate evidencing the identity, authority and capacity of each Responsible Officer of such Loan Party authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which it is a party;
(c) such other documents and certificates as the Lender may request relating to the organization, existence and good standing of each Loan Party and any other legal matters relating to the Loan Parties, the Loan Documents or the transactions contemplated thereby;
(d) a certificate of status, compliance or like certificate for each Loan Party and Subsidiary from the appropriate Governmental Authority of the jurisdiction of incorporation or formation of such Person and each jurisdiction where it is required to qualify to do business, each dated not more than thirty (30) days prior to the Closing Date;
(e) a certificate of a Responsible Officer of the Company, dated as of the Closing Date and attaching reasonably detailed calculations demonstrating pro forma compliance with the minimum Liquidity covenant set forth in Section 6.8(d) after giving effect to the Term Loans to be funded on the Closing Date;
(f) an appropriately completed Perfection Certificate with respect to the Borrowers and the other Loan Parties, dated as of the Closing Date and duly executed by a Responsible Officer of the Borrowers;
(g) one or more opinions of counsel to the Loan Parties, addressed to the Lender and dated the Closing Date, in form and substance satisfactory to the Lender (covering the jurisdiction of formation of each Loan Party, the jurisdiction of the governing law of each Loan Document and the jurisdiction in which any Farm Project Site is located, as applicable);
(h) with respect to the Existing Bridge Indebtedness and any other Indebtedness or other obligations owing by the Loan Parties to any Exiting Lenders:
(i) evidence that all such Indebtedness has been, or as of the Closing Date will be, repaid in full in cash and all such obligations have been, or as of the Closing Date will be, terminated;
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(ii) a payoff letter (accompanied by such other discharges, releases (including, without limitation, mortgage releases), terminations or other documents as the Lender may request in its sole discretion), in each case duly executed by the Exiting Lenders or their agent, as applicable, releasing effective as of the Closing Date all Liens on any assets of any Loan Parties or any Subsidiaries of any Loan Party granted in favor of the Exiting Lenders upon receipt of the payoff amount on the Closing Date and authorizing the Borrowers, the Lender or their respective designees to file UCC-3 termination statements and such other releases and terminations as necessary to terminate any and all such Liens;
(i) Lien searches with respect to the Loan Parties and any Subsidiary in scope satisfactory to the Lender and with results showing no Liens (other than Liens in favor of the Lender, other Permitted Liens and Liens authorized to be released on the Closing Date in accordance with Section 4.1(h)) and otherwise satisfactory to the Lender;
(j) UCC financing statements for each jurisdiction as is necessary, in the Lenders sole discretion, to perfect the Lenders security interest in the Collateral to the extent such Liens can be perfected by filing or recordation;
(k) an executed Account Control Agreement with respect to (i) the Debt Service Reserve Account and (ii) each other deposit, securities and commodity account of the Loan Parties (other than Excluded Accounts);
(l) a written consent, duly executed by Holdings and confirming that this Agreement, the other Loan Documents, the Term Loan Facility and the Liens created pursuant to any Loan Document to secure the Obligations are permitted under, and do not conflict with or contravene, the SPAC Merger Agreement;
(m) [reserved];
(n) evidence from the Borrowers that all material governmental and third-party consents required to effectuate the transactions contemplated by the Loan Documents have been obtained;
(o) true, correct and complete copies of the Warrant Agreement and all other Material Agreements then in effect (including, without limitation, to the extent not previously delivered to the Lender, all Farm Lease Agreements and Approved Long-Term Supply Agreements then in effect) of the Borrowers, the Guarantors and any Subsidiary, each of which shall be satisfactory to the Lender, together with such Collateral Assignments of such Material Agreements and acknowledgments by such counterparties as may be reasonably requested by the Lender in its sole discretion, duly executed by the parties thereto;
(p) at least five (5) Business Days prior to the Closing Date (or such shorter period as may be approved by the Lender in its sole discretion), completed background checks and such other documentation and information requested by (or on behalf of) the Lender, in each case satisfactory to the Lender, including information required by Lender to satisfy any know your customer requirements, including, without limitation, the Beneficial Ownership Certification;
(q) evidence that adequate liability, property, business interruption and builders risk insurance required to be maintained under this Agreement is in full force and effect, in each case together with certificates naming the Lender as additional insured, mortgagee and lenders loss payee, as applicable, with respect to the Collateral and, in the case of any business interruption insurance, accompanied by an assignment of such business interruption insurance in favor of the Lender signed by the Loan Parties and the applicable insurer;
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(r) payment of (i) all fees, costs and expenses then due and payable pursuant to Section 8.3 hereof, to the extent invoiced on or prior to the date hereof and (ii) payment of such fees as are set forth in the Fee Letter; and
(s) such financial statements, budgets, forecasts, projections and any other information or documents as the Lender reasonably requests.
Section 4.2 Additional Conditions to Initial Credit Extension. In addition to, and without limiting, the conditions set forth in Sections 4.1 and 4.3, the obligation of the Lender to make the initial Term Loan hereunder is subject to the Lenders receipt, on or prior to the date of such initial Term Loan, of the following, each of which shall be in form and substance satisfactory to the Lender in its sole discretion:
(a) evidence of the consummation of the Qualified SPAC Transaction and the occurrence of the Qualified SPAC Transaction Effective Date (including, without limitation, in the form of copies of the relevant certificates of merger certified or recorded by the appropriate Governmental Authorities);
(b) a certificate of a Responsible Officer of the Company, substantially in the form delivered to the Lender pursuant to Section 4.1(b) and, among other things, (i) certifying the Organizational Documents of the Company after giving effect to the Qualified SPAC Transaction and the occurrence of the Qualified SPAC Transaction Effective Date, and (ii) attaching true, correct, and complete copies of the SPAC Merger Agreement and all Ancillary Agreements (as defined in the SPAC Merger Agreement); and
(c) a disbursement letter (demonstrating, among other things, that the Debt Service Reserve Account shall, as of the Initial Senior Funding Date, be funded with the Minimum P&I Amount required on such date), duly executed by the Borrowers.
Section 4.3 Additional Conditions to each Term Loan. In addition to, and without limiting, the conditions set forth in Sections 4.1 and 4.2 (other than with respect to the funding of a Term Loan pursuant to Section 5.17(b), which such funding shall be limited to Sections 4.1 and 4.2 above and to clauses (a), (b), (c) and (d) of this Section 4.3), the obligation of the Lender to make any Term Loan hereunder is subject to the satisfaction (or waiver by the Lender in its sole discretion) of the following additional conditions precedent on or before the date of such Term Loan, each of which shall be in form and substance satisfactory to the Lender:
(a) the representations and warranties set forth in this Agreement and the other Loan Documents shall be true and correct in all material respects (or, in the case of any such representation or warranty already qualified by materiality, in all respects) on and as of the date of such Term Loan;
(b) no Default or Event of Default shall have occurred and be continuing or would result from such Term Loan or from the application of proceeds thereof;
(c) the Borrowers shall have delivered to the Lender an appropriately completed and duly executed Loan Request for each Term Loan requested to be made pursuant to this Agreement;
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(d) the Lender shall have received evidence that, concurrently with the funding of each Term Loan requested hereunder, (x) an equity or capital contribution is made by the Borrowers and/or (y) a loan is funded under the Subordinated Credit Agreement, in each case in accordance with Section 6.8(e);
(e) to the extent the proceeds of a requested Term Loan are to be used for the first payment of Project Costs in respect of a Farm Project, the Lender shall have received, on or prior to the date of such Term Loan:
(i) each of the items set forth in Section 5.15 with respect to the Farm Project Site where the Farm Project being funded by the applicable Term Loan is to be located (including, without limitation, Mortgages, insurance (including title insurance and flood insurance) documentation, surveys, appraisals and environmental assessment, in each case complying with Section 5.15); and
(ii) such financial statements, budgets, forecasts, projections (including projected draw schedules) or other information or documents with respect to such Farm Project as the Lender reasonably requests, in each case in form and substance satisfactory to the Lender;
(f) the Lender and the Disbursing Agent shall have received all items required under the Disbursing Agreement in connection with such Term Loan;
(g) the Lender shall have received a copy of each Material Project Document and each other Material Agreement then in effect (including, without limitation, each Farm Lease Agreement and each Approved Long-Term Supply Agreement) not previously delivered to the Lender, together with a Collateral Assignment of the same (to the extent such Collateral Assignment (or any consent or acknowledgment thereof) is required or requested in accordance with the definition of Collateral Assignment);
(h) the Lender shall have received a certificate of a Responsible Officer of the Company, in the form of Exhibit D attached hereto, certifying, as of the date of such Term Loan, that:
(i) after giving effect to such Term Loan, (A) such Term Loan, together with any loan under the Subordinated Credit Agreement made concurrently with such Term Loan, shall constitute not more than 75% of the Project Costs in respect of which such Term Loan is requested, and (B) the Borrowers will be in compliance with the capital stacking covenant set forth in Section 6.8(e), and attaching thereto reasonably detailed calculations demonstrating each of the foregoing;
(ii) each Material Project Document delivered to the Lender as of such date is a true, correct and complete copy of the same;
(iii) each Material Project Document is in full force and effect and, to the best knowledge of the Company, no default or event of default has occurred thereunder;
(iv) all Project Licenses and any other governmental and third-party consents, permits and approvals with respect to each Farm Project that are required as of such date have been duly obtained, validly issued and are in full force and effect, not subject to any appellate, judicial or administrative proceeding or to any unsatisfied condition that may allow material modification or revocation, and no material violation thereof shall have occurred;
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(v) such Term Loan shall not be used to pay for materials or equipment for a Farm Project unless (x) such materials or equipment have been incorporated into such Farm Project or have been delivered to the applicable Farm Project Site for later incorporation into such Farm Project and stored at the applicable Farm Project Site or (y) such Term Loan shall be used to fund deposits or scheduled payments required pursuant to any Project Documents prior to work being commenced or materials or equipment being delivered to or incorporated into the such Farm Project;
(vi) the development of each Farm Project is substantially proceeding in the manner provided for in the Project Documents relating thereto;
(vii) the aggregate amount of the Project Costs paid (and remaining to be paid) with respect to each Farm Project does not exceed the Initial Construction Budget applicable to such Farm Project; provided, notwithstanding the foregoing, the aggregate amount of the Project Costs paid (and remaining to be paid) with respect to each Farm Project may exceed the Initial Construction Budget applicable to such Farm Project by an amount not to exceed 5% of such Initial Construction Budget, but only so long as, on or prior to the date of the requested Term Loan, (A) (x) such excess amount is funded by cash contributions from the Borrowers in compliance with Section 6.8(d) or an irrevocable capital cash contribution from Holdings to the Borrowers, and (y) the Borrowers have fully paid such excess Projects Costs from the proceeds of such contributions, and (B) the Borrowers deliver to the Lender reasonably satisfactory evidence of the foregoing;
(viii) as of the date of such certificate, and after giving effect to the requested Term Loan, the unadvanced amounts under both the Term Loan Facility and the Subordinated Credit Agreement (determined in accordance with the capital stacking requirements set forth in Section 6.8(e)) and Unrestricted Cash of the Borrowers (including Unrestricted Cash contributed to the Borrowers by Holdings) are sufficient to pay all Project Costs required in order to achieve the Completion of each Farm Project on or prior to the Completion Deadline applicable to such Farm Project;
(ix) the Final Completion Date of each Farm Project can reasonably be expected to occur on or prior to the Completion Deadline applicable to such Farm Project;
(i) the Lender shall have received an updated Project Status Report, Construction Budget and Construction Schedule with respect to each Farm Project;
(j) the Lender shall have received (i) a current sworn construction cost statement of the Company in form reasonably acceptable to the Lender, (ii) a current sworn construction cost statement of each Material Project Contractor in form reasonably acceptable to the Lender, and (iii) copies of invoices, bills, statements or bills of sale representing the Project Costs to be paid from proceeds of the requested Term Loan;
(k) to the extent permitted under Applicable Law, the Lender shall have received Lien waivers and releases, conditioned only upon receipt of payment, duly executed by each Person (other than an Excluded Contractor or Subcontractor) being paid from the proceeds of the requested Term Loan who may have or may be entitled to have a Lien pursuant to Applicable Law or agreement;
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(l) the Lender shall have received unconditional Lien waivers and releases, duly executed by each Person (other than an Excluded Contractor or Subcontractor) paid from proceeds of all prior Term Loans who may have or may be entitled to have a Lien pursuant to Applicable Law or agreement, to the extent not previously delivered to the Lender;
(m) no stop notice with respect to any Farm Project shall have been delivered to the Company or any other Loan Party, unless the Company has filed a release bond with respect thereto in accordance with the requirements of Law in the state where the Farm Project Site is located;
(n) if required by the Lender, the Lender shall have received a certificate from the Project Consultant, duly executed by the Project Consultant and dated not earlier than five (5) Business Days prior to the date of the requested Term Loan, certifying as follows: (i) the Project Consultant has reviewed the Project Status Report, Construction Budget, and Construction Schedule applicable to each Farm Project, (ii) the Project Consultant recommends payment of the Project Costs that the Borrowers intend to pay with proceeds of such requested Term Loan, (iii) the development of each Farm Project is substantially proceeding in the manner provided for in the Project Documents relating thereto, (iv) the aggregate amount of the Project Costs paid (and remaining to be paid) with respect to each Farm Project does not exceed the Initial Construction Budget applicable to such Farm Project (provided that the aggregate amount of the Project Costs paid (and remaining to be paid) with respect to each Farm Project may exceed the Initial Construction Budget applicable to such Farm Project by an amount not to exceed 5% of such Initial Construction Budget, but only so long as, on or prior to the date of such certificate, (A) (x) such excess amount is funded by cash contributions from the Borrowers in compliance with Section 6.8(d) or an irrevocable capital cash contribution from Holdings to the Borrowers, and (y) the Borrowers have fully paid such excess Projects Costs from the proceeds of such contributions, and (B) the Borrowers deliver to the Lender reasonably satisfactory evidence of the foregoing), (v) as of the date of such certificate, and after giving effect to the requested Term Loan, the unadvanced amounts under both the Term Loan Facility and the Subordinated Credit Agreement (determined in accordance with the capital stacking requirements set forth in Section 6.8(e)) and Unrestricted Cash of the Borrowers (including Unrestricted Cash contributed to the Borrowers by Holdings) are sufficient to pay all Project Costs required in order to achieve Completion of each Farm Project on or prior to the Completion Deadline applicable to such Farm Project, and (vi) the Final Completion Date of each Farm Project can reasonably be expected to occur on or prior to the Completion Deadline applicable to such Farm Project;
(o) for payments to each General Contractor, the Lender shall have received payment and performance bonds in the amount of the GC Contract with such General Contractor (which, to the extent approved by the Lender in writing in its reasonable discretion, may be in the form of payment and performance bonds issued by applicable subcontractors), together with a dual obligee rider in favor of the Lender, in each case in form and substance acceptable to the Lender;
(p) to the extent not previously delivered, the Borrowers shall have delivered to the Lender evidence of the insurance required by Section 5.18(d);
(q) the Lender shall have received such bring-down certificates, searches, an endorsement to the title insurance policy issued to the Lender covering the date of such Term Loan and increasing the amount of Lenders insurance coverage by the amount of such Term Loan disbursed and date down the coverage for mechanics liens with the ALTA 33-06 Construction Disbursement Endorsement; and
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(r) if the requested Term Loan is for the last disbursement necessary to Complete a Farm Project, the Lender shall have received (i) a certification from the Company and the Project Consultant that the improvements on such Farm Project will, after application of the proceeds of such Term Loan, be Complete and (ii) the applicable title insurance company shall be committed to issue to the Lender such endorsements as the Lender may reasonably require, to be issued by such title insurance company subsequent to the expiration of the period during which any Lien for labor, services or materials may be validly recorded against such Farm Project or such other endorsements to the Lenders title insurance policy as the Lender may reasonably require which shall insure that such Farm Project improvements have been completed free of all mechanics and materialmens Liens or claims and other Liens, other than Liens expressly permitted under the Mortgage applicable to such Farm Project).
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrowers covenant and agree with the Lender that, until all Obligations shall have been Paid in Full:
Section 5.1 Financial Statements. The Borrowers will furnish to the Lender, each in form, detail and substance satisfactory to the Lender:
(a) as soon as available, and in any event within 120 days after the end of each Fiscal Year, audited financial statements of the Company and its Subsidiaries consisting of a consolidated (and, with respect to each Subsidiary of the Company, consolidating) balance sheet of the Company and its Subsidiaries as at the end of such Fiscal Year and the related consolidated (and, with respect to each Subsidiary of the Company, consolidating) statements of income or operations, shareholders equity and cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, prepared by independent public accountants of nationally or regionally recognized standing (or other firm of independent public accountants reasonably acceptable to the Lender, it being agreed and acknowledged that RSM US LLP is acceptable to the Lender) in accordance with generally accepted auditing standards (and, except for the Permitted Going Concern Qualification (if any), shall not be subject to any going concern or like qualification, exception or explanatory paragraph), certified by a Financial Officer of the Company as fairly presenting in all material respects the financial condition, results of operations, shareholders equity and cash flows of the Company and its Subsidiaries in accordance with GAAP consistently applied, together with a management discussion and analysis of such financial statements; and
(b) as soon as available, but in any event within 60 days after the end of each calendar quarter, commencing with the calendar quarter ending September 30, 2021, a consolidated (and, with respect to each Subsidiary of the Company, consolidating) balance sheet of the Company and its Subsidiaries as at the end of such calendar quarter, the related consolidated (and, with respect to each Subsidiary of the Company, consolidating) statements of income or operations, shareholders equity and cash flows for such calendar quarter and for the portion of the Companys Fiscal Year then ended, in each case setting forth in comparative form the year-to-date period of the current Fiscal Year as compared to the corresponding portion of the previous Fiscal Year, certified by a Financial Officer of the Company as fairly presenting in all material respects the financial condition, results of operations, shareholders equity and cash flows of the Company and its Subsidiaries in accordance with GAAP consistently applied, subject only to normal year-end adjustments and the absence of footnotes.
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(c) Notwithstanding anything in this Section 5.1 to the contrary, commencing after the Qualified SPAC Transaction Effective Date, (i) any financial statements required to be delivered pursuant to this Section 5.1 shall be financial statements of the Consolidated Group and (ii) the obligations in clauses (a) and (b) of this Section 5.1 may be satisfied with respect to financial information of the Consolidated Group by furnishing (A) the applicable financial statements of the Consolidated Group to the Lender or (B) the Form 10-K, 10-Q or 8-K, as applicable, of the Consolidated Group, filed with the SEC. Documents required to be delivered pursuant to Sections 5.1(a) and (b) and Section 5.2(d) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the earliest date on which (x) Holdings or the Company provides a link thereto on Holdings or the Companys website on the Internet; (y) such documents are posted on Holdings or the Companys behalf on IntraLinks/IntraAgency or another website, if any, to which the Lender has access (whether a commercial, third-party website or whether sponsored by the Lender), or (z) such financial statements and/or other documents are posted on the SECs website on the Internet at www.sec.gov.
Section 5.2 Certificates; Other Information. The Borrowers will deliver, or cause to be delivered, to the Lender, each in form, detail and substance satisfactory to the Lender:
(a) concurrently with the delivery of the financial statements referred to in Sections 5.1(a) and (b), a duly completed Compliance Certificate signed by a Responsible Officer of the Company (i) certifying as to whether a Default or Event of Default has occurred and, if a Default or Event of Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto and (ii) setting forth reasonably detailed calculations demonstrating compliance with the covenants set forth in Section 6.8;
(b) promptly following request therefor, copies of any detailed audit reports, management letters or recommendations submitted to the Governing Board (or the audit committee of the Governing Board) of any Loan Party or Subsidiary by independent accountants in connection with the accounts or books of such Loan Party or Subsidiary, or any audit of any of them as the Lender may from time to time reasonably request;
(c) as soon as practicable and in any event before the beginning of each Fiscal Year, the projected balance sheets, income statements, capital expenditures budget and cash flow statements for the Consolidated Group, on a consolidated and consolidating basis, for each month of the next Fiscal Year, each in reasonable detail, representing the good faith projections of the Consolidated Group for each such month, and certified by a Financial Officer of the Company as being the projections upon which the Consolidated Group relies, together with such supporting schedules and information as the Lender from time to time may reasonably request;
(d) promptly after receipt or furnishing thereof, copies of each annual report, proxy or financial statement or other report or communication sent to the shareholders of any Loan Party or Subsidiary, and copies of all annual, regular, periodic and special reports and registration statements that such Loan Party or Subsidiary may file or be required to file with the SEC or with any national securities exchange, and not otherwise required to be delivered pursuant hereto;
(e) promptly after receipt thereof by any Loan Party or Subsidiary, copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other similar inquiry by such agency regarding financial or other operational results of such Loan Party or Subsidiary thereof;
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(f) promptly after the occurrence thereof, notice of any change in the information provided in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified in such certification; provided, that following the Qualified SPAC Transaction Effective Date, such notice shall only be required to the extent Holdings or any other Loan Party is a legal entity customer under the Beneficial Ownership Regulation;
(g) promptly upon execution thereof, a true, correct and complete copy of each Material Agreement, or any amendment thereto, entered into after the Closing Date;
(h) promptly after the furnishing thereof, copies of any material request, report or notice received by any Loan Party or any Subsidiary, or any material statement or report furnished by any Loan Party or any Subsidiary pursuant to the terms of any Material Agreement (including, without limitation, the SPAC Merger Agreement);
(i) with respect to each Farm Project:
(i) as soon as available and in any event within thirty (30) days after the end of each fiscal month of the Company, a Project Status Report and Construction Budget with respect to such Farm Project, in each case certified by the Project Consultant;
(ii) promptly upon receipt, a copy of any Farm Project Site visit report or other reviews or notices issued by any Governmental Authority, including, without limitation, EPA or USDA;
(iii) promptly upon receipt, a copy of each material report delivered to a Loan Party by any Person pursuant to a Material Project Document;
(iv) copies of all material notices sent or received by any Loan Party with respect to such Farm Project; and
(v) promptly after any officer of any Loan Party has knowledge of any material delays in the construction of such Farm Project or if the Project Costs applicable to such Farm Project at any time exceed the Initial Construction Budget applicable to such Farm Project, a certificate signed by a Responsible Officer of the Company setting forth the details with respect thereto and the action that the Company proposes to take with respect thereto; and
(j) promptly following any request therefor, such other information, notices, meeting minutes, consents and other materials regarding the operations, business, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of any Loan Party or Subsidiary, or compliance with the terms of the Loan Documents, as the Lender may from time to time reasonably request.
Section 5.3 Notices. The Borrowers will promptly notify the Lender of:
(a) in any event within two (2) Business Days thereof, the occurrence of any Default or Event of Default;
(b) the consummation of the Qualified SPAC Transaction and the occurrence of the Qualified SPAC Transaction Effective Date;
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(c) the filing or commencement of any action, claim, suit, injunction, arbitration, settlement, investigation or proceeding by or before any arbitrator or Governmental Authority against or affecting any Loan Party, any Subsidiary or any Affiliate thereof, which, if adversely determined, could reasonably be expected to give rise to liability in excess of $2,000,000;
(d) any labor dispute or any noncompliance by any Loan Party or Subsidiary with Applicable Law (other than Environmental Law) or any permit, approval, license or other authorization, which, if adversely determined, could reasonably be expected to give rise to liability in excess of $2,000,000;
(e) any action arising under any Environmental Law or any noncompliance by any Loan Party or Subsidiary with any Environmental Law, which, if adversely determined, could reasonably be expected to give rise to liability in excess of $1,000,000;
(f) the discovery of any Hazardous Materials or of any Release from or upon any Farm Project Site, the Montana Property or any other land or property owned (either individually or jointly), operated or controlled by any Loan Party or Subsidiary, which, individually or in the aggregate, could reasonably be expected to give rise to liability in excess of $1,000,000;
(g) any damage to or destruction of any property of the Loan Parties (or any of their Subsidiaries) which, either individually or in the aggregate, could reasonably be expected to give rise to a claim for insurance monies in excess of $2,000,000;
(h) any material change in accounting or financial reporting practices by any Loan Party or any Subsidiary;
(i) any material breach or non-performance of, or any material default under, any Material Agreement;
(j) any cessation or material delay in the construction of any Farm Project, in each case accompanied by a reasonably detailed report or certificate of the Borrowers explaining whether or not such cessation or delay is expected to have a Material Adverse Effect; and
(k) any matter or development that has had or could reasonably be expected to have a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of a Responsible Officer of the Company setting forth the details of the occurrence requiring such notice and stating what action the Company has taken and proposes to take with respect thereto.
Section 5.4 Preservation of Existence, Etc. Each Borrower will, and will cause each other Loan Party and Subsidiary to, (a) preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization and under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; (b) take all reasonable action to maintain all material rights, licenses, permits, bonding arrangements, privileges and franchises necessary in the normal conduct of its business; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which, in the case of this clause (c), could reasonably be expected to have a Material Adverse Effect.
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Section 5.5 Maintenance of Properties.
(a) Each Borrower will, and will cause each other Loan Party and Subsidiary to, (i) maintain, preserve and protect all of its properties and equipment material to the operation of its business (including, without limitation, each Farm) in good working order and condition (ordinary wear and tear excepted), and operate each Farm, in each case in accordance in all material respects with prudent industry practice and applicable Contractual Obligations and (ii) make all necessary repairs thereto and renewals and replacements thereof.
(b) The sole owner of all assets with respect to each Farm Project (including, without limitation, each Farm and all Project Documents and Project Licenses relating to such Farm Project, whether now existing or hereafter arising), is, and at all times will continue to be, a Loan Party.
Section 5.6 Maintenance of Insurance. The Borrowers will, and will cause each other Loan Party and Subsidiary to, maintain with financially sound and reputable insurance companies, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business (including fire, extended coverage, workers compensation, public liability, property damage, business interruption and, with respect to each Farm Project, builders risk insurance) and against other risks (including errors and omissions) and in such amounts as are customarily carried under similar circumstances by such Persons. Such insurance policies shall contain (a) with respect to any general liability insurance policy, an additional insured special endorsement and (b) with respect to any property insurance policy, a mortgagee and a lenders loss payee special endorsement, in each case in form and substance satisfactory to the Lender naming the Lender as additional insured, mortgagee and lenders loss payee, as applicable, on a primary, non-contributory basis, waiving subrogation, and providing the Lender with notice of cancellation acceptable to the Lender. Without limiting the foregoing, the Borrowers will, and will cause each other Loan Party to, to the extent required under Flood Laws, obtain and maintain flood insurance for such structures and contents constituting Collateral located in a flood hazard zone, in such amounts as similar structures and contents are insured by prudent companies in similar circumstances carrying on similar businesses and otherwise satisfactory to the Lender.
Section 5.7 Payment of Obligations. The Borrowers will, and will cause each other Loan Party and Subsidiary to, pay, discharge or otherwise satisfy as the same shall become due and payable (i) all of its material Tax liabilities and remittances and other obligations owing to any Governmental Authority and (ii) all of its material other obligations, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings diligently conducted and the Borrowers or such Loan Party or Subsidiary has set aside on its books adequate reserves with respect thereto to the extent required by GAAP, and (b) no foreclosure or similar proceedings have been commenced or notice of Liens filed with respect thereto.
Section 5.8 Compliance with Laws. The Borrowers will, and will cause each other Loan Party and Subsidiary to, comply with the requirements of all Laws (including, without limitation, all Applicable Food and Feed Safety Laws) and all orders, writs, injunctions and decrees applicable to it or to its business or property, except where the failure to do so, either individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. The Borrowers shall, and, where applicable, shall cause each of their Affiliates (including any ERISA Affiliates) to, maintain each Plan in compliance with all applicable requirements of Law ERISA and the Code, except where the failure to do so could not be reasonably expected to result in a Material Adverse Effect.
Section 5.9 Environmental Matters. Except to the extent that the failure to do so could not reasonably be expected to have, individually or in the aggregate, liability (including any Environmental Liability) in excess of $2,000,000 or a Material Adverse Effect, the Borrowers will, and will cause each
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other Loan Party and Subsidiary to, (a) comply with all Environmental Laws, (b) obtain, maintain in full force and effect and comply with any Licenses or other approvals (including any Project Licenses) required for the facilities or operations of the Borrowers, any other Loan Party or Subsidiary, and (c) conduct and complete any investigation, study, sampling or testing, and undertake any corrective, cleanup, removal, response, remedial or other action necessary to identify, report, remove and clean up all Hazardous Materials present or released at, on, in, under or from any of the facilities or real properties of the Borrowers, any other Loan Party or Subsidiary.
Section 5.10 Books and Records. Each Borrower will, and will cause each other Loan Party and Subsidiary to, maintain proper books of record and account, in which entries shall be made of all financial transactions and matters involving the assets and business of such Borrower, other Loan Party or Subsidiary, as the case may be, that are true, complete and correct in all material respects and prepared in conformity with GAAP in all material respects.
Section 5.11 Inspection Rights. Each Borrower will, and will cause each other Loan Party and Subsidiary to, permit representatives and independent contractors of the Lender and the Project Consultant to visit and inspect any of its properties (including, but not limited to, examination and inspection of any Farm Project Site and the Montana Property), to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its owners, directors, officers, and independent public accountants, all at the reasonable expense of the Borrowers; provided that, if no Event of Default has occurred and is continuing, (x) the Lender shall not request, and shall not be permitted to receive, reimbursement from the Borrowers for more than one visit and inspection in any Fiscal Year and (y) the Lender will provide the Borrowers with at least five (5) days prior notice of each visit and inspection (or such shorter period acceptable to the Borrowers in their sole discretion).
Section 5.12 Use of Proceeds. The Borrowers will, and will cause each other Loan Party and Subsidiary to, use the proceeds of:
(a) the initial Term Loan (i) to fund or otherwise remit cash to the Debt Service Reserve Account in accordance with Section 5.17, (ii) to pay the reasonable costs and expenses of the Loan Parties payable pursuant to Section 8.3(a) and outstanding as of the Initial Senior Funding Date, (iii) to pay Project Costs applicable to a Farm Project, and (iv) for working capital related to the operation of a Farm Project or Farm; and
(b) any other Term Loan (i) to fund the Debt Service Reserve Account as a result of a DSRA Shortfall in accordance with Section 5.17, (ii) to pay Project Costs applicable to a Farm Project, and (iii) for working capital related to the operation of a Farm Project or Farm,
in each case not in contravention of any Law or of any Loan Document. Notwithstanding the foregoing or anything herein to the contrary, however, no Term Loan will be used to finance (1) dual use goods (i.e. products and technologies which may have military applications), (2) tobacco products, (3) extraction of thermal coal, and/or (4) business activities which are not aligned with the principles of the New York Declaration on Forests (2014) (https://forestdeclaration.org/about).
Section 5.13 Sanctions and Anti-Terrorism Laws; Anti-Corruption Laws. The Borrowers will, and will cause each other Loan Party and Subsidiary to, maintain in effect policies and procedures designed to promote compliance by the Loan Parties and Subsidiaries, and their respective directors, officers, employees, and agents with applicable Sanctions and Anti-Terrorism Laws and applicable Anti-Corruption Laws.
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Section 5.14 Additional Subsidiaries; Holdings as Guarantor.
(a) Promptly after (i) the creation or acquisition of any Subsidiary of Holdings or any other Loan Party (including, without limitation, any Subsidiary formed by merger, amalgamation, consolidation, division under the Delaware Code or otherwise), in each case other than an Excluded Subsidiary, or (ii) any existing Excluded Subsidiary ceases to be an Excluded Subsidiary (and, in any event, within ten (10) days after each event described in the preceding clauses (i) or (ii) and without limiting Section 6.14 hereof (or such later date as may be agreed by the Lender in writing)), the Borrowers will (unless otherwise waived in writing by the Lender in its sole discretion) cause such Person to (A) become a Borrower hereunder by delivering to the Lender a duly executed joinder agreement or such other documents as the Lender shall deem appropriate for such purpose, (B) grant a Lien on substantially all of the real and personal property of such Person by delivering to the Lender such deeds of trust, security agreements and other agreements as the Lender shall deem appropriate for such purpose, (C) deliver to the Lender such original certificated Equity Interests or other certificates and stock or other transfer powers evidencing the Equity Interests of such Person as the Lender may require, (D) deliver to the Lender such opinions, documents and certificates as the Lender requests and (E) deliver to the Lender such updated Schedules to the Loan Documents as requested by the Lender with respect to such Person and Collateral; in each case, in form, content and scope satisfactory to the Lender.
(b) Notwithstanding anything to the contrary contained herein or in any other Loan Document:
(i) the minority equityholders of the Northwest SPV (which minority equityholders, for the avoidance of doubt, shall hold not more than 1% of all Equity Interests of the Northwest SPV) shall not be required to pledge their Equity Interests of the Northwest SPV to the Lender; and
(ii) in connection with a Disposition of the Northwest SPV permitted under Section 6.4(f), upon the request of the Borrowers, the Lender shall, in each case at the sole cost and expense of the Loan Parties, (A) execute and deliver to the Loan Parties such UCC terminations, intellectual property releases, deposit account control agreement termination letters, releases, reconveyances and other documentation reasonably requested by the Loan Parties and appropriate to effectuate the termination of any Liens on the assets and property of the Northwest SPV in favor of the Lender; (B) deliver to the Loan Parties any original certificated Equity Interests or other certificates and stock or other transfer powers evidencing the Equity Interests of the Northwest SPV in the Lenders possession; and (C) take such further action as the Loan Parties may reasonably request from time to time in order to effectuate the provisions of this clause (ii).
(c) Promptly, and in any event not later than ten (10) Business Days after the Qualified SPAC Transaction Effective Date, the Borrowers shall cause Holdings to (i) become a Guarantor by delivering to the Lender a duly executed Guaranty or such other documents as the Lender shall deem appropriate for such purpose, (ii) grant a Lien on substantially all of the real and personal property of Holdings by delivering to the Lender such deeds of trust, security agreements and other agreements as the Lender shall deem appropriate for such purpose, (iii) deliver to the Lender such original certificated Equity Interests or other certificates and stock or other transfer powers evidencing the Equity Interests owned or held by Holdings as the Lender may require, (iv) deliver to the Lender such opinions, documents and certificates as the Lender requests, and (v) deliver to the Lender such updated Schedules to the Loan Documents as requested by the Lender with respect to Holdings and its Collateral; in each case, in form, content and scope satisfactory to the Lender.
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Section 5.15 Real Property.
