UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): December 10, 2020

 

FORUM MERGER III CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware   001-39457   84-2308711
(State or other jurisdiction
of incorporation)
  (Commission
File Number)
  (IRS Employer
Identification No.)

 

1615 South Congress Avenue, Suite 103

Delray Beach, FL 33445

(Address of principal executive offices, including zip code)

 

Registrant’s telephone number, including area code: (212) 739-7860

 

Not Applicable
(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
     
  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
     
  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
     
  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on
which registered
Units, each consisting of one share of Class A common stock and one-third of one redeemable warrant   FIIIU   The Nasdaq Stock Market LLC
Class A common stock, par value $0.0001 per share   FIII   The Nasdaq Stock Market LLC
Warrants, each whole warrant exercisable for one share of Class A common stock, each at an exercise price of $11.50 per share   FIIIW   The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

  

 

 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

Merger Agreement

 

On December 10, 2020, Forum Merger III Corporation, a Delaware corporation (“Forum”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with ELMS Merger Corp., a Delaware corporation and a wholly owned subsidiary of Forum (“Merger Sub”), Electric Last Mile, Inc., a Delaware corporation (“ELMI”), and Jason Luo, in the capacity as the initial stockholder representative thereto, pursuant to which, subject to the satisfaction or waiver of certain conditions set forth therein, Merger Sub will merge with and into ELMI (the “Merger”), with ELMI surviving the merger in accordance with the Delaware General Corporation Law as a wholly owned subsidiary of Forum (the transactions contemplated by the Merger Agreement and the related ancillary agreements, the “Business Combination”). The Business Combination is subject to certain closing conditions, including the Carveout Transaction, as defined below under “—Conditions to Closing.” Prior to the Carveout Transaction, ELMI will have limited operations.

 

Merger Consideration

 

The aggregate consideration payable to the stockholders of ELMI at the closing of the Business Combination (the “Closing”) is $1,300,000,000, payable solely in shares of Forum common stock, par value $0.0001 per share (“Common Stock”), valued at $10.00 per share, subject to the purchase price adjustments and deductions as set forth in the Merger Agreement less $292,000,000, the value of the 29,200,000 shares of Common Stock reserved for a new long-term equity incentive plan ($150,000,000 of which are restricted share units with vesting terms substantially similar to the Earnout Shares (as defined below)), less $2,500,000, the value of the Adjustment Escrow Stock (as defined below), and less $50,000,000, the value of the Earnout Shares (the “Closing Merger Consideration”).

 

In addition, an aggregate of 5,000,000 shares of Common Stock (the “Earnout Shares”) will be placed into escrow at Closing and will be payable to ELMI stockholders (the “ELMI Stockholders”) during the 36-month period following the Closing (the “Earnout Period”) as follows: (i) if the closing price of the Common Stock (the “Closing Price”) equals or exceeds $14.00 on any 20 trading days in any 30-consecutive-day trading period, then 2,500,000 Earnout Shares will be released from escrow to the ELMI Stockholders, and (ii) if the Closing Price equals or exceeds $16.00 on any 20 trading days in any 30-consecutive-day trading period, then the remaining 2,500,000 Earnout Shares will be released from escrow to the ELMI Stockholders. Subject to the terms and conditions set forth in the Merger Agreement, if a qualifying Change in Control (as defined in the Merger Agreement) occurs during the Earnout Period, all Earnout Shares not previously released will be released to the ELMI Stockholders. Any Earnout Shares not released prior to the expiration of the Earnout Period will be forfeited and cancelled.

 

Forum has agreed that, at the Closing, Forum will place 250,000 shares of Common Stock into an adjustment escrow account (the “Adjustment Escrow Stock”) to secure any downward post-closing purchase price adjustment. Following the date on which the Closing Merger Consideration is finally determined, all or a portion of those shares of Common Stock will either be released to the ELMI Stockholders or released to Forum in accordance with the adjustment mechanisms set forth in the Merger Agreement.

 

Representations, Warranties and Covenants

 

The Merger Agreement contains customary representations, warranties and covenants by the parties thereto, including, among other things, covenants with respect to the conduct of Forum and ELMI during the period between execution of the Merger Agreement and the Closing. The representations, warranties and covenants made under the Merger Agreement will not survive the Closing; provided, any covenants that are to be performed at or after the Closing shall survive until such covenant has been performed or satisfied. No party to the Merger Agreement will have any liabilities to such other parties, other than claims for fraud. Each of Forum and ELMI has agreed to use its reasonable best efforts to cause the Merger to be consummated as promptly as reasonably practicable.

 

1

 

 

Conditions to Closing

 

The Closing is subject to the following contracts having been executed in form and substance acceptable to Forum, in its sole discretion: (i) a lease agreement between ELMI and SF Motors Inc. (d/b/a SERES) (“SERES”) relating to a manufacturing plant located in Mishawaka, Indiana, (ii) an exclusive IP license agreement and exclusive patent license agreement between ELMI and SERES relating to the license and/or transfer by SERES to ELMI of certain patents and other key intellectual property, (iii) a transition services agreement between SERES and ELMI, and (iv) a supply agreement between ELMI and Chongqing Sokon Motor (Group) Imp. & Exp. Co., Ltd., a subsidiary of SERES’ majority stockholder, Chongqing Sokon Industry Group Stock Co. Ltd. (the foregoing collectively referred to as the “Carveout Transaction”).