(a) Fee-Owned Real Property. Not more than sixty (60) days (or such later date as may be agreed by the Lender in writing) following the acquisition by the Borrowers, any other Loan Party or any Subsidiary of any fee interest in any real property (including the acquisition of any Subsidiary that has a fee interest in real property), the Borrowers shall (unless otherwise waived in writing by the Lender in its sole discretion) deliver to the Lender each of the following, each in form and substance satisfactory to the Lender:
(i) a Mortgage covering such property, properly executed on behalf of the applicable Loan Party or Subsidiary;
(ii) if requested by the Lender or the Disbursing Agent, an amendment to the Disbursing Agreement (or a new Disbursing Agreement), a priority agreement or other similar agreements or documents, in each case duly executed by the parties thereto and incorporating jurisdiction-specific updates or other modifications;
(iii) an ALTA title insurance policy or policies in favor of the Lender, insuring such Mortgage as a valid first priority Lien upon such parcel subject only to such exceptions as are acceptable to the Lender (including such endorsements as the Lender may require);
(iv) a survey meeting such minimum survey standards as the Lender may require, such survey to be certified in favor of (and to permit reliance by) the Lender as to such parcel;
(v) if requested by the Lender, a final as built appraisal with respect to any Farm or Farm Project to be located on such real property, in form and containing assumptions and appraisal methods reasonably satisfactory to the Lender, conducted by an appraiser acceptable to the Lender, addressed to the Lender and on which the Lender is expressly permitted to rely;
(vi) if requested by the Lender, a Phase I environmental audit or such other environmental due diligence report as the Lender may approve (and permitting reliance by the Lender), together with such other environmental information as the Lender may request;
(vii) evidence that the Loan Parties have taken all actions required under the Flood Laws and/or requested by the Lender to ensure that the Lender is in compliance with the Flood Laws applicable to each parcel of real property constituting Collateral; and
(viii) such evidence as the Lender may require that such Mortgage has been duly authorized by all appropriate action of and is enforceable against the applicable Loan Party, together with such opinions of counsel covering such authorization and enforceability and other matters as the Lender may require.
Notwithstanding the foregoing, however, this Section 5.15(a) will not apply to the Pasco Property if, and solely to the extent, that the Pasco Property is subject to a Lien securing the USDA Loans in compliance with Section 6.2(l).
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(b) Leased Real Property, Warehouses, Etc.. (i) In the case of any headquarters location of the Loan Parties or any leased premises, warehouse or other third party-owned or - operated storage facility where tangible Collateral with a value in excess of $1,000,000 is located, the Loan Parties shall obtain Lien Waiver Agreements after entering into any lease following the Closing Date or after the tangible Collateral valued at any such location exceeds $1,000,000, and (ii) in the case of any Third-Party Farm Lease Agreement, the Loan Parties shall deliver, or cause to be delivered, to the Lender a Mortgage in respect of the real property subject to such Third-Party Farm Lease Agreement, together with (x) a corresponding lenders title insurance policy (and accompanying endorsements) in favor of the Lender (up to an amount reasonably determined by the Lender in consultation with the Borrowers), (y) a ground lease recognition and estoppel agreement, duly executed by the lessor under such Third-Party Farm Lease Agreement, and (z) opinions of counsel with respect to such Mortgage, each of the foregoing to be in form and substance reasonably satisfactory to the Lender.
Section 5.16 Further Assurances. The Borrowers shall, and shall cause each other Loan Party and Subsidiary to, from time to time, at the Borrowers expense, preserve and protect the Lenders Lien on the Collateral (first in priority subject only to Permitted Liens) and shall do such other acts and things as the Lender in its sole discretion may deem necessary or advisable from time to time in order to preserve, perfect and protect the Liens granted or purported to be granted under the Collateral Documents and to exercise and enforce its rights and remedies thereunder with respect to the Collateral. Without limiting the generality of the foregoing or Sections 4.1(k) or 5.17 hereof, concurrently with the opening of any deposit account, commodity account or securities account (other than Excluded Accounts) by any Borrower, any other Loan Party or Subsidiary after the Closing Date, the Borrowers shall deliver a notice of the opening of such account to the Lender and an executed Account Control Agreement in respect of such account. In addition the Borrowers shall deliver, or cause to be delivered, to the Lender a Collateral Assignment with respect to any Material Agreement entered into by the Borrowers or the other Loan Parties.
Section 5.17 Debt Service Reserve Account.
(a) Commencing on the Initial Senior Funding Date, the Borrowers will, or will cause, the Debt Service Reserve Account to be funded with proceeds of the initial Term Loan or with cash of the Loan Parties in an amount equal to or greater than the Minimum P&I Amount.
(b) If at any time (whether as a result of fluctuations in applicable interest rates or otherwise) the funds in the Debt Service Reserve Account are determined by the Lender in its reasonable discretion to be less than the Minimum P&I Amount (each such shortfall, a DSRA Shortfall), the Borrowers shall promptly (and in any event not later than two (2) Business Days after a DSRA Shortfall has been identified) fund or otherwise remit cash (including, at the Borrowers election, any proceeds of a Term Loan) to the Debt Service Reserve Account in an amount equal to or greater than such DSRA Shortfall. For the avoidance of doubt, the Borrowers shall cause the Debt Service Reserve Account to be subject to a blocked Account Control Agreement in favor of the Lender at all times.
Section 5.18 Farm Project Construction.
(a) The Borrowers will, and will cause each other Loan Party and Subsidiary to, continuously, diligently and with reasonable dispatch proceed with the design, development and construction of each Farm Project in a good workmanlike manner in material accordance with the Project Documents applicable to such Farm Project, the Loan Documents and all Applicable Laws so that the Final Completion Date applicable to such Farm Project will be reasonably expected to occur on or prior to the Completion Deadline applicable to such Farm Project.
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(b) The Borrowers will, and will cause each other Loan Party and Subsidiary to, comply in all material respects with each Material Agreement to which they are a party and enforce all of their respective material rights under the Project Documents, including all material indemnification rights thereunder, and pursue all material remedies available to any Loan Party or Subsidiary with diligence and in good faith.
(c) Not later than sixty (60) after the Final Completion Date of a Farm Project, the Borrowers will deliver or cause to be delivered to the Lender:
(i) if requested by the Lender in its sole discretion, a date down endorsement to the applicable title insurance policy insuring the priority of Mortgage in respect of the applicable Farm Project Site and which deletes from such title insurance policy any mechanics Lien, survey or other standard exception, and includes the following endorsements, to the extent not previously delivered to the Lender: ALTA 3.1 zoning endorsement; ALTA 9.3 conditions, covenants and restrictions endorsement; ALTA 9.6 private rights; ALTA 17 access and entry endorsement; ALTA 17.2 utility access endorsement; ALTA 18 single tax parcel or ALTA 18.1 multiple tax parcels (as applicable); and ALTA 28 easement endorsement (as applicable);
(ii) copies of the as-built final plans and specifications for such Farm Project; and
(iii) such additional items as the Lender may reasonably request, including, without limitation, copies of final appraisals, final as-built appraisals, surveys and final unconditional Lien waivers.
(d) The Borrowers will cause:
(i) the design professionals who prepare the Project Plans applicable to a Farm Project to maintain professional liability insurance written on a claims made basis, with coverage limits in amounts reasonably acceptable to the Lender, insuring each such design professional and its sub-consultants against any and all liabilities arising out of or in connection with the negligent acts, errors, or omissions of the foregoing in connection with the carrying out of their professional responsibilities for the applicable Farm Project;
(ii) each Material Project Contractor to maintain such insurance as will protect such Material Project Contractor from claims set forth below which may arise out of or result from such Material Project Contractors operations and completed operations in connection with the applicable Farm Project, whether such operations be by such Material Project Contractor or by its subcontractors or by anyone directly or indirectly employed by any of them, or by anyone for whose acts any of them may be liable: (A) claims under workers compensation, disability benefit and other similar employee benefit acts that are applicable to the work to be performed; (B) claims for damages because of bodily injury, occupational sickness or disease, or death of such Material Project Contractors employees; (C) claims for damages because of bodily injury, sickness or disease, or death of any person other than such Material Project Contractors employees; (D) claims for damages insured by usual personal injury liability coverage; (E) claims for damages because of injury to or destruction of tangible property, including loss of use resulting therefrom; (F) claims for damages because of bodily injury, death of a person or property damage arising out of ownership, maintenance or use of a motor vehicle; and (G) claims for bodily injury or property damage arising out of completed operations;
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(iii) each Material Project Contractor referenced in subsection (ii) above to name the Lender as an additional insured for claims caused in whole or in part by such Material Project Contractors negligent acts or omissions during such Material Project Contractors ongoing operations and completed operations, with such insurance afforded to the Lender as an additional insured being primary insurance and not excess over, or contributing with, any insurance purchased or maintained by the Lender; and
(iv) each Material Project Contractor that has commenced any work with respect to a Farm Plant to obtain payment and performance bonds of such Material Project Contractor (which, to the extent approved by the Lender in writing in its reasonable discretion, may be in the form of payment and performance bonds issued by applicable subcontractors) and dual obligee riders in favor of the Lender, in form and substance acceptable to the Lender in its sole discretion.
Section 5.19 Post-Closing Requirements.
(a) Promptly, and in any event not later than the earlier of (i) the Initial Senior Funding Date and (ii) sixty (60) days after the Closing Date (or such later date as the Lender may agree to in writing in its sole discretion), the Borrowers will deliver, or cause to be delivered, to the Lender a Mortgage in respect of the Montana Property, together with (x) a corresponding lenders title insurance policy (and accompanying endorsements) in favor of the Lender, (y) a ground lease recognition and estoppel agreement, duly executed by the lessor of the Montana Property, and (z) opinions of counsel with respect to such Mortgage, each of the foregoing to be in form and substance reasonably satisfactory to the Lender; provided, notwithstanding Section 5.15(b)(ii), the lenders title insurance policy in favor of the Lender delivered pursuant to this Section 5.19(a) will be in an amount equal to $5,000,000.
(b) Promptly, and in any event not later than the earlier of (i) the Initial Senior Funding Date and (ii) sixty (60) days after the Closing Date (or such later date as the Lender may agree to in writing in its sole discretion), but subject to the last paragraph of Section 5.15(a), the Borrowers will deliver, or cause to be delivered, to the Lender each of the items set forth in Section 5.15 with respect to Pasco Property, in each case complying with Section 5.15.
ARTICLE VI
NEGATIVE COVENANTS
The Borrowers covenant and agree with the Lender that, until all Obligations have been Paid in Full:
Section 6.1 Indebtedness. The Borrowers will not, nor will it permit any Loan Party or Subsidiary to, create, incur, assume or suffer to exist any Indebtedness, except (collectively, the Permitted Indebtedness):
(a) Indebtedness under the Loan Documents;
(b) Subordinated Indebtedness (including, for the avoidance of doubt, the Permitted Northwest Subordinated Loan);
(c) Indebtedness (contingent or otherwise) of any Loan Party arising under (i) any Swap Contract with a Swap Party or (ii) to the extent approved by the Lender in advance in writing, any other Swap Contract; provided that such obligations are entered into by a Loan Party in the ordinary course of business for the purpose of mitigating risks associated with liabilities, commitments, investments, assets or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for speculative purposes;
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(d) Indebtedness in respect of performance bonds, bid bonds, appeal bonds, surety bonds and similar obligations not in connection with money borrowed, in each case provided in the ordinary course of business, including those incurred to secure health, safety and environmental obligations in the ordinary course of business, and in an aggregate amount issued not to exceed $2,000,000 (or such higher amount as may be approved by the Lender in writing);
(e) Indebtedness resulting from a bank or other financial institution honoring a check, draft or similar instrument in the ordinary course of business or arising under or in connection with cash management services in the ordinary course of business;
(f) Indebtedness arising from or incurred with respect to Capitalized Leases, Purchase Money Security Interests or other title retention agreements and leases that are in the nature of title retention agreements in an amount not to exceed (i) if such Indebtedness is reflected in the then-current Approved Budget, the amount set forth in such Approved Budget, and (ii) in all other cases, an aggregate principal amount not to exceed $2,500,000 at any time;
(g) prior to the Initial Senior Funding Date, unsecured Indebtedness under the Closing Date Convertible Notes; provided, that no Indebtedness under this clause (g) will be permitted at any time on or after the Initial Senior Funding Date;
(h) Indebtedness arising under guaranties made in the ordinary course of business of obligations of any Loan Party (and only so long as such Person is and remains a Loan Party) which obligations are otherwise permitted hereunder;
(i) Indebtedness of the Northwest SPV to an Approved USDA Lender, guaranteed by the USDA, in an aggregate principal amount under this Section 6.1(i) not to exceed $25,000,000 at any time (the USDA Loans);
(j) Investments permitted under Section 6.6(d) to the extent such Investments are in the form of unsecured loans or advances incurred by the Northwest SPV from the Company; and
(k) other Indebtedness, but only so long as, immediately following the incurrence thereof, the aggregate principal amount of all such Indebtedness permitted under this clause (k) does not exceed $2,000,000.
Section 6.2 Liens. The Borrowers will not, nor will it permit any Loan Party or Subsidiary to, create, incur, assume or suffer to exist any Lien upon any of their property, assets or revenues, whether now existing or owned or hereafter arising or acquired, other than the following (collectively, the Permitted Liens):
(a) Liens created pursuant to any Loan Document to secure the Obligations;
(b) subject to the terms of the Subordination Agreement, Liens securing payment of the Subordinated Indebtedness;
(c) pledges or deposits in the ordinary course of business in connection with (i) workers compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA or other applicable pension and employment Law, and (ii) public utility services provided to the Borrowers, any other Loan Party or Subsidiary;
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(d) deposits to secure the performance of bids, surety and appeal bonds, performance bonds and similar obligations not in connection with money borrowed incurred in the ordinary course of business, in each case to the extent permitted under Section 6.1(d);
(e) Liens for Taxes, assessments or other governmental charges the payment of which is not yet due or the payment of which is not at the time required by Section 5.7, so long as no filing of a Lien has been made in connection therewith;
(f) easements, rights-of-way, restrictions and other similar encumbrances affecting real property that, in the aggregate, are not substantial in amount, and that do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person, and any zoning or similar law or right reserved to or vested in any Governmental Authority to control or regulate the use of any real property that does not materially interfere with the ordinary conduct of the business of the Borrowers, any other Loan Party or Subsidiary;
(g) Liens of warehouses, carriers, workers, repairmen, employees or other like Liens, securing obligations incurred in the ordinary course of business that are not yet due and payable or for amounts being contested in good faith by appropriate proceedings and for which adequate reserves are being maintained in accordance with GAAP;
(h) Liens in favor of a banking institution arising as a matter of Law encumbering deposits (including the right of setoff) that are customary in the banking industry;
(i) any interest or title of a lessor or sublessor under any lease incurred in the ordinary course of business and not prohibited by the Loan Documents;
(j) Liens in favor of collecting banks arising by operation of law under Section 4-210 of the UCC or, with respect to collecting banks located in the State of New York, under Section 4-208 of the UCC;
(k) Liens securing Indebtedness permitted by Section 6.1(f); provided that such Liens do not at any time encumber any property other than the property financed by such Indebtedness;
(l) Liens securing Indebtedness permitted by Section 6.1(i); provided that such Liens do not at any time encumber any assets other than the assets and property of the Northwest SPV;
(m) mineral rights the use and enjoyment of which do not materially detract from the value of the property subject thereto or materially interfere with the use and enjoyment of the Farm Project or the Farm Project Site; and
(n) involuntary Liens (including a Lien of an attachment, judgment or execution) securing a charge or obligation, on the Companys property, either real or personal, related to the Farm Project, whether now or hereafter owned, in the aggregate sum of less than $500,000.
Section 6.3 Fundamental Changes. The Borrowers will not, nor will it permit any Loan Party or Subsidiary to, in each case without the prior written consent of the Lender, (i) dissolve, liquidate or wind-up its affairs, (ii) become a party to, or suffer to exist, any merger, amalgamation, consolidation or division (under the Delaware Code or otherwise), (iii) Dispose of (whether in one transaction or in a series of transactions) any of its assets (whether now existing or owned or hereafter arising or acquired) to or in favor of any Person, or (iv) acquire by purchase, lease or otherwise all or substantially all of the
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assets or Equity Interests of any other Person or group of related Persons or any division, line of business or other business unit of any other Person; except that, so long as no Default or Event of Default exists or would result therefrom, (A) the Borrowers and their Subsidiaries may make Dispositions permitted by Section 6.4 and Investments permitted by Section 6.6, and (B) following reasonable prior written notice to the Lender, any immaterial Loan Party or immaterial Subsidiary no longer useful in the business of the Company may dissolve or merge into another Loan Party (such other Loan Party, the Surviving Loan Party), in each case with the Surviving Loan Party continuing as the surviving entity.
Section 6.4 Dispositions. The Borrowers will not, and will not permit any Loan Party or Subsidiary to, make any Disposition or enter into any agreement to make any Disposition, except:
(a) Dispositions of inventory in the ordinary course of business;
(b) transactions and Investments permitted by Sections 6.2, 6.3, 6.6 and 6.17;
(c) conversions of Cash Equivalents into cash or other Cash Equivalents;
(d) the transfer of property by a Loan Party to a Loan Party (except that no transfers may be made to the Northwest SPV except to the extent set forth in Sections 6.1(j) and 6.6(d));
(e) Dispositions of tangible assets that are obsolete, worn out or no longer used or useful in the business of a Loan Party, provided that the fair market value of assets subject to such Dispositions does not exceed $2,000,000 in the aggregate for all such Dispositions during any Fiscal Year;
(f) the Disposition of the Northwest SPV and/or its assets into a qualified opportunity fund as defined in Section 1400Z-2(d)(1) of the Code (it being understood and agreed, for the avoidance of doubt, that on the effective date of such Disposition, the Northwest SPV shall immediately cease to be a Loan Party for the purposes of this Agreement), but only so long as (i) no Default or Event of Default has occurred and is continuing and (ii) prior to or concurrently with such Disposition, the Permitted Northwest Subordinated Loan, and all accrued and unpaid interest and fees with respect thereto, are paid in full in cash; and
(g) the Disposition of minority Equity Interests not owned by the Loan Parties of the Northwest SPV (which minority Equity Interests, for the avoidance of doubt, shall constitute not more than 1% of all Equity Interests of the Northwest SPV) to a director or manager of the Company or other persons reasonably acceptable to the Lender.
Section 6.5 Restricted Payments; Payments of Subordinated Indebtedness.
(a) The Borrowers will not, and will not permit any Loan Party or Subsidiary to, declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, or permit, commence or consummate any issuance of Equity Interests; provided that the foregoing shall not prohibit (a) any Restricted Payment from a Loan Party to another Loan Party, (b) to the extent the Northwest SPV is a Subsidiary of a Loan Party but not a Loan Party itself, any Restricted Payment from the Northwest SPV to a Loan Party, (c) any Restricted Payment and the issuance of Equity Interests from the Company to its equityholders pursuant to the Warrant Agreement or any warrant issued thereunder, or (d) the conversion of any Closing Date Convertible Notes into Equity Interests of the Company in accordance with the terms of such Closing Date Convertible Notes and this Agreement (including, without limitation, the terms set forth in the definitions of Change of Control).
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(b) Unless expressly provided otherwise in the intercreditor agreement or subordination agreement applicable thereto, the Borrowers will not, and will not permit any other Loan Party or Subsidiary to, make any payment on, or redeem, repurchase, defease or otherwise acquire or retire for value, in each case, any Junior Debt; provided, notwithstanding the foregoing, to the extent permitted under the Subordination Agreement, and so long as no Default or Event of Default has occurred and is continuing or would result therefrom, the Borrowers may (i) make regularly scheduled payments of interest in respect of the Subordinated Indebtedness and (ii) prepay the outstanding principal balance of the Permitted Northwest Subordinated Loan, together with interest and fees with respect thereto.
Section 6.6 Investments. The Borrowers will not, and will not permit any Loan Party or Subsidiary to, make any Investments, except:
(a) Investments in the form of cash or Cash Equivalents;
(b) Investments consisting of the indorsement of negotiable instruments payable to such Person for deposit or collection in the ordinary course of business;
(c) Investments by a Loan Party in another Loan Party (other than the Northwest SPV);
(d) so long as the Northwest SPV is a Subsidiary of the Company, Investments by the Company in the Northwest SPV in the form of cash or loans from the Company in an aggregate amount not to exceed $11,000,000, but only to the extent that such Investments from the Company were made from proceeds of the Closing Date Convertible Notes or the equity capital of the Company;
(e) guarantees of Indebtedness permitted under Section 6.1; and
(f) Dispositions permitted by Sections 6.4(f) and (g).
Section 6.7 Transactions with Affiliates; Management Fees. The Borrowers will not, and will not permit any Loan Party or Subsidiary to, enter into any transaction of any kind with any Affiliate of the Borrowers, whether or not in the ordinary course of business, other than:
(a) on fair and reasonable terms substantially as favorable to the Borrowers or such Loan Party or Subsidiary as would be obtainable by the Borrowers or such Loan Party or Subsidiary at the time in a comparable arms-length transaction with a Person other than an Affiliate;
(b) the payment of management fees to a manager of the Company pursuant to a management services agreement or similar agreement (a Management Agreement), but only so long as (i) such Management Agreement is in form and substance satisfactory to the Lender in its sole discretion, and subject to subordination arrangements satisfactory to the Lender in its sole discretion, and (ii) both at the time of and after giving effect to each such payment, no Default or Event of Default shall have occurred and be continuing; and
(c) transactions among the Loan Parties (and if the transaction is with the Northwest SPV, then (x) the Northwest SPV must be a Subsidiary at the effective time of such transaction and (y) such transaction must also be subject to the terms and conditions of this Agreement (including, without limitation, Sections 6.1(j) and 6.6(d)).
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Section 6.8 Financial Covenants.
(a) Minimum Debt Service Coverage Ratio. Commencing March 31, 2025, and as of the last day of each calendar quarter thereafter, the Borrowers will not permit the Debt Service Coverage Ratio to be less than 1.25 to 1.00.
(b) Maximum Consolidated Senior Net Leverage Ratio. Commencing March 31, 2025, and as of the last day of each calendar quarter thereafter, the Borrowers will not permit the Consolidated Senior Net Leverage Ratio to be greater than 3.00 to 1.00.
(c) Minimum Consolidated Interest Coverage Ratio. Commencing March 31, 2025, and as of the last day of each calendar quarter thereafter, the Borrowers will not permit the Consolidated Interest Coverage Ratio to be less than 2.50 to 1.00.
(d) Minimum Liquidity. The Borrowers will not permit Liquidity to be less than (I) at any time during the period commencing on the Closing Date and ending on the Minimum Liquidity Step-up Date, $5,000,000, and (II) at any time thereafter, $30,000,000; provided, notwithstanding the foregoing, if at any time after the Minimum Liquidity Step-up Date:
(i) the Company enters into (and maintains in effect at all times) an offtake agreement that (x) is with a customer or buyer that is reasonably acceptable to the Lender (an Acceptable Buyer), (y) obligates such Acceptable Buyer to purchase at least 75% of all inventory and products produced by the Consolidated Group, and (z) has a tenor of not less than three (3) years, then the minimum Liquidity that must be maintained pursuant to Section 6.8(d) will be $15,000,000;
(ii) the Company enters into (and maintains in effect at all times) an offtake agreement that (x) is with an Acceptable Buyer, (y) obligates such Acceptable Buyer to purchase at least 75% of all inventory and products produced by the Consolidated Group, and (z) has a tenor ending on or after the Maturity Date, then the minimum Liquidity that must be maintained pursuant to Section 6.8(d) will be $5,000,000; and
(iii) the Applicable Margin is set at (and only for so long as the Applicable Margin remains at) either Level II or Level III of the Pricing Grid in accordance with the definition of Pricing Grid, then the minimum Liquidity that must be maintained pursuant to Section 6.8(d) will be $10,000,000.
(e) Capital Stacking Requirement. Commencing on the Closing Date and at all times thereafter, the Borrowers will ensure that the proceeds of Term Loans made hereunder will constitute not more than 60% of all amounts used by the Borrowers in respect of Farms and Farm Projects or in any way related to Farms or Farm Projects, including, without limitation, working capital in connection therewith (collectively, the Total Farm Financing Amounts), with all remaining Total Farm Financing Amounts funded solely from equity or capital contributions of the Borrowers; provided, to the extent that any Farm Project is funded with the proceeds of Subordinated Indebtedness (other than the Permitted Northwest Subordinated Loan), the Borrowers will ensure that the proceeds of Term Loans made hereunder will constitute not more than 60% of the Total Farm Financing Amounts and the proceeds of Subordinated Indebtedness will constitute not more than 15% of the Total Farm Financing Amounts, with all remaining amounts funded solely from equity or capital contributions of the Borrowers.
Section 6.9 Certain Restrictive Agreements. The Borrowers will not, and will not permit any Loan Party or Subsidiary to, enter into any Contractual Obligation (other than this Agreement, any other Loan Document, the Subordinated Indebtedness Documents, or the documentation governing the Indebtedness permitted under Sections 6.1(f) and (i)) that, directly or indirectly, (a) limits the ability of
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(i) Holdings or any Subsidiary to make Restricted Payments to any Borrower or to otherwise transfer property to any Borrower, (ii) Holdings or any Subsidiary to guaranty Indebtedness of any Borrower or (iii) any Borrower, any Loan Party or any Subsidiary to create, incur, assume or suffer to exist Liens (other than Permitted Liens) on property of such Person to secure the Obligations; or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien (other than a Permitted Lien) is granted to secure another obligation of such Person.
Section 6.10 Changes in Fiscal Periods; Accounting Methods. No Borrower will, and no Borrower will permit any Loan Party or Subsidiary to, change its method of determining its fiscal year, fiscal months or other accounting periods. In addition, no Borrower will, and no Borrower will permit any Loan Party or Subsidiary to, change its method of accounting (other than as may be required to conform to GAAP, in which case the Borrowers shall disclose such changes to the Lender).
Section 6.11 Changes in Nature of Business. The Borrowers will not, and will not permit any Loan Party or Subsidiary to, engage in any material extent in any business other than those businesses conducted by the Borrowers, such Loan Party or Subsidiary on the date hereof or any business reasonably related or incidental thereto or representing a reasonable expansion thereof.
Section 6.12 Organizational Documents. The Borrowers will not, and will not permit any Loan Party or Subsidiary to, amend its Organizational Documents unless, in each case, the Borrowers have provided not less than fifteen (15) Business Days prior written notice thereof to the Lender and, if such amendment could reasonably be expected to have an adverse effect on the Lender, obtained the prior written consent of the Lender.
Section 6.13 Material Agreements; Change Orders.
(a) The Borrowers will not, and will not permit any Loan Party or Subsidiary to, without the prior written consent of the Lender, cause or permit to occur any amendment, restatement, supplement, termination, cancellation or revocation of, or any waiver or forbearance in respect of the exercise of any rights or remedies of the Borrowers or any other Loan Party or Subsidiary under, any GC Contract, except to the extent that such amendment, restatement, supplement, termination, cancellation, revocation or waiver (i) is not adverse to the Lender (as determined by the Lender in its reasonable discretion) and (ii) complies with clause (d) below.
(b) With respect to any Material Agreement (other than a GC Contract), the Borrowers will not, and will not permit any Loan Party or Subsidiary to, without the prior written consent of the Lender, cause or permit to occur any amendment, restatement, supplement, termination, cancellation or revocation of, or any waiver or forbearance in respect of the exercise of any rights or remedies of the Borrowers or any other Loan Party or Subsidiary under, any such Material Agreement, except to the extent that such amendment, restatement, supplement, termination, cancellation, revocation or waiver (i) is not materially adverse to the Lender (as determined by the Lender in its reasonable discretion) and (ii) complies with clause (d) below.
(c) The Borrowers will not permit any Material Project Participant to commence any work with respect to a Farm Project unless and until the Borrowers have received and delivered to the Lender, each in form and substance satisfactory to the Lender, (i) if requested by Lender, a consent and acknowledgment of such Material Project Participant to the Collateral Assignment of the applicable Project Document, (ii) if such Material Project Participant is a Material Project Contractor, payment and performance bonds of such Material Project Contractor (which, to the extent approved by the Lender in writing in its reasonable discretion, may be in the form of payment and performance bonds issued by applicable subcontractors) and dual obligee riders in favor of the Lender as required by Section 5.18(d)(iv), and (iii) if such Material Project Participant is a Material Project Contractor, evidence of insurance of such Material Project Contractor as required by Sections 5.18(d)(ii) and 5.18(d)(iii).
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(d) The Borrowers will not, and will not permit any Loan Party or Subsidiary to, without the prior written consent of the Lender, sign or permit to exist any change orders to a Material Project Document that are, individually, in excess of $250,000 or, with respect to all change orders relating to any one contractor, are in excess of $500,000 in the aggregate.
Section 6.14 Subsidiaries, Joint Ventures. The Borrowers will not, and will not permit any Loan Party or Subsidiary to, own or create directly or indirectly any Subsidiaries (other than any Excluded Subsidiary) without the prior written consent of the Lender unless such new Subsidiary is a Loan Party hereunder. The Borrowers will not, and will not permit any Loan Party or Subsidiary to, become or agree to become a party to any partnership or joint venture without the prior written consent of the Lender.
Section 6.15 Sanctions and Anti-Terrorism; Anti-Corruption Use of Proceeds. The Borrowers will not, directly or indirectly, use the proceeds of any Term Loan, or lend, contribute or otherwise make available such proceeds to any other Loan Party, Subsidiary, joint venture partner or other Person, (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of the FCPA or any other Anti-Corruption Law, or (ii) (A) to fund any activities or business of or with any Person, or in any country or territory, that, at the time of such funding, is, or whose government is, the subject of Sanctions or Anti-Terrorism Laws, or (B) in any other manner that would result in a violation of Sanctions, Anti-Terrorism Laws or Anti-Corruption Laws by any Person.
Section 6.16 ERISA. The Borrowers will not, and will not permit any ERISA Affiliate, Loan Party or Subsidiary to, establish, maintain, contribute to, or become obligated to contribute to any employee benefit plan or other plan that is covered by Title IV of ERISA or subject to the funding standards of Section 412 of the Code; or become an ERISA Affiliate of any Person that sponsors, maintains, contributes to or is obligated to contribute to (or in the immediately preceding seven plan years has contributed to or been obligated to contribute to) any employee benefit plan or other plan that is covered by Title IV or ERISA or subject to the funding standards of Section 412 of the Code.
Section 6.17 Sale-Leasebacks. The Borrowers will not, and will not permit any Loan Party or Subsidiary (other than the Northwest SPV) to, directly or indirectly, sell or otherwise transfer, in one or more related transactions, any property (whether real, personal or mixed) and thereafter rent or lease such transferred property or substantially similar property.
Section 6.18 Operating Leases. The Borrowers will not, and will not permit any Loan Party to Subsidiary to, become a party to or suffer to exist any operating lease, other than (a) Farm Lease Agreements, but only so long as (i) the Borrowers provide the Lender with not less than thirty (30) days prior written notice before entering into any Farm Lease Agreement, (ii) if such Farm Lease Agreement is a Third-Party Farm Lease Agreement, the Borrowers will comply with the requirements set forth in Section 5.15(b)(ii) (provided, that if such Farm Lease Agreement is not a Third-Party Farm Lease Agreement, the Borrowers will comply with the requirements set forth in Section 5.15(b)(i)), (iii) each Farm Lease Agreement is non-cancellable and has a tenor ending no earlier than the later of (x) the seventh (7th)-year anniversary of such Farm Lease Agreement and (y) the Maturity Date, and (iv) each Farm Lease Agreement is otherwise in form and substance reasonably acceptable to the Lender, and (b) subject to Section 6.1(k), other operating leases.
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ARTICLE VII
EVENTS OF DEFAULT
Section 7.1 Events of Default. If any of the following events (each, an Event of Default) shall occur:
(a) the Borrowers or any other Loan Party shall fail to pay any principal or interest hereunder when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise; or
(b) the Borrowers or any other Loan Party shall fail to pay any fee or any other amount (other than an amount referred to in clause (a) of this Section) payable under this Agreement or under any other Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of two (2) Business Days; or
(c) any representation or warranty made or deemed made by or on behalf of any Loan Party in or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof, or any waiver hereunder or thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof, or any waiver hereunder or thereunder, shall prove to have been incorrect in any material respect (or, in the case of any such representation or warranty under this Agreement or any other Loan Document already qualified by materiality, such representation or warranty shall prove to have been incorrect) when made or deemed made; or
(d) any of the Loan Parties shall fail to observe or perform any covenant, condition or agreement contained in Section 5.3, 5.4, 5.5(b), 5.6, 5.8, 5.9, 5.12 through 5.19 or in Article VI; or
(e) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in this Agreement or any other Loan Document (other than those specified in clause (a), (b) or (d) of this Section) and such failure shall continue unremedied for a period of thirty (30) or more days (or such earlier period as may be specified in any other Loan Document); or
(f) (i) a material default shall occur under the SPAC Merger Agreement or the Warrant Agreement (or any warrant issued thereunder), and such material default shall remain in effect after any grace period applicable thereto, (ii) a default shall occur under a Swap Contract with a Swap Party, and such default shall remain in effect after any grace period applicable thereto, if any, or (iii) with respect to any Material Agreement other than (x) a Material Agreement specified in the foregoing clause (i) or (y) a Material Project Document, any Loan Party or any Subsidiary of a Loan Party fails to perform or observe any material term, covenant or agreement contained in such Material Agreement or otherwise breaches any such Material Agreement in any material respect, or any such Material Agreement is terminated or revoked or permitted to lapse, or any party to any such Material Agreement delivers a notice of termination or revocation in respect of such Material Agreement; or
(g) (i) any Loan Party or Subsidiary shall fail to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness (other than Indebtedness under the Loan Documents) of more than $500,000 (including, without limitation, undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement), in each case beyond the applicable grace or cure periods with respect thereto, if any; or (ii) any Loan Party or Subsidiary shall fail to observe or perform any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or
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relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, such Indebtedness to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, in each case, beyond the applicable grace or cure periods with respect thereto; provided that this clause (g)(ii) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness, if (x) such Indebtedness and repayment is permitted under the Loan Documents and (y) the sale or transfer is permitted hereunder and under the documents providing for such Indebtedness and such Indebtedness is repaid when required under the documents providing for such documents; or
(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of any Loan Party or Subsidiary or any of its Subsidiaries or its debts, or of a substantial part of its assets, under any Debtor Relief Law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or Subsidiary or any of its Subsidiaries or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for a period of thirty (30) or more days or an order or decree approving or ordering any of the actions sought in such proceeding shall be entered; or
(i) any Loan Party or Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief, including any stay of proceeding under any Debtor Relief Law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Section, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing; or
(j) any Loan Party or Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due; or
(k) there is entered against any Loan Party or Subsidiary a judgment, award, decree or order, which is either (i) for the payment of money in an aggregate amount (as to all such judgments and orders) exceeding $2,000,000 (to the extent not covered by independent third-party insurance as to which the insurer has been notified of such judgment or order and has not denied or failed to acknowledge coverage), or (ii) a non-monetary judgment, award, decree or order that, either individually or in the aggregate, has or could reasonably be expected to have a Material Adverse Effect, in each case, that has remained unsatisfied, unvacated, undischarged and unstayed pending appeal for a period of thirty (30) days after the entry thereof; or
(l) a Change of Control shall occur; or
(m) the Chief Executive Officer of the Company as of the Closing Date resigns or is terminated and the Company has not retained a replacement Chief Executive Officer acceptable to the Lender in its reasonable discretion within ten (10) Business Days (or such longer time as the Lender may agree in its reasonable discretion) following such resignation or termination; or
(n) any material License (including any Agricultural License) of any Loan Party or any Subsidiary thereof shall terminate or otherwise cease to be in full force and effect and the conditions causing the termination or cessation of such License are not cured within 15 days of such termination or cessation; or
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(o) any material provision of any Loan Document or the Warrant Agreement (or any warrant issued thereunder), at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or Payment in Full of all Obligations, ceases to be in full force and effect; or any Loan Party or other Person contests in writing the validity or enforceability of any provision of any Loan Document or the Warrant Agreement (or any warrant issued thereunder); or any Loan Party denies in writing that it has any or further liability or obligation under any Loan Document or the Warrant Agreement (or any warrant issued thereunder), or purports in writing to revoke, terminate or rescind any Loan Document or the Warrant Agreement (or any warrant issued thereunder); or
(p) any Lien purported to be created under any Collateral Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid, perfected or first-priority Lien on any portion of the Collateral (subject only to Permitted Liens and except to the extent not required to be perfected or first priority under the terms of the Collateral Documents); or
(q) (i) any inventory or products of any Loan Party or any Subsidiary thereof shall be subject to any seizure, administrative detention or mandatory recall by any Governmental Authority; (ii) any Loan Party or any Subsidiary thereof shall voluntarily recall any of its inventory or products having a fair market value in excess of $1,000,000; or (iii) any Loan Party or any Subsidiary thereof receives a warning letter from any Governmental Authority in connection with such Loan Partys or Subsidiarys failure to adequately address any Form 483 observations or any other Governmental Authority findings relating to the conditions, procedures or products in any such Loan Partys or Subsidiarys facilities; or
(r) there shall occur any uninsured damage to or loss, condemnation, theft or destruction of any portion of the Loan Parties or any of their Subsidiaries assets with a fair market value in excess of $2,000,000; or such assets with a fair market value in excess of $2,000,000 are attached, seized, levied upon or subjected to a writ of attachment, garnishment, levy or similar process; or any assets of the Loan Parties or any of their Subsidiaries with a fair market value in excess of $2,000,000 come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors; or
(s) any Loan Party or any Subsidiary of a Loan Party incurs any Environmental Liability which will require expenditures, individually or in the aggregate, in excess of $1,000,000 during any Fiscal Year; or
(t) any act of expropriation, nationalization or similar event or circumstance occurs affecting the properties and assets of the Loan Parties; or
(u) any Loan Party or any Subsidiary of a Loan Party shall, or shall propose to, suspend or discontinue its business or any material line thereof; or
(v) [reserved]; or
(w) any development, event or circumstance shall occur or exist that results in or could result in a Material Adverse Effect; or
(x) (i) any Material Project Participant fails to perform or observe any material term or obligation contained in any Material Project Document and within the later of (x) the cure
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period provided therefor in such Material Project Document or (y) thirty (30) days thereafter (or such longer period as expressly permitted under the applicable Material Project Document), either (A) such default has not been cured on terms reasonably acceptable to the Lender, or (B) the applicable Material Project Participant has not been replaced by a replacement Material Project Participant pursuant to a replacement Material Project Document that is, in each case, reasonably acceptable to the Lender and subject to a Collateral Assignment; or
(ii) (A) any Material Project Document for any reason ceases to be legal, valid and binding and in full force and effect with respect to each Material Project Participant that is a party thereto or any such Material Project Participant shall so assert in writing; (B) any Material Project Document is terminated for any reason whatsoever prior to the later of (x) its scheduled expiration date and (y) sixty (60) days after the Final Completion Date applicable to the Farm Project to which such Material Project Document relates, in each case without the prior consent of the Lender; or (C) any material provision of any Material Project Document shall be declared to be null and void (unless such declaration is expressly permitted pursuant to the terms of such Material Project Document and does not result in any Default or Event of Default); provided, that any such event described in this Section 7.1(x)(ii) shall not be an Event of Default if, within thirty (30) days of the occurrence thereof, the applicable Material Project Participant has been replaced pursuant to a replacement Material Project Document that, in each case, is reasonably acceptable to the Lender and subject to a Collateral Assignment; provided, however, that if (I) such breach or default cannot be cured within such thirty (30)-day period, (II) such breach or default is susceptible to cure within sixty (60) days, (III) such breach or default has not resulted, and could not, with the additional cure time contemplated by this proviso, be reasonably expected to result, in a Material Adverse Effect with respect to the Borrowers or any other Loan Party, and (IV) the Borrowers are proceeding with all requisite diligence and in good faith to cure such failure, then the time within which such failure may be cured shall be extended to such date, not to exceed a total of thirty (30) days after the end of the initial thirty (30)-day period, as shall be necessary for such party diligently to cure such failure; or
(y) (i) the Project Costs applicable to a Farm Project at any time exceed the Initial Construction Budget applicable to such Farm Project (including the contingency reserves set forth therein) or (ii) the Lender shall at any time reasonably determine that the unadvanced amounts under both the Term Loan Facility and the Subordinated Credit Agreement (determined in accordance with the capital stacking requirements set forth in Section 6.8(e)) and Unrestricted Cash of the Borrowers (including Unrestricted Cash contributed to the Borrowers by Holdings) are insufficient to pay all costs and expenses that are reasonably anticipated in connection with the Completion of all Farm Projects; provided, that any such event described in this Section 7.1(y) shall not be an Event of Default if (A) in the case of the preceding clauses (i) and (ii), the Borrowers have, within thirty (30) days after notice or knowledge thereof, deposited in escrow or otherwise posted security or evidence of funds reasonably acceptable to the Lender, and (B) in the case of the preceding clause (i), such excess amount does not exceed 5% of the applicable Initial Construction Budget; or
(z) any cessation in the construction of any Farm Project shall have occurred for more than thirty (30) days, regardless of the cause, except to the extent such cessation could not reasonably be expected to have a Material Adverse Effect with respect to the Borrowers or any other Loan Party; or
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(aa) any material portion of any Farm Project is destroyed, condemned or seized, or the Borrowers suffer a total loss with respect to any Farm Project; or
(bb) the Final Completion Date applicable to a Farm Project shall not have occurred on prior to the Completion Deadline applicable to such Farm Project; provided, that any such event described in this Section 7.1(bb) shall not be an Event of Default so long as (i) such failure to meet the applicable Completion Deadline could not reasonably be expected to have a Material Adverse Effect with respect to the Borrowers or any other Loan Party, (ii) the Borrowers are proceeding with all requisite diligence and in good faith to Complete the applicable Farm Project, and (iii) such Farm Project is Completed not later than sixty (60) days after the applicable Completion Deadline;
then, and in every such event and at any time thereafter during the continuance of such event, the Lender shall have no further obligation to offer any credit accommodations and the Lender may, by notice to the Borrowers, take any or all of the following actions, at the same or different times, in each case in the Lenders sole discretion:
(i) declare the Term Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Term Loans so declared to be due and payable, together with accrued interest thereon and all fees (including, without limitation, any Specified Fees set forth in Section 2.10) and other Obligations of the Borrowers accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers;
(ii) apply for the appointment of, or taking possession by, a trustee, receiver, liquidator or other similar official of the Borrowers with respect to the operations of any Loan Party or to hold or liquidate all or any substantial part of the properties or assets of any Loan Party (and each Loan Party hereby consents to such appointment and agrees to execute and deliver any and all documents requested by the Lender relating to the appointment of such trustee, receiver, liquidator or other similar official, whether by joining in a petition for the appointment of such an official, by entering no contest to a petition for the appointment of such an official, or otherwise, as appropriate under Applicable Law);
(iii) setoff and apply any and all obligations at any time owing by the Lender or any of its Affiliates to the Borrowers or any other Loan Party (including, if applicable, any obligations owing by CRM to any Borrower under a Swap Contract) against any or all of the Obligations, irrespective of whether or not the Lender shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrowers or such other Loan Party may be contingent or unmatured; and
(iv) exercise all rights and remedies available to it under the Loan Documents and Applicable Law;
provided that, in case of any event with respect to the Borrowers described in clause (h), (i) or (j) of this Section, the principal of the Term Loan then outstanding, together with accrued interest thereon and all fees (including, without limitation, any Specified Fees set forth in Section 2.10) and other Obligations accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers.
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Section 7.2 Application of Payments. Notwithstanding anything herein to the contrary, following the occurrence and during the continuance of an Event of Default, all payments received on account of the Obligations shall be applied in such order as the Lender shall, in its sole discretion, determine.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Notices. All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile or email as follows:
(a) if to any Borrower or any other Loan Party or Subsidiary, delivered to the Company at 490 Foley Lane, Hamilton, MT 59840, Attention: Kathleen Valiasek; Email: kathy@localbounti.com; with a copy to: King & Spalding LLP at 1185 Avenue of the Americas, New York, NY, Attention: Jonathan M.A. Melmed; Telephone No. (212) 556-2344; Email: jmelmed@kslaw.com and King & Spalding LLP at 110 N. Wacker Drive, Suite 3800, Chicago, IL 60606, Attention: Evan Palenschat; Email: epalenschat@kslaw.com; Telephone: (312) 764-6915; and
(b) if to the Lender, delivered to Cargill Financial Services International, Inc., 9320 Excelsior Boulevard, MS 142, Hopkins, MN 55343, Attention: Erik Haugen; Telephone No.: (952) 984-0574; Fax No.: (952) 249-4416; Email: erik_haugen@cargill.com.
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile or email shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Any party hereto may change its address, facsimile number or email address for notices and other communications hereunder by notice to the other parties hereto.
Section 8.2 Amendments; Waivers. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrowers therefrom, shall be effective unless in writing executed by the Borrowers and the Lender, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No failure or delay by the Lender in exercising any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, remedy, power or privilege, or any abandonment or discontinuance of steps to enforce such a right remedy, power or privilege, preclude any other or further exercise thereof or the exercise of any other right remedy, power or privilege. The rights, remedies, powers and privileges of the Lender are cumulative and are not exclusive of any rights, remedies, powers or privileges that the Lender would otherwise have.
Section 8.3 Expenses; Indemnity; Damage Waiver.
(a) Costs and Expenses. The Borrowers shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Lender and its Affiliates (including the reasonable and documented fees, charges and disbursements of the Project Consultant and of outside counsel for the Lender) in connection with the preparation, negotiation, execution, delivery and administration of this Agreement, the other Loan Documents and the Warrant Agreement (including any warrant issued thereunder), or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall
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be consummated), and (ii) all out-of-pocket expenses incurred by the Lender (including the fees, charges and disbursements of the Project Consultant and of outside counsel for the Lender) in connection with (A) the enforcement or protection of its rights, including, without limitation, any expenses incurred in connection with the hiring of consultants or advisors, (I) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (II) in connection with the Term Loans, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of the Term Loans, and (B) any bankruptcy or other insolvency proceeding with respect to any Loan Party or any Subsidiary of any Loan Party.
(b) Indemnification. The Borrowers shall indemnify the Lender, the Project Consultant, each Swap Party and each Related Party of any of the foregoing Persons (each such Person being called an Indemnitee) against, and hold each Indemnitee harmless from, any and all actual costs and expenses, losses, claims, damages, liabilities and related expenses (including the out-of-pocket costs, expenses, fees, charges and disbursements of outside counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any Person (including any Borrower) arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) the Term Loans or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or Release of Hazardous Materials on or from any property owned or operated by any Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrowers, the other Loan Parties or any of their Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrowers, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrowers against an Indemnitee for breach in bad faith of such Indemnitees obligations hereunder or under any other Loan Document, if the Borrowers has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.
(c) Waiver of Consequential Damages, Etc. To the fullest extent permitted by Applicable Law, no party to this Agreement shall assert, and each such party hereby waives, any claim against any other party hereto, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, the Term Loans or the use of the proceeds thereof. No Indemnitee referred to in paragraph (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.
(d) Payments. All amounts due under this Section shall be payable not later than three (3) days after demand therefor.
(e) Survival. Each partys obligations under this Section shall survive the termination of the Loan Documents and payment of the Obligations hereunder.
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Section 8.4 Engagement of Project Consultant, Other Agents. In addition to, and not in limitation of Sections 5.1, 5.11 and 8.3 of this Agreement, the Borrowers acknowledges that the Lender may from time to time engage the Project Consultant and other agents on terms and conditions acceptable to the Lender. The Borrowers shall at all times cooperate with reasonable requests for information from the Project Consultant and each such agent, and the Borrowers acknowledge and agree that the Borrowers shall, promptly after demand therefor, reimburse the Lender for all costs, fees, charges and disbursements of the Project Consultant each such agent; provided, notwithstanding the foregoing, that the Borrowers reimbursement obligations under this Section in respect of all costs, fees, charges and disbursements of the Project Consultant shall not exceed $200,000 in the aggregate.
Section 8.5 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that no Borrower may assign or otherwise transfer any of its rights or obligations hereunder or under any other Loan Document without the prior written consent of the Lender. The Lender may at any time assign to one or more assignees all or a portion of its rights or obligations under this Agreement (including all or a portion of the Term Loans or commitments of the Lender under the Term Loan Facility), provided that such assignment shall be subject to the consent of the Borrowers (such consent not to be unreasonably withheld or delayed) unless an Event of Default has occurred and is continuing. Notwithstanding the foregoing, the Lender may participate all or a portion of its rights and obligations under this Agreement (including all or a portion of the Term Loans) without the prior written consent of the Borrowers. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Related Parties of the Lender) any legal or equitable right, remedy or claim under or by reason of this Agreement.
Section 8.6 Survival. All covenants, agreements, representations and warranties made by the Borrowers herein and in any Loan Document or other documents delivered in connection herewith or therewith or pursuant hereto or thereto shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery hereof and thereof and the making of the Term Loans hereunder, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Lender may have had notice or knowledge of any Default or Event of Default at the time of the Term Loans, and shall continue in full force and effect until Payment in Full. The provisions of Sections 8.3 and 8.14 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, Payment in Full or the termination of this Agreement or any provision hereof.
Section 8.7 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (e.g., pdf or tif) format shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 8.8 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
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Section 8.9 Governing Law; Jurisdiction; Etc.
(a) Governing Law. This Agreement and the other Loan Documents and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the internal law of the State of New York (without giving effect to the conflict of laws principles thereof other than Sections 5-1401 and 5-1402 of the New York General Obligations Law, which shall apply to this Agreement and all documentation hereunder).
(b) Jurisdiction. Each Borrower irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Lender or any Related Party of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than a state court located in the County of New York, State of New York or a federal court located in the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York state court or, to the fullest extent permitted by Applicable Law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or in any other Loan Document shall affect any right that the Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Loan Party or its properties in the courts of any jurisdiction.
(c) Waiver of Venue. Each Borrower irrevocably and unconditionally waives, to the fullest extent permitted by Applicable Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by Applicable Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(d) Service of Process. Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 8.1. Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by Applicable Law.
Section 8.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
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BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 8.11 Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
Section 8.12 PATRIOT Act. The Lender hereby notifies the Loan Parties that, pursuant to the requirements of the PATRIOT Act, it may be required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of the Loan Parties and other information that will allow the Lender to identify the Loan Parties in accordance with the PATRIOT Act. The Borrowers will, promptly following a request by the Lender, provide all documentation and other information, including, without limitation, the certification regarding beneficial ownership of legal entity customers (the Beneficial Ownership Certification), that the Lender requests in order to comply with its ongoing obligations under applicable know your customer and anti-money laundering rules and regulations, including the PATRIOT Act.
Section 8.13 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to the Term Loans, together with all fees, charges and other amounts that are treated as interest on the Term Loans under Applicable Law (collectively, charges), shall exceed the maximum lawful rate (the Maximum Rate) that may be contracted for, charged, taken, received or reserved by the Lender in accordance with Applicable Law, the rate of interest payable in respect of the Term Loans hereunder, together with all charges payable in respect thereof, shall be limited to the Maximum Rate. Any amount collected by the Lender that exceeds the maximum amount collectible at the Maximum Rate shall be applied to the reduction of the principal balance of the Term Loans or refunded to the Borrowers so that at no time shall the interest and charges paid or payable in respect of the Term Loans exceed the maximum amount collectible at the Maximum Rate.
Section 8.14 Payments Set Aside; Reinstatement of Liens. To the extent that any payment by or on behalf of the Borrowers is made to the Lender and such payment or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceedings under any Debtor Relief Law or otherwise, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred. In addition, in the event that the Lender is required to return funds received after Payment in Full and release of the Liens to any Loan Parties or estates thereof or Persons claiming through the foregoing, in connection with a proceeding under Debtor Relief Laws or otherwise, then the Liens granted pursuant to the Loan Documents shall automatically be reinstated without further action of the Loan Parties. This Section 8.14 shall survive termination of this Agreement and the other Loan Documents.
Section 8.15 Joint and Several Liability. EACH BORROWER AGREES THAT IT IS LIABLE, JOINTLY AND SEVERALLY, WITH EACH OTHER BORROWER FOR THE PAYMENT AND PERFORMANCE OF ALL OBLIGATIONS OF THE BORROWERS UNDER THIS AGREEMENT, AND THAT THE LENDER CAN ENFORCE SUCH OBLIGATIONS AGAINST ANY OR ALL BORROWERS, IN THE LENDERS SOLE AND UNLIMITED DISCRETION. Each Borrower represents and warrants to the Lender that it has established adequate means of obtaining from every other Borrower on a continuing basis financial and other information relating to the financial condition of such other Borrower, and each Borrower agrees to keep adequately informed by such means of any facts, events or circumstances which might in any way affect its risks hereunder. Each Borrower
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further agrees that the Lender shall have no obligation to disclose to it any information or material about any other Borrower which is acquired by the Lender in any manner. Until Payment in Full has occurred, each Borrower waives any right to enforce any remedy which the Lender now has or may hereafter have against any other Borrower or any other Person, and waives any benefit of, or any right to participate in, any security now or hereafter held by the Lender.
Section 8.16 The Company as Agent for Borrowers. Each Borrower hereby irrevocably appoints the Company as the borrowing agent and attorney-in-fact for all Borrowers (the Administrative Borrower) which appointment shall remain in full force and effect unless and until the Lender shall have received prior written notice signed by each Borrower that such appointment has been revoked and that another Borrower has been appointed Administrative Borrower. Each Borrower hereby irrevocably appoints and authorizes the Administrative Borrower (a) to provide the Lender with all notices with respect to Term Loans obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and the other Loan Documents (and any notice or instruction provided by Administrative Borrower shall be deemed to be given by all Borrowers hereunder and shall bind each Borrower), (b) to receive notices and instructions from the Lender (and any notice or instruction provided by the Lender to the Administrative Borrower in accordance with the terms hereof shall be deemed to have been given to each Borrower), (c) to execute, deliver and perform any Loan Document on behalf of such Borrower (it being understood and agreed that any Loan Document that is binding on the Administrative Borrower will be deemed binding on all Borrowers), and (d) to take such action as the Administrative Borrower deems appropriate on its behalf to obtain Term Loans and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement and the other Loan Documents. Each Borrower agrees that any action taken by the Administrative Borrower in accordance with the terms of this Agreement or the other Loan Documents, and the exercise by the Administrative Borrower of its powers set forth herein or therein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Borrowers. Each Borrower hereby jointly and severally agrees to indemnify the Lender and hold the Lender harmless against any and all liability, expense, loss or claim of damage or injury, made against the Lender by any Borrower or by any third party whosoever, arising from or incurred by reason of (x) the handling of any Collateral of the Borrowers as provided in this Section 8.16, or (y) the Lender relying on any instructions of the Administrative Borrower.
Section 8.17 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each Borrower acknowledges and agrees, and acknowledges its Affiliates understanding, that (a) no fiduciary, advisory or agency relationship between such Borrower and its Subsidiaries and the Lender is intended to be or has been created in respect of the transactions contemplated hereby or by the other Loan Documents, irrespective of whether the Lender has advised or is advising such Borrower or any Subsidiary on other matters and irrespective of any Equity Interest of such Borrower held by the Lender (if any), (b) the services regarding this Agreement provided by the Lender are arms-length commercial transactions between such Borrower and its Affiliates, on the one hand, and the Lender, on the other hand, (c) such Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent that it has deemed appropriate, (d) such Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents, (e) the Lender has no obligation to such Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (f) the Lender and its Affiliates may be engaged, for their own accounts or the accounts of customers, in a broad range of transactions that involve interests that differ from those of such Borrower and its Affiliates, and the Lender has no obligation to disclose any of such interests to such Borrower or its Affiliates. To the fullest extent permitted by Law, each Borrower hereby waives and releases any claims that it may have against the Lender with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
Signature page follows.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
LOCAL BOUNTI CORPORATION, as Borrower |
By |
|
Name: |
||
Title: |
||
BOUNTI BITTEROOT LLC, as Borrower |
By |
|
Name: |
||
Title: |
||
CONTROLLED ENVIRONMENT PROPERTY COMPANY, LLC, as Borrower |
By |
|
Name: |
||
Title: |
||
GROW BOUNTI NORTHWEST, LLC, as Borrower |
By |
|
Name: |
||
Title: |
Signature Page to Credit Agreement
CARGILL FINANCIAL SERVICES INTERNATIONAL, INC., as Lender |
By |
|
Name: | ||
Title: |
Signature Page to Credit Agreement
Exhibit 10.14
SUBORDINATED CREDIT AGREEMENT
dated as of
September 3, 2021
between
LOCAL BOUNTI CORPORATION
and
CERTAIN SUBSIDIARIES THEREOF,
as Borrowers,
and
CARGILL FINANCIAL SERVICES INTERNATIONAL, INC.,
as Lender
TABLE OF CONTENTS
ARTICLE I DEFINITIONS |
1 | |||||
Section 1.1 |
Defined Terms |
1 | ||||
Section 1.2 |
Terms Generally |
23 | ||||
Section 1.3 |
Accounting Terms; Changes in GAAP |
24 | ||||
Section 1.4 |
Time |
24 | ||||
Section 1.5 |
Divisions |
24 | ||||
ARTICLE II TERMS OF THE TERM LOAN FACILITY |
24 | |||||
Section 2.1 |
Term Loan Facility |
24 | ||||
Section 2.2 |
Interest on the Term Loans |
25 | ||||
Section 2.3 |
Payment of Principal and Interest |
25 | ||||
Section 2.4 |
Voluntary Prepayments |
26 | ||||
Section 2.5 |
Lender Discretionary Prepayment |
26 | ||||
Section 2.6 |
Fees |
27 | ||||
Section 2.7 |
Evidence of Debt |
28 | ||||
Section 2.8 |
Payments Generally |
28 | ||||
Section 2.9 |
Increased Costs |
29 | ||||
Section 2.10 |
Specified Fees |
30 | ||||
ARTICLE III REPRESENTATIONS AND WARRANTIES |
30 | |||||
Section 3.1 |
Existence, Qualification and Power; Subsidiaries |
31 | ||||
Section 3.2 |
Authorization; No Contravention |
31 | ||||
Section 3.3 |
Governmental Authorization; Other Consents |
31 | ||||
Section 3.4 |
Execution and Delivery; Binding Effect |
31 | ||||
Section 3.5 |
Financial Statements; No Material Adverse Effect |
31 | ||||
Section 3.6 |
Outstanding Indebtedness |
32 | ||||
Section 3.7 |
Litigation |
32 | ||||
Section 3.8 |
No Material Adverse Effect; No Default |
32 | ||||
Section 3.9 |
Property; Licenses; Margin Regulations |
32 | ||||
Section 3.10 |
Taxes |
33 | ||||
Section 3.11 |
Disclosure |
33 | ||||
Section 3.12 |
Compliance with Laws |
33 | ||||
Section 3.13 |
ERISA Compliance |
34 | ||||
Section 3.14 |
Environmental Matters; Hazardous Materials |
34 | ||||
Section 3.15 |
Investment Company Act |
34 | ||||
Section 3.16 |
Insurance |
35 | ||||
Section 3.17 |
Sanctions and Anti-Terrorism; Anti-Corruption |
35 | ||||
Section 3.18 |
Solvency |
35 | ||||
Section 3.19 |
Material Agreements |
35 | ||||
Section 3.20 |
Employee and Labor Matters |
35 | ||||
Section 3.21 |
Compliance with Food Security Act and Agricultural Lien Statutes; Agricultural Lien Notices |
36 | ||||
Section 3.22 |
Agricultural Licenses |
36 | ||||
Section 3.23 |
The Farm Projects |
36 | ||||
ARTICLE IV CONDITIONS |
37 | |||||
Section 4.1 |
Conditions Precedent to Effectiveness |
37 | ||||
Section 4.2 |
Additional Conditions to First Post-Merger Subordinated Term Loan |
39 | ||||
Section 4.3 |
Additional Conditions to each Term Loan |
39 | ||||
Section 4.4 |
Additional Conditions to Permitted Northwest Subordinated Loan |
43 |
i
ARTICLE V AFFIRMATIVE COVENANTS |
44 | |||||
Section 5.1 |
Financial Statements |
44 | ||||
Section 5.2 |
Certificates; Other Information |
45 | ||||
Section 5.3 |
Notices |
46 | ||||
Section 5.4 |
Preservation of Existence, Etc. |
47 | ||||
Section 5.5 |
Maintenance of Properties |
47 | ||||
Section 5.6 |
Maintenance of Insurance |
48 | ||||
Section 5.7 |
Payment of Obligations |
48 | ||||
Section 5.8 |
Compliance with Laws |
48 | ||||
Section 5.9 |
Environmental Matters |
48 | ||||
Section 5.10 |
Books and Records |
49 | ||||
Section 5.11 |
Inspection Rights |
49 | ||||
Section 5.12 |
Use of Proceeds |
49 | ||||
Section 5.13 |
Sanctions and Anti-Terrorism Laws; Anti-Corruption Laws |
49 | ||||
Section 5.14 |
Additional Subsidiaries; Holdings as Guarantor |
49 | ||||
Section 5.15 |
Real Property |
51 | ||||
Section 5.16 |
Further Assurances |
52 | ||||
Section 5.17 |
Interest Reserve Account |
52 | ||||
Section 5.18 |
Farm Project Construction |
52 | ||||
Section 5.19 |
Post-Closing Requirements |
54 | ||||
ARTICLE VI NEGATIVE COVENANTS |
54 | |||||
Section 6.1 |
Indebtedness |
54 | ||||
Section 6.2 |
Liens |
55 | ||||
Section 6.3 |
Fundamental Changes |
56 | ||||
Section 6.4 |
Dispositions |
57 | ||||
Section 6.5 |
Restricted Payments; Payments of Junior Debt |
57 | ||||
Section 6.6 |
Investments |
58 | ||||
Section 6.7 |
Transactions with Affiliates; Management Fees |
58 | ||||
Section 6.8 |
Financial Covenants |
59 | ||||
Section 6.9 |
Certain Restrictive Agreements |
59 | ||||
Section 6.10 |
Changes in Fiscal Periods; Accounting Methods |
60 | ||||
Section 6.11 |
Changes in Nature of Business |
60 | ||||
Section 6.12 |
Organizational Documents |
60 | ||||
Section 6.13 |
Material Agreements; Change Orders |
60 | ||||
Section 6.14 |
Subsidiaries, Joint Ventures |
61 | ||||
Section 6.15 |
Sanctions and Anti-Terrorism; Anti-Corruption Use of Proceeds |
61 | ||||
Section 6.16 |
ERISA |
61 | ||||
Section 6.17 |
Sale-Leasebacks |
61 | ||||
Section 6.18 |
Operating Leases |
61 | ||||
ARTICLE VII EVENTS OF DEFAULT |
61 | |||||
Section 7.1 |
Events of Default |
61 | ||||
Section 7.2 |
Application of Payments |
66 | ||||
ARTICLE VIII MISCELLANEOUS |
67 | |||||
Section 8.1 |
Notices |
67 | ||||
Section 8.2 |
Amendments; Waivers |
67 | ||||
Section 8.3 |
Expenses; Indemnity; Damage Waiver |
67 |
ii
Section 8.4 |
Engagement of Project Consultant, Other Agents |
68 | ||||
Section 8.5 |
Successors and Assigns |
69 | ||||
Section 8.6 |
Survival |
69 | ||||
Section 8.7 |
Counterparts; Integration; Effectiveness |
69 | ||||
Section 8.8 |
Severability |
69 | ||||
Section 8.9 |
Governing Law; Jurisdiction; Etc. |
70 | ||||
Section 8.10 |
WAIVER OF JURY TRIAL |
70 | ||||
Section 8.11 |
Headings |
71 | ||||
Section 8.12 |
PATRIOT Act |
71 | ||||
Section 8.13 |
Interest Rate Limitation |
71 | ||||
Section 8.14 |
Payments Set Aside; Reinstatement of Liens |
71 | ||||
Section 8.15 |
Joint and Several Liability |
71 | ||||
Section 8.16 |
The Company as Agent for Borrowers |
72 | ||||
Section 8.17 |
No Advisory or Fiduciary Responsibility |
72 |
Exhibits |
||||||||
Exhibit A |
- | Form of Term Loan Note | ||||||
Exhibit B |
- | Form of Loan Request | ||||||
Exhibit C |
- | Form of Compliance Certificate | ||||||
Exhibit D |
- | Form of Officers Certificate (Project Costs) | ||||||
Exhibit E |
- | Form of Final Completion Certificate | ||||||
Schedules |
||||||||
Schedule A |
- | Closing Date Convertible Notes | ||||||
Schedule B |
- | Excluded Subsidiaries | ||||||
Schedule 3.1 |
- | Subsidiaries | ||||||
Schedule 3.14(b) |
- | Environmental Disclosures |
iii
SUBORDINATED CREDIT AGREEMENT
This Agreement is entered into as of September 3, 2021 by and among LOCAL BOUNTI CORPORATION, a Delaware corporation which, as of the Qualified SPAC Transaction Effective Date (and after giving effect to the mergers contemplated under the SPAC Merger Agreement), will be renamed Local Bounti Operating Company LLC, a Delaware limited liability company (the Company), each Subsidiary of the Company identified as a Borrower on the signature pages hereto (each such Subsidiary, a Subsidiary Borrower; all Subsidiary Borrowers, together with the Company and with any Person subsequently joining in this Agreement as a borrower pursuant to Section 5.14 hereof, collectively, the Borrowers), and CARGILL FINANCIAL SERVICES INTERNATIONAL, INC., a Delaware corporation (the Lender).
The Borrowers have requested that the Lender make a multiple-advance term loan to the Borrowers, and the Lender is willing to do so on the terms and conditions set forth herein. In consideration of the mutual covenants and agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. As used in this Agreement, the following terms have the meanings specified below:
Acceptable Buyer has the meaning specified in Section 6.8(d)(i).
Account Control Agreement means, with respect to any deposit, securities or commodity account of any Loan Party or any Subsidiary, an account control agreement (including any blocked account agreement) in favor of and in form and substance acceptable to the Lender, duly executed by the parties thereto.
Affiliate means, with respect to a specified Person, another Person that directly or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified; provided that, except with respect to Section 6.7, the term Affiliate (with respect to any Loan Party) shall not include any private equity funds owned or managed by Lion Capital LLP, an English limited liability partnership, or any unrelated portfolio companies of such funds or Lion Capital LLP (other than the Loan Parties and their Subsidiaries).
Agreement means this Credit Agreement.
Agricultural License means each License held (or required to be held) by a Loan Party pursuant to any Agricultural Lien Statutes applicable to such Loan Party.
Agricultural Lien Statutes means, collectively, PACA, PASA, the Food Security Act and all other Applicable Laws that could create or give rise to any Lien, trust, charge, encumbrance or claim, including without limitation any agricultural lien (as defined in the UCC), in or against (a) any portion of the farm products (as defined in the UCC) or any other agricultural products purchased, stored or otherwise handled by any Loan Party, by any Person from whom any Loan Party purchases goods or by any other Person from whom such first Person purchases or otherwise receives goods in the ordinary course of business, or (b) any products, proceeds or derivatives of any such farm product or other agricultural product (including, without limitation, any accounts receivable arising from the sale of any such farm product, other agricultural product or any products, proceeds or derivatives thereof).
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Anti-Corruption Laws means the FCPA, the U.K. Bribery Act 2010, and any other anti-bribery or anti-corruption laws, regulations or ordinances in any jurisdiction in which any Loan Party or any of its Subsidiaries is located or doing business.
Anti-Terrorism Laws means any Laws relating to terrorism, Sanctions or other trade sanctions programs and embargoes, import/export licensing, money laundering or bribery and corruption (including the PATRIOT Act), and any regulation, order, or directive promulgated, issued or enforced pursuant to such Laws.
Applicable Food and Feed Safety Law means each Applicable Law with respect to the safety of food and feed products, including without limitation the FDA Food Safety Modernization Act, Pub. L. No. 111-353, 124 Stat. 3885 (2011) and corresponding rules and regulations, each as amended from time to time.
Applicable Interest Rate means 10.50% per annum.
Applicable Law means, as to any Person, all applicable Laws binding upon such Person or to which such Person is subject.
Approved Budget means, at any time, the budget most recently submitted to the Lender pursuant to Section 5.2(c), but only so long as such budget has been approved by the Lender in its reasonable discretion in writing.
Approved Long-Term Supply Agreement means each offtake agreement entered into by the Company with an Acceptable Buyer that satisfies the requirements set forth in subclause (i) or subclause (ii) of Section 6.8(d).
Approved USDA Lender means Live Oak Banking Company or another Person approved by the Lender in writing in its reasonable discretion.
Attributable Indebtedness means, as of any date of determination, (a) in respect of any Capitalized Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.
Beneficial Ownership Certification has the meaning specified in Section 8.12.
Beneficial Ownership Regulation shall mean 31 C.F.R. § 1010.230.
Bitterroot Lease Agreement means the Lease (Single Tenant; Gross) dated as of June 12, 2020, between Grow Bitterroot, LLC, as landlord, and Bounti Bitterroot, as tenant.
Borrowers has the meaning specified in the preamble.
Bounti Bitterroot means Bounti Bitterroot LLC, a Delaware limited liability company.
Business Day means any day that is not a Saturday, Sunday or other day that is a legal holiday under the laws of the State of New York or Minnesota or is a day on which banking institutions in such state are authorized or required by Law to close.