 

In addition, the closing is subject to certain other conditions, including that (i) the ELMI Stockholders and the stockholders of Forum approve the Business Combination, (ii) The Nasdaq Stock Market approves for listing the Common Stock to be issued in connection with the Business Combination and (iii) Forum has, including any proceeds from Forum’s private investment in public equity financing and net of any redemptions, at least $125,000,000 unrestricted cash on hand at the Closing.

 

Termination

 

The Merger Agreement may be terminated prior to the Closing under certain circumstances, including, among others, (i) by written consent of ELMI and Forum, (ii) by written notice from either Forum or ELMI, if the Closing has not occurred on or before June 30, 2021 (the “Outside Date”), unless the terminating party’s failure to comply with any material respect of its obligations under the Merger Agreement shall have proximately contributed to the failure of the Closing to have occurred on or prior to the Outside Date, (iii) by written notice from either Forum or ELMI, in the event that the other party breaches any of its representations, warranties, covenants or other agreements under the Merger Agreement in any material respect that would result in the failure of the conditions to Forum’s or ELMI’s obligation to consummate the Business Combination and such breach has not been cured by the earlier of 30 days after receiving notice of such breach and the Outside Date, (iv) by ELMI if at any time prior to the approval by Forum’s public stockholders, if the board of directors of Forum shall have effected a change in recommendation and (v) by Forum on or after January 31, 2020, if at such time the Carveout Transaction documents have not been executed in form and substance acceptable to Forum, in its sole discretion.

 

The foregoing description of the Merger Agreement and the Business Combination does not purport to be complete and is qualified in its entirety by the terms and conditions of the Merger Agreement, a copy of which is attached as Exhibit 2.1 hereto and is incorporated by reference herein. The Merger Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of such agreement or other specific dates. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating such agreement. The Merger Agreement has been attached to provide investors with information regarding its terms and is not intended to provide any other factual information about Forum, ELMI or any other party to the Merger Agreement. In particular, the representations, warranties, covenants and agreements contained in the Merger Agreement, which were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties (including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts) and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors and reports and documents filed with the U.S. Securities and Exchange Commission (the “SEC”). Investors should not rely on the representations, warranties, covenants and agreements, or any descriptions thereof, as characterizations of the actual state of facts or condition of any party to the Merger Agreement. In addition, the representations, warranties, covenants and agreements and other terms of the Merger Agreement may be subject to subsequent waiver or modification. Moreover, information concerning the subject matter of the representations and warranties and other terms may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in Forum’s public disclosures.

 

2

 

 

Subscription Agreements

 

In connection with the transactions contemplated by the Merger Agreement, Forum has entered into subscription agreements, each dated December 10, 2020 (collectively, the “Subscription Agreements”) with certain third-party investors (the “PIPE Investors”), pursuant to which Forum agreed to issue and sell to the PIPE Investors in private placements to close immediately prior to the Closing, an aggregate of 13.0 million shares of Common Stock at $10.00 per share, for an aggregate purchase price of $130,000,000 (the “PIPE Investment”). Pursuant to the Subscription Agreements, Forum has agreed to provide registration rights to the PIPE Investors relating to the sale and issuance of Common Stock. At the Closing, the PIPE Investors and Forum shall consummate the PIPE Investment pursuant to and in accordance with the terms of the Subscription Agreements. The foregoing description of the Subscription Agreements does not purport to be complete and is qualified in its entirety by the terms and conditions of the form of Subscription Agreement, a copy of which is filed as Exhibit 10.1 hereto and is incorporated by reference herein.

 

Convertible Notes

 

On December 10, 2020, EMLI issued convertible promissory notes to certain investors in an aggregate principal amount of approximately $25,000,000 (the “Convertible Notes”). Pursuant to the terms of the Merger Agreement, Forum will enter into a joinder to the Convertible Notes, pursuant to which (1) the outstanding principal and accrued interest on the Convertible Notes will convert at Closing into shares of Common Stock, at a conversion price per share equal to the product of (i) the price per share paid by the PIPE Investors in the PIPE Investment multiplied by (ii) 0.90909 and (2) Forum will agree to provide registration rights to the holders of Convertible Notes relating to the issuance of Common Stock upon the conversion of the Convertible Notes. The foregoing description of the Convertible Notes does not purport to be complete and is qualified in its entirety by the terms and conditions of the form of Convertible Note, a copy of which is filed as Exhibit 10.2 hereto and is incorporated by reference herein.

 

Restrictive Covenant Agreements

 

In connection with the entry into the Merger Agreement and effective at Closing, Forum entered into restrictive covenant agreements (collectively, the “Restrictive Covenant Agreements”), with Jason Luo, James Taylor, Benjamin Wu and Hailiang Hu (the “Restricted Parties”). Pursuant to the terms of the Restrictive Covenant Agreements, the Restricted Parties have agreed to certain non-compete, non-solicit and non-disparagement provisions. The foregoing description of the Restrictive Covenant Agreements does not purport to be complete and is qualified in its entirety by the terms and conditions of the form of Restrictive Covenant Agreement, a copy of which is attached as Exhibit 10.3 hereto and is incorporated by reference herein.