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Capitalized Lease means each lease that has been or is required to be, in accordance with GAAP, recorded as a capital or finance lease.
Cash Equivalents means:
(a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from a Credit Rating Agency;
(c) investments in certificates of deposit, bankers acceptances and time deposits maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any state thereof that has a combined capital and surplus and undivided profits of not less than $500,000,000;
(d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; and
(e) money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA and Aaa (or equivalent rating) by at least two Credit Rating Agencies and (iii) have portfolio assets of at least $5,000,000,000.
Change in Law means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any Law, rule, regulation or treaty, (b) any change in any Law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of Law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a Change in Law, regardless of the date enacted, adopted or issued.
Change of Control means any event, circumstance or occurrence that results in:
(a) at any time prior to the Qualified SPAC Transaction Effective Date, (i) the Closing Date Holders failing to own and Control, directly or indirectly, 75% of the Equity Interests of the Company; (ii) the Company failing to own and Control, directly or indirectly, 100% of the Equity Interests of each Subsidiary (other than the Northwest SPV) (it being agreed that a Change of Control shall not occur to the extent an immaterial Subsidiary no longer useful in the business of the Company dissolves or merges into a Loan Party in accordance with Section 6.3, with such Loan Party continuing as the surviving entity), (iii) the Company failing to own and Control, directly or indirectly, at least 99% of the Equity Interests of the Northwest SPV (except pursuant to a transaction permitted by Section 6.4(f)), or (iv) a change in the composition of the Governing Board of the Company such that Continuing Directors cease to constitute 50% or more of the Companys Governing Board.
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(b) at any time after the Qualified SPAC Transaction Effective Date, (i) Holdings failing to own and Control, directly or indirectly, 100% of the Equity Interests of the Company, free and clear of all Liens other than Liens in favor of the Lender, (ii) the Company failing to own and Control, directly or indirectly, 100% of the Equity Interests of each other Loan Party (other than the Northwest SPV), free and clear of all Liens other than Liens in favor of the Lender (it being agreed that a Change of Control shall not occur to the extent an immaterial Loan Party no longer useful in the business of the Company dissolves or merges into another Loan Party in accordance with Section 6.3), (iii) the Company failing to own and Control, directly or indirectly, at least 99% of the Equity Interests of the Northwest SPV (except pursuant to a transaction permitted by Section 6.4(f)), free and clear of all Liens other than Liens in favor of the Lender, (iv) any person or group (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have beneficial ownership of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an option right)), directly or indirectly, of 30% or more of the Equity Interests of Holdings entitled to vote for members of the Governing Board of Holdings on a fully diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right), or (v) a change in the composition of the Governing Board of Holdings, the Company or any Subsidiary Borrower such that Continuing Directors cease to constitute 50% or more of such Persons Governing Board.
For the avoidance of doubt, the occurrence of the First Merger (as defined in the SPAC Merger Agreement) shall not result in any Change of Control hereunder so long as such First Merger (i) is consummated in accordance with the terms and conditions of the SPAC Merger Agreement and (ii) occurs substantially concurrently with the Second Merger (as defined in the SPAC Merger Agreement).
Closing Date means the date of this Agreement.
Closing Date Convertible Notes means the unsecured Convertible Promissory Notes outstanding on the Closing Date and listed on Schedule A hereto.
Closing Date Holders means, collectively, the beneficial owners of all Equity Interests of the Company as of the Closing Date as listed in the Perfection Certificate delivered to the Lender pursuant to Section 4.1(g).
Closing Date Letter Agreement means Letter Agreement dated as of the Closing Date between the Company and the Lender.
Closing Date Subordinated Loan means the Term Loan made hereunder on the Closing Date, the proceeds of which must be applied in accordance with Section 5.12(b).
Code means the Internal Revenue Code of 1986, as amended.
Collateral means any and all assets on which a Lien is granted to the Lender to secure any or all of the Obligations.
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Collateral Assignment means:
(a) with respect to any Material Project Document, a collateral assignment in favor of and in form and substance reasonably acceptable to the Lender, duly executed by the applicable parties thereto and consented to and acknowledged by (x) with respect to any GC Contract, the applicable General Contractor, and (y) with respect to any other Material Project Document, to the extent reasonably requested by the Lender, the Material Project Participant party to such Material Project Document; provided that, solely with respect to Project Licenses, the Loan Parties shall only be required to use commercially reasonable efforts to deliver consents and acknowledgments of collateral assignments in respect of Project Licenses under this clause (a)(y); and
(b) with respect to any Material Agreement (other than a Material Project Document), when reasonably requested by the Lender, (x) a collateral assignment in favor of and in form and substance reasonably acceptable to the Lender, duly executed by the applicable Loan Party or Subsidiary and (y) consented to and acknowledged by each other Person party to or other Person who has an interest in such Material Agreement; provided that, except in the case of Third-Party Farm Lease Agreements, the Loan Parties shall only be required to use commercially reasonable efforts to deliver consents and acknowledgments of collateral assignments from third parties under this clause (b)(y).
Collateral Documents means, collectively, the Security Agreement, each Account Control Agreement, each Mortgage, each Collateral Assignment, each Lien Waiver Agreement and each other instrument, certificate or document pursuant to which any Borrower or any other Loan Party has granted a Lien to the Lender to secure any or all of the Obligations.
Commodity Exchange Act means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.
Completion means, with respect to a Farm Project, (a) the completion of such Farm Project in accordance with the terms of the applicable Project Documents and the Loan Documents and the requirements of all Applicable Laws and third-party and governmental consents and approvals; (b) without limiting the foregoing, construction of such Farm Project has been certified as complete by the applicable General Contractor, the other Material Project Contractors and the Project Consultant; (c) the Borrowers have delivered to the Lender evidence that a valid notice of completion has been recorded to establish commencement of the shortest statutory period in the filing of mechanics and materialmens Liens, if applicable; (d) full and final unconditional waivers of mechanics Liens from all contractors engaged in connection with such Farm Project shall have been delivered to the Lender; (e) a final, unconditional certificate of occupancy or other applicable approval from the appropriate Governmental Authority permitting occupancy of the applicable Farm shall have been issued as to the applicable Farm; and (f) the Company has delivered to the Lender a duly executed Final Completion Certificate. Complete shall have a correlative meaning.
Completion Deadline means, with respect to each Farm Project, the date determined by the Borrowers and reasonably acceptable to the Lender by which Completion of such Farm Project must occur, which date will be set forth in the Construction Budget (including the Initial Construction Budget) and Construction Schedule applicable to such Farm Project.
Compliance Certificate means a certificate substantially in the form of Exhibit C attached hereto or such other form approved by the Lender.
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Consolidated Adjusted EBITDA means, with respect to the Consolidated Group, for the applicable Covenant Computation Period, Consolidated Net Income for such period plus, without duplication and to the extent deducted in determining Consolidated Net Income for such period, the sum of (a) Consolidated Interest Expense, (b) provision for Taxes based on income, (c) depreciation expense, (d) amortization expense, (e) unusual or non-recurring charges, expenses or losses and (f) other non-cash charges, expenses or losses (excluding any such non-cash charge to the extent it represents an accrual or reserve for potential cash charge in any future period or amortization of a prepaid cash charge that was paid in a prior period), minus, to the extent included in determining Consolidated Net Income for such period, the sum of (i) unusual or non-recurring gains and non-cash income, (ii) any other non-cash income or gains increasing Consolidated Net Income for such period (excluding any such non-cash gain to the extent it represents the reversal of an accrual or reserve for potential cash charge in any prior period) and (iii) any gains realized from the disposition of property outside of the ordinary course of business, all as determined on a consolidated basis.
Consolidated Group means, prior to the Qualified SPAC Transaction Effective Date, the Company and the other Loan Parties, and after the Qualified SPAC Transaction Effective Date, Holdings, the Company and the other Loan Parties, in each case, including, but not limited to, each Borrower.
Consolidated Interest Coverage Ratio means, as of any date of determination, the ratio of (a) Consolidated Adjusted EBITDA for the most recently completed Covenant Computation Period, to (b) Consolidated Interest Expense for the most recently completed Covenant Computation Period.
Consolidated Interest Expense means, with respect to the applicable Covenant Computation Period, total interest expense (including that attributable to Capitalized Leases) net of total interest income of the Consolidated Group on a consolidated basis for such period with respect to all outstanding Indebtedness of the Consolidated Group (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers acceptance financing and net costs under Swap Contracts to the extent that such net costs are allocable to such period).
Consolidated Net Income means, with respect to the applicable Covenant Computation Period, the consolidated net income (or loss) of the Consolidated Group on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary of a Loan Party or is merged into or consolidated with a Loan Party or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary of a Loan Party) in which a Loan Party or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by such Loan Party or such Subsidiary in the form of dividends or similar distributions, and (c) the undistributed earnings of any Subsidiary of a Loan Party to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligation (other than under any Loan Document) or requirement of Law applicable to such Subsidiary.
Consolidated Total Funded Indebtedness means, as of any date of determination, the aggregate amount of Indebtedness of the Consolidated Group outstanding on such date, determined on a consolidated basis in accordance with GAAP, consisting only of Indebtedness included in clauses (a), (b) (but with respect to earn-out obligations, only to the extent due and payable), (c) (but with respect to letters of credit, only to the extent of any drawn and unreimbursed amounts in respect thereof), (e), (f), (g) and (k) (only with respect to guarantees of Indebtedness otherwise included in this definition) of the definition of Indebtedness.
Consolidated Total Net Leverage Ratio means, as of any date of determination, the ratio of (a) Consolidated Total Funded Indebtedness as of such date, minus Unrestricted Cash of the Loan Parties as of such date in an amount not to exceed $30,000,000, to (b) Consolidated Adjusted EBITDA for the most recently completed Covenant Computation Period.
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Continuing Directors means, as of any date, (a) those members of the Governing Board of a Person who assumed office prior to such date, and (b) those members of the Governing Board of a Person who assumed office after such date and whose appointment or nomination for election by such Persons members was approved by the Governing Board of such Person in accordance with such Persons Organizational Documents.
Construction Budget means, with respect to a Farm Project, a budget in form and substance reasonably satisfactory to the Lender (and, in the discretion of the Lender, after consultation with the Project Consultant), which may be revised from time to time by the Borrowers in accordance with the terms and conditions of this Agreement, and which sets forth all anticipated Project Costs, including, but not limited to, all construction and non-construction costs, all interest, fees and other carrying costs relating to such Farm Project, and all applicable contingency reserves. Each Construction Budget shall contain a statement of sources and uses of proceeds, broken down as to separate construction phases and components, including line item costs breakdowns for all costs by trade, job and subcontractor.
Construction Schedule means, with respect to a Farm Project, a progress schedule in form and substance reasonably satisfactory to the Lender (and, in the discretion of the Lender, after consultation with the Project Consultant), showing the estimated commencement and completion dates for each material phase of such Farm Project, including the construction, equipping and completion of such Farm Project, and setting forth the estimated Final Completion Date with respect to such Farm Project, as such progress schedule may be revised from time to time by the Borrowers in accordance with the terms and conditions of this Agreement.
Contractual Obligation means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
Control means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. Controlling and Controlled have meanings analogous thereto.
Controlled Environment means Controlled Environment Property Company, LLC, a Delaware limited liability company and a wholly owned Subsidiary of the Company.
Covenant Compliance Date means the last day of each calendar quarter.
Covenant Computation Period means the four consecutive calendar quarters immediately preceding and ending on a Covenant Compliance Date.
Credit Rating Agency means a nationally recognized credit rating agency that evaluates the financial condition of issuers of debt instruments and then assigns a rating that reflects its assessment of the issuers ability to make debt payments.
CRM means Cargill Risk Management, a division of Cargill, Incorporated, or any Affiliate thereof.
Debtor Relief Laws means the Bankruptcy Code of the United States of America and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
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Debt Service Coverage Ratio means, with respect to the Consolidated Group, for the applicable Covenant Computation Period, the ratio of (a) Consolidated Adjusted EBITDA during such period, to (b) the sum of (without duplication) (i) all scheduled principal payments on all Indebtedness for borrowed money (other than any such Indebtedness described in clause (j) of the definition thereof) due during such period or on demand, (ii) all interest paid in cash during such period, and (iii) all rental payments under leases of real or personal property, regardless of whether such leases are characterized as operating leases or a finance (or capital) leases, all determined in accordance with GAAP on a consolidated basis.
Default means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
Default Rate means, as of any date of determination, the following: (a) for each Term Loan, the Applicable Interest Rate plus 3.00% per annum; and (b) for all other Obligations, the Applicable Interest Rate plus 3.00%.
Delaware Code means the Delaware Code as defined in 1 Del. C. § 101, as amended from time to time.
Disbursing Agent means First American Title Insurance Company or such other title insurance company to the Lender in its sole discretion.
Disbursing Agreement means the Disbursing Agreement of even date herewith among the Company, the Lender and the Disbursing Agent.
Disposition or Dispose means the sale, transfer, license, lease or other disposition of any property or asset by any Person, including, but not limited to, any sale and leaseback transaction, any division under the Delaware Code, any issuance of Equity Interests by a Subsidiary of such Person, or any sale, discounting, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.
Disqualified Equity Interest means any Equity Interest that, by its terms (or the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for Equity Interests that are not Disqualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior Payment in Full of all Obligations), (b) is redeemable at the option of the holder thereof, in whole or in part, (c) provides for scheduled payments of dividends in cash, or (d) is or becomes convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is 91 days after the Maturity Date; provided that if such Equity Interests are issued in the ordinary course of business pursuant to a plan for the benefit of employees of the Company or any of its Subsidiaries or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Equity Interests solely because they may be required to be repurchased by the Company or any of its Subsidiaries in order to satisfy applicable statutory or regulatory obligations.
Dollar, Dollars, U.S. Dollars and $ mean lawful money of the United States.
Environmental Indemnity means the Environmental Indemnity Agreement of even date herewith by the Borrowers in favor of the Lender.
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Environmental Laws means any and all federal, state, local and foreign statutes, Laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions, including all common law, relating to pollution or the protection of health, safety or the environment or the release of any materials into the environment, including those related to Hazardous Materials, air emissions, discharges to waste or public systems and health and safety matters.
Environmental Liability means any liability or obligation, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), directly or indirectly, resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment, disposal or permitting or arranging for the disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
EPA means the United States Environmental Protection Agency or any successor agency thereto, whether acting through a local, state, federal or other office.
Equity Interests means, as to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
ERISA Affiliate means any trade or business (whether or not incorporated) under common control with the Borrowers or another Loan Party within the meaning of Sections 414(b), (c), (m) and (o) of the Code or Section 4001(a) of ERISA.
Event of Default has the meaning specified in Article VII.
Excluded Accounts has the meaning assigned to such term in the Security Agreement.
Excluded Contractor or Subcontractor means each contractor or subcontractor engaged to furnish materials or services in connection with a Farm Project pursuant to contracts, purchase orders or other agreements that in the aggregate are less than $50,000 (or such greater amount as the Disbursing Agent and the Lender may agree to in writing) with respect to each such contractor or subcontractor.
Excluded Subsidiary means any Subsidiary that satisfies the following conditions: (a) such Subsidiary is identified on Schedule B hereto (as such schedule may be amended or supplemented from time to time with the Lenders prior written consent (not to be unreasonably withheld)), (b) all of the tangible assets of such Subsidiary are located in a qualified opportunity zone as defined in Section 1400Z-1(a) of the Code, and (c) such Subsidiary at no time received or receives, directly or indirectly, any proceeds of any Term Loan made hereunder.
Excluded Swap Obligations means with respect to any Guarantor, any obligations in respect of Swap Obligations if, and to the extent that, all or a portion of the guaranty of such Guarantor of, or the
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grant by such Guarantor of a security interest to secure, such Swap Obligations (or any guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the United States Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantors failure for any reason not to constitute an eligible contract participant as defined in the Commodity Exchange Act at the time the guaranty of such Guarantor becomes effective with respect to such related Swap Obligations. For purposes of this definition, Swap Obligations means, with respect to any Guarantor, any obligations to pay or perform under any agreement, contract or transaction that constitutes a swap within the meaning of section 1a(47) of the Commodity Exchange Act.
Excluded Taxes means any of the following Taxes imposed on or with respect to the Lender or required to be withheld or deducted from a payment to the Lender: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of the Lender being organized under the laws of, or having its principal office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of the Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of the Lender with respect to an applicable interest in the Term Loan pursuant to a Law in effect on the date on which the Lender acquires such interest in the Term Loan, and (c) any withholding Taxes imposed under FATCA.
Existing Bridge Indebtedness means the Indebtedness under the Credit Agreement dated as of March 22, 2021 between the Company and the Lender (as defined therein).
Exiting Lenders means, as of the Closing Date, the holders of any Indebtedness of any Loan Party (other than Permitted Indebtedness).
Farm means a greenhouse facility and associated infrastructure.
Farm Lease Agreement means each lease agreement in respect of a Farm Project Site.
Farm Project means the development, design, construction, equipping, testing and completion of a Farm in accordance with the terms of the relevant Project Documents, including (a) all equipment, buildings, structures, improvements, fixtures, attachments, appliances, machinery and systems in connection with such Farm and (b) all Project Documents and other contracts and agreements related thereto.
Farm Project Site means the real property in which a Loan Party has a fee simple or leasehold interest and upon which a Farm Project or Farm is or will be located.
FATCA means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.
FCPA means the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations promulgated thereunder.
Fee Determination Date means the earlier of (a) the Maturity Date, (b) the date on which any of the Obligations (other than the Permitted Northwest Subordinated Loan) are prepaid pursuant to Section 2.4 or 2.5, and (c) the date on which any Obligations are accelerated pursuant to the Loan Documents or Applicable Law.
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Fee Letter means the Fee Letter dated as of the Closing Date among the Borrowers and the Lender and each separate agreement entered into from time to time by and between the Borrowers or any other Loan Party and the Lender, in each case setting forth certain fees to be paid by the Borrowers or such other Loan Party to the Lender, as more fully set forth therein.
Final Completion Certificate means a certificate of a Responsible Officer of the Company in the form of Exhibit E attached hereto.
Final Completion Date means the date of Completion.
Financial Officer means, as to any Person, the chief financial officer, principal accounting officer, treasurer or controller of such Person.
First Post-Merger Subordinated Term Loan has the meaning specified therefor in the definition of Subordinated Facility Post-Merger Funding Date.
Fiscal Year means, with respect to the Borrowers or any Subsidiary, a calendar year ending December 31.
Flood Laws means, collectively, (a) the National Flood Insurance Act of 1968, (b) the Flood Disaster Protection Act of 1973, (c) the National Flood Insurance Reform Act of 1994 and (d) the Biggert-Waters Flood Insurance Act of 2012, in each case, as now or hereinafter in effect, and any successor statute thereto, and all such other Applicable Laws related thereto.
Food Security Act means 7 U.S.C. Section 1631, and any successor statute thereto, together with each law establishing a central filing system (as defined in 7 U.S.C. Section 1631) that has been certified by the Secretary of the United States Department of Agriculture.
GAAP means, subject to Section 1.3, United States generally accepted accounting principles as in effect as of the date of determination thereof.
GC Contract means, with respect to a Farm Project, an agreement for general contract services entered into between the General Contractor engaged for such Farm Project, on the one hand, and any Borrower or any other Loan Party or Subsidiary, on the other hand.
General Contractor means, with respect to a Farm Project, a Person engaged by any Borrower or any other Loan Party or Subsidiary to act as the general contractor for such Farm Project, which Person shall in each case be acceptable to the Lender in its reasonable discretion.
Governing Board means, with respect to any corporation, limited liability company or similar Person, the board of directors, board of governors or other body or entity that sets overall institutional direction for such Person (including, with respect to any trust, the trustees thereof).
Governmental Authority means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
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Guarantor means each Person guarantying the payment of the Obligations pursuant to a Guaranty.
guaranty means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guarantying or having the economic effect of guarantying any Indebtedness or other obligation payable or performable by another Person (the primary obligor) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part) or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien); provided that the term guaranty shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any guaranty shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such guaranty is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guarantying Person in good faith. The term guaranty as a verb has a corresponding meaning.
Guaranty means each guaranty, in form and substance acceptable to the Lender, guarantying the payment of the Obligations.
Hazardous Materials means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes, and any other substance or wastes defined as a hazardous waste, hazardous material, hazardous substance, extremely hazardous waste, restricted hazardous waste, toxic waste or toxic substance pursuant to any Environmental Law.
Holdings means, following the Qualified SPAC Transaction Effective Date, Local Bounti Corporation, a Delaware corporation, as successor to Leo Holdings III Corp., a Cayman Islands exempted company which shall have domesticated as a Delaware corporation in accordance with the terms of the SPAC Merger Agreement.
Indebtedness means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:
(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;
(b) all obligations of such Person for the deferred purchase price of property, assets or services (other than trade payables, in each case to the extent payable in the ordinary course of business);
(c) all direct or contingent obligations of such Person arising under (i) letters of credit (including standby and commercial), bankers acceptances and bank guaranties and (ii) surety bonds, performance bonds and similar instruments issued or created by or for the account of such Person;
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(d) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements);
(e) all obligations, contingent or otherwise, of such Person in connection with any securitization of any products, receivables or other property or assets which obligations are recourse to such Person or such Persons property or assets;
(f) all obligations of such Person under factoring agreements or similar arrangements;
(g) all Attributable Indebtedness;
(h) all obligations of such Person in respect of Disqualified Equity Interests;
(i) all other obligations of such Person which are required to be reflected in, or are reflected in, such Persons financial statements recorded or treated as indebtedness under GAAP;
(j) net obligations of such Person under any Swap Contract; and
(k) all guaranties of such Person in respect of any of the foregoing.
For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any Indebtedness of any Person for purposes of clause (d) that is expressly made non-recourse or limited-recourse (limited solely to the assets securing such Indebtedness) to such Person shall be deemed to be equal to the lesser of (i) the aggregate principal amount of such Indebtedness and (ii) the fair market value of the property encumbered thereby as determined by such Person in good faith. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.
Indemnified Taxes means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of the Obligations under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.
Indemnitee has the meaning specified in Section 8.3(b).
Initial Construction Budget means, with respect to each Farm Project, the initial Construction Budget delivered to the Lender in respect of such Farm Project.
Initial Minimum Interest Amount means an amount equal to the greater of (a) $0 and (b) the sum of all interest payments due and payable by the Borrowers in respect of Term Loans outstanding during the period commencing on the funding date of the Closing Date Subordinated Loan (or, if no Closing Date Subordinated Loan is made, on the funding date of the initial Term Loan hereunder), and ending on the last Business Day of the calendar quarter ending September 30, 2023; provided, to the extent the aggregate principal balance of outstanding Term Loans during such period is at any time less than $20,000,000, the Initial Minimum Interest Amount shall be determined assuming that aggregate principal balance of outstanding Term Loans is $20,000,000.
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Interest Reserve Account means a deposit account established by the Company with a financial institution acceptable to the Lender and containing such minimum funds as required under Section 5.17.
Investment means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests or debt or other securities of another Person, (b) a loan, advance or capital contribution to, guaranty or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor incurs Indebtedness of the type referred to in clause (k) of the definition of Indebtedness in respect of such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of all or substantially all of the property and assets or business of another Person or assets constituting a business unit, line of business or division of such Person. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment but giving effect to any returns or distributions of capital or repayment of principal actually received in cash by such Person with respect thereto.
IRA Shortfall has the meaning specified in Section 5.17(b).
Junior Debt means unsecured Indebtedness and any other Indebtedness that (a) is secured by Liens on Collateral that have a priority that is junior to the Liens on Collateral that secure the Obligations, and/or (b) by its terms, is contractually subordinated in right of payment to the Obligations.
Laws means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.
Lender has the meaning specified in the preamble.
Lender Discretionary Prepayment Event has the meaning specified in Section 2.5.
Licenses means all franchises, permits, licenses and other rights, including all governmental approvals, authorizations, consents, licenses and permits, that are necessary or required for the conduct of the businesses conducted by any Loan Party or any of its Subsidiaries, including, without limitation, the construction and operation of any Farm.
Lien means any mortgage, pledge, hypothecation, collateral assignment, deposit arrangement, encumbrance, lien (statutory or other, including, without limitation, mechanics liens), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).
Lien Waiver Agreement means any landlords waiver, bailee waiver or other lien waiver or subordination agreement, in form and substance reasonably satisfactory to the Lender, duly executed by the parties thereto.
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Liquidity means, as of any date of determination, the sum, without duplication, of (a) the amount at such time of all Unrestricted Cash of the Loan Parties, plus (b) the amount at such time of all cash held in the Interest Reserve Account. plus (without duplication) (c) the amount at such time of all cash held in the Debt Service Reserve Account (as defined in the Senior Credit Agreement) (it being understood and agreed, for the avoidance of doubt, that the Interest Reserve Account and the Debt Service Reserve Account may both be maintained in a single deposit account of the Company).
Loan Documents means, collectively, this Agreement, the Term Loan Note, the Collateral Documents, the Guaranty, the Subordination Agreement, the Disbursing Agreement, the Environmental Indemnity, the Perfection Certificate, the Closing Date Letter Agreement, each Fee Letter and each other instrument, certificate or document delivered in connection herewith or therewith.
Loan Parties means the Borrowers, any Guarantor and any other Person that grants a Lien on any of its assets to secure the Obligations.
Loan Request means a request for a Term Loan, in each case substantially in the form of Exhibit B hereto or any other form accepted by the Lender in its sole discretion.
Management Agreement has the meaning specified in Section 6.7(b).
Margin Stock means margin stock within the meaning of Regulation T, U or X of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof.
Material Adverse Effect means (a) a material adverse change in or a material adverse effect on the operations, business, properties or condition (financial or otherwise) of the Borrowers (taken as a whole) or of any other Loan Party (individually), or (b) a material adverse effect on (i) the ability of any Loan Party to punctually perform any of the Obligations, (ii) the legality, validity, binding effect or enforceability of any Loan Document or (iii) the rights, remedies and benefits available to, or conferred upon, the Lender under any Loan Documents.
Material Agreement means (a) the SPAC Merger Agreement, (b) each Material Project Document, (c) each Farm Lease Agreement, (d) each Approved Long-Term Supply Agreement, (e) the Bitterroot Lease Agreement and each other Farm Lease Agreement, (f) the Warrant Agreement, (g) each agreement, contract, note, bond, debenture or other instrument evidencing Indebtedness of any Loan Party or Subsidiary in an aggregate principal amount in excess of $2,000,000; and (h) without limiting the foregoing, each other agreement, contract, License or instrument (including any supply, sales, input or offtake agreement) binding on any Loan Party or Subsidiary pursuant to which either (x) such Person shall pay or receive more than $2,000,000 per annum in the aggregate, or (y) the cancellation, termination or suspension of which, or the failure of any party thereto to perform its obligations thereunder, could reasonably be expected to have a Material Adverse Effect. Notwithstanding the foregoing, however, in no event will any Loan Document or any Senior Indebtedness Document constitute a Material Agreement for purposes of this Agreement.
Material Project Contractor means, with respect to a Farm Project, the General Contractor engaged for such Farm Project and any contractor whose work, equipment and/or supplies provided with respect to such Farm Project exceeds $500,000 in the aggregate.
Material Project Documents means, with respect to a Farm Project, the applicable Project Plans, Project Licenses, GC Contract, Construction Budget, Construction Schedule, construction payment and performance bonds, insurance certificates, and each contract or supply agreement entered into by any Borrower, any other Loan Party or Subsidiary in connection with such Farm Project pursuant to which such Person shall pay or receive more than $500,000 per annum in the aggregate.
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Material Project Participants means, collectively, any Borrower, each other Loan Party and each other Person that is from time to time a party to a Material Project Document.
Maturity Date means September 3, 2028.
Maximum Rate has the meaning specified in Section 8.13.
Minimum Interest Amount means, as of any date of determination occurring during the periods described in the table below, the amount set forth opposite each such applicable period:
Period |
Minimum Interest Amount |
|
The period commencing on the Closing Date and ending on September 30, 2023 | The Initial Minimum Interest Amount (as such amount may be reduced from time to time as a result of the application of funds in the Interest Reserve Account to the payment of interest in accordance with Sections 2.3(a) and 2.3(d)) | |
The period commencing on October 1, 2023 and at all times thereafter | An amount equal to interest payments that would be required for two (2) calendar quarters, calculated based on the aggregate principal balance of outstanding Term Loans during such period |
Minimum Liquidity Step-up Date means the earlier to occur of (a) the Qualified SPAC Transaction Effective Date and (b) December 31, 2021.
Montana Property means the real property and related improvements leased by Bounti Bitterroot in Hamilton, Montana pursuant to the Bitterroot Lease Agreement.
Mortgage means a mortgage (including a leasehold mortgage), deed of trust or similar security instrument from a Loan Party, pursuant to which such Loan Party grants the Lender a Lien on real property and related improvements to secure payment of the Obligations.
Net Proceeds means (a) with respect to any Disposition, the cash and Cash Equivalent proceeds thereof received by any Borrower, any other Loan Party or Subsidiary, net of reasonable and documented brokerage, legal, accounting and other fees and expenses, to the extent actually paid from such gross proceeds to Persons other than Affiliates of any Loan Party, (b) with respect to any issuance or incurrence of Indebtedness or Equity Interests, the cash and Cash Equivalent proceeds thereof, net of reasonable and documented fees, commissions, costs, underwriting discounts and other fees and expenses incurred in connection therewith, and (c) with respect to any casualty or condemnation event, the cash and Cash Equivalent proceeds thereof received by any Loan Party or Subsidiary, net of reasonable and documented legal, accounting and other fees and expenses, to the extent actually paid from such gross proceeds to Persons other than Affiliates of any Loan Party. If any proceeds are received in a form other than cash or Cash Equivalents and subsequently converted into cash or Cash Equivalents, then such proceeds shall be treated as Net Proceeds for purposes of this definition at such time as they are converted into cash or Cash Equivalents.
Northwest SPV Grow Bounti NorthWest, LLC, a Delaware limited liability company and a wholly owned Subsidiary of Controlled Environment, formed solely for the purpose of developing a Farm Project in the State of Washington.
Obligations means (a) all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document, and (b) all Swap Obligations, and other obligations with respect to any Swap Contract, of any Loan Party to a Swap Party, in each case (whether under the
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foregoing clause (a) or clause (b)) direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding. Without limiting the foregoing, the Obligations include (x) the obligation to pay principal, interest, charges, expenses, fees, indemnities and other amounts payable by any Loan Party or Subsidiary under any Loan Document and (y) the obligation of each Loan Party or Subsidiary to reimburse any amount in respect of any of the foregoing that the Lender, in each case in its sole discretion, may elect to pay or advance on behalf of the Borrowers. Notwithstanding the foregoing or the terms of any other Loan Document, the Obligations guaranteed by any Loan Party or secured by any Lien granted by any Loan Party shall exclude any obligations constituting Excluded Swap Obligations with respect to such Loan Party.
OFAC means the United States Department of the Treasurys Office of Foreign Assets Control.
Organizational Documents means (a) as to any corporation, the charter or certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction), (b) as to any limited liability company, the certificate or articles of formation or organization and operating or limited liability agreement and (c) as to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.
Other Connection Taxes means, with respect to the Lender, Taxes imposed as a result of a present or former connection between the Lender and the jurisdiction imposing such Tax (other than connections arising from the Lender having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in the Term Loan or any Loan Document).
Other Taxes means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment.
PACA means the Perishable Agricultural Commodities Act, 1930, as amended (7 U.S.C. § 499(e)(c)(2) et. seq.), together with all rules and regulations relating thereto or promulgated thereunder by any Governmental Authority (including 7 C.F.R. § 46.1 et seq.).
PASA means the Packers and Stockyards Act, 1921, as amended (7 U.S.C. § 181) et. seq.), together with all rules and regulations relating thereto or promulgated thereunder (including 9 C.F.R. § 200 et seq.).
Pasco Property means the real property and related improvements owned by the Northwest SPV and described in Exhibit A attached to the Statutory Warranty Deed made by Snake River Agriculture, LLC, as grantor, in favor of the Northwest SPV, as grantee, dated as of June 3, 2021, recorded June 7, 2021 as document number 1940393 in the real estate records of Franklin County, Washington.
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PATRIOT Act means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).
Payment in Full means, as of any date of determination, that (a) all commitments of the Lender with respect to the Term Loan Facility and all obligations of the Swap Parties in respect of Swap Contracts are terminated, and (b) the entire amount of principal of and interest on the Term Loans, and all other amounts of fees, payments and other Obligations under this Agreement and the other Loan Documents (including, without limitation, all obligations of the Loan Parties under Swap Contracts entered into with any Swap Party) are paid in full in cash (other than contingent indemnification obligations and reimbursement obligations in respect of which no claim for payment has yet been asserted by the Person entitled thereto). Paid in Full shall have a correlative meaning.
Perfection Certificate means a certificate in form and substance satisfactory to the Lender signed by a Responsible Officer of the Borrowers setting forth certain information with respect to the Borrowers, their Subsidiaries and their respective assets.
Permitted Going Concern Qualification means, solely with respect to the audited financial statements of the Company and its Subsidiaries (or, if delivered after the Qualified SPAC Transaction Effective Date, of the Consolidated Group) delivered to the Lender pursuant to Section 5.1(a) for the Fiscal Year ending December 31, 2021 and the Fiscal Year ending December 31, 2022, a going concern or like qualification, exception or explanatory paragraph.
Permitted Indebtedness has the meaning specified in Section 6.1.
Permitted Liens has the meaning specified in Section 6.2.
Permitted Northwest Subordinated Loan means the Term Loan made hereunder, the principal amount of which may not exceed $8,750,000 and the proceeds of which must be applied in accordance with Section 5.12
(a).
Person means any natural Person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
Plan means any employee benefit plan (as such term is defined in Section 3(3) of ERISA) maintained for current or former employees, officers, members or directors of any Loan Party or any ERISA Affiliate, or any such plan to which any Loan Party or Subsidiary is required to contribute on behalf of any of its current or former employees or with respect to which such Loan Party or Subsidiary has any liability.
Producer means any producer, packer, processor, manufacturer, dealer, broker, agent, person engaged in farming operations, cooperative whose members consist of any such Persons or other seller of perishable agricultural products or other agricultural goods, including, without limitation, potatoes, corn, Meat Food Products, Livestock, Livestock Products, Poultry, Poultry Products (each as defined in PASA) and Perishable Agricultural Commodities (as defined in PACA).
Project Consultant means a project consultant appointed or retained by the Lender and approved by the Company (such approval not to be unreasonably withheld or delayed) to review, on behalf of the Lender, Construction Budgets, Construction Schedules, ongoing construction of any Farm Project, and/or other matters related to any Farm Project. To the extent a Project Consultant has not been appointed or retained, the references in this Agreement to Project Consultant and related provisions shall have no force and effect and any required approvals, consents or other actions of the Project Consultant which are required or to be performed shall be deemed given or performed, as the case may be.
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Project Costs means the following costs and expenses incurred by the Borrowers or any other Loan Party or Subsidiary in connection with a Farm Project and set forth in the applicable Construction Budget or otherwise approved by the Lender (and, in the discretion of the Lender, after consultation with the Project Consultant): (a) costs incurred by a Borrower or any other Loan Party or Subsidiary under any Project Documents with respect to the acquisition (including the acquisition of a Farm Project Site), site preparation, design, engineering, procurement of equipment, construction, installation, start-up, mobilization and testing of a Farm Project (including costs associated with structural matters, piping, labor, electrical, design and management and contingency matters); (b) fees and expenses incurred by or on behalf of a Borrower or any other Loan Party or Subsidiary in connection with any Farm Project and the consummation of the transactions contemplated by this Agreement and the other Loan Documents with respect to financing such Farm Project, including financial, working capital, accounting, legal, surveying and consulting fees, and the costs of engineering; (c) interest and fees on the Term Loans with respect to a Farm Project; (d) insurance premiums with respect to any Mortgages for a Farm Project and as otherwise required pursuant to this Agreement; and (e) without duplication of the foregoing, Taxes, salaries, rent and general administrative and overhead costs that are incurred by a Borrower or any other Loan Party or Subsidiary in connection with a Farm Project.
Project Documents means the Material Project Documents, all other contracts or subcontracts entered into in connection with a Farm Project and any other agreement, instrument or document relating to the ownership, design, development, construction, lease, maintenance, repair, improvement, management, operation or use of a Farm.
Project Licenses means the Licenses required for construction and operation of a Farm Project.
Project Plans means, with respect to a Farm Project, the plans and specifications for the construction and equipping of such Farm Project, as the same may be revised from time to time in accordance with the Project Documents and the Loan Documents.
Project Status Report means a reasonably detailed report signed by a Responsible Officer of the Company and setting forth (a) the aggregate amount of all Project Costs expended during the preceding calendar quarter and through the date of each such report; (b) an assessment of the overall construction progress of each Farm Project since the date of the last report and since the Closing Date, together with an assessment of how such progress compares to each applicable Construction Schedule; (c) the anticipated Final Completion Date of each Farm Project; (d) a detailed description of all material problems (including actual and anticipated cost overruns, if any, in excess of $500,000 in the aggregate) encountered or anticipated in connection with the construction of each Farm Project since the date of the last report, together with (i) an assessment of how such problems may impact the applicable Construction Schedule and the meeting of critical path dates thereunder and (ii) a detailed description of the proposed solutions to any such problems; (e) the delivery status of material equipment and the negative effect, if any, that the anticipated delivery dates of such equipment has on each applicable Construction Schedule; (f) any proposed or pending change orders in an amount exceeding $250,000; (g) a discussion of any material change in the status of any pending Project Licenses or, if there has been no such change in the status of such consents and approvals since the most recent report delivered pursuant to this clause, a statement that there has been no such change; and (h) an analysis of such other material matters related to each Farm Project as the Lender may reasonably request.
Properties has the meaning specified in Section 3.14(b)(i).
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Purchase Money Security Interest means Liens upon fixed or capital assets or other tangible personal property securing loans to any Loan Party or Subsidiary of a Loan Party or deferred payments by such Loan Party or Subsidiary for the purchase of such fixed or capital assets or other tangible personal property.
Qualified SPAC Transaction means the transactions contemplated by that certain Agreement and Plan of Merger dated as of June 17, 2021 (the SPAC Merger Agreement), by and among Holdings, Longleaf Merger Sub, Inc., a Delaware corporation, Longleaf Merger Sub II, LLC, a Delaware limited liability company, and the Company, which shall result in minimum cash to the balance sheet of the Company, after the payment of transaction costs and expenses, of not less than $100,000,000.
Qualified SPAC Transaction Effective Date means the date on which the Closing (as defined in the SPAC Merger Agreement) has occurred in accordance with the terms and conditions of the SPAC Merger Agreement (and including, for the avoidance of doubt, the satisfaction or waiver of all conditions set forth in Article VI of the SPAC Merger Agreement).
Related Parties means, with respect to any Person, such Persons Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors, representatives, successors and assigns of such Person and of such Persons Affiliates.
Release means a release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment or into or out of any property, in each case, of Hazardous Materials through or in the air, soil, surface water, groundwater or property.
Responsible Officer means, with respect to any Loan Party, (a) the chief executive officer, president, executive vice president or a Financial Officer of such Person, and (b) solely for purposes of the delivery of incumbency certificates and certified Organizational Documents and resolutions, any vice president, secretary or assistant secretary of such Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
Restricted Payment means any dividend or other distribution (including a return of capital and whether in cash, securities or other property) with respect to any Equity Interest of any Person, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interest, or on account of any return of capital to such Persons shareholders, partners or members (or the equivalent Persons thereof).
Sanctions means all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and anti-terrorism laws imposed, administered or enforced from time to time by (a) the United States of America (including those administered by OFAC, the U.S. State Department, the U.S. Department of Commerce, or through any existing or future Executive Order), (b) the United Nations Security Council, (c) the European Union, (d) the United Kingdom or (e) any other Governmental Authority in any jurisdiction in which (i) any Loan Party is located or conducts business, (ii) in which any of the proceeds of the Term Loan will be used, or (iii) from which repayment of the Term Loan will be derived.
SEC means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
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Security Agreement means a security agreement from one or more Loan Parties, pursuant to which such Loan Parties grant a Lien on any or all of their assets to secure payment of the Obligations in favor of the Lender and in form and substance acceptable to the Lender, duly executed by the parties thereto.
Senior Credit Agreement means the Credit Agreement of even date herewith among the Company, the Subsidiary Borrowers and the Senior Creditor, governing a senior multi-advance term loan facility.
Senior Creditor means the lender party to the Senior Credit Agreement.
Senior Indebtedness means all Indebtedness under the Senior Credit Agreement.
Senior Indebtedness Documents means, collectively, the Senior Credit Agreement and all other Loan Documents (as defined in the Senior Credit Agreement).
Solvent means, as to any Person as of any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Persons ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Persons property would constitute an unreasonably small capital. The amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
SPAC Merger Agreement has the meaning specified therefor in the definition of Qualified SPAC Transaction.
Subordinated Facility Post-Merger Funding Date means the date on which the first Term Loan hereunder (such Term Loan, the First Post-Merger Subordinated Term Loan) is funded following satisfaction (or waiver by the Lender in its sole discretion) of all conditions set forth in Sections 4.1, 4.2 and 4.3.
Subordination Agreement means the Subordination Agreement of even date herewith among the Company, the Senior Creditor, and the Lender.
Subsidiary of a Person means a corporation, partnership, limited liability company, association or joint venture or other business entity of which a majority of the Equity Interests having ordinary voting power for the election of directors or other Governing Board (other than securities or interests having such power only by reason of the happening of a contingency) are at the time owned or the management of which is Controlled, directly, or indirectly through one or more intermediaries, by such Person. Unless otherwise specified, all references herein to a Subsidiary or to Subsidiaries shall refer to a Subsidiary or Subsidiaries of any Loan Party.
Swap Contract means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap
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transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, that are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a Master Agreement), including any such obligations or liabilities under any Master Agreement.
Swap Obligation means, with respect to any Person, any obligation to pay or perform under any agreement, contract or transaction that constitutes a swap within the meaning of section 1a(47) of the Commodity Exchange Act.
Swap Party means any party to a Swap Contract that is the Lender or any Affiliate of the Lender (including, without limitation, CRM).
Swap Termination Value means, as to any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include the Lender or any Affiliate of the Lender).
Synthetic Lease Obligation means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).
Taxes means all present or future taxes, levies, tariffs, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
Term Loan Amount means up to $50,000,000.
Term Loan Commitment Termination Date means the earlier of (a) September 30, 2023 and (b) the date on which any Obligations are accelerated pursuant to Article VII hereof or Applicable Law.
Term Loan Facility means the term loan facility being made available to the Borrowers by the Lender pursuant to Section 2.1.
Term Loan Note means a promissory note of the Borrowers payable to the Lender substantially in the form of Exhibit A, as such promissory note may be amended, extended or otherwise modified from time to time, and including each other promissory note accepted from time to time in substitution therefor or in renewal thereof.
Term Loans has the meaning specified in Section 2.1.
Third-Party Farm Lease Agreement means a Farm Lease Agreement in respect of real property not owned in fee by a Loan Party.
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Treasury Rate means, as of any prepayment date, shall mean the yield to maturity at the time of computation of United States Treasury Securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519), which has become publicly available at least (2) two Business Days prior such prepayment (or, if such Statistical Release is no longer published, any publicly available source or similar market data) most nearly equal to the period from such prepayment date to the second anniversary of the Closing Date; provided, however, that if the period from such prepayment date to the second anniversary of the Closing Date, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one twelfth of a year) from the weekly average yields of United States Treasury Securities for which such yields are given.
UCC and Uniform Commercial Code means the Uniform Commercial Code as the same may, from time to time, be in effect in the State of New York (the NY UCC); provided, however, in the event that, by reason of mandatory provisions of law, any or all of the perfection or priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term UCC shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or priority and for purposes of definitions related to such provisions.
United States and U.S. mean the United States of America.
Unrestricted Cash means, with respect to any Person, the aggregate amount of cash and Cash Equivalents reflected on the consolidated balance sheet of such Person and its Subsidiaries and over which the Lender has a perfected second priority security interest.
Unused Commitment Fee Rate means 1.25% per annum.
USDA means the United States Department of Agriculture, Office of Rural Development or any successor agency thereto, whether acting through a local, state, federal or other office.
USDA Loans has the meaning specified in Section 6.1(i).
Warrant Agreement means the Warrant Agreement dated as of the Closing Date made by the Company, as company, in favor of the Lender, as holder.
Section 1.2 Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words include, includes and including shall be deemed to be followed by the phrase without limitation. The word will shall be construed to have the same meaning and effect as the word shall. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Persons successors and assigns, (c) the words herein, hereof and hereunder, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (f) the words asset and property shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. All terms used in this Agreement which are defined in Article 8 or Article 9 of the NY UCC and which are not otherwise defined herein shall have the same meanings herein as set forth therein.
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Section 1.3 Accounting Terms; Changes in GAAP.
(a) Accounting Terms. Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall be construed in conformity with GAAP. Financial statements and other information required to be delivered by the Company pursuant to Sections 5.1(a) and 5.1(b) shall be prepared in accordance with GAAP as in effect at the time of such preparation. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Loan Parties and their Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded. Notwithstanding anything to the contrary contained in this Agreement, any lease that was or would have been treated as an operating lease under GAAP as in effect on December 1, 2018 that would become or be treated as a Capitalized Lease solely as a result of a change in GAAP after December 1, 2018 shall always be treated as an operating lease for purposes of determining compliance with the financial and other covenants set forth in this Agreement and the other Loan Documents.
(b) Changes in GAAP. If the Borrowers notify the Lender that the Borrowers request an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Lender notifies the Borrowers that it requests an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.
Section 1.4 Time. All references to times of day in this Agreement shall be references to Minnesota time unless otherwise specifically provided.
Section 1.5 Divisions. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdictions laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Equity Interests at such time.
ARTICLE II
TERMS OF THE TERM LOAN FACILITY
Section 2.1 Term Loan Facility.
(a) Term Loans. Subject to the terms and conditions herein set forth, including specifically satisfaction of all conditions set forth in Article IV, the Lender agrees to make one or more term loans (the Term Loans) to the Borrowers from time to time during the period from the Closing Date to and including the Term Loan Commitment Termination Date in an aggregate principal amount not to exceed the Term Loan Amount. Each request by the Borrowers for a Term Loan shall be deemed to be a representation by each Borrower that it shall be in compliance with the preceding sentence and with Article IV both before and after giving effect to the requested Term Loan. The Term Loan Facility is not a revolving credit facility; the Borrowers shall have no right to reborrow any portion of any Term Loan that has been repaid.
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(b) Requests for Term Loans. The Company may from time to time prior to the Term Loan Commitment Termination Date request that the Lender make a Term Loan by delivering to the Lender, not later than 11:00 a.m. seven (7) Business Days prior to the proposed borrowing date, a duly completed Loan Request. No more than two (2) Loan Request for any Term Loan may be submitted each month (other than with respect to the funding of a Term Loan pursuant to Section 5.17(b)). Each Loan Request shall be irrevocable and shall specify the amount of the proposed Term Loan, which amount shall be not less than $3,000,000.
Section 2.2 Interest on the Term Loans. Interest shall accrue on the unpaid principal amount of the Term Loans for the period commencing on the Closing Date until the unpaid principal amount thereof is Paid in Full, in accordance with the following:
(a) Interest. Except as set forth in paragraph (b) below, the outstanding principal balance of each Term Loan shall bear interest from the date such Term Loan is made until the Term Loan Facility is Paid in Full at the Applicable Interest Rate.
(b) Default Interest. Notwithstanding paragraph (a), immediately and automatically upon the occurrence and during the continuation of an Event of Default under clauses (a), (b), (h), (i) or (j) of Section 7.1, or immediately after written notice by the Lender to the Company after the occurrence and during the continuation of any other Event of Default (and, to the extent specified in such notice, commencing as of the date of the occurrence of such Event of Default), all outstanding and unpaid Obligations shall bear interest at the Default Rate.
(c) Interest Computation. All interest hereunder shall be computed on the basis of a year of 360 days, and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day).
Section 2.3 Payment of Principal and Interest.
(a) The Borrowers shall pay accrued interest on the Term Loans quarterly in arrears on the last Business Day of each calendar quarter, commencing the last Business Day of the calendar quarter ending December 31, 2021, and on the Maturity Date; provided, that during the period commencing on the Closing Date and ending on the last Business Day of the calendar quarter ending September 30, 2023 (without limiting the Borrowers obligation to pay any IRA Shortfall in accordance with Section 5.17(b)), interest payments under this Section 2.3(a) may be paid by the Borrowers from the Interest Reserve Account.
(b) In addition to any prepayments made pursuant to Sections 2.4 and 2.5, if not sooner paid, the outstanding principal balance of the Term Loans, all accrued interest thereon, any unpaid fees with respect thereto and all other Obligations shall be due and payable in full in cash on the Maturity Date.
(c) Without limiting the foregoing, interest accruing at the Default Rate hereunder shall be due and payable upon the Lenders demand. Likewise, interest on the principal amount of the Term Loan or other monetary Obligation shall be due and payable on demand after such principal amount or other monetary Obligation becomes due and payable (whether on the stated Maturity Date, upon an accelerated Maturity Date or otherwise).
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(d) At the election of the Lender, all payments of principal, interest, fees, premiums, costs, expenses and other Obligations (including, without limitation, all fees, costs and expenses pursuant to Section 8.3), and other sums payable under the Loan Documents, may at any time be deducted by the Lender from the Interest Reserve Account or, following an Event of Default, any other deposit account of the Borrowers subject to an Account Control Agreement in favor of the Lender. Without limiting any other provision of this Agreement (including, but not limited to, the Borrowers payment obligations hereunder), the Borrowers hereby irrevocably authorize the Lender (but with absolutely no obligation) to charge the Interest Reserve Account and, following an Event of Default, any other deposit account of the Borrowers subject to an Account Control Agreement in favor of the Lender for each payment of principal, interest and fees as it becomes due hereunder or any other amount due under the Loan Documents.
Section 2.4 Voluntary Prepayments. Subject to the terms and conditions of the Subordination Agreement (including, without limitation, Sections 2.2 and 2.3 thereof), the Borrowers may at any time upon at least five (5) days (or such shorter period as is acceptable to the Lender) prior written notice by the Borrowers to the Lender, prepay the Term Loans in whole or in part (provided, that any partial prepayment shall be in an amount greater than or equal to $5,000,000) without premium except as provided in Section 2.10. A prepayment notice delivered by the Borrowers to the Lender shall be irrevocable. An optional prepayment of the Term Loans scheduled or anticipated to occur during any month (x) shall be made and effected on the last Business Day of such month, (y) shall be accompanied by accrued but unpaid interest on the principal amount being prepaid and any Specified Fee, and (z) to the extent such optional prepayment prepays the Term Loans in whole, shall be accompanied by payment in full of all other Obligations.
Section 2.5 Lender Discretionary Prepayment.
(a) Subject to the terms and conditions of the Subordination Agreement (including, without limitation, Sections 2.2 and 2.3 thereof), promptly (and in any event within two (2) Business Days) after the occurrence of any Lender Discretionary Prepayment Event, the Borrowers shall inform the Lender in writing of the occurrence of such Lender Discretionary Prepayment Event and, solely to the extent requested by the Lender in writing in its sole discretion, the Borrowers shall promptly (and in any event within two (2) Business Days after such request) remit to the Lender an amount equal to 100% of the Net Proceeds realized by any Borrower or any other Loan Party or Subsidiary from such Lender Discretionary Prepayment Event. For the purpose of this Section 2.5, a Lender Discretionary Prepayment Event means the receipt by any Borrower, any other Loan Party or Subsidiary of proceeds from:
(i) the Disposition of any assets by any Borrower, any other Loan Party or Subsidiary (except for Dispositions to the extent permitted by Section 6.4);
(ii) any casualty or other insurance maintained by any Borrower, any other Loan Party or Subsidiary in excess of $2,000,000 in the aggregate in any Fiscal Year (provided that such $2,000,000 minimum threshold shall not apply if any Default or Event of Default has occurred and is continuing); provided, however, that if (A) the Company shall deliver a certificate of a Financial Officer to the Lender at the time of receipt thereof setting forth the Borrowers intent to reinvest such proceeds in productive assets of a kind then used or usable in the business of the Company and its Subsidiaries (or to repair any property damaged in a casualty event) within 365 days of receipt of such proceeds and (B) no Default or Event of Default shall have occurred and shall be continuing at the time of such certificate or at the time of the application of such proceeds, such proceeds shall not constitute Net Proceeds except to the extent not so used
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at the end of such 365-day period, at which time such proceeds shall be deemed to be Net Proceeds; provided, further, if any Default or Event of Default shall have occurred and shall be continuing at the time of delivery of the foregoing certificate or at the time of the application of proceeds contemplated thereunder, then 100% of such proceeds (without giving effect to the $2,000,000 minimum threshold set forth above) shall be applied to the Obligations in accordance with Section 2.5(b);
(iii) any condemnation award with respect to property owned by any Borrower, any other Loan Party or Subsidiary in excess of $2,000,000 in the aggregate in any Fiscal Year (provided that such $2,000,000 minimum threshold shall not apply if any Default or Event of Default has occurred and is continuing); provided, however, that if (A) the Company shall deliver a certificate of a Financial Officer to the Lender at the time of receipt thereof setting forth the Borrowers intent to reinvest such proceeds in productive assets of a kind then used or usable in the business of the Company and its Subsidiaries within 365 days of receipt of such proceeds and (B) no Default or Event of Default shall have occurred and shall be continuing at the time of such certificate or at the time of the application of such proceeds, such proceeds shall not constitute Net Proceeds except to the extent not so used at the end of such 365-day period, at which time such proceeds shall be deemed to be Net Proceeds; provided, further, if any Default or Event of Default shall have occurred and shall be continuing at the time of delivery of the foregoing certificate or at the time of the application of proceeds contemplated thereunder, then 100% of such proceeds (without giving effect to the $2,000,000 minimum threshold set forth above) shall be applied to the Obligations in accordance with Section 2.5(b);
(iv) the issuance or incurrence of Indebtedness other than Indebtedness permitted by Section 6.1; and
(v) the issuance of any Equity Interests of any Loan Party or Subsidiary except for Equity Interests issued to the Company.
(b) All amounts (if any) remitted to the Lender under this Section 2.5 shall be applied by the Lender to the payment of the Obligations in such order of application as the Lender may in its sole discretion determine. All prepayments pursuant to this Section 2.5 shall be accompanied by accrued and unpaid interest upon the principal amount of each such prepayment and, to the extent applicable, the Specified Fee set forth in Section 2.10. Notwithstanding anything herein to the contrary, any such prepayment shall not constitute or be deemed to be a cure of any Default or Event of Default arising as a result of any Disposition, casualty or condemnation event or otherwise.
Section 2.6 Fees.
(a) Unused Commitment Fee. Accruing from the Closing Date until the Term Loan Commitment Termination Date, the Borrowers agree to pay to the Lender a nonrefundable unused commitment fee (the Unused Commitment Fee) equal to the Unused Commitment Fee Rate (computed on the basis of a year of 360 days and actual days elapsed) multiplied by the average daily difference between (i) the Term Loan Amount and (ii) the aggregate principal amount of Term Loans actually funded under the Term Loan Facility. All Unused Commitment Fees shall be payable quarterly in arrears on the last Business Day of each calendar quarter, commencing the last Business Day of the calendar quarter ending September 30, 2021.
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(b) Other Fees. The Borrowers agree to pay to the Lender such other fees as agreed in the Fee Letters.
Section 2.7 Evidence of Debt. The Lender shall maintain in accordance with its usual practice records evidencing the Term Loans. The entries made in the records maintained pursuant to this Section shall be prima facie evidence absent manifest error of the existence and amounts of the obligations recorded therein. Any failure of the Lender to maintain such records or make any entry therein or any error therein shall not in any manner affect the obligations of the Borrowers under this Agreement and the other Loan Documents. Upon the request of the Lender at any time, the Borrowers shall prepare, execute and deliver to the Lender a Term Loan Note.
Section 2.8 Payments Generally.
(a) Payments by Borrowers. All payments to be made by the Borrowers hereunder and under the other Loan Documents shall be made on the date when due without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Borrowers, and without condition or deduction (except as required under Section 2.8(c)) for any counterclaim, defense, recoupment or setoff. All payments shall be made to the Lender in U.S. Dollars in immediately available funds not later than 2:00 p.m. on the date specified herein. All amounts received by the Lender after such time on any date shall be deemed to have been received on the next succeeding Business Day and any applicable interest or fees shall continue to accrue. If any payment to be made by the Borrowers shall fall due on a day that is not a Business Day, payment shall be made on the next succeeding Business Day and such extension of time shall be reflected in computing interest or fees, as the case may be; provided that, if such next succeeding Business Day would fall after the Maturity Date, payment shall be made on the immediately preceding Business Day.
(b) Application of Insufficient Payments. If at any time insufficient funds are received by and available to the Lender to pay fully all amounts of principal, interest, fees and other amounts then due hereunder, such funds shall be applied in such order of application as the Lender in its sole discretion determines.
(c) Taxes. Any and all payments by or on account of any Obligation shall be made free and clear of and without deduction or withholding for any Taxes, except as required by any Law. If payor shall be required by any Laws to deduct or withhold any Taxes from or in respect of any sum payable under any Obligation, (i) if the Tax in question is an Indemnified Tax or Other Tax, then the sum payable shall be increased as necessary so that after making all required deductions or withholding (including deductions or withholding applicable to additional sums payable under this Section 2.8(c)), each payee receives an amount equal to the sum it would have received had no such deductions or withholding been made, (ii) the payor shall make such deductions or withholding, (iii) the payor shall pay the full amount deducted or withheld to the relevant taxation authority or other authority in accordance with Applicable Laws, and (iv) within 30 days after the date of such payment (or, if receipts or evidence are not available within 30 days, as soon as possible thereafter), the payor shall furnish to such payee the original or a copy of a receipt evidencing payment thereof or other evidence acceptable to such payee. In addition, the Borrowers agree to pay any Other Taxes. If the Lender is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document, the Lender shall deliver to the Borrowers, at the time or times reasonably requested by the Borrowers, such properly completed and executed documentation reasonably requested by the Borrowers as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, if reasonably requested by the Borrowers, the Lender shall deliver such
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other documentation prescribed by Applicable Law or reasonably requested by the Borrowers as will enable the Borrowers to determine whether or not the Lender is subject to backup withholding or information reporting requirements. For purposes of this Section 2.8(c), the terms Law and Applicable Law shall include FATCA (and any amendments made thereto after the date of this Agreement).
(d) Tax Indemnity. The Borrowers and each Guarantor agree to indemnify the Lender for (i) the full amount of Indemnified Taxes and Other Taxes payable by the Lender (including Indemnified Taxes and Other Taxes imposed on or attributable to amounts payable under this Section 2.8(d)) and (ii) any expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability prepared in good faith and delivered by the Lender, accompanied by a written statement thereof setting forth in reasonable detail the basis and calculation of such amounts shall be conclusive absent manifest error.
Section 2.9 Increased Costs.
(a) Increased Costs Generally. If any Change in Law shall (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, the Lender, (ii) subject the Lender to any Taxes (other than Indemnified Taxes and Excluded Taxes) on its loans, loan principal or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto, or (iii) impose on the Lender any other condition, cost or expense (other than Taxes) affecting this Agreement or the Term Loans made by the Lender; and the result of any of the foregoing shall be to increase the cost to the Lender of making, continuing or maintaining the Term Loans, or to reduce the amount of any sum received or receivable by the Lender hereunder (whether of principal, interest or any other amount) then, upon request of the Lender, the Borrowers will pay to the Lender such additional amount or amounts as will compensate the Lender for such additional costs incurred or reduction suffered.
(b) Capital Requirements. If the Lender determines that any Change in Law affecting the Lender regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on the Lenders capital as a consequence of this Agreement or the Term Loans to a level below that which the Lender could have achieved but for such Change in Law (taking into consideration the Lenders policies with respect to capital adequacy), then from time to time the Borrowers will pay to the Lender such additional amount or amounts as will compensate the Lender for any such reduction suffered.
(c) Certificates for Reimbursement. A certificate of the Lender setting forth the amount or amounts necessary to compensate the Lender as specified in this Section 2.9 and delivered to the Borrowers shall be conclusive absent manifest error. The Borrowers shall pay the Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of the Lender to demand compensation pursuant to this Section 2.9 shall not constitute a waiver of the Lenders right to demand such compensation, provided that the Borrowers shall not be required to compensate the Lender pursuant to this Section 2.9 for any increased costs incurred or reductions suffered more than nine (9) months prior to the date that the Lender notifies the Borrowers of the Change in Law giving rise to such increased costs or reductions and of the Lenders intention to claim
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compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine (9)-month period referred to above shall be extended to include the period of retroactive effect thereof).
Section 2.10 Specified Fees. The Borrowers shall pay to the Lender:
(a) with respect to any Fee Determination Date occurring prior to the Term Loan Commitment Termination Date, a fee equal to the present value (such present value shall be computed using a discount rate equal to the Treasury Rate plus fifty (50) basis points) of the amount (to the extent positive) of interest that would have accrued on the Term Loan Facility in accordance with this Agreement had a principal balance equal to the Term Loan Amount remained outstanding during the period commencing on such Fee Determination Date and ending on the Maturity Date, taking into account all interest accrued and paid prior to such Fee Determination Date;
(b) with respect to any Fee Determination Date occurring on or after the Term Loan Commitment Termination Date but prior to the third (3rd) anniversary of the Closing Date, a fee equal to the present value (such present value shall be computed using a discount rate equal to the Treasury Rate plus fifty (50) basis points) of the amount (to the extent positive) of interest that would have accrued on such principal balance of the Term Loans in accordance with this Agreement had such principal balance remained outstanding during the period commencing on such Fee Determination Date and ending on the Maturity Date, taking into account all interest accrued and paid prior to such Fee Determination Date and the outstanding principal balance of the Term Loans as of the Fee Determination Date;
(c) with respect to any Fee Determination Date occurring on or after the third (3rd) anniversary of the Closing Date but prior to the fourth (4th) anniversary of the Closing Date, a fee equal to 5.00% of the aggregate principal amount of the Term Loans being prepaid as of such Fee Determination Date; and
(d) with respect to any Fee Determination Date occurring on or after the fourth (4th) anniversary of the Closing Date but prior to the fifth (5th) anniversary of the Closing Date, a fee equal to 3.00% of the aggregate principal amount of the Term Loans being prepaid as of such Fee Determination Date; and
(e) with respect to any Fee Determination Date occurring on or after the fifth (5th) anniversary of the Closing Date but prior to the sixth (6th) anniversary of the Closing Date, a fee equal to 2.00% of the aggregate principal amount of the Term Loans being prepaid as of such Fee Determination Date;
(the fees described in the foregoing clauses (a), (b), (c), (d) and (e), the Specified Fees); provided, that no Specified Fee shall apply to prepayments of the Term Loans made on or after the sixth (6th) anniversary of the Closing Date. The Borrowers agree that each Specified Fee is a fee that, as of a Fee Determination Date, is deemed fully earned. Each Specified Fee shall be due and payable in full in immediately available funds on the applicable Fee Determination Date. Once paid, no Specified Fee or any portion thereof shall be refundable under any circumstance.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Lender that:
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Section 3.1 Existence, Qualification and Power; Subsidiaries. Each Loan Party is a corporation or limited liability company, as applicable, duly formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization and each Loan Party and each Subsidiary thereof is duly formed, validly existing and in good standing under the Law of its jurisdiction of its incorporation or organization as set forth on Schedule 3.1 hereto. Each Loan Party and each Subsidiary (i) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (a) own or lease its assets and carry on its business and (b) execute, deliver and perform its obligations under the Loan Documents to which it is a party, and (ii) is duly qualified and is licensed and, if applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license, except, in the case of clause (ii), in jurisdictions where the failure to be so qualified or in good standing, individually or in the aggregate, has not had and could not reasonably be expected to result in a Material Adverse Effect.
Section 3.2 Authorization; No Contravention. The execution, delivery and performance by each Loan Party of each Loan Document to which it is party have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of its Organizational Documents, (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under, (i) any Contractual Obligation (including, without limitation, any Material Agreement or any Contractual Obligation relating to borrowed money) to which any Loan Party or Subsidiary is a party or affecting any Loan Party or Subsidiary or the properties of any Loan Party or any Subsidiary or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which any Loan Party or Subsidiary or its property is subject, or (c) violate any Law other than any violation, in the case of this clause (c), that could not reasonably be expected to result in a Material Adverse Effect.
Section 3.3 Governmental Authorization; Other Consents. No material approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or the other Loan Document or is then necessary or required in connection with any Material Agreement, except for such approvals, consents, exemptions, authorizations or other actions, notices or filings that have already been duly obtained or made and that are in full force and effect.
Section 3.4 Execution and Delivery; Binding Effect. This Agreement has been, each other Loan Document, when delivered hereunder, will have been, and each Material Agreement has been, duly executed and delivered by the Loan Parties party thereto. Each Loan Document and each Material Agreement constitutes a legal, valid and binding obligation of the Loan Parties party thereto, enforceable against such Loan Parties in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other Laws affecting creditors rights generally and by general principles of equity.
Section 3.5 Financial Statements; No Material Adverse Effect.
(a) Financial Statements. The financial statements delivered to the Lender on or before the Closing Date in accordance with Section 4.1 and thereafter most recently delivered in accordance with Section 5.1 (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, (ii) fairly present in all material respects the financial condition of the Company and its Subsidiaries (or, following the Qualified SPAC Transaction Effective Date, of Holdings and its Subsidiaries) as of the date thereof and their results of operations and cash flows for the period covered thereby in
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accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein and (iii) show all material Indebtedness and other liabilities, direct or contingent, of the Company and its Subsidiaries (or, following the Qualified SPAC Transaction Effective Date, of Holdings and its Subsidiaries) as of the date thereof, including liabilities for Taxes, material commitments and Indebtedness.
(b) No Material Adverse Effect. Since December 31, 2020, there has been no event or circumstance that, either individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect.
Section 3.6 Outstanding Indebtedness. Except for the Obligations and the other Permitted Indebtedness, no Loan Party nor any Subsidiary has any Indebtedness.
Section 3.7 Litigation. There are no actions, suits, proceedings, claims, disputes or investigations pending or, to the knowledge of the Borrowers, threatened in writing, at Law, in equity, in arbitration or before any Governmental Authority, by or against any Loan Party or Subsidiary or against any of their properties or revenues that (a) either individually or in the aggregate could reasonably be expected to have a Material Adverse Effect, (b) either individually or in the aggregate could reasonably be expected to result in losses, claims, damages, expenses or liabilities exceeding $2,000,000 or (c) purport to affect or pertain to this Agreement or any other Loan Document or any of the transactions contemplated hereby.
Section 3.8 No Material Adverse Effect; No Default. No Loan Party or Subsidiary is (a) in material default under or with respect to any Material Agreement or (b) in default under or with respect to any other Contractual Obligation that, in the case of this clause (b), either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.
Section 3.9 Property; Licenses; Margin Regulations.
(a) Ownership of Properties. Each Loan Party and Subsidiary has good legal and marketable title in fee simple (in the case of real property) and good title (in the case of personal property) to, or valid leasehold interests in, all real and personal property necessary in the ordinary conduct of its business, in each case free and clear of all Liens other than Liens in favor of the Lender and other Permitted Liens.
(b) Intellectual Property. Each Loan Party and Subsidiary owns, licenses or possesses the right to use all of the trademarks, tradenames, service marks, trade names, copyrights, patents, franchises, licenses and other intellectual property rights that are necessary for the operation of their respective businesses, as currently conducted, business, and the use thereof by the Loan Parties and Subsidiaries does not conflict with the rights of any other Person, except to the extent that such failure to own, license or possess or such conflicts, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. The conduct of the business of the Loan Parties and Subsidiaries as currently conducted or as contemplated to be conducted does not infringe upon or violate any rights held by any other Person, except to the extent that such infringements and violations, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. No claim or litigation regarding any of the foregoing is pending or, to the knowledge of the Borrowers, threatened in writing that could reasonably be expected to have a Material Adverse Effect.
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(c) Licenses. Each Loan Party and Subsidiary is in compliance with, and has procured and is now in possession of, all Licenses then required by any Applicable Law for the operation of its business in each jurisdiction wherein it is now conducting or proposes to conduct business, and each such License then required to be issued has been validly issued to the relevant Loan Party or Subsidiary. No Loan Party or Subsidiary has any knowledge of any basis upon which the renewal of any material License would be denied in the future. Each Project License then required to be issued has been validly issued to the relevant Loan Party or Subsidiary and is in full force and effect, and no Loan Party nor any Subsidiary is in violation in any material respect of any such Project License. Each Loan Party and Subsidiary has posted such bonds then required to be posted under its Licenses (including its Project Licenses).
(d) Margin Regulations. None of the assets of any Loan Party or Subsidiary will be Margin Stock, and no part of the proceeds of the Term Loans hereunder will be used to buy or carry Margin Stock.