 

Employment Agreements

 

In connection with the entry into the Merger Agreement and effective at Closing, ELMI entered into employment agreements (collectively, the “Employment Agreements”) with each of Jason Luo, James Taylor, Benjamin Wu and Hailiang Hu. Pursuant to the Merger Agreement, after Closing, the executive officers of ELMI immediately prior to Closing will be the executive officers of Forum and the surviving corporation of the Merger. The foregoing description of the Employment Agreements does not purport to be complete and is qualified in its entirety by the terms and conditions of the form of Employment Agreement, a copy of which is attached as Exhibit F to the Merger Agreement and is incorporated by reference herein.

 

Amended and Restated Registration Rights Agreement

 

At the Closing, Forum will enter into an amended and restated registration rights agreement (the “A&R RRA”) with Forum Investors III LLC, Forum’s sponsor (“Sponsor”), Jefferies LLC, and the other parties thereto (collectively, the “Investors”), which, among other things, amends and restates the registration rights agreement entered into by and among Forum, Forum’s initial directors and officers, the Sponsor and Jefferies LLC at the time of Forum’s initial public offering. Pursuant to the terms of the A&R RRA, among other things, Forum will be obligated to file, not later than 30 days after the Closing, a registration statement covering the shares of Common Stock issued or issuable to the Investors.

 

3

 

 

In addition, the Sponsor will agree that it will not transfer shares of Common Stock held by it prior to the earlier of (x) twelve months after the Closing, (y) the date on which the last sales price of Common Stock equals or exceeds $12.00, subject to adjustment as provided therein, for any 20 trading days in any 30-consecutive-day trading period commencing at least 150 days after the Merger and (z) the date on which Forum completes a transaction that results in all of Forum’s stockholders having the right to exchange their shares of Common Stock for cash, securities or other property. Each of the Sponsor and Jefferies LLC will agree that they will not transfer units obtained in a private placement completed in connection with Forum’s initial public offering until 30 days after Closing. ELMI Stockholders will agree that they will not transfer shares of Common Stock received as consideration in the Business Combination until six months after the Closing; provided, that, Jason Luo and James Taylor will agree that they will not transfer (i) any shares of Common Stock received as consideration in the Business Combination until 12 months after the Closing and (ii) 50% of such shares until 24 months after the Closing. The foregoing description of the A&R RRA does not purport to be complete and is qualified in its entirety by the terms and conditions of the A&R RRA, a copy of which is attached as Exhibit D to the Merger Agreement and is incorporated by reference herein.

 

Sponsor Support Agreement

 

In connection with the entry into the Merger Agreement, the Sponsor, the managing member of the Sponsor (“Sponsor Managing Member”) and the managers of the Sponsor Managing Member (collectively, the “Sponsor Parties”) entered into a support agreement (the “Sponsor Support Agreement”) with Forum and ELMI, pursuant to which the Sponsor Parties agreed to, among other things, to vote or cause to be voted (or express consent or dissent in writing, as applicable) all of his, her or its shares of Forum’s common stock that are entitled to vote to approve and adopt the Merger Agreement and the Business Combination. The foregoing description of the Sponsor Support Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Sponsor Support Agreement, a copy of which is attached as Exhibit 10.4 hereto and is incorporated by reference herein.

 

Stockholder Support Agreement

 

As a condition to the Closing of the Business Combination, Forum and the ELMI Stockholders will execute and deliver support agreements (the “Stockholder Support Agreements”), pursuant to which each ELMI Stockholder will agree to, among other things, (i) consent to, and vote to approve and adopt, the Merger Agreement and the Business Combination, (ii) waive any dissenters’ or approval rights under applicable law in connection with the Business Combination, and (iii) not transfer, subject to certain permitted exceptions, any of such stockholder’s shares until expiration of the Stockholder Support Agreement. The foregoing description of the Stockholder Support Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Stockholder Support Agreement, a copy of which is attached as Exhibit 10.5 hereto and is incorporated by reference herein.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K with respect to the issuance of shares of Common Stock is incorporated by reference herein. The shares of Common Stock issuable in connection with the transactions contemplated by the Business Combination will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

 

Item 7.01 Regulation FD Disclosure.

 

On December 11, 2020, Forum and ELMI issued a joint press release announcing the execution of the Merger Agreement. The press release is furnished hereto as Exhibit 99.1.

 

In addition, furnished as Exhibit 99.2 hereto is the investor presentation dated December 2020, that will be used by Forum with respect to the Business Combination during a webcast for investors and analysts on December 11, 2020.

 

The information in this Item 7.01, including Exhibits 99.1 and 99.2, is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities under that section, and shall not be deemed to be incorporated by reference into the filings of Forum under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filings. This Current Report on Form 8-K will not be deemed an admission as to the materiality of any information of the information in this Item 7.01, including Exhibits 99.1 and 99.2.