Section 3.10 Taxes. Each Loan Party and Subsidiary has (a) filed all federal, state and other material tax returns and reports required by Applicable Law to be filed by any Loan Party or Subsidiary, or extensions have been obtained, and (b) paid all Taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except to the extent that (i) Taxes that are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves are being maintained in accordance with GAAP, (ii) no foreclosure or similar proceedings have been commenced or notice of Liens filed with respect thereto, and (iii) the failure to pay such Taxes, either individually or in the aggregate, could not reasonably be expected to result in liability in excess of $2,000,000.
Section 3.11 Disclosure. The Borrowers have disclosed to the Lender all agreements, instruments and corporate or other restrictions to which any Loan Party or Subsidiary is subject, and all other matters known to the Borrowers that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. The reports, financial statements, certificates and other written information (other than projected or pro forma financial information) furnished by or on behalf of the Loan Parties to the Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as amended, modified or supplemented by other information so furnished), when taken as a whole, do not contain any material misstatement of fact or omit to state any material fact necessary to make the statements therein (when taken as a whole), in the light of the circumstances under which they were made, not materially misleading; provided that, with respect to projected or pro forma financial information, the Borrowers represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time of preparation and delivery (it being understood that such projected information may vary from the actual results and that such variances may be material). The Perfection Certificate is true, complete and correct in all material respects, and, as of the Closing Date, the Beneficial Ownership Certification is true, complete and correct in all material respects.
Section 3.12 Compliance with Laws. Each Loan Party and Subsidiary is in compliance with the requirements of all Laws (including, without limitation, all Environmental Laws and all Applicable Food and Feed Safety Laws) and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to so comply, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. Each Plan is in compliance, in all material respects, with all applicable requirements of ERISA, the Code and other Laws.
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Section 3.13 ERISA Compliance. No Loan Party or ERISA Affiliate sponsors, maintains, contributes to, or has an obligation to, or has contributed to or been obligated to contribute to at any time during the immediately preceding seven plan year, a Plan that is covered by Title IV of ERISA or subject to the funding standards of Section 412 of the Code. There are no pending or, to the knowledge of the Borrowers, threatened or contemplated claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that, either individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect.
Section 3.14 Environmental Matters; Hazardous Materials.
(a) Except with respect to any matters that, either individually or in the aggregate, could not reasonably be expected to result in liability in excess of $2,000,000 or have a Material Adverse Effect, no Loan Party or Subsidiary (a) has failed to comply with any Environmental Law or to obtain, maintain or comply with any License or other approval required under any Environmental Law, (b) knows of any basis for any License or other approval required under any Environmental Law to be revoked, canceled, limited, terminated, modified, appealed or otherwise challenged, (c) has or could reasonably be expected to become subject to any Environmental Liability, (d) has received notice of any claim, complaint, proceeding, investigation or inquiry with respect to any Environmental Liability (and no such claim, complaint, proceeding, investigation or inquiry is pending or, to the knowledge of the Borrowers, is threatened or contemplated) or (e) knows of any facts, events or circumstances that could give rise to any basis for any Environmental Liability of any Loan Party or Subsidiary.
(b) Except as disclosed on Schedule 3.14(b):
(i) All Farm Project Sites and the other facilities and properties currently or formerly owned, leased or operated by any Loan Party or Subsidiary (the Properties) do not contain any Hazardous Materials attributable to such Loan Partys or Subsidiarys ownership, lease or operation of the Properties in amounts or concentrations or stored or utilized which (A) constitute or constituted a violation of Environmental Laws, or (B) could reasonably be expected to give rise to any Environmental Liability, in each case, to the extent that such violation could reasonably be expected to give rise, either individually or in the aggregate, to any Environmental Liability in excess of $1,000,000; and
(ii) Hazardous Materials have not been transported or disposed of from the Properties (A) in violation of Environmental Law, or (B) in a manner or to a location which could reasonably be expected to give rise, either individually or in the aggregate, to any Environmental Liability in excess of $1,000,000 for the Loan Parties and their Subsidiaries, nor have any Hazardous Materials been generated, treated, stored or disposed of by or on behalf of any Loan Party or Subsidiary at, on or under any of the Properties in violation of Environmental Laws or in a manner that could reasonably be expected to give rise, either individually or in the aggregate, to any Environmental Liability in excess of $1,000,000.
Section 3.15 Investment Company Act. No Loan Party or Subsidiary is or is required to be registered as an investment company as defined in the Investment Company Act of 1940.
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Section 3.16 Insurance. The properties of each Loan Party and each of its Subsidiaries are insured pursuant to policies and other bonds that are valid and in full force and effect and that provide coverage satisfying or surpassing the requirements set forth in Section 5.6.
Section 3.17 Sanctions and Anti-Terrorism; Anti-Corruption.
(a) No Loan Party or Subsidiary or director, officer, employee, agent or Affiliate of any Loan Party or Subsidiary is an individual or entity (person) that is, or is owned or controlled by persons that are, (i) the target of any Sanctions or Anti-Terrorism Laws, or (ii) located, organized or resident in a country or territory that is, or whose government is, the subject of Sanctions or Anti-Terrorism Laws (including, currently, Crimea, Cuba, Iran, North Korea and Syria).
(b) Each Loan Party and Subsidiary and their respective directors, officers and employees and, to the knowledge of the Borrowers, the agents of each Loan Party and Subsidiary are in compliance with all applicable Sanctions, Anti-Terrorism Laws and Anti-Corruption Laws. Each Loan Party and Subsidiary has instituted and maintains policies and procedures designed to ensure continued compliance with applicable Sanctions, Anti-Terrorism Laws and Anti-Corruption Laws.
Section 3.18 Solvency. The Company, individually, is, and the Loan Parties, together with their Subsidiaries on a consolidated basis, are, Solvent.
Section 3.19 Material Agreements. The Borrowers have delivered to the Lender a true, correct and complete copy of each Material Agreement. No Material Agreement has been terminated or otherwise modified except in accordance with the terms thereof, and each Material Agreement (other than those terminated in accordance with their terms) remains in full force and effect. No material default or event of default has occurred and is continuing under any Material Agreement, and no condition or event has occurred and is continuing that would be likely to result in a material default or event of default with the giving notice, the lapse of time or both. The terms of each Material Agreement conform, in all material respects, to all applicable governmental and third-party consents and approvals and the requirements of Applicable Law. The Loan Parties and their Subsidiaries have all Material Agreements, material Licenses and other rights necessary to carry out their business as conducted.
Section 3.20 Employee and Labor Matters.
(a) There is no unfair labor practice complaint pending or, to the knowledge of the Borrowers, threatened against any Loan Party or its Subsidiaries before any Governmental Authority and no grievance or arbitration proceeding pending or threatened against any Loan Party or its Subsidiaries which arises out of or under any collective bargaining agreement and that could reasonably be expected to result in liability in excess of $2,000,000.
(b) There exists no strike, labor dispute, slowdown, stoppage or similar action or grievance pending or threatened in writing against any Loan Party or its Subsidiaries that could reasonably be expected to lead to an interruption of their respective operations at any location or result in liability in excess of $2,000,000. To the knowledge of the Borrowers, no union representation question existing with respect to the employees of any Loan Party or its Subsidiaries and no union organizing activity is taking place with respect to any of the employees of any Loan Party or its Subsidiaries. No Loan Party or any of its Subsidiaries has incurred any liability or obligation under the Worker Adjustment and Retraining Notification Act or similar state law, which remains unpaid or unsatisfied. The hours worked and payments made to employees of each Loan Party and its Subsidiaries have not been in violation of the Fair Labor
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Standards Act or any other applicable legal requirements, except to the extent such violations could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. All material payments due from any Loan Party or its Subsidiaries on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of the Borrowers.
(c) The Loan Parties and their Subsidiaries are in material compliance with Applicable Laws respecting employment and employment practices (including employment insurance, employer health tax, employment standards, labor relations, occupational health and safety, human rights, workers compensation, employment equity and pay equity) and, to the knowledge of the Borrowers, there are no pending or threatened proceedings before any Governmental Authority or otherwise with respect to any of the foregoing that could reasonably be expected to result in liability in excess of $2,000,000.
Section 3.21 Compliance with Food Security Act and Agricultural Lien Statutes; Agricultural Lien Notices.
(a) Each Loan Party (i) is in compliance in all material respects with the Food Security Act, as applicable to it, and has filed all appropriate notices and requests and otherwise taken all applicable steps, if any, that are required of it to register with the Central Filing System and subscribe to the portions of the master list covering effective financing statements related to farm products and other agricultural products purchased by such Loan Party, in each case established, maintained and distributed by the Secretary of State (or such other similar state agency) of each state that maintains a Central Filing System in accordance with the Food Security Act, and (ii) is in compliance in all material respects with all other applicable Agricultural Lien Statutes.
(b) (x) No Loan Party has received notice (written or otherwise) from any Producer, unpaid seller, supplier, agent or secured party indicating such Persons intent to claim or preserve the benefits of any trust under any Agricultural Lien Statute or of any Lien in any farm products (as defined in the UCC) under Applicable Law (other than any standard boiler-plate language included on invoices or similar documentation in the ordinary course of business), and (y) no action has been commenced against any Loan Party or any Subsidiary thereof by (i) any beneficiary of any such Lien to enforce such Lien or (ii) any Governmental Authority or any beneficiary of a trust created under any Agricultural Lien Statute to enforce payment from such trust.
Section 3.22 Agricultural Licenses. Each Loan Party and each Subsidiary thereof maintains all necessary and material Agricultural Licenses required to operate its business.
Section 3.23 The Farm Projects.
(a) The Borrowers have delivered to the Lender a true, correct, and complete copy of each Material Project Document entered into on or prior to the Closing Date, will promptly deliver to the Lender a true, correct, and complete copy of each Material Project Document entered into or obtained after the Closing Date, and none of the Material Project Documents that have been delivered to the Lender have been terminated or otherwise modified except in accordance with the terms hereof and remains in full force and effect.
(b) The Project Documents that have been or will be delivered to the Lender comprise substantially all of the material services, materials and property interests required for Completion of the applicable Farm Project.
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(c) No material default or event of default has occurred under any Material Project Document, and no material condition or event has occurred that would result in such a default or event of default with the giving notice, the lapse of time or both.
(d) Each Farm Project is and will continue to be owned by a Loan Party, subject to a Lien in favor of the Lender (subject only to Permitted Liens), and developed, constructed and maintained in accordance with the Project Documents and Applicable Law in all material respects.
(e) The terms of each Material Project Document conform in all material respects to the applicable Project Licenses and any other applicable governmental and third-party consents and approvals and the requirements of Applicable Law.
(f) All material property interests, utility services, means of transportation, facilities and other material necessary for Completion and operation of the applicable Farm Project are, or will be when needed, available to such Farm Project.
(g) Each Initial Construction Budget and each other Construction Budget is realistic and feasible for achievement of Completion on or prior to the applicable Completion Deadline.
ARTICLE IV
CONDITIONS
Section 4.1 Conditions Precedent to Effectiveness. The obligation of the Lender to make any Term Loan hereunder is subject to the condition precedent that, on or before the Closing Date, the Lender shall have received each of the following, each in form and substance satisfactory to the Lender:
(a) this Agreement, the Collateral Documents and the other Loan Documents to be entered into on the Closing Date, each signed by a Responsible Officer of each Loan Party and a duly authorized officer of each other party thereto, together with all other original items required to be delivered pursuant to the Collateral Documents or any other Loan Document;
(b) a certificate of a Responsible Officer of each Loan Party, attaching (i) the Organizational Documents of such Loan Party, (ii) resolutions or other action of the Governing Board of such Loan Party approving the transactions and other matters contemplated by the Loan Documents to which it is a party, and (iii) an incumbency certificate evidencing the identity, authority and capacity of each Responsible Officer of such Loan Party authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which it is a party;
(c) such other documents and certificates as the Lender may request relating to the organization, existence and good standing of each Loan Party and any other legal matters relating to the Loan Parties, the Loan Documents or the transactions contemplated thereby;
(d) a certificate of status, compliance or like certificate for each Loan Party and Subsidiary from the appropriate Governmental Authority of the jurisdiction of incorporation or formation of such Person and each jurisdiction where it is required to qualify to do business, each dated not more than thirty (30) days prior to the Closing Date;
(e) a certificate of a Responsible Officer of the Company, dated as of the Closing Date and attaching reasonably detailed calculations demonstrating pro forma compliance with the minimum Liquidity covenant set forth in Section 6.8(d) after giving effect to the Term Loans to be funded on the Closing Date;
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(f) a written consent, duly executed by Holdings and confirming that this Agreement, the other Loan Documents, the Term Loan Facility and the Liens created pursuant to any Loan Document to secure the Obligations are permitted under, and do not conflict with or contravene, the SPAC Merger Agreement;
(g) an appropriately completed Perfection Certificate with respect to the Borrowers and the other Loan Parties, dated as of the Closing Date and duly executed by a Responsible Officer of the Borrowers;
(h) one or more opinions of counsel to the Loan Parties, addressed to the Lender and dated the Closing Date, in form and substance satisfactory to the Lender (covering the jurisdiction of formation of each Loan Party, the jurisdiction of the governing law of each Loan Document and the jurisdiction in which any Farm Project Site is located, as applicable);
(i) with respect to the Existing Bridge Indebtedness and any other Indebtedness or other obligations owing by the Loan Parties to any Exiting Lenders:
(i) evidence that all such Indebtedness has been, or as of the Closing Date will be, repaid in full in cash and all such obligations have been, or as of the Closing Date will be, terminated;
(ii) a payoff letter (accompanied by such other discharges, releases (including, without limitation, mortgage releases), terminations or other documents as the Lender may request in its sole discretion), in each case duly executed by the Exiting Lenders or their agent, as applicable, releasing effective as of the Closing Date all Liens on any assets of any Loan Parties or any Subsidiaries of any Loan Party granted in favor of the Exiting Lenders upon receipt of the payoff amount on the Closing Date and authorizing the Borrowers, the Lender or their respective designees to file UCC-3 termination statements and such other releases and terminations as necessary to terminate any and all such Liens;
(j) Lien searches with respect to the Loan Parties and any Subsidiary in scope satisfactory to the Lender and with results showing no Liens (other than Liens in favor of the Lender, other Permitted Liens and Liens authorized to be released on the Closing Date in accordance with Section 4.1(i)) and otherwise satisfactory to the Lender;
(k) UCC financing statements for each jurisdiction as is necessary, in the Lenders sole discretion, to perfect the Lenders security interest in the Collateral to the extent such Liens can be perfected by filing or recordation;
(l) an executed Account Control Agreement with respect to (i) the Interest Reserve Account and (ii) each other deposit, securities and commodity account of the Loan Parties (other than Excluded Accounts);
(m) a disbursement letter, duly executed by the Borrowers and demonstrating, among other things, that the Interest Reserve Account shall be funded with the Minimum Interest Amount required on such date in accordance with Section 5.17;
(n) [reserved];
(o) evidence from the Borrowers that all material governmental and third-party consents required to effectuate the transactions contemplated by the Loan Documents have been obtained;
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(p) true, correct and complete copies of the Warrant Agreement and all other Material Agreements then in effect (including, without limitation, to the extent not previously delivered to the Lender, all Farm Lease Agreements and Approved Long-Term Supply Agreements then in effect) of the Borrowers, the Guarantors and any Subsidiary, each of which shall be satisfactory to the Lender, together with such Collateral Assignments of such Material Agreements and acknowledgments by such counterparties as may be reasonably requested by the Lender in its sole discretion, duly executed by the parties thereto;
(q) at least five (5) Business Days prior to the Closing Date (or such shorter period as may be approved by the Lender in its sole discretion), completed background checks and such other documentation and information requested by (or on behalf of) the Lender, in each case satisfactory to the Lender, including information required by Lender to satisfy any know your customer requirements, including, without limitation, the Beneficial Ownership Certification;
(r) evidence that adequate liability, property, business interruption and builders risk insurance required to be maintained under this Agreement is in full force and effect, in each case together with certificates naming the Lender as additional insured, mortgagee and lenders loss payee, as applicable, with respect to the Collateral and, in the case of any business interruption insurance, accompanied by an assignment of such business interruption insurance in favor of the Lender signed by the Loan Parties and the applicable insurer;
(s) payment of (i) all fees, costs and expenses then due and payable pursuant to Section 8.3 hereof, to the extent invoiced on or prior to the date hereof and (ii) payment of such fees as are set forth in the Fee Letter; and
(t) such financial statements, budgets, forecasts, projections and any other information or documents as the Lender reasonably requests.
Section 4.2 Additional Conditions to First Post-Merger Subordinated Term Loan. In addition to, and without limiting, the conditions set forth in Sections 4.1 and 4.3, the obligation of the Lender to make the First Post-Merger Subordinated Term Loan is subject to the Lenders receipt, on or prior to Subordinated Facility Post-Merger Funding Date, of the following, each of which shall be in form and substance satisfactory to the Lender in its sole discretion:
(a) evidence of the consummation of the Qualified SPAC Transaction and the occurrence of the Qualified SPAC Transaction Effective Date (including, without limitation, in the form of copies of the relevant certificates of merger certified or recorded by the appropriate Governmental Authorities); and
(b) a certificate of a Responsible Officer of the Company, substantially in the form delivered to the Lender pursuant to Section 4.1(b) and, among other things, (i) certifying the Organizational Documents of the Company after giving effect to the Qualified SPAC Transaction and the occurrence of the Qualified SPAC Transaction Effective Date, and (ii) attaching true, correct, and complete copies of the SPAC Merger Agreement and all Ancillary Agreements (as defined in the SPAC Merger Agreement);
it being understood and agreed, for the avoidance of doubt, that the funding of the Closing Date Subordinated Loan and the Permitted Northwest Subordinated Loan shall not be subject to this Section 4.2.
Section 4.3 Additional Conditions to each Term Loan. In addition to, and without limiting, the conditions set forth in Sections 4.1, 4.2 and 4.4 (other than with respect to the funding of (i) the
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Closing Date Subordinated Loan, (ii) the Permitted Northwest Subordinated Loan and (iii) a Term Loan pursuant to Section 5.17(b), which such funding shall be limited to Section 4.1 above (and, in the case of the Permitted Northwest Subordinated Loan, Section 4.4 below) and to clauses (a), (b), (c) and (d) of this Section 4.3), the obligation of the Lender to make any Term Loan hereunder is subject to the satisfaction (or waiver by the Lender in its sole discretion) of the following additional conditions precedent on or before the date of such Term Loan, each of which shall be in form and substance satisfactory to the Lender:
(a) the representations and warranties set forth in this Agreement and the other Loan Documents shall be true and correct in all material respects (or, in the case of any such representation or warranty already qualified by materiality, in all respects) on and as of the date of such Term Loan;
(b) no Default or Event of Default shall have occurred and be continuing or would result from such Term Loan or from the application of proceeds thereof;
(c) the Borrowers shall have delivered to the Lender an appropriately completed and duly executed Loan Request for each Term Loan requested to be made pursuant to this Agreement;
(d) the Lender shall have received evidence that, concurrently with the funding of each Term Loan requested hereunder, (x) an equity or capital contribution is made by the Borrowers and (y) a loan is funded under the Senior Credit Agreement, in each case in accordance with Section 6.8(e);
(e) to the extent the proceeds of a requested Term Loan are to be used for the first payment of Project Costs in respect of a Farm Project, the Lender shall have received, on or prior to the date of such Term Loan:
(i) each of the items set forth in Section 5.15 with respect to the Farm Project Site where the Farm Project being funded by the applicable Term Loan is to be located (including, without limitation, Mortgages, insurance (including title insurance and flood insurance) documentation, surveys, appraisals and environmental assessment, in each case complying with Section 5.15); and
(ii) such financial statements, budgets, forecasts, projections (including projected draw schedules) or other information or documents with respect to such Farm Project as the Lender reasonably requests, in each case in form and substance satisfactory to the Lender;
(f) the Lender and the Disbursing Agent shall have received all items required under the Disbursing Agreement in connection with such Term Loan;
(g) the Lender shall have received a copy of each Material Project Document and each other Material Agreement then in effect (including, without limitation, each Farm Lease Agreement and each Approved Long-Term Supply Agreement) not previously delivered to the Lender, together with a Collateral Assignment of the same (to the extent such Collateral Assignment (or any consent or acknowledgment thereof) is required or requested in accordance with the definition of Collateral Assignment);
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(h) the Lender shall have received a certificate of a Responsible Officer of the Company, in the form of Exhibit D attached hereto, certifying, as of the date of such Term Loan, that:
(i) after giving effect to such Term Loan, (A) such Term Loan, together with any loan under the Senior Credit Agreement made concurrently with such Term Loan, shall constitute not more than 75% of the Project Costs in respect of which such Term Loan is requested, and (B) the Borrowers will be in compliance with the capital stacking covenant set forth in Section 6.8(e), and attaching thereto reasonably detailed calculations demonstrating each of the foregoing;
(ii) each Material Project Document delivered to the Lender as of such date is a true, correct and complete copy of the same;
(iii) each Material Project Document is in full force and effect and, to the best knowledge of the Company, no default or event of default has occurred thereunder;
(iv) all Project Licenses and any other governmental and third-party consents, permits and approvals with respect to each Farm Project that are required as of such date have been duly obtained, validly issued and are in full force and effect, not subject to any appellate, judicial or administrative proceeding or to any unsatisfied condition that may allow material modification or revocation, and no material violation thereof shall have occurred;
(v) such Term Loan shall not be used to pay for materials or equipment for a Farm Project unless (x) such materials or equipment have been incorporated into such Farm Project or have been delivered to the applicable Farm Project Site for later incorporation into such Farm Project and stored at the applicable Farm Project Site or (y) such Term Loan shall be used to fund deposits or scheduled payments required pursuant to any Project Documents prior to work being commenced or materials or equipment being delivered to or incorporated into the such Farm Project;
(vi) the development of each Farm Project is substantially proceeding in the manner provided for in the Project Documents relating thereto;
(vii) the aggregate amount of the Project Costs paid (and remaining to be paid) with respect to each Farm Project does not exceed the Initial Construction Budget applicable to such Farm Project; provided, notwithstanding the foregoing, the aggregate amount of the Project Costs paid (and remaining to be paid) with respect to each Farm Project may exceed the Initial Construction Budget applicable to such Farm Project by an amount not to exceed 5% of such Initial Construction Budget, but only so long as, on or prior to the date of the requested Term Loan, (A) (x) such excess amount is funded by cash contributions from the Borrowers in compliance with Section 6.8(d) or an irrevocable capital cash contribution from Holdings to the Borrowers, and (y) the Borrowers have fully paid such excess Projects Costs from the proceeds of such contributions, and (B) the Borrowers deliver to the Lender reasonably satisfactory evidence of the foregoing;
(viii) as of the date of such certificate, and after giving effect to the requested Term Loan, the unadvanced amounts under both the Term Loan Facility and the Senior Credit Agreement (determined in accordance with the capital stacking requirements set forth in Section 6.8(e)) and Unrestricted Cash of the Borrowers (including Unrestricted
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Cash contributed to the Borrowers by Holdings) are sufficient to pay all Project Costs required in order to achieve the Completion of each Farm Project on or prior to the Completion Deadline applicable to such Farm Project;
(ix) the Final Completion Date of each Farm Project can reasonably be expected to occur on or prior to the Completion Deadline applicable to such Farm Project;
(i) the Lender shall have received an updated Project Status Report, Construction Budget and Construction Schedule with respect to each Farm Project;
(j) the Lender shall have received (i) a current sworn construction cost statement of the Company in form reasonably acceptable to the Lender, (ii) a current sworn construction cost statement of each Material Project Contractor in form reasonably acceptable to the Lender, and (iii) copies of invoices, bills, statements or bills of sale representing the Project Costs to be paid from proceeds of the requested Term Loan;
(k) to the extent permitted under Applicable Law, the Lender shall have received Lien waivers and releases, conditioned only upon receipt of payment, duly executed by each Person (other than an Excluded Contractor or Subcontractor) being paid from the proceeds of the requested Term Loan who may have or may be entitled to have a Lien pursuant to Applicable Law or agreement;
(l) the Lender shall have received unconditional Lien waivers and releases, duly executed by each Person (other than an Excluded Contractor or Subcontractor) paid from proceeds of all prior Term Loans who may have or may be entitled to have a Lien pursuant to Applicable Law or agreement, to the extent not previously delivered to the Lender;
(m) no stop notice with respect to any Farm Project shall have been delivered to the Company or any other Loan Party, unless the Company has filed a release bond with respect thereto in accordance with the requirements of Law in the state where the Farm Project Site is located;
(n) if required by the Lender, the Lender shall have received a certificate from the Project Consultant, duly executed by the Project Consultant and dated not earlier than five (5) Business Days prior to the date of the requested Term Loan, certifying as follows: (i) the Project Consultant has reviewed the Project Status Report, Construction Budget, and Construction Schedule applicable to each Farm Project, (ii) the Project Consultant recommends payment of the Project Costs that the Borrowers intend to pay with proceeds of such requested Term Loan, (iii) the development of each Farm Project is substantially proceeding in the manner provided for in the Project Documents relating thereto, (iv) the aggregate amount of the Project Costs paid (and remaining to be paid) with respect to each Farm Project does not exceed the Initial Construction Budget applicable to such Farm Project (provided that the aggregate amount of the Project Costs paid (and remaining to be paid) with respect to each Farm Project may exceed the Initial Construction Budget applicable to such Farm Project by an amount not to exceed 5% of such Initial Construction Budget, but only so long as, on or prior to the date of such certificate, (A) (x) such excess amount is funded by cash contributions from the Borrowers in compliance with Section 6.8(d) or an irrevocable capital cash contribution from Holdings to the Borrowers, and (y) the Borrowers have fully paid such excess Projects Costs from the proceeds of such contributions, and (B) the Borrowers deliver to the Lender reasonably satisfactory evidence of the foregoing), (v) as of the date of such certificate, and after giving effect to the requested Term Loan, the unadvanced amounts under both the Term Loan Facility and the Senior Credit Agreement
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(determined in accordance with the capital stacking requirements set forth in Section 6.8(e)) and Unrestricted Cash of the Borrowers (including Unrestricted Cash contributed to the Borrowers by Holdings) are sufficient to pay all Project Costs required in order to achieve Completion of each Farm Project on or prior to the Completion Deadline applicable to such Farm Project, and (vi) the Final Completion Date of each Farm Project can reasonably be expected to occur on or prior to the Completion Deadline applicable to such Farm Project;
(o) for payments to each General Contractor, the Lender shall have received payment and performance bonds in the amount of the GC Contract with such General Contractor (which, to the extent approved by the Lender in writing in its reasonable discretion, may be in the form of payment and performance bonds issued by applicable subcontractors), together with a dual obligee rider in favor of the Lender, in each case in form and substance acceptable to the Lender;
(p) to the extent not previously delivered, the Borrowers shall have delivered to the Lender evidence of the insurance required by Section 5.18(d);
(q) the Lender shall have received such bring-down certificates, searches, an endorsement to the title insurance policy issued to the Lender covering the date of such Term Loan and increasing the amount of Lenders insurance coverage by the amount of such Term Loan disbursed and date down the coverage for mechanics liens with the ALTA 33-06 Construction Disbursement Endorsement; and
(r) if the requested Term Loan is for the last disbursement necessary to Complete a Farm Project, the Lender shall have received (i) a certification from the Company and the Project Consultant that the improvements on such Farm Project will, after application of the proceeds of such Term Loan, be Complete and (ii) the applicable title insurance company shall be committed to issue to the Lender such endorsements as the Lender may reasonably require, to be issued by such title insurance company subsequent to the expiration of the period during which any Lien for labor, services or materials may be validly recorded against such Farm Project or such other endorsements to the Lenders title insurance policy as the Lender may reasonably require which shall insure that such Farm Project improvements have been completed free of all mechanics and materialmens Liens or claims and other Liens, other than Liens expressly permitted under the Mortgage applicable to such Farm Project).
Section 4.4 Additional Conditions to Permitted Northwest Subordinated Loan. In addition to, and without limiting, the conditions set forth in Section 4.1 and in clauses (a), (b), (c) and (to the extent occurring on or after the Subordinated Facility Post-Merger Funding Date) (d) of Section 4.3, the obligation of the Lender to make the Permitted Northwest Subordinated Loan is subject to the satisfaction (or waiver by the Lender in its sole discretion) of the following additional conditions precedent on or before the funding date of the Permitted Northwest Subordinated Loan, each of which shall be in form and substance satisfactory to the Lender:
(a) the Lender shall have received a certificate of a Responsible Officer of the Company, attaching true, correct, and complete copies of all agreements, instruments and other documents (i) evidencing the binding commitment of an Approved USDA Lender to make, and of the USDA to guarantee, the USDA Loans to the Northwest SPV and (ii) to the extent such USDA Loans are secured by assets of the Northwest SPV, expressly permitting (A) each of the Lender and the Senior Creditor to have and maintain a second priority security interest in and Lien on such assets and (B) the Northwest SPV to guarantee each of the Obligations and the Obligations (as defined in the Senior Credit Agreement), in each case subject to intercreditor terms and conditions reasonably satisfactory to the Lender;
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(b) the Lender shall have received each of the items set forth in Section 5.15 with respect to Pasco Property, in each case complying with Section 5.15 and with the preceding clause (a); and
(c) the Senior Credit Agreement shall have become effective in accordance with its terms prior to, or substantially concurrently with, the funding date of the Closing Date Subordinated Loan.
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrowers covenant and agree with the Lender that, until all Obligations shall have been Paid in Full:
Section 5.1 Financial Statements. The Borrowers will furnish to the Lender, each in form, detail and substance satisfactory to the Lender:
(a) as soon as available, and in any event within 120 days after the end of each Fiscal Year, audited financial statements of the Company and its Subsidiaries consisting of a consolidated (and, with respect to each Subsidiary of the Company, consolidating) balance sheet of the Company and its Subsidiaries as at the end of such Fiscal Year and the related consolidated (and, with respect to each Subsidiary of the Company, consolidating) statements of income or operations, shareholders equity and cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, prepared by independent public accountants of nationally or regionally recognized standing (or other firm of independent public accountants reasonably acceptable to the Lender, it being agreed and acknowledged that RSM US LLP is acceptable to the Lender) in accordance with generally accepted auditing standards (and, except for the Permitted Going Concern Qualification (if any), shall not be subject to any going concern or like qualification, exception or explanatory paragraph), certified by a Financial Officer of the Company as fairly presenting in all material respects the financial condition, results of operations, shareholders equity and cash flows of the Company and its Subsidiaries in accordance with GAAP consistently applied, together with a management discussion and analysis of such financial statements; and
(b) as soon as available, but in any event within 60 days after the end of each calendar quarter, commencing with the calendar quarter ending September 30, 2021, a consolidated (and, with respect to each Subsidiary of the Company, consolidating) balance sheet of the Company and its Subsidiaries as at the end of such calendar quarter, the related consolidated (and, with respect to each Subsidiary of the Company, consolidating) statements of income or operations, shareholders equity and cash flows for such calendar quarter and for the portion of the Companys Fiscal Year then ended, in each case setting forth in comparative form the year-to-date period of the current Fiscal Year as compared to the corresponding portion of the previous Fiscal Year, certified by a Financial Officer of the Company as fairly presenting in all material respects the financial condition, results of operations, shareholders equity and cash flows of the Company and its Subsidiaries in accordance with GAAP consistently applied, subject only to normal year-end adjustments and the absence of footnotes.
(c) Notwithstanding anything in this Section 5.1 to the contrary, commencing after the Qualified SPAC Transaction Effective Date, (i) any financial statements required to be delivered pursuant to this Section 5.1 shall be financial statements of the Consolidated Group and (ii) the obligations in clauses (a) and (b) of this Section 5.1 may be satisfied with respect to financial information of the Consolidated Group by furnishing (A) the applicable financial
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statements of the Consolidated Group to the Lender or (B) the Form 10-K, 10-Q or 8-K, as applicable, of the Consolidated Group, filed with the SEC. Documents required to be delivered pursuant to Sections 5.1(a) and (b) and Section 5.2(d) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the earliest date on which (x) Holdings or the Company provides a link thereto on Holdings or the Companys website on the Internet; (y) such documents are posted on Holdings or the Companys behalf on IntraLinks/IntraAgency or another website, if any, to which the Lender has access (whether a commercial, third-party website or whether sponsored by the Lender), or (z) such financial statements and/or other documents are posted on the SECs website on the Internet at www.sec.gov.
Section 5.2 Certificates; Other Information. The Borrowers will deliver, or cause to be delivered, to the Lender, each in form, detail and substance satisfactory to the Lender:
(a) concurrently with the delivery of the financial statements referred to in Sections 5.1(a) and (b), a duly completed Compliance Certificate signed by a Responsible Officer of the Company (i) certifying as to whether a Default or Event of Default has occurred and, if a Default or Event of Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto and (ii) setting forth reasonably detailed calculations demonstrating compliance with the covenants set forth in Section 6.8;
(b) promptly following request therefor, copies of any detailed audit reports, management letters or recommendations submitted to the Governing Board (or the audit committee of the Governing Board) of any Loan Party or Subsidiary by independent accountants in connection with the accounts or books of such Loan Party or Subsidiary, or any audit of any of them as the Lender may from time to time reasonably request;
(c) as soon as practicable and in any event before the beginning of each Fiscal Year, the projected balance sheets, income statements, capital expenditures budget and cash flow statements for the Consolidated Group, on a consolidated and consolidating basis, for each month of the next Fiscal Year, each in reasonable detail, representing the good faith projections of the Consolidated Group for each such month, and certified by a Financial Officer of the Company as being the projections upon which the Consolidated Group relies, together with such supporting schedules and information as the Lender from time to time may reasonably request;
(d) promptly after receipt or furnishing thereof, copies of each annual report, proxy or financial statement or other report or communication sent to the shareholders of any Loan Party or Subsidiary, and copies of all annual, regular, periodic and special reports and registration statements that such Loan Party or Subsidiary may file or be required to file with the SEC or with any national securities exchange, and not otherwise required to be delivered pursuant hereto;
(e) promptly after receipt thereof by any Loan Party or Subsidiary, copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other similar inquiry by such agency regarding financial or other operational results of such Loan Party or Subsidiary thereof;
(f) promptly after the occurrence thereof, notice of any change in the information provided in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified in such certification; provided, that following the Qualified SPAC Transaction Effective Date, such notice shall only be required to the extent Holdings or any other Loan Party is a legal entity customer under the Beneficial Ownership Regulation;
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(g) promptly upon execution thereof, a true, correct and complete copy of each Material Agreement, or any amendment thereto, entered into after the Closing Date;
(h) promptly after the furnishing thereof, copies of any material request, report or notice received by any Loan Party or any Subsidiary, or any material statement or report furnished by any Loan Party or any Subsidiary pursuant to the terms of any Material Agreement (including, without limitation, the SPAC Merger Agreement);
(i) with respect to each Farm Project:
(i) as soon as available and in any event within thirty (30) days after the end of each fiscal month of the Company, a Project Status Report and Construction Budget with respect to such Farm Project, in each case certified by the Project Consultant;
(ii) promptly upon receipt, a copy of any Farm Project Site visit report or other reviews or notices issued by any Governmental Authority, including, without limitation, EPA or USDA;
(iii) promptly upon receipt, a copy of each material report delivered to a Loan Party by any Person pursuant to a Material Project Document;
(iv) copies of all material notices sent or received by any Loan Party with respect to such Farm Project; and
(v) promptly after any officer of any Loan Party has knowledge of any material delays in the construction of such Farm Project or if the Project Costs applicable to such Farm Project at any time exceed the Initial Construction Budget applicable to such Farm Project, a certificate signed by a Responsible Officer of the Company setting forth the details with respect thereto and the action that the Company proposes to take with respect thereto; and
(j) promptly following any request therefor, such other information, notices, meeting minutes, consents and other materials regarding the operations, business, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of any Loan Party or Subsidiary, or compliance with the terms of the Loan Documents, as the Lender may from time to time reasonably request.