 

4

 

 

Important Information About the Business Combination and Where to Find It

 

In connection with the Business Combination, Forum intends to file a preliminary proxy statement. Forum will mail a definitive proxy statement and other relevant documents to its stockholders. Forum’s stockholders and other interested persons are advised to read, when available, the preliminary proxy statement and the amendments thereto and the definitive proxy statement and documents incorporated by reference therein filed in connection with the Business Combination, as these materials will contain important information about Forum, ELMI and the Business Combination. When available, the definitive proxy statement and other relevant materials for the Business Combination will be mailed to stockholders of Forum as of a record date to be established for voting on the Business Combination. Stockholders will also be able to obtain copies of the preliminary proxy statement, the definitive proxy statement and other documents filed with the SEC that will be incorporated by reference therein, without charge, once available, at the SEC’s web site at www.sec.gov, or by directing a request to: Forum Merger III Corporation, 1615 South Congress Avenue, Suite 103, Delray Beach, FL 33445, Attention: Secretary, telephone: (212) 739-7860.

 

Participants in the Solicitation

 

Forum and its directors and executive officers may be deemed participants in the solicitation of proxies from Forum’s stockholders with respect to the Business Combination. A list of the names of those directors and executive officers and a description of their interests in Forum is contained in Forum’s Registration Statement on Form S-1/A, which was filed with the SEC and is available free of charge at the SEC’s web site at www.sec.gov, or by directing a request to Forum Merger III Corporation, 1615 South Congress Avenue, Suite 103, Delray Beach, FL 33445, Attention: Secretary, telephone: (212) 739-7860. Additional information regarding the interests of such participants will be contained in the proxy statement for the Business Combination when available.

 

ELMI and its directors and executive officers may also be deemed to be participants in the solicitation of proxies from the stockholders of Forum in connection with the Business Combination. A list of the names of such directors and executive officers and information regarding their interests in the Business Combination will be included in the proxy statement for the Business Combination when available.

 

5

 

 

Forward-Looking Statements

 

This Current Report on Form 8-K includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forum and ELMI’s actual results may differ from their expectations, estimates and projections and consequently, you should not rely on these forward looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, Forum’s and ELMI’s expectations with respect to future performance and anticipated financial impacts of the Business Combination, the satisfaction of the closing conditions to the Business Combination, the size, demands and growth potential of the markets for ELMI’s products and ELMI’s ability to serve those markets, ELMI’s ability to develop innovative products and compete with other companies engaged in the commercial delivery vehicle industry and/or the electric vehicle industry, ELMI’s ability to attract and retain customers, the estimated go to market timing and cost for ELMI’s products, the implied valuation of ELMI and the timing of the completion of the Business Combination. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside Forum’s and ELMI’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement or could otherwise cause the Business Combination to fail to close; (2) the inability of ELMI to (x) execute the transaction agreements for the Carveout Transaction that are in form and substance acceptable to Forum (at Forum’s sole discretion), (y) acquire a leasehold interest or fee simple title to the Indiana manufacturing facility or (z) secure key intellectual property rights related to its proposed business; (3) the outcome of any legal proceedings that may be instituted against Forum or ELMI following the announcement of the Business Combination; (4) the inability to complete the Business Combination, including due to failure to obtain approval of the stockholders of Forum or other conditions to closing in the Merger Agreement; (5) the receipt of an unsolicited offer from another party for an alternative business transaction that could interfere with the Business Combination; (6) the inability to obtain the listing of the common stock of the post-acquisition company on the Nasdaq Stock Market or any alternative national securities exchange following the Business Combination; (7) the risk that the announcement and consummation of the Business Combination disrupts current plans and operations; (8) the inability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and the ability of the combined company to grow and manage growth profitably and retain its key employees; (9) costs related to the Business Combination; (10) changes in applicable laws or regulations; (11) the possibility that ELMI may be adversely affected by other economic, business, and/or competitive factors; (12) the impact of COVID-19 on the combined company’s business; and (14) other risks and uncertainties indicated from time to time in the proxy statement to be filed relating to the Business Combination, including those under the “Risk Factors” section therein, and in Forum’s other filings with the SEC. Some of these risks and uncertainties may in the future be amplified by the COVID-19 outbreak and there may be additional risks that Forum considers immaterial or which are unknown. Forum cautions that the foregoing list of factors is not exclusive. Forum cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. ELMI is currently engaged in limited operations only and its ability to carry out its business plans and strategies in the future are contingent upon the closing of the proposed Business Combination. The consummation of the Business Combination is subject to, among other conditions, (i) the execution and effectiveness of transaction agreements relating to the Carveout Transaction that are each in form and substance acceptable to Forum (at Forum’s sole discretion), (ii) the acquisition by ELMI of a leasehold interest or fee simple title to the Indiana manufacturing facility prior to the business combination, and (iii) the securing by ELMI of key intellectual property rights related to its proposed business. Forum does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.

 

No Offer or Solicitation

 

This Current Report on Form 8-K shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the Business Combination. This Current Report on Form 8-K shall also not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any states or jurisdictions in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

 

6

 

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.   Description
2.1†   Agreement and Plan or Merger, dated as of December 10, 2020, by and among Forum Merger III Corporation, ELMS Merger Corp., Electric Last Mile, Inc. and Jason Luo, in the capacity as the initial stockholder representative thereto.
10.1   Form of Subscription Agreement.
10.2   Form of Convertible Promissory Note of Electric Last Mile, Inc.
10.3   Form of Restrictive Covenant Agreement.
10.4   Sponsor Support Agreement, dated as of December 10, 2020, by and among Forum Merger III Corporation, Electric Last Mile, Inc., Forum Investors III LLC, Marshall Kiev and David Boris.
10.5   Form of Stockholder Support Agreement.
99.1   Press Release, dated December 11, 2020.
99.2   Investor Presentation, dated December 2020.

 

Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request; provided, however, that Forum may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act, as amended, for any schedule or exhibit so furnished.

 

7

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  FORUM MERGER III CORPORATION

 

Dated: December 11, 2020 By: /s/ David Boris
    Name:  David Boris
    Title:

Co-Chief Executive Officer and

Chief Financial Officer

 

 

8

 

 

Exhibit 2.1

 

EXECUTION VERSION

 

AGREEMENT AND PLAN OF MERGER

 

by and among

 

FORUM MERGER III CORPORATION,

 

ELMS MERGER CORP.,

 

ELECTRIC LAST MILE, INC.

 

and

 

JASON LUO, as the Stockholder Representative

 

Dated as of December 10, 2020

 

 

 

 

Table of Contents

 

    Page
     
  Article I  
     
THE MERGER; CLOSING
 
Section 1.1 The Merger 2
Section 1.2 Time and Place of Closing 3
Section 1.3 Effective Time 3
Section 1.4 The Certificate of Incorporation and Bylaws of Parent 3
Section 1.5 The Certificate of Incorporation and Bylaws of the Surviving Corporation 3
Section 1.6 Directors and Officers 3
     
Article II
     
MERGER CONSIDERATION; EFFECT OF THE MERGER on capital stock
 
Section 2.1 Conversion of Shares of Company Common Stock 4
Section 2.2 Merger Sub 4
Section 2.3 PIPE Investment 4
Section 2.4 Closing Date Statement and Merger Consideration Schedule 4
Section 2.5 Merger Consideration 5
Section 2.6 Exchange Procedures. 6
Section 2.7 Merger Consideration Adjustment 7
Section 2.8 Section 16 Matters 9
Section 2.9 Tax Consequences of the Merger 9
Section 2.10 Earnout 10
Section 2.11 Closing Deliverables. 11
     
Article III
     
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
     
Section 3.1 Organization, Good Standing and Qualification 13
Section 3.2 Capital Structure 13
Section 3.3 Authority; Approval 14
Section 3.4 Governmental Filings; No Violation; Certain Contracts 14
Section 3.5 Financial Statements 15
Section 3.6 Absence of Certain Changes 16
Section 3.7 No Undisclosed Liabilities 16
Section 3.8 Litigation 16
Section 3.9 Employee Benefits 16
Section 3.10 Labor Matters 18
Section 3.11 Compliance with Laws; Licenses 19
Section 3.12 Material Contracts 19
Section 3.13 Real Property 22

 

i

 

 

Section 3.14 Environmental Matters 24
Section 3.15 Taxes 25
Section 3.16 Intellectual Property 27
Section 3.17 Insurance 30
Section 3.18 Suppliers 30
Section 3.19 Related Party Transactions 30
Section 3.20 Brokers and Finders 31
Section 3.21 Information Supplied; Proxy Statement 31
Section 3.22 Anti-Corruption; Sanctions 31
Section 3.23 Accredited Investors 32
Section 3.24 Sufficiency of the Assets 32
Section 3.25 No Other Representations or Warranties 33
     
Article IV
     
REPRESENTATIONS AND WARRANTIES OF PARENT
     
Section 4.1 Organization, Good Standing and Qualification 33
Section 4.2 Capital Structure 34
Section 4.3 Authority; Approval 35
Section 4.4 Governmental Filings; No Violations; Certain Contracts 36
Section 4.5 Parent Reports; Financial Statements; Internal Controls 37
Section 4.6 Absence of Certain Changes 38
Section 4.7 Litigation and Liabilities 39
Section 4.8 Parent Trust Account 39
Section 4.9 PIPE Investments 40
Section 4.10 [RESERVED] 40
Section 4.11 Investment Intent 40
Section 4.12 Brokers and Finders 40
Section 4.13 Information Supplied; Proxy Statement 41
Section 4.14 Taxes 41
Section 4.15 Material Contracts 42
Section 4.16 Benefit Plans 42
Section 4.17 Compliance with Laws 42
Section 4.18 Investment Company Act 42
Section 4.19 Investigation and Reliance 42
Section 4.20 No Other Representations or Warranties 43
     
Article V
     
COVENANTS
     
Section 5.1 Interim Operations of the Company 43
Section 5.2 Conduct of Parent 47
Section 5.3 Parent Trust Account Matters 49
Section 5.4 [RESERVED] 49
Section 5.5 Proxy Filing; Information Supplied 49