Section 5.3 Notices. The Borrowers will promptly notify the Lender of:
(a) in any event within two (2) Business Days thereof, the occurrence of any Default or Event of Default;
(b) the consummation of the Qualified SPAC Transaction and the occurrence of the Qualified SPAC Transaction Effective Date;
(c) the filing or commencement of any action, claim, suit, injunction, arbitration, settlement, investigation or proceeding by or before any arbitrator or Governmental Authority against or affecting any Loan Party, any Subsidiary or any Affiliate thereof, which, if adversely determined, could reasonably be expected to give rise to liability in excess of $2,000,000;
(d) any labor dispute or any noncompliance by any Loan Party or Subsidiary with Applicable Law (other than Environmental Law) or any permit, approval, license or other authorization, which, if adversely determined, could reasonably be expected to give rise to liability in excess of $2,000,000;
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(e) any action arising under any Environmental Law or any noncompliance by any Loan Party or Subsidiary with any Environmental Law, which, if adversely determined, could reasonably be expected to give rise to liability in excess of $1,000,000;
(f) the discovery of any Hazardous Materials or of any Release from or upon any Farm Project Site, the Montana Property or any other land or property owned (either individually or jointly), operated or controlled by any Loan Party or Subsidiary, which, individually or in the aggregate, could reasonably be expected to give rise to liability in excess of $1,000,000;
(g) any damage to or destruction of any property of the Loan Parties (or any of their Subsidiaries) which, either individually or in the aggregate, could reasonably be expected to give rise to a claim for insurance monies in excess of $2,000,000;
(h) any material change in accounting or financial reporting practices by any Loan Party or any Subsidiary;
(i) any material breach or non-performance of, or any material default under, any Material Agreement;
(j) any cessation or material delay in the construction of any Farm Project, in each case accompanied by a reasonably detailed report or certificate of the Borrowers explaining whether or not such cessation or delay is expected to have a Material Adverse Effect; and
(k) any matter or development that has had or could reasonably be expected to have a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of a Responsible Officer of the Company setting forth the details of the occurrence requiring such notice and stating what action the Company has taken and proposes to take with respect thereto.
Section 5.4 Preservation of Existence, Etc. Each Borrower will, and will cause each other Loan Party and Subsidiary to, (a) preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization and under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; (b) take all reasonable action to maintain all material rights, licenses, permits, bonding arrangements, privileges and franchises necessary in the normal conduct of its business; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which, in the case of this clause (c), could reasonably be expected to have a Material Adverse Effect.
Section 5.5 Maintenance of Properties.
(a) Each Borrower will, and will cause each other Loan Party and Subsidiary to, (i) maintain, preserve and protect all of its properties and equipment material to the operation of its business (including, without limitation, each Farm) in good working order and condition (ordinary wear and tear excepted), and operate each Farm, in each case in accordance in all material respects with prudent industry practice and applicable Contractual Obligations and (ii) make all necessary repairs thereto and renewals and replacements thereof.
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(b) The sole owner of all assets with respect to each Farm Project (including, without limitation, each Farm and all Project Documents and Project Licenses relating to such Farm Project, whether now existing or hereafter arising), is, and at all times will continue to be, a Loan Party.
Section 5.6 Maintenance of Insurance. The Borrowers will, and will cause each other Loan Party and Subsidiary to, maintain with financially sound and reputable insurance companies, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business (including fire, extended coverage, workers compensation, public liability, property damage, business interruption and, with respect to each Farm Project, builders risk insurance) and against other risks (including errors and omissions) and in such amounts as are customarily carried under similar circumstances by such Persons. Such insurance policies shall contain (a) with respect to any general liability insurance policy, an additional insured special endorsement and (b) with respect to any property insurance policy, a mortgagee and a lenders loss payee special endorsement, in each case in form and substance satisfactory to the Lender naming the Lender as additional insured, mortgagee and lenders loss payee, as applicable, on a primary, non-contributory basis, waiving subrogation, and providing the Lender with notice of cancellation acceptable to the Lender. Without limiting the foregoing, the Borrowers will, and will cause each other Loan Party to, to the extent required under Flood Laws, obtain and maintain flood insurance for such structures and contents constituting Collateral located in a flood hazard zone, in such amounts as similar structures and contents are insured by prudent companies in similar circumstances carrying on similar businesses and otherwise satisfactory to the Lender.
Section 5.7 Payment of Obligations. The Borrowers will, and will cause each other Loan Party and Subsidiary to, pay, discharge or otherwise satisfy as the same shall become due and payable (i) all of its material Tax liabilities and remittances and other obligations owing to any Governmental Authority and (ii) all of its material other obligations, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings diligently conducted and the Borrowers or such Loan Party or Subsidiary has set aside on its books adequate reserves with respect thereto to the extent required by GAAP, and (b) no foreclosure or similar proceedings have been commenced or notice of Liens filed with respect thereto.
Section 5.8 Compliance with Laws. The Borrowers will, and will cause each other Loan Party and Subsidiary to, comply with the requirements of all Laws (including, without limitation, all Applicable Food and Feed Safety Laws) and all orders, writs, injunctions and decrees applicable to it or to its business or property, except where the failure to do so, either individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. The Borrowers shall, and, where applicable, shall cause each of their Affiliates (including any ERISA Affiliates) to, maintain each Plan in compliance with all applicable requirements of Law ERISA and the Code, except where the failure to do so could not be reasonably expected to result in a Material Adverse Effect.
Section 5.9 Environmental Matters. Except to the extent that the failure to do so could not reasonably be expected to have, individually or in the aggregate, liability (including any Environmental Liability) in excess of $2,000,000 or a Material Adverse Effect, the Borrowers will, and will cause each other Loan Party and Subsidiary to, (a) comply with all Environmental Laws, (b) obtain, maintain in full force and effect and comply with any Licenses or other approvals (including any Project Licenses) required for the facilities or operations of the Borrowers, any other Loan Party or Subsidiary, and (c) conduct and complete any investigation, study, sampling or testing, and undertake any corrective, cleanup, removal, response, remedial or other action necessary to identify, report, remove and clean up all Hazardous Materials present or released at, on, in, under or from any of the facilities or real properties of the Borrowers, any other Loan Party or Subsidiary.
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Section 5.10 Books and Records. Each Borrower will, and will cause each other Loan Party and Subsidiary to, maintain proper books of record and account, in which entries shall be made of all financial transactions and matters involving the assets and business of such Borrower, other Loan Party or Subsidiary, as the case may be, that are true, complete and correct in all material respects and prepared in conformity with GAAP in all material respects.
Section 5.11 Inspection Rights. Each Borrower will, and will cause each other Loan Party and Subsidiary to, permit representatives and independent contractors of the Lender and the Project Consultant to visit and inspect any of its properties (including, but not limited to, examination and inspection of any Farm Project Site and the Montana Property), to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its owners, directors, officers, and independent public accountants, all at the reasonable expense of the Borrowers; provided that, if no Event of Default has occurred and is continuing, (x) the Lender shall not request, and shall not be permitted to receive, reimbursement from the Borrowers for more than one visit and inspection in any Fiscal Year and (y) the Lender will provide the Borrowers with at least five (5) days prior notice of each visit and inspection (or such shorter period acceptable to the Borrowers in their sole discretion).
Section 5.12 Use of Proceeds. The Borrowers will, and will cause each other Loan Party and Subsidiary to, use the proceeds of:
(a) the Permitted Northwest Subordinated Loan to invest in the Northwest SPV for the purpose of developing a Farm Project in the State of Washington;
(b) the Closing Date Subordinated Loan (i) to fund or otherwise remit cash to the Interest Reserve Account in accordance with Section 5.17, (ii) to pay the reasonable costs and expenses of the Loan Parties with respect to the closing of the transactions effected by this Agreement and by the Senior Credit Agreement, (iii) to pay the fees set forth in the Fee Letter dated as of the Closing Date among the Borrowers and the Lender, and (iv) to repay the Existing Bridge Indebtedness; and
(c) any other Term Loan (i) to fund the Interest Reserve Account as a result of an IRA Shortfall in accordance with Section 5.17, (ii) to pay Project Costs applicable to a Farm Project, and (iii) for working capital related to the operation of a Farm Project or Farm,
in each case not in contravention of any Law or of any Loan Document. Notwithstanding the foregoing or anything herein to the contrary, however, no Term Loan will be used to finance (1) dual use goods (i.e. products and technologies which may have military applications), (2) tobacco products, (3) extraction of thermal coal, and/or (4) business activities which are not aligned with the principles of the New York Declaration on Forests (2014) (https://forestdeclaration.org/about).
Section 5.13 Sanctions and Anti-Terrorism Laws; Anti-Corruption Laws. The Borrowers will, and will cause each other Loan Party and Subsidiary to, maintain in effect policies and procedures designed to promote compliance by the Loan Parties and Subsidiaries, and their respective directors, officers, employees, and agents with applicable Sanctions and Anti-Terrorism Laws and applicable Anti-Corruption Laws.
Section 5.14 Additional Subsidiaries; Holdings as Guarantor.
(a) Promptly after (i) the creation or acquisition of any Subsidiary of Holdings or any other Loan Party (including, without limitation, any Subsidiary formed by merger, amalgamation, consolidation, division under the Delaware Code or otherwise), in each case other
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than an Excluded Subsidiary, or (ii) any existing Excluded Subsidiary ceases to be an Excluded Subsidiary (and, in any event, within ten (10) days after each event described in the preceding clauses (i) or (ii) and without limiting Section 6.14 hereof (or such later date as may be agreed by the Lender in writing)), the Borrowers will (unless otherwise waived in writing by the Lender in its sole discretion) cause such Person to (A) become a Borrower hereunder by delivering to the Lender a duly executed joinder agreement or such other documents as the Lender shall deem appropriate for such purpose, (B) grant a Lien on substantially all of the real and personal property of such Person by delivering to the Lender such deeds of trust, security agreements and other agreements as the Lender shall deem appropriate for such purpose, (C) deliver to the Lender such original certificated Equity Interests or other certificates and stock or other transfer powers evidencing the Equity Interests of such Person as the Lender may require, (D) deliver to the Lender such opinions, documents and certificates as the Lender requests and (E) deliver to the Lender such updated Schedules to the Loan Documents as requested by the Lender with respect to such Person and Collateral; in each case, in form, content and scope satisfactory to the Lender.
(b) Notwithstanding anything to the contrary contained herein or in any other Loan Document:
(i) the minority equityholders of the Northwest SPV (which minority equityholders, for the avoidance of doubt, shall hold not more than 1% of all Equity Interests of the Northwest SPV) shall not be required to pledge their Equity Interests of the Northwest SPV to the Lender; and
(ii) in connection with a Disposition of the Northwest SPV permitted under Section 6.4(f), upon the request of the Borrowers, the Lender shall, in each case at the sole cost and expense of the Loan Parties, (A) execute and deliver to the Loan Parties such UCC terminations, intellectual property releases, deposit account control agreement termination letters, releases, reconveyances and other documentation reasonably requested by the Loan Parties and appropriate to effectuate the termination of any Liens on the assets and property of the Northwest SPV in favor of the Lender; (B) deliver to the Loan Parties any original certificated Equity Interests or other certificates and stock or other transfer powers evidencing the Equity Interests of the Northwest SPV in the Lenders possession; and (C) take such further action as the Loan Parties may reasonably request from time to time in order to effectuate the provisions of this clause (ii).
(c) Promptly, and in any event not later than ten (10) Business Days after the Qualified SPAC Transaction Effective Date, the Borrowers shall cause Holdings to (i) become a Guarantor by delivering to the Lender a duly executed Guaranty or such other documents as the Lender shall deem appropriate for such purpose, (ii) grant a Lien on substantially all of the real and personal property of Holdings by delivering to the Lender such deeds of trust, security agreements and other agreements as the Lender shall deem appropriate for such purpose, (iii) deliver to the Lender such original certificated Equity Interests or other certificates and stock or other transfer powers evidencing the Equity Interests owned or held by Holdings as the Lender may require, (iv) deliver to the Lender such opinions, documents and certificates as the Lender requests, and (v) deliver to the Lender such updated Schedules to the Loan Documents as requested by the Lender with respect to Holdings and its Collateral; in each case, in form, content and scope satisfactory to the Lender.
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Section 5.15 Real Property.
(a) Fee-Owned Real Property. Not more than sixty (60) days (or such later date as may be agreed by the Lender in writing) following the acquisition by the Borrowers, any other Loan Party or any Subsidiary of any fee interest in any real property (including the acquisition of any Subsidiary that has a fee interest in real property), the Borrowers shall (unless otherwise waived in writing by the Lender in its sole discretion) deliver to the Lender each of the following, each in form and substance satisfactory to the Lender:
(i) a Mortgage covering such property, properly executed on behalf of the applicable Loan Party or Subsidiary;
(ii) if requested by the Lender or the Disbursing Agent, an amendment to the Disbursing Agreement (or a new Disbursing Agreement), a priority agreement or other similar agreements or documents, in each case duly executed by the parties thereto and incorporating jurisdiction-specific updates or other modifications;
(iii) an ALTA title insurance policy or policies in favor of the Lender, insuring such Mortgage as a valid second priority Lien upon such parcel subject only to such exceptions as are acceptable to the Lender (including such endorsements as the Lender may require);
(iv) a survey meeting such minimum survey standards as the Lender may require, such survey to be certified in favor of (and to permit reliance by) the Lender as to such parcel;
(v) if requested by the Lender, a final as built appraisal with respect to any Farm or Farm Project to be located on such real property, in form and containing assumptions and appraisal methods reasonably satisfactory to the Lender, conducted by an appraiser acceptable to the Lender, addressed to the Lender and on which the Lender is expressly permitted to rely;
(vi) if requested by the Lender, a Phase I environmental audit or such other environmental due diligence report as the Lender may approve (and permitting reliance by the Lender), together with such other environmental information as the Lender may request;
(vii) evidence that the Loan Parties have taken all actions required under the Flood Laws and/or requested by the Lender to ensure that the Lender is in compliance with the Flood Laws applicable to each parcel of real property constituting Collateral; and
(viii) such evidence as the Lender may require that such Mortgage has been duly authorized by all appropriate action of and is enforceable against the applicable Loan Party, together with such opinions of counsel covering such authorization and enforceability and other matters as the Lender may require.
Notwithstanding the foregoing, however (but without limiting Section 4.4), this Section 5.15(a) will not apply to the Pasco Property if, and solely to the extent, that the Pasco Property is subject to a Lien securing the USDA Loans in compliance with Section 6.2(l).
(b) Leased Real Property, Warehouses, Etc.. (i) In the case of any headquarters location of the Loan Parties or any leased premises, warehouse or other third party-owned or -operated storage facility where tangible Collateral with a value in excess of $1,000,000 is located,
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the Loan Parties shall obtain Lien Waiver Agreements after entering into any lease following the Closing Date or after the tangible Collateral valued at any such location exceeds $1,000,000, and (ii) in the case of any Third-Party Farm Lease Agreement, the Loan Parties shall deliver, or cause to be delivered, to the Lender a Mortgage in respect of the real property subject to such Third-Party Farm Lease Agreement, together with (x) a corresponding lenders title insurance policy (and accompanying endorsements) in favor of the Lender (up to an amount reasonably determined by the Lender in consultation with the Borrowers), (y) a ground lease recognition and estoppel agreement, duly executed by the lessor under such Third-Party Farm Lease Agreement, and (z) opinions of counsel with respect to such Mortgage, each of the foregoing to be in form and substance reasonably satisfactory to the Lender.
Section 5.16 Further Assurances. The Borrowers shall, and shall cause each other Loan Party and Subsidiary to, from time to time, at the Borrowers expense, preserve and protect the Lenders Lien on the Collateral (first in priority subject only to Permitted Liens) and shall do such other acts and things as the Lender in its sole discretion may deem necessary or advisable from time to time in order to preserve, perfect and protect the Liens granted or purported to be granted under the Collateral Documents and to exercise and enforce its rights and remedies thereunder with respect to the Collateral. Without limiting the generality of the foregoing or Sections 4.1(l) or 5.17 hereof, concurrently with the opening of any deposit account, commodity account or securities account (other than Excluded Accounts) by any Borrower, any other Loan Party or Subsidiary after the Closing Date, the Borrowers shall deliver a notice of the opening of such account to the Lender and an executed Account Control Agreement in respect of such account. In addition the Borrowers shall deliver, or cause to be delivered, to the Lender a Collateral Assignment with respect to any Material Agreement entered into by the Borrowers or the other Loan Parties.
Section 5.17 Interest Reserve Account.
(a) Commencing on the funding date of the Closing Date Subordinated Loan, the Borrowers will, or will cause, the Interest Reserve Account to be funded with proceeds of Term Loans or with cash of the Loan Parties in an amount equal to or greater than the Minimum Interest Amount.
(b) If at any time (whether as a result of fluctuations in applicable interest rates or otherwise) the funds in the Interest Reserve Account are determined by the Lender in its reasonable discretion to be less than the Minimum Interest Amount (each such shortfall, an IRA Shortfall), the Borrowers shall promptly (and in any event not later than two (2) Business Days after an IRA Shortfall has been identified) fund or otherwise remit cash (including, at the Borrowers election, any proceeds of a Term Loan) to the Interest Reserve Account in an amount equal to or greater than such IRA Shortfall. For the avoidance of doubt, the Borrowers shall cause the Interest Reserve Account to be subject to a blocked Account Control Agreement in favor of the Lender at all times.
Section 5.18 Farm Project Construction.
(a) The Borrowers will, and will cause each other Loan Party and Subsidiary to, continuously, diligently and with reasonable dispatch proceed with the design, development and construction of each Farm Project in a good workmanlike manner in material accordance with the Project Documents applicable to such Farm Project, the Loan Documents and all Applicable Laws so that the Final Completion Date applicable to such Farm Project will be reasonably expected to occur on or prior to the Completion Deadline applicable to such Farm Project.
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(b) The Borrowers will, and will cause each other Loan Party and Subsidiary to, comply in all material respects with each Material Agreement to which they are a party and enforce all of their respective material rights under the Project Documents, including all material indemnification rights thereunder, and pursue all material remedies available to any Loan Party or Subsidiary with diligence and in good faith.
(c) Not later than sixty (60) after the Final Completion Date of a Farm Project, the Borrowers will deliver or cause to be delivered to the Lender:
(i) if requested by the Lender in its sole discretion, a date down endorsement to the applicable title insurance policy insuring the priority of Mortgage in respect of the applicable Farm Project Site and which deletes from such title insurance policy any mechanics Lien, survey or other standard exception, and includes the following endorsements, to the extent not previously delivered to the Lender: ALTA 3.1 zoning endorsement; ALTA 9.3 conditions, covenants and restrictions endorsement; ALTA 9.6 private rights; ALTA 17 access and entry endorsement; ALTA 17.2 utility access endorsement; ALTA 18 single tax parcel or ALTA 18.1 multiple tax parcels (as applicable); and ALTA 28 easement endorsement (as applicable);
(ii) copies of the as-built final plans and specifications for such Farm Project; and
(iii) such additional items as the Lender may reasonably request, including, without limitation, copies of final appraisals, final as-built appraisals, surveys and final unconditional Lien waivers.
(d) The Borrowers will cause:
(i) the design professionals who prepare the Project Plans applicable to a Farm Project to maintain professional liability insurance written on a claims made basis, with coverage limits in amounts reasonably acceptable to the Lender, insuring each such design professional and its sub-consultants against any and all liabilities arising out of or in connection with the negligent acts, errors, or omissions of the foregoing in connection with the carrying out of their professional responsibilities for the applicable Farm Project;
(ii) each Material Project Contractor to maintain such insurance as will protect such Material Project Contractor from claims set forth below which may arise out of or result from such Material Project Contractors operations and completed operations in connection with the applicable Farm Project, whether such operations be by such Material Project Contractor or by its subcontractors or by anyone directly or indirectly employed by any of them, or by anyone for whose acts any of them may be liable: (A) claims under workers compensation, disability benefit and other similar employee benefit acts that are applicable to the work to be performed; (B) claims for damages because of bodily injury, occupational sickness or disease, or death of such Material Project Contractors employees; (C) claims for damages because of bodily injury, sickness or disease, or death of any person other than such Material Project Contractors employees; (D) claims for damages insured by usual personal injury liability coverage; (E) claims for damages because of injury to or destruction of tangible property, including loss of use resulting therefrom; (F) claims for damages because of bodily injury, death of a person or property damage arising out of ownership, maintenance or use of a motor vehicle; and (G) claims for bodily injury or property damage arising out of completed operations;
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(iii) each Material Project Contractor referenced in subsection (ii) above to name the Lender as an additional insured for claims caused in whole or in part by such Material Project Contractors negligent acts or omissions during such Material Project Contractors ongoing operations and completed operations, with such insurance afforded to the Lender as an additional insured being primary insurance and not excess over, or contributing with, any insurance purchased or maintained by the Lender; and
(iv) each Material Project Contractor that has commenced any work with respect to a Farm Plant to obtain payment and performance bonds of such Material Project Contractor (which, to the extent approved by the Lender in writing in its reasonable discretion, may be in the form of payment and performance bonds issued by applicable subcontractors) and dual obligee riders in favor of the Lender, in form and substance acceptable to the Lender in its sole discretion.
Section 5.19 Post-Closing Requirements.
(a) Promptly, and in any event not later than the earlier of (i) the Subordinated Facility Post-Merger Funding Date and (ii) sixty (60) days after the Closing Date (or such later date as the Lender may agree to in writing in its sole discretion), the Borrowers will deliver, or cause to be delivered, to the Lender a Mortgage in respect of the Montana Property, together with (x) a corresponding lenders title insurance policy (and accompanying endorsements) in favor of the Lender, (y) a ground lease recognition and estoppel agreement, duly executed by the lessor of the Montana Property, and (z) opinions of counsel with respect to such Mortgage, each of the foregoing to be in form and substance reasonably satisfactory to the Lender; provided, notwithstanding Section 5.15(b)(ii), the lenders title insurance policy in favor of the Lender delivered pursuant to this Section 5.19 will be in an amount equal to $5,000,000.
(b) Promptly, and in any event not later than the earlier of (i) the Subordinated Facility Post-Merger Funding Date and (ii) sixty (60) days after the Closing Date (or such later date as the Lender may agree to in writing in its sole discretion), but subject to the last paragraph of Section 5.15(a), the Borrowers will deliver, or cause to be delivered, to the Lender each of the items set forth in Section 5.15 with respect to Pasco Property, in each case complying with Section 5.15.
ARTICLE VI
NEGATIVE COVENANTS
The Borrowers covenant and agree with the Lender that, until all Obligations have been Paid in Full:
Section 6.1 Indebtedness. The Borrowers will not, nor will it permit any Loan Party or Subsidiary to, create, incur, assume or suffer to exist any Indebtedness, except (collectively, the Permitted Indebtedness):
(a) Indebtedness under the Loan Documents;
(b) Senior Indebtedness;
(c) Indebtedness (contingent or otherwise) of any Loan Party arising under (i) any Swap Contract with a Swap Party or (ii) to the extent approved by the Lender in advance in writing, any other Swap Contract; provided that such obligations are entered into by a Loan Party
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in the ordinary course of business for the purpose of mitigating risks associated with liabilities, commitments, investments, assets or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for speculative purposes;
(d) Indebtedness in respect of performance bonds, bid bonds, appeal bonds, surety bonds and similar obligations not in connection with money borrowed, in each case provided in the ordinary course of business, including those incurred to secure health, safety and environmental obligations in the ordinary course of business, and in an aggregate amount issued not to exceed $2,000,000 (or such higher amount as may be approved by the Lender in writing);
(e) Indebtedness resulting from a bank or other financial institution honoring a check, draft or similar instrument in the ordinary course of business or arising under or in connection with cash management services in the ordinary course of business;
(f) Indebtedness arising from or incurred with respect to Capitalized Leases, Purchase Money Security Interests or other title retention agreements and leases that are in the nature of title retention agreements in an amount not to exceed (i) if such Indebtedness is reflected in the then-current Approved Budget, the amount set forth in such Approved Budget, and (ii) in all other cases, an aggregate principal amount not to exceed $2,500,000 at any time;
(g) prior to the Subordinated Facility Post-Merger Funding Date, unsecured Indebtedness under the Closing Date Convertible Notes; provided, that no Indebtedness under this clause (g) will be permitted at any time on or after the Subordinated Facility Post-Merger Funding Date;
(h) Indebtedness arising under guaranties made in the ordinary course of business of obligations of any Loan Party (and only so long as such Person is and remains a Loan Party) which obligations are otherwise permitted hereunder;
(i) Indebtedness of the Northwest SPV to an Approved USDA Lender, guaranteed by the USDA, in an aggregate principal amount under this Section 6.1(i) not to exceed $25,000,000 at any time (the USDA Loans);
(j) Investments permitted under Section 6.6(d) to the extent such Investments are in the form of unsecured loans or advances incurred by the Northwest SPV from the Company; and
(k) other Indebtedness, but only so long as, immediately following the incurrence thereof, the aggregate principal amount of all such Indebtedness permitted under this clause (k) does not exceed $2,000,000.
Section 6.2 Liens. The Borrowers will not, nor will it permit any Loan Party or Subsidiary to, create, incur, assume or suffer to exist any Lien upon any of their property, assets or revenues, whether now existing or owned or hereafter arising or acquired, other than the following (collectively, the Permitted Liens):
(a) Liens created pursuant to any Loan Document to secure the Obligations;
(b) subject to the terms of the Subordination Agreement, Liens securing payment of the Senior Indebtedness;
(c) pledges or deposits in the ordinary course of business in connection with (i) workers compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA or other applicable pension and employment Law, and (ii) public utility services provided to the Borrowers, any other Loan Party or Subsidiary;
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(d) deposits to secure the performance of bids, surety and appeal bonds, performance bonds and similar obligations not in connection with money borrowed incurred in the ordinary course of business, in each case to the extent permitted under Section 6.1(d);
(e) Liens for Taxes, assessments or other governmental charges the payment of which is not yet due or the payment of which is not at the time required by Section 5.7, so long as no filing of a Lien has been made in connection therewith;
(f) easements, rights-of-way, restrictions and other similar encumbrances affecting real property that, in the aggregate, are not substantial in amount, and that do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person, and any zoning or similar law or right reserved to or vested in any Governmental Authority to control or regulate the use of any real property that does not materially interfere with the ordinary conduct of the business of the Borrowers, any other Loan Party or Subsidiary;
(g) Liens of warehouses, carriers, workers, repairmen, employees or other like Liens, securing obligations incurred in the ordinary course of business that are not yet due and payable or for amounts being contested in good faith by appropriate proceedings and for which adequate reserves are being maintained in accordance with GAAP;
(h) Liens in favor of a banking institution arising as a matter of Law encumbering deposits (including the right of setoff) that are customary in the banking industry;
(i) any interest or title of a lessor or sublessor under any lease incurred in the ordinary course of business and not prohibited by the Loan Documents;
(j) Liens in favor of collecting banks arising by operation of law under Section 4-210 of the UCC or, with respect to collecting banks located in the State of New York, under Section 4-208 of the UCC;
(k) Liens securing Indebtedness permitted by Section 6.1(f); provided that such Liens do not at any time encumber any property other than the property financed by such Indebtedness;
(l) Liens securing Indebtedness permitted by Section 6.1(i); provided that such Liens do not at any time encumber any assets other than the assets and property of the Northwest SPV;
(m) mineral rights the use and enjoyment of which do not materially detract from the value of the property subject thereto or materially interfere with the use and enjoyment of the Farm Project or the Farm Project Site; and
(n) involuntary Liens (including a Lien of an attachment, judgment or execution) securing a charge or obligation, on the Companys property, either real or personal, related to the Farm Project, whether now or hereafter owned, in the aggregate sum of less than $500,000.
Section 6.3 Fundamental Changes. The Borrowers will not, nor will it permit any Loan Party or Subsidiary to, in each case without the prior written consent of the Lender, (i) dissolve, liquidate or wind-up its affairs, (ii) become a party to, or suffer to exist, any merger, amalgamation, consolidation or
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division (under the Delaware Code or otherwise), (iii) Dispose of (whether in one transaction or in a series of transactions) any of its assets (whether now existing or owned or hereafter arising or acquired) to or in favor of any Person, or (iv) acquire by purchase, lease or otherwise all or substantially all of the assets or Equity Interests of any other Person or group of related Persons or any division, line of business or other business unit of any other Person; except that, so long as no Default or Event of Default exists or would result therefrom, (A) the Borrowers and their Subsidiaries may make Dispositions permitted by Section 6.4 and Investments permitted by Section 6.6, and (B) following reasonable prior written notice to the Lender, any immaterial Loan Party or immaterial Subsidiary no longer useful in the business of the Company may dissolve or merge into another Loan Party (such other Loan Party, the Surviving Loan Party), in each case with the Surviving Loan Party continuing as the surviving entity.
Section 6.4 Dispositions. The Borrowers will not, and will not permit any Loan Party or Subsidiary to, make any Disposition or enter into any agreement to make any Disposition, except:
(a) Dispositions of inventory in the ordinary course of business;
(b) transactions and Investments permitted by Sections 6.2, 6.3, 6.6 and 6.17;
(c) conversions of Cash Equivalents into cash or other Cash Equivalents;
(d) the transfer of property by a Loan Party to a Loan Party (except that no transfers may be made to the Northwest SPV except to the extent set forth in Sections 6.1(j) and 6.6(d));
(e) Dispositions of tangible assets that are obsolete, worn out or no longer used or useful in the business of a Loan Party, provided that the fair market value of assets subject to such Dispositions does not exceed $2,000,000 in the aggregate for all such Dispositions during any Fiscal Year;
(f) the Disposition of the Northwest SPV and/or its assets into a qualified opportunity fund as defined in Section 1400Z-2(d)(1) of the Code (it being understood and agreed, for the avoidance of doubt, that on the effective date of such Disposition, the Northwest SPV shall immediately cease to be a Loan Party for the purposes of this Agreement), but only so long as (i) no Default or Event of Default has occurred and is continuing and (ii) prior to or concurrently with such Disposition, the Permitted Northwest Subordinated Loan, and all accrued and unpaid interest and fees with respect thereto, are paid in full in cash; and
(g) the Disposition of minority Equity Interests not owned by the Loan Parties of the Northwest SPV (which minority Equity Interests, for the avoidance of doubt, shall constitute not more than 1% of all Equity Interests of the Northwest SPV) to a director or manager of the Company or other persons reasonably acceptable to the Lender.
Section 6.5 Restricted Payments; Payments of Junior Debt.
(a) The Borrowers will not, and will not permit any Loan Party or Subsidiary to, declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, or permit, commence or consummate any issuance of Equity Interests; provided that the foregoing shall not prohibit (a) any Restricted Payment from a Loan Party to another Loan Party, (b) to the extent the Northwest SPV is a Subsidiary of a Loan Party but not a Loan Party itself, any Restricted Payment from the Northwest SPV to a Loan Party, (c) any Restricted Payment and the issuance of Equity Interests from the Company to its equityholders pursuant to the Warrant Agreement or any warrant issued thereunder, or (d) the conversion of any Closing Date Convertible Notes into Equity Interests of the Company in accordance with the terms of such Closing Date Convertible Notes and this Agreement (including, without limitation, the terms set forth in the definitions of Change of Control).
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(b) Unless expressly provided otherwise in the intercreditor agreement or subordination agreement applicable thereto, the Borrowers will not, and will not permit any other Loan Party or Subsidiary to, make any payment on, or redeem, repurchase, defease or otherwise acquire or retire for value, in each case, any Junior Debt.
Section 6.6 Investments. The Borrowers will not, and will not permit any Loan Party or Subsidiary to, make any Investments, except:
(a) Investments in the form of cash or Cash Equivalents;
(b) Investments consisting of the indorsement of negotiable instruments payable to such Person for deposit or collection in the ordinary course of business;
(c) Investments by a Loan Party in another Loan Party (other than the Northwest SPV);
(d) so long as the Northwest SPV is a Subsidiary of the Company, Investments by the Company in the Northwest SPV in the form of cash or loans from the Company in an aggregate amount not to exceed $11,000,000, but only to the extent that such Investments from the Company were made from proceeds of the Closing Date Convertible Notes or the equity capital of the Company;
(e) guarantees of Indebtedness permitted under Section 6.1; and
(f) Dispositions permitted by Sections 6.4(f) and (g).
Section 6.7 Transactions with Affiliates; Management Fees. The Borrowers will not, and will not permit any Loan Party or Subsidiary to, enter into any transaction of any kind with any Affiliate of the Borrowers, whether or not in the ordinary course of business, other than:
(a) on fair and reasonable terms substantially as favorable to the Borrowers or such Loan Party or Subsidiary as would be obtainable by the Borrowers or such Loan Party or Subsidiary at the time in a comparable arms-length transaction with a Person other than an Affiliate;
(b) the payment of management fees to a manager of the Company pursuant to a management services agreement or similar agreement (a Management Agreement), but only so long as (i) such Management Agreement is in form and substance satisfactory to the Lender in its sole discretion, and subject to subordination arrangements satisfactory to the Lender in its sole discretion, and (ii) both at the time of and after giving effect to each such payment, no Default or Event of Default shall have occurred and be continuing; and
(c) transactions among the Loan Parties (and if the transaction is with the Northwest SPV, then (x) the Northwest SPV must be a Subsidiary at the effective time of such transaction and (y) such transaction must also be subject to the terms and conditions of this Agreement (including, without limitation, Sections 6.1(j) and 6.6(d)).
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Section 6.8 Financial Covenants.
(a) Minimum Debt Service Coverage Ratio. Commencing March 31, 2025, and as of the last day of each calendar quarter thereafter, the Borrowers will not permit the Debt Service Coverage Ratio to be less than 1.25 to 1.00.