 

ii

 

 

Section 5.6 Parent Meeting 51
Section 5.7 Approval of Sole Stockholder of Merger Sub 52
Section 5.8 Required Stockholder Approval 52
Section 5.9 Information Statement 52
Section 5.10 Regulatory Filings/Approvals 53
Section 5.11 Cooperation and Efforts to Consummate Transactions; Status 54
Section 5.12 Third-Party Consents 55
Section 5.13 Access and Reports 55
Section 5.14 LTIP 56
Section 5.15 Exclusivity 56
Section 5.16 Publicity 57
Section 5.17 Confidentiality 57
Section 5.18 Financing 58
Section 5.19 Subscription Agreements 58
Section 5.20 Takeover Statutes 59
Section 5.21 Further Assurances 59
Section 5.22 Tax Matters 59
Section 5.23 Financial Statements and Related Information 60
Section 5.24 Directors’ and Officers’ Insurance Policy 61
Section 5.25 Supplement to Company Disclosure Letter 62
Section 5.26 Mandatory Disclosure 62
Section 5.27 Code Section 280G 63
Section 5.28 Convertible Notes 63
Section 5.29 Key Contracts 63
     
Article VI
     
CONDITIONS
     
Section 6.1 Conditions to Each Party’s Obligation to Consummate the Transactions 63
Section 6.2 Conditions to Obligation of Parent 64
Section 6.3 Conditions to Obligations of the Company 66
Section 6.4 Frustration of Closing Conditions 67
     
Article VII
     
TERMINATION
     
Section 7.1 Termination 68
Section 7.2 Effect of Termination and Abandonment 69
     
Article VIII
     
STOCKHOLDER REPRESENTATIVE
     
Section 8.1 Designation and Replacement of Stockholder Representative 69

 

iii

 

 

Article IX
     
MISCELLANEOUS AND GENERAL
     
Section 9.1 Amendment; Waiver 70
Section 9.2 Expenses 71
Section 9.3 Counterparts 71
Section 9.4 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL; SPECIFIC PERFORMANCE 71
Section 9.5 Notices 72
Section 9.6 Entire Agreement 73
Section 9.7 No Third-Party Beneficiaries 73
Section 9.8 Obligations of Parent 73
Section 9.9 Severability 73
Section 9.10 Interpretation; Construction 74
Section 9.11 Assignment 75
Section 9.12 Fulfillment of Obligations 75
Section 9.13 Obligations of Merger Sub 75
Section 9.14 Non-Survival of Representations, Warranties and Covenants 75
Section 9.15 Release of Claims 76

 

iv

 

 

EXHIBITS AND SCHEDULES

 

Exhibits

 
Exhibit A Definitions
Exhibit B Form of Sponsor Support Agreement
Exhibit C Form of Support Agreement
Exhibit D Form of Amended and Restated Registration Rights Agreement
Exhibit E Form of Restrictive Covenant Agreement
Exhibit F Form(s) of Employment Agreement
Exhibit G Form of Certificate of Merger
Exhibit H Form of Amended and Restated Parent Charter
Exhibit I Form of Amended and Restated Parent Bylaws
Exhibit J Company Letter of Transmittal
Exhibit K Form of Director Nomination Agreement
Exhibit L Form of FIRPTA Certificate
Exhibit M-1 Form of Forum III LTIP
Exhibit M-2 Form of RSU Agreement for Earnout Shares
Exhibit M-3 Form of RSU Agreement for Time-Vesting Shares
Exhibit M-4 Form of RSU Agreement for Performance-Vesting Shares
Exhibit M-5 Forum III LTIP Parties
Exhibit N Form of Escrow Agreement
   
Schedules  
Schedule A-1 Initial Stockholder Consent Parties
Schedule A-2 Parties to Certain Ancillary Agreements

 

v

 

 

AGREEMENT AND PLAN OF MERGER

 

THIS AGREEMENT AND PLAN OF MERGER (including the exhibits and schedules hereto, each as amended or restated from time to time, this “Agreement”), dated as of December 10, 2020 (the “Execution Date”), is entered into by and among Forum Merger III Corporation, a Delaware corporation (“Parent”), ELMS Merger Corp., a Delaware corporation and a wholly owned Subsidiary of Parent (“Merger Sub”), Electric Last Mile, Inc., a Delaware corporation (the “Company”), and Jason Luo, in the capacity as the initial Stockholder Representative hereto. Each of the signatories to this Agreement referred to herein as a “Party” or, collectively, as the “Parties”.

 

RECITALS

 

WHEREAS, the Parties intend that, on the terms and subject to the conditions set forth in this Agreement, Merger Sub shall merge with and into the Company (the “Merger”), with the Company surviving the Merger, pursuant to the provisions of the General Corporation Law of the State of Delaware (the “DGCL”);

 

WHEREAS, the board of directors of the Company (the “Company Board”) has unanimously: (a) approved and declared advisable this Agreement and the transactions contemplated by this Agreement and the other Transaction Documents to which it is a party, including the Merger (the “Transactions”), on the terms and subject to the conditions set forth in this Agreement; (b) determined that this Agreement and the Transactions, are fair to, and in the best interests of, the Company and the holders of shares of the Company’s common stock, par value $0.001 per share (the “Company Common Stock”); and (c) resolved to recommend that the holders of shares of Company Common Stock approve the Merger and adopt this Agreement;

 

WHEREAS, the board of directors of Parent (the “Parent Board”) has unanimously: (a) approved this Agreement and the Transactions on the terms and subject to the conditions set forth in this Agreement; and (b) resolved to recommend that the holders of shares of Parent’s Class A common stock, par value $0.0001 per share (the “Parent Class A Common Stock”), and Parent’s Class B common stock, par value of $0.0001 per share (the “Parent Class B Common Stock”), approve the Parent Stockholder Proposals;

 

WHEREAS, as a material inducement to the Company’s willingness to enter into this Agreement, concurrently with the execution and delivery of this Agreement, Sponsor is entering into a Sponsor Support Agreement (the “Sponsor Support Agreement”), substantially in the form attached hereto as Exhibit B;

 

WHEREAS, as a material inducement to Parent’s and Merger Sub’s willingness to enter into this Agreement: (a) promptly after the execution and delivery of this Agreement and in any event within twenty-four (24) hours, those certain Stockholders set forth on Schedule A-1 hereto shall (“Initial Stockholder Consent”); and (b) prior to the Closing, Stockholders holding 100% of the issued and outstanding Company Common Stock will have, in each case, executed and delivered support agreements in the Agreed Form (collectively, the “Support Agreements”);

 

WHEREAS, the Support Agreements will constitute the applicable Stockholder’s agreement to consent to, and vote to approve and adopt, this Agreement and the Merger, and waive any dissenters’ or approval rights under applicable Law;

 

 

 

 

WHEREAS, as a material inducement to Parent’s and Merger Sub’s willingness to enter into this Agreement, concurrently with the effectiveness of this Agreement, and each effective as of the Closing, those Persons set forth on Schedule A-2 shall enter into an Amended and Restated Registration Rights Agreement (the “Amended and Restated Registration Rights Agreement”), substantially in the form attached hereto as Exhibit D;

 

WHEREAS, concurrently with the effectiveness of this Agreement, and each effective as of the Closing, those Persons set forth on Schedule A-2 will have executed and delivered to Parent: (a) a Restrictive Covenant Agreement in the form of Exhibit E (together, the “Restrictive Covenant Agreements”); and (b) an Employment Agreement substantially in the form of Exhibit F (together, the “Employment Agreements”);

 

WHEREAS, in connection with the Transactions, Parent has entered into subscription agreements (collectively, the “Subscription Agreements”) with certain third-party investors (the “PIPE Investors”) pursuant to which the PIPE Investors have committed to make a private investment in public equity in the form of Parent Common Stock up to an aggregate amount of $130,000,000;

 

WHEREAS, on the date hereof, the Company issued convertible promissory notes to certain third-party investors (the “Convertible Note Holders”) pursuant to which the Convertible Note Holders agreed to lend to the Company an aggregate principal amount of $25,000,000, which such principal amount and interest is convertible into Parent Common Stock upon the Closing of the Transactions (collectively, the “Convertible Notes”);

 

WHEREAS, pursuant to the Organizational Documents of Parent, shares of the Parent Class B Common Stock shall automatically convert into shares of Parent Common Stock in connection with the Transactions;

 

WHEREAS, it is intended that, for U.S. federal income tax purposes, the Merger shall qualify as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”); and

 

WHEREAS, the Company, Parent and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with this Agreement and set forth certain conditions to the Merger.

 

NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements set forth in this Agreement, the Parties agree as follows:

 

Article I

THE MERGER; CLOSING

 

Section 1.1 The Merger. On the terms and subject to the conditions set forth in this Agreement: (a) at the Effective Time, Merger Sub shall be merged with and into the Company in accordance with the DGCL and the separate corporate existence of Merger Sub shall thereupon cease; (b) the Company shall be the surviving corporation in the Merger (sometimes hereinafter referred to as the “Surviving Corporation”) and from and after the Effective Time, shall be a wholly owned subsidiary of Parent and the separate corporate existence of the Company with all of its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger, except, in each case, as expressly set forth in Section 1.4 and Section 1.5 and as provided in the DGCL; and (c) the Merger shall have such other effects as provided in the DGCL.

 

2

 

 

Section 1.2 Time and Place of Closing. The closing of the Merger (the “Closing”) will take place at 9:00 a.m. (New York Time), by means of a virtual closing through electronic exchange of signatures, on the fifth (5th) Business Day following the satisfaction or, to the extent permitted by applicable Law, waiver of the last condition in Article VI to be satisfied or waived (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or, to the extent permitted by applicable Law, waiver of those conditions) or at such other time and place as Parent and the Company mutually agree (the “Closing Date”).

 

Section 1.3 Effective Time. As soon as practicable following, and on the date of, the Closing, the Company and Parent will cause a certificate of merger relating to the Merger in the form set forth on Exhibit G (the “Certificate of Merger”) to be executed, acknowledged and filed with the Secretary of State of the State of Delaware as provided in Section 251 of the DGCL. The Merger shall become effective at the time when the Certificate of Merger has been duly filed with and accepted by the Secretary of State of the State of Delaware or at such later date and time as may be agreed by the Parties in writing and specified in the Certificate of Merger (such date and time, the “Effective Time”).