(b) Maximum Consolidated Total Net Leverage Ratio. Commencing March 31, 2025, and as of the last day of each calendar quarter thereafter, the Borrowers will not permit the Consolidated Total Net Leverage Ratio to be greater than 4.75 to 1.00.
(c) Minimum Consolidated Interest Coverage Ratio. Commencing March 31, 2025, and as of the last day of each calendar quarter thereafter, the Borrowers will not permit the Consolidated Interest Coverage Ratio to be less than 2.50 to 1.00.
(d) Minimum Liquidity. The Borrowers will not permit Liquidity to be less than (I) at any time during the period commencing on the Closing Date and ending on the Minimum Liquidity Step-up Date, $5,000,000, and (II) at any time thereafter, $30,000,000; provided, notwithstanding the foregoing, if at any time after the Minimum Liquidity Step-up Date:
(i) the Company enters into (and maintains in effect at all times) an offtake agreement that (x) is with a customer or buyer that is reasonably acceptable to the Lender (an Acceptable Buyer), (y) obligates such Acceptable Buyer to purchase at least 75% of all inventory and products produced by the Consolidated Group, and (z) has a tenor of not less than three (3) years, then the minimum Liquidity that must be maintained pursuant to Section 6.8(d) will be $15,000,000;
(ii) the Company enters into (and maintains in effect at all times) an offtake agreement that (x) is with an Acceptable Buyer, (y) obligates such Acceptable Buyer to purchase at least 75% of all inventory and products produced by the Consolidated Group, and (z) has a tenor ending on or after the Maturity Date, then the minimum Liquidity that must be maintained pursuant to Section 6.8(d) will be $5,000,000; and
(iii) [reserved].
(e) Capital Stacking Requirement. Commencing on the Closing Date and at all times thereafter, the Borrowers will ensure that the proceeds of Term Loans made hereunder will constitute not more than 15% of all amounts used by the Borrowers in respect of Farms and Farm Projects or in any way related to Farms or Farm Projects, including, without limitation, working capital in connection therewith (collectively, the Total Farm Financing Amounts), with all remaining Total Farm Financing Amounts funded solely from Senior Indebtedness or from equity or capital contributions of the Borrowers.
Section 6.9 Certain Restrictive Agreements. The Borrowers will not, and will not permit any Loan Party or Subsidiary to, enter into any Contractual Obligation (other than this Agreement, any other Loan Document, the Senior Indebtedness Documents, or the documentation governing the Indebtedness permitted under Sections 6.1(f) and (i)) that, directly or indirectly, (a) limits the ability of (i) Holdings or any Subsidiary to make Restricted Payments to any Borrower or to otherwise transfer property to any Borrower, (ii) Holdings or any Subsidiary to guaranty Indebtedness of any Borrower or (iii) any Borrower, any Loan Party or any Subsidiary to create, incur, assume or suffer to exist Liens (other than Permitted Liens) on property of such Person to secure the Obligations; or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien (other than a Permitted Lien) is granted to secure another obligation of such Person.
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Section 6.10 Changes in Fiscal Periods; Accounting Methods. No Borrower will, and no Borrower will permit any Loan Party or Subsidiary to, change its method of determining its fiscal year, fiscal months or other accounting periods. In addition, no Borrower will, and no Borrower will permit any Loan Party or Subsidiary to, change its method of accounting (other than as may be required to conform to GAAP, in which case the Borrowers shall disclose such changes to the Lender).
Section 6.11 Changes in Nature of Business. The Borrowers will not, and will not permit any Loan Party or Subsidiary to, engage in any material extent in any business other than those businesses conducted by the Borrowers, such Loan Party or Subsidiary on the date hereof or any business reasonably related or incidental thereto or representing a reasonable expansion thereof.
Section 6.12 Organizational Documents. The Borrowers will not, and will not permit any Loan Party or Subsidiary to, amend its Organizational Documents unless, in each case, the Borrowers have provided not less than fifteen (15) Business Days prior written notice thereof to the Lender and, if such amendment could reasonably be expected to have an adverse effect on the Lender, obtained the prior written consent of the Lender.
Section 6.13 Material Agreements; Change Orders.
(a) The Borrowers will not, and will not permit any Loan Party or Subsidiary to, without the prior written consent of the Lender, cause or permit to occur any amendment, restatement, supplement, termination, cancellation or revocation of, or any waiver or forbearance in respect of the exercise of any rights or remedies of the Borrowers or any other Loan Party or Subsidiary under, any GC Contract, except to the extent that such amendment, restatement, supplement, termination, cancellation, revocation or waiver (i) is not adverse to the Lender (as determined by the Lender in its reasonable discretion) and (ii) complies with clause (d) below.
(b) With respect to any Material Agreement (other than a GC Contract), the Borrowers will not, and will not permit any Loan Party or Subsidiary to, without the prior written consent of the Lender, cause or permit to occur any amendment, restatement, supplement, termination, cancellation or revocation of, or any waiver or forbearance in respect of the exercise of any rights or remedies of the Borrowers or any other Loan Party or Subsidiary under, any such Material Agreement, except to the extent that such amendment, restatement, supplement, termination, cancellation, revocation or waiver (i) is not materially adverse to the Lender (as determined by the Lender in its reasonable discretion) and (ii) complies with clause (d) below.
(c) The Borrowers will not permit any Material Project Participant to commence any work with respect to a Farm Project unless and until the Borrowers have received and delivered to the Lender, each in form and substance satisfactory to the Lender, (i) if requested by Lender, a consent and acknowledgment of such Material Project Participant to the Collateral Assignment of the applicable Project Document, (ii) if such Material Project Participant is a Material Project Contractor, payment and performance bonds of such Material Project Contractor (which, to the extent approved by the Lender in writing in its reasonable discretion, may be in the form of payment and performance bonds issued by applicable subcontractors) and dual obligee riders in favor of the Lender as required by Section 5.18(d)(iv), and (iii) if such Material Project Participant is a Material Project Contractor, evidence of insurance of such Material Project Contractor as required by Sections 5.18(d)(ii) and 5.18(d)(iii).
(d) The Borrowers will not, and will not permit any Loan Party or Subsidiary to, without the prior written consent of the Lender, sign or permit to exist any change orders to a Material Project Document that are, individually, in excess of $250,000 or, with respect to all change orders relating to any one contractor, are in excess of $500,000 in the aggregate.
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Section 6.14 Subsidiaries, Joint Ventures. The Borrowers will not, and will not permit any Loan Party or Subsidiary to, own or create directly or indirectly any Subsidiaries (other than any Excluded Subsidiary) without the prior written consent of the Lender unless such new Subsidiary is a Loan Party hereunder. The Borrowers will not, and will not permit any Loan Party or Subsidiary to, become or agree to become a party to any partnership or joint venture without the prior written consent of the Lender.
Section 6.15 Sanctions and Anti-Terrorism; Anti-Corruption Use of Proceeds. The Borrowers will not, directly or indirectly, use the proceeds of any Term Loan, or lend, contribute or otherwise make available such proceeds to any other Loan Party, Subsidiary, joint venture partner or other Person, (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of the FCPA or any other Anti-Corruption Law, or (ii) (A) to fund any activities or business of or with any Person, or in any country or territory, that, at the time of such funding, is, or whose government is, the subject of Sanctions or Anti-Terrorism Laws, or (B) in any other manner that would result in a violation of Sanctions, Anti-Terrorism Laws or Anti-Corruption Laws by any Person.
Section 6.16 ERISA. The Borrowers will not, and will not permit any ERISA Affiliate, Loan Party or Subsidiary to, establish, maintain, contribute to, or become obligated to contribute to any employee benefit plan or other plan that is covered by Title IV of ERISA or subject to the funding standards of Section 412 of the Code; or become an ERISA Affiliate of any Person that sponsors, maintains, contributes to or is obligated to contribute to (or in the immediately preceding seven plan years has contributed to or been obligated to contribute to) any employee benefit plan or other plan that is covered by Title IV or ERISA or subject to the funding standards of Section 412 of the Code.
Section 6.17 Sale-Leasebacks. The Borrowers will not, and will not permit any Loan Party or Subsidiary (other than the Northwest SPV) to, directly or indirectly, sell or otherwise transfer, in one or more related transactions, any property (whether real, personal or mixed) and thereafter rent or lease such transferred property or substantially similar property.
Section 6.18 Operating Leases. The Borrowers will not, and will not permit any Loan Party to Subsidiary to, become a party to or suffer to exist any operating lease, other than (a) Farm Lease Agreements, but only so long as (i) the Borrowers provide the Lender with not less than thirty (30) days prior written notice before entering into any Farm Lease Agreement, (ii) if such Farm Lease Agreement is a Third-Party Farm Lease Agreement, the Borrowers will comply with the requirements set forth in Section 5.15(b)(ii) (provided, that if such Farm Lease Agreement is not a Third-Party Farm Lease Agreement, the Borrowers will comply with the requirements set forth in Section 5.15(b)(i)), (iii) each Farm Lease Agreement is non-cancellable and has a tenor ending no earlier than the later of (x) the seventh (7th)-year anniversary of such Farm Lease Agreement and (y) the Maturity Date, and (iv) each Farm Lease Agreement is otherwise in form and substance reasonably acceptable to the Lender, and (b) subject to Section 6.1(k), other operating leases.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1 Events of Default. If any of the following events (each, an Event of Default) shall occur:
(a) the Borrowers or any other Loan Party shall fail to pay any principal or interest hereunder when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise; or
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(b) the Borrowers or any other Loan Party shall fail to pay any fee or any other amount (other than an amount referred to in clause (a) of this Section) payable under this Agreement or under any other Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of two (2) Business Days; or
(c) any representation or warranty made or deemed made by or on behalf of any Loan Party in or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof, or any waiver hereunder or thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof, or any waiver hereunder or thereunder, shall prove to have been incorrect in any material respect (or, in the case of any such representation or warranty under this Agreement or any other Loan Document already qualified by materiality, such representation or warranty shall prove to have been incorrect) when made or deemed made; or
(d) any of the Loan Parties shall fail to observe or perform any covenant, condition or agreement contained in Section 5.3, 5.4, 5.5(b), 5.6, 5.8, 5.9, 5.12 through 5.19 or in Article VI; or
(e) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in this Agreement or any other Loan Document (other than those specified in clause (a), (b) or (d) of this Section) and such failure shall continue unremedied for a period of thirty (30) or more days (or such earlier period as may be specified in any other Loan Document); or
(f) (i) a material default shall occur under the SPAC Merger Agreement or the Warrant Agreement (or any warrant issued thereunder), and such material default shall remain in effect after any grace period applicable thereto, (ii) a default shall occur under a Swap Contract with a Swap Party, and such default shall remain in effect after any grace period applicable thereto, if any, or (iii) with respect to any Material Agreement other than (x) a Material Agreement specified in the foregoing clause (i) or (y) a Material Project Document, any Loan Party or any Subsidiary of a Loan Party fails to perform or observe any material term, covenant or agreement contained in such Material Agreement or otherwise breaches any such Material Agreement in any material respect, or any such Material Agreement is terminated or revoked or permitted to lapse, or any party to any such Material Agreement delivers a notice of termination or revocation in respect of such Material Agreement; or
(g) (i) any Loan Party or Subsidiary shall fail to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness (other than Indebtedness under the Loan Documents) of more than $500,000 (including, without limitation, undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement), in each case beyond the applicable grace or cure periods with respect thereto, if any; or (ii) any Loan Party or Subsidiary shall fail to observe or perform any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, such Indebtedness to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, in each case, beyond the applicable grace or cure periods with respect
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thereto; provided that this clause (g)(ii) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness, if (x) such Indebtedness and repayment is permitted under the Loan Documents and (y) the sale or transfer is permitted hereunder and under the documents providing for such Indebtedness and such Indebtedness is repaid when required under the documents providing for such documents; or
(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of any Loan Party or Subsidiary or any of its Subsidiaries or its debts, or of a substantial part of its assets, under any Debtor Relief Law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or Subsidiary or any of its Subsidiaries or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for a period of thirty (30) or more days or an order or decree approving or ordering any of the actions sought in such proceeding shall be entered; or
(i) any Loan Party or Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief, including any stay of proceeding under any Debtor Relief Law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Section, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing; or
(j) any Loan Party or Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due; or
(k) there is entered against any Loan Party or Subsidiary a judgment, award, decree or order, which is either (i) for the payment of money in an aggregate amount (as to all such judgments and orders) exceeding $2,000,000 (to the extent not covered by independent third-party insurance as to which the insurer has been notified of such judgment or order and has not denied or failed to acknowledge coverage), or (ii) a non-monetary judgment, award, decree or order that, either individually or in the aggregate, has or could reasonably be expected to have a Material Adverse Effect, in each case, that has remained unsatisfied, unvacated, undischarged and unstayed pending appeal for a period of thirty (30) days after the entry thereof; or
(l) a Change of Control shall occur; or
(m) the Chief Executive Officer of the Company as of the Closing Date resigns or is terminated and the Company has not retained a replacement Chief Executive Officer acceptable to the Lender in its reasonable discretion within ten (10) Business Days (or such longer time as the Lender may agree in its reasonable discretion) following such resignation or termination; or
(n) any material License (including any Agricultural License) of any Loan Party or any Subsidiary thereof shall terminate or otherwise cease to be in full force and effect and the conditions causing the termination or cessation of such License are not cured within 15 days of such termination or cessation; or
(o) any material provision of any Loan Document or the Warrant Agreement (or any warrant issued thereunder), at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or Payment in Full of all Obligations, ceases
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to be in full force and effect; or any Loan Party or other Person contests in writing the validity or enforceability of any provision of any Loan Document or the Warrant Agreement (or any warrant issued thereunder); or any Loan Party denies in writing that it has any or further liability or obligation under any Loan Document or the Warrant Agreement (or any warrant issued thereunder), or purports in writing to revoke, terminate or rescind any Loan Document or the Warrant Agreement (or any warrant issued thereunder); or
(p) any Lien purported to be created under any Collateral Document shall cease to be, or shall be asserted by any Loan Party not to be, a valid, perfected or second-priority Lien on any portion of the Collateral (subject only to Permitted Liens and except to the extent not required to be perfected or second priority under the terms of the Collateral Documents); or
(q) (i) any inventory or products of any Loan Party or any Subsidiary thereof shall be subject to any seizure, administrative detention or mandatory recall by any Governmental Authority; (ii) any Loan Party or any Subsidiary thereof shall voluntarily recall any of its inventory or products having a fair market value in excess of $1,000,000; or (iii) any Loan Party or any Subsidiary thereof receives a warning letter from any Governmental Authority in connection with such Loan Partys or Subsidiarys failure to adequately address any Form 483 observations or any other Governmental Authority findings relating to the conditions, procedures or products in any such Loan Partys or Subsidiarys facilities; or
(r) there shall occur any uninsured damage to or loss, condemnation, theft or destruction of any portion of the Loan Parties or any of their Subsidiaries assets with a fair market value in excess of $2,000,000; or such assets with a fair market value in excess of $2,000,000 are attached, seized, levied upon or subjected to a writ of attachment, garnishment, levy or similar process; or any assets of the Loan Parties or any of their Subsidiaries with a fair market value in excess of $2,000,000 come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors; or
(s) any Loan Party or any Subsidiary of a Loan Party incurs any Environmental Liability which will require expenditures, individually or in the aggregate, in excess of $1,000,000 during any Fiscal Year; or
(t) any act of expropriation, nationalization or similar event or circumstance occurs affecting the properties and assets of the Loan Parties; or
(u) any Loan Party or any Subsidiary of a Loan Party shall, or shall propose to, suspend or discontinue its business or any material line thereof; or
(v) [reserved]; or
(w) any development, event or circumstance shall occur or exist that results in or could result in a Material Adverse Effect; or
(x) (i) any Material Project Participant fails to perform or observe any material term or obligation contained in any Material Project Document and within the later of (x) the cure period provided therefor in such Material Project Document or (y) thirty (30) days thereafter (or such longer period as expressly permitted under the applicable Material Project Document), either (A) such default has not been cured on terms reasonably acceptable to the Lender, or (B) the applicable Material Project Participant has not been replaced by a replacement Material Project Participant pursuant to a replacement Material Project Document that is, in each case, reasonably acceptable to the Lender and subject to a Collateral Assignment; or
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(ii) (A) any Material Project Document for any reason ceases to be legal, valid and binding and in full force and effect with respect to each Material Project Participant that is a party thereto or any such Material Project Participant shall so assert in writing; (B) any Material Project Document is terminated for any reason whatsoever prior to the later of (x) its scheduled expiration date and (y) sixty (60) days after the Final Completion Date applicable to the Farm Project to which such Material Project Document relates, in each case without the prior consent of the Lender; or (C) any material provision of any Material Project Document shall be declared to be null and void (unless such declaration is expressly permitted pursuant to the terms of such Material Project Document and does not result in any Default or Event of Default); provided, that any such event described in this Section 7.1(x)(ii) shall not be an Event of Default if, within thirty (30) days of the occurrence thereof, the applicable Material Project Participant has been replaced pursuant to a replacement Material Project Document that, in each case, is reasonably acceptable to the Lender and subject to a Collateral Assignment; provided, however, that if (I) such breach or default cannot be cured within such thirty (30)-day period, (II) such breach or default is susceptible to cure within sixty (60) days, (III) such breach or default has not resulted, and could not, with the additional cure time contemplated by this proviso, be reasonably expected to result, in a Material Adverse Effect with respect to the Borrowers or any other Loan Party, and (IV) the Borrowers are proceeding with all requisite diligence and in good faith to cure such failure, then the time within which such failure may be cured shall be extended to such date, not to exceed a total of thirty (30) days after the end of the initial thirty (30)-day period, as shall be necessary for such party diligently to cure such failure; or
(y) (i) the Project Costs applicable to a Farm Project at any time exceed the Initial Construction Budget applicable to such Farm Project (including the contingency reserves set forth therein) or (ii) the Lender shall at any time reasonably determine that the unadvanced amounts under both the Term Loan Facility and the Senior Credit Agreement (determined in accordance with the capital stacking requirements set forth in Section 6.8(e)) and Unrestricted Cash of the Borrowers (including Unrestricted Cash contributed to the Borrowers by Holdings) are insufficient to pay all costs and expenses that are reasonably anticipated in connection with the Completion of all Farm Projects; provided, that any such event described in this Section 7.1(y) shall not be an Event of Default if (A) in the case of the preceding clauses (i) and (ii), the Borrowers have, within thirty (30) days after notice or knowledge thereof, deposited in escrow or otherwise posted security or evidence of funds reasonably acceptable to the Lender, and (B) in the case of the preceding clause (i), such excess amount does not exceed 5% of the applicable Initial Construction Budget; or
(z) any cessation in the construction of any Farm Project shall have occurred for more than thirty (30) days, regardless of the cause, except to the extent such cessation could not reasonably be expected to have a Material Adverse Effect with respect to the Borrowers or any other Loan Party; or
(aa) any material portion of any Farm Project is destroyed, condemned or seized, or the Borrowers suffer a total loss with respect to any Farm Project; or
(bb) the Final Completion Date applicable to a Farm Project shall not have occurred on prior to the Completion Deadline applicable to such Farm Project; provided, that any such event described in this Section 7.1(bb)(bb)(bb) shall not be an Event of Default so long as (i) such failure to meet the applicable Completion Deadline could not reasonably be expected to have a Material Adverse Effect with respect to the Borrowers or any other Loan Party, (ii) the Borrowers
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are proceeding with all requisite diligence and in good faith to Complete the applicable Farm Project, and (iii) such Farm Project is Completed not later than sixty (60) days after the applicable Completion Deadline;
then, and in every such event and at any time thereafter during the continuance of such event, the Lender shall have no further obligation to offer any credit accommodations and the Lender may, by notice to the Borrowers, take any or all of the following actions, at the same or different times, in each case in the Lenders sole discretion:
(i) declare the Term Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Term Loans so declared to be due and payable, together with accrued interest thereon and all fees (including, without limitation, any Specified Fees set forth in Section 2.10) and other Obligations of the Borrowers accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers;
(ii) apply for the appointment of, or taking possession by, a trustee, receiver, liquidator or other similar official of the Borrowers with respect to the operations of any Loan Party or to hold or liquidate all or any substantial part of the properties or assets of any Loan Party (and each Loan Party hereby consents to such appointment and agrees to execute and deliver any and all documents requested by the Lender relating to the appointment of such trustee, receiver, liquidator or other similar official, whether by joining in a petition for the appointment of such an official, by entering no contest to a petition for the appointment of such an official, or otherwise, as appropriate under Applicable Law);
(iii) setoff and apply any and all obligations at any time owing by the Lender or any of its Affiliates to the Borrowers or any other Loan Party (including, if applicable, any obligations owing by CRM to any Borrower under a Swap Contract) against any or all of the Obligations, irrespective of whether or not the Lender shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrowers or such other Loan Party may be contingent or unmatured; and
(iv) exercise all rights and remedies available to it under the Loan Documents and Applicable Law;
provided that, in case of any event with respect to the Borrowers described in clause (h), (i) or (j) of this Section, the principal of the Term Loan then outstanding, together with accrued interest thereon and all fees (including, without limitation, any Specified Fees set forth in Section 2.10) and other Obligations accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers.
Section 7.2 Application of Payments. Notwithstanding anything herein to the contrary, following the occurrence and during the continuance of an Event of Default, all payments received on account of the Obligations shall be applied in such order as the Lender shall, in its sole discretion, determine.
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ARTICLE VIII
MISCELLANEOUS
Section 8.1 Notices. All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile or email as follows:
(a) if to any Borrower or any other Loan Party or Subsidiary, delivered to the Company at 490 Foley Lane, Hamilton, MT 59840, Attention: Kathleen Valiasek; Email: kathy@localbounti.com; with a copy to: King & Spalding LLP at 1185 Avenue of the Americas, New York, NY, Attention: Jonathan M.A. Melmed; Telephone No. (212) 556-2344; Email: jmelmed@kslaw.com and King & Spalding LLP at 110 N. Wacker Drive, Suite 3800, Chicago, IL 60606, Attention: Evan Palenschat; Email: epalenschat@kslaw.com; Telephone: (312) 764-6915; and
(b) if to the Lender, delivered to Cargill Financial Services International, Inc., 9320 Excelsior Boulevard, MS 142, Hopkins, MN 55343, Attention: Erik Haugen; Telephone No.: (952) 984-0574; Fax No.: (952) 249-4416; Email: erik_haugen@cargill.com.
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile or email shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Any party hereto may change its address, facsimile number or email address for notices and other communications hereunder by notice to the other parties hereto.
Section 8.2 Amendments; Waivers. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrowers therefrom, shall be effective unless in writing executed by the Borrowers and the Lender, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No failure or delay by the Lender in exercising any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, remedy, power or privilege, or any abandonment or discontinuance of steps to enforce such a right remedy, power or privilege, preclude any other or further exercise thereof or the exercise of any other right remedy, power or privilege. The rights, remedies, powers and privileges of the Lender are cumulative and are not exclusive of any rights, remedies, powers or privileges that the Lender would otherwise have.
Section 8.3 Expenses; Indemnity; Damage Waiver.
(a) Costs and Expenses. The Borrowers shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Lender and its Affiliates (including the reasonable and documented fees, charges and disbursements of the Project Consultant and of outside counsel for the Lender) in connection with the preparation, negotiation, execution, delivery and administration of this Agreement, the other Loan Documents and the Warrant Agreement (including any warrant issued thereunder), or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), and (ii) all out-of-pocket expenses incurred by the Lender (including the fees, charges and disbursements of the Project Consultant and of outside counsel for the Lender) in connection with (A) the enforcement or protection of its rights, including, without limitation, any expenses incurred in connection with the hiring of consultants or advisors, (I) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (II) in
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connection with the Term Loans, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of the Term Loans, and (B) any bankruptcy or other insolvency proceeding with respect to any Loan Party or any Subsidiary of any Loan Party.
(b) Indemnification. The Borrowers shall indemnify the Lender, the Project Consultant, each Swap Party and each Related Party of any of the foregoing Persons (each such Person being called an Indemnitee) against, and hold each Indemnitee harmless from, any and all actual costs and expenses, losses, claims, damages, liabilities and related expenses (including the out-of-pocket costs, expenses, fees, charges and disbursements of outside counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any Person (including any Borrower) arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) the Term Loans or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or Release of Hazardous Materials on or from any property owned or operated by any Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrowers, the other Loan Parties or any of their Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrowers, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrowers against an Indemnitee for breach in bad faith of such Indemnitees obligations hereunder or under any other Loan Document, if the Borrowers has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.
(c) Waiver of Consequential Damages, Etc. To the fullest extent permitted by Applicable Law, no party to this Agreement shall assert, and each such party hereby waives, any claim against any other party hereto, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, the Term Loans or the use of the proceeds thereof. No Indemnitee referred to in paragraph (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.
(d) Payments. All amounts due under this Section shall be payable not later than three (3) days after demand therefor.
(e) Survival. Each partys obligations under this Section shall survive the termination of the Loan Documents and payment of the Obligations hereunder.
Section 8.4 Engagement of Project Consultant, Other Agents. In addition to, and not in limitation of Sections 5.1, 5.11 and 8.3 of this Agreement, the Borrowers acknowledges that the Lender may from time to time engage the Project Consultant and other agents on terms and conditions acceptable to the Lender. The Borrowers shall at all times cooperate with reasonable requests for information from
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the Project Consultant and each such agent, and the Borrowers acknowledge and agree that the Borrowers shall, promptly after demand therefor, reimburse the Lender for all costs, fees, charges and disbursements of the Project Consultant each such agent; provided, notwithstanding the foregoing, that the Borrowers reimbursement obligations under this Section in respect of all costs, fees, charges and disbursements of the Project Consultant shall not exceed $200,000 in the aggregate.
Section 8.5 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that no Borrower may assign or otherwise transfer any of its rights or obligations hereunder or under any other Loan Document without the prior written consent of the Lender. The Lender may at any time assign to one or more assignees all or a portion of its rights or obligations under this Agreement (including all or a portion of the Term Loans or commitments of the Lender under the Term Loan Facility), provided that such assignment shall be subject to the consent of the Borrowers (such consent not to be unreasonably withheld or delayed) unless an Event of Default has occurred and is continuing. Notwithstanding the foregoing, the Lender may participate all or a portion of its rights and obligations under this Agreement (including all or a portion of the Term Loans) without the prior written consent of the Borrowers. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Related Parties of the Lender) any legal or equitable right, remedy or claim under or by reason of this Agreement.
Section 8.6 Survival. All covenants, agreements, representations and warranties made by the Borrowers herein and in any Loan Document or other documents delivered in connection herewith or therewith or pursuant hereto or thereto shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery hereof and thereof and the making of the Term Loans hereunder, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Lender may have had notice or knowledge of any Default or Event of Default at the time of the Term Loans, and shall continue in full force and effect until Payment in Full. The provisions of Sections 8.3 and 8.14 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, Payment in Full or the termination of this Agreement or any provision hereof.
Section 8.7 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (e.g., pdf or tif) format shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 8.8 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
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Section 8.9 Governing Law; Jurisdiction; Etc.
(a) Governing Law. This Agreement and the other Loan Documents and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the internal law of the State of New York (without giving effect to the conflict of laws principles thereof other than Sections 5-1401 and 5-1402 of the New York General Obligations Law, which shall apply to this Agreement and all documentation hereunder).
(b) Jurisdiction. Each Borrower irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Lender or any Related Party of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than a state court located in the County of New York, State of New York or a federal court located in the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York state court or, to the fullest extent permitted by Applicable Law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or in any other Loan Document shall affect any right that the Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Loan Party or its properties in the courts of any jurisdiction.
(c) Waiver of Venue. Each Borrower irrevocably and unconditionally waives, to the fullest extent permitted by Applicable Law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by Applicable Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(d) Service of Process. Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 8.1. Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by Applicable Law.
Section 8.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
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Section 8.11 Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
Section 8.12 PATRIOT Act. The Lender hereby notifies the Loan Parties that, pursuant to the requirements of the PATRIOT Act, it may be required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of the Loan Parties and other information that will allow the Lender to identify the Loan Parties in accordance with the PATRIOT Act. The Borrowers will, promptly following a request by the Lender, provide all documentation and other information, including, without limitation, the certification regarding beneficial ownership of legal entity customers (the Beneficial Ownership Certification), that the Lender requests in order to comply with its ongoing obligations under applicable know your customer and anti-money laundering rules and regulations, including the PATRIOT Act.
Section 8.13 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to the Term Loans, together with all fees, charges and other amounts that are treated as interest on the Term Loans under Applicable Law (collectively, charges), shall exceed the maximum lawful rate (the Maximum Rate) that may be contracted for, charged, taken, received or reserved by the Lender in accordance with Applicable Law, the rate of interest payable in respect of the Term Loans hereunder, together with all charges payable in respect thereof, shall be limited to the Maximum Rate. Any amount collected by the Lender that exceeds the maximum amount collectible at the Maximum Rate shall be applied to the reduction of the principal balance of the Term Loans or refunded to the Borrowers so that at no time shall the interest and charges paid or payable in respect of the Term Loans exceed the maximum amount collectible at the Maximum Rate.
Section 8.14 Payments Set Aside; Reinstatement of Liens. To the extent that any payment by or on behalf of the Borrowers is made to the Lender and such payment or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceedings under any Debtor Relief Law or otherwise, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred. In addition, in the event that the Lender is required to return funds received after Payment in Full and release of the Liens to any Loan Parties or estates thereof or Persons claiming through the foregoing, in connection with a proceeding under Debtor Relief Laws or otherwise, then the Liens granted pursuant to the Loan Documents shall automatically be reinstated without further action of the Loan Parties. This Section 8.14 shall survive termination of this Agreement and the other Loan Documents.
Section 8.15 Joint and Several Liability. EACH BORROWER AGREES THAT IT IS LIABLE, JOINTLY AND SEVERALLY, WITH EACH OTHER BORROWER FOR THE PAYMENT AND PERFORMANCE OF ALL OBLIGATIONS OF THE BORROWERS UNDER THIS AGREEMENT, AND THAT THE LENDER CAN ENFORCE SUCH OBLIGATIONS AGAINST ANY OR ALL BORROWERS, IN THE LENDERS SOLE AND UNLIMITED DISCRETION. Each Borrower represents and warrants to the Lender that it has established adequate means of obtaining from every other Borrower on a continuing basis financial and other information relating to the financial condition of such other Borrower, and each Borrower agrees to keep adequately informed by such means of any facts, events or circumstances which might in any way affect its risks hereunder. Each Borrower further agrees that the Lender shall have no obligation to disclose to it any information or material about any other Borrower which is acquired by the Lender in any manner. Until Payment in Full has occurred, each Borrower waives any right to enforce any remedy which the Lender now has or may hereafter have against any other Borrower or any other Person, and waives any benefit of, or any right to participate in, any security now or hereafter held by the Lender.
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Section 8.16 The Company as Agent for Borrowers. Each Borrower hereby irrevocably appoints the Company as the borrowing agent and attorney-in-fact for all Borrowers (the Administrative Borrower) which appointment shall remain in full force and effect unless and until the Lender shall have received prior written notice signed by each Borrower that such appointment has been revoked and that another Borrower has been appointed Administrative Borrower. Each Borrower hereby irrevocably appoints and authorizes the Administrative Borrower (a) to provide the Lender with all notices with respect to Term Loans obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and the other Loan Documents (and any notice or instruction provided by Administrative Borrower shall be deemed to be given by all Borrowers hereunder and shall bind each Borrower), (b) to receive notices and instructions from the Lender (and any notice or instruction provided by the Lender to the Administrative Borrower in accordance with the terms hereof shall be deemed to have been given to each Borrower), (c) to execute, deliver and perform any Loan Document on behalf of such Borrower (it being understood and agreed that any Loan Document that is binding on the Administrative Borrower will be deemed binding on all Borrowers), and (d) to take such action as the Administrative Borrower deems appropriate on its behalf to obtain Term Loans and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement and the other Loan Documents. Each Borrower agrees that any action taken by the Administrative Borrower in accordance with the terms of this Agreement or the other Loan Documents, and the exercise by the Administrative Borrower of its powers set forth herein or therein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Borrowers. Each Borrower hereby jointly and severally agrees to indemnify the Lender and hold the Lender harmless against any and all liability, expense, loss or claim of damage or injury, made against the Lender by any Borrower or by any third party whosoever, arising from or incurred by reason of (x) the handling of any Collateral of the Borrowers as provided in this Section 8.16, or (y) the Lender relying on any instructions of the Administrative Borrower.
Section 8.17 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each Borrower acknowledges and agrees, and acknowledges its Affiliates understanding, that (a) no fiduciary, advisory or agency relationship between such Borrower and its Subsidiaries and the Lender is intended to be or has been created in respect of the transactions contemplated hereby or by the other Loan Documents, irrespective of whether the Lender has advised or is advising such Borrower or any Subsidiary on other matters and irrespective of any Equity Interest of such Borrower held by the Lender (if any), (b) the services regarding this Agreement provided by the Lender are arms-length commercial transactions between such Borrower and its Affiliates, on the one hand, and the Lender, on the other hand, (c) such Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent that it has deemed appropriate, (d) such Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents, (e) the Lender has no obligation to such Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (f) the Lender and its Affiliates may be engaged, for their own accounts or the accounts of customers, in a broad range of transactions that involve interests that differ from those of such Borrower and its Affiliates, and the Lender has no obligation to disclose any of such interests to such Borrower or its Affiliates. To the fullest extent permitted by Law, each Borrower hereby waives and releases any claims that it may have against the Lender with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
Signature page follows.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
LOCAL BOUNTI CORPORATION, as Borrower |
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BOUNTI BITTEROOT LLC, as Borrower |
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CONTROLLED ENVIRONMENT PROPERTY COMPANY, LLC, as Borrower |
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GROW BOUNTI NORTHWEST, LLC, as Borrower |
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Signature Page to Credit Agreement
CARGILL FINANCIAL SERVICES INTERNATIONAL, INC., as Lender |
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Signature Page to Credit Agreement
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Prospectus constituting a part of this Registration Statement on Form S-4 Amendment No. 1, of our report dated March 1, 2021, relating to the financial statements of Leo Holdings III Corp., which is contained in that Prospectus. We also consent the reference to our Firm under the caption Experts in the Prospectus.
/s/ WithumSmith+Brown, PC
New York, New York
September 3, 2021
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the use in this Amendment No. 1 to the Registration Statement (No. 333-257997) on Form S-4 of Leo Holdings III Corp of our report dated July 16, 2021, relating to the consolidated financial statements of Local Bounti Corporation for the years ended December 31, 2020 and 2019, appearing in the Joint Proxy Statement/Prospectus, which is part of this Registration Statement.
We also consent to the reference of our firm under the heading Experts in such Registration Statement.
/s/ RSM US LLP
San Francisco, California
September 3, 2021