 

Section 1.4 The Certificate of Incorporation and Bylaws of Parent. At the Effective Time, (a) the certificate of incorporation of Parent shall be amended and restated to be in the form of the certificate of incorporation set forth in Exhibit H (the “Amended and Restated Parent Charter”) and (b) the bylaws of Parent shall be amended and restated to be in the form of the bylaws set forth in Exhibit I, in each case, until thereafter amended as provided therein or by applicable Law. The Parties shall take all actions necessary to implement the intent of this Section 1.4.

 

Section 1.5 The Certificate of Incorporation and Bylaws of the Surviving Corporation. The certificate of incorporation and bylaws of the Company in effect immediately prior to the Effective Time shall, at the Effective Time, be the certificate of incorporation and bylaws of the Surviving Corporation, until thereafter amended as provided therein or by applicable Law. The Parties shall take all actions necessary to implement the intent of this Section 1.5.

 

Section 1.6 Directors and Officers. The Parties shall take all actions necessary to ensure that immediately following the Effective Time: (a) the directors of Parent and the Surviving Corporation shall be comprised of the Persons whose names are set forth in the Proxy Statement; and (b) the officers of the Company immediately prior to the Closing shall be the officers of each of Parent and the Surviving Corporation.

 

3

 

 

Article II

MERGER CONSIDERATION; EFFECT OF THE MERGER on capital stock

 

Section 2.1 Conversion of Shares of Company Common Stock.

 

(a) At the Effective Time, by virtue of the Merger and without any action on the part of the Parties or any holder of any capital stock of the Company, each share of Company Common Stock issued and outstanding at the Effective Time shall be converted into, and become exchangeable for (x) the number of shares of Parent Class A Common Stock equal to the quotient obtained by dividing (A) the Aggregate Consideration Value less the Earnout Share Value, less the Adjustment Escrow Amount, by (B) $10.00 (the “Reference Price”) by (C) the Fully Diluted Share Number (such number of shares of Parent Class A Common Stock, the “Stock Merger Consideration”), (y) the contingent right to receive its portion of the Earnout Shares (if any) after the Closing if payable subject to and in accordance with Section 2.10 (such rights, the “Earnout Share Rights”) and (z) the contingent right to receive its portion of the Adjustment Escrow Stock (if any) after the Closing if payable subject to and in accordance with Section 2.7 (such right, the “Adjustment Escrow Share Rights”, and together with the Earnout Share Rights and the Stock Merger Consideration, the “Merger Consideration”).

 

(b) By virtue of the Merger and without any action on the part of the Parties or any holder of any capital stock of the Company, all of the shares of Company Common Stock shall represent the right to receive the Merger Consideration pursuant to this Article II, shall cease to be outstanding, shall be cancelled and shall cease to exist as of the Effective Time, and each certificate formerly representing any of the shares of Company Common Stock (each, a “Certificate”) shall thereafter represent only the right to receive the Merger Consideration pursuant to Section 2.4.

 

Section 2.2 Merger Sub. At the Effective Time, each share of common stock, par value $0.0001 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall remain outstanding and each certificate or book-entry account therefor shall continue to evidence an equivalent number of shares of common stock, par value $0.0001 per share, of the Surviving Corporation.

 

Section 2.3 PIPE Investment. At the Closing, the PIPE Investors and Parent shall consummate the PIPE Investment pursuant to and in accordance with the terms of the applicable Subscription Agreements.

 

Section 2.4 Closing Date Statement and Merger Consideration Schedule. Not less than three (3) Business Days prior to the Closing Date, the Company shall deliver to Parent:

 

(a) A statement (the “Closing Date Statement”), signed and certified by the Chief Financial Officer of the Company on its behalf, which sets forth a good faith estimate (with reasonable supporting detail) of (i) the Closing Date Cash (“Estimated Closing Date Cash”) and (ii) Closing Date Indebtedness (“Estimated Closing Date Indebtedness”). In addition, the Closing Date Statement shall also include (i) the Company’s calculation of the Stock Merger Consideration based on the foregoing estimates (and the other components contemplated by Section 2.1 in the calculation of the Stock Merger Consideration), (ii) a copy of the Company’s good faith estimated unaudited consolidated balance sheet of the Company as of immediately prior to the Closing upon which such calculations are based, and (iii) wire transfer or other applicable delivery instructions for payment of each item of Company Transaction Expenses to be paid at Closing. Each of the components required to be set forth on the Closing Date Statement shall be calculated in accordance with the definitions set forth in this Agreement.

 

4

 

 

(b) A statement (the “Merger Consideration Schedule”), signed and certified by the Chief Financial Officer of the Company in his or her capacity as such, which sets forth: (i) a detailed capitalization schedule of the Company, setting forth all Company Common Stock; (ii) a schedule of the Convertible Note Holders, setting forth for each Convertible Note Holder the amount of principal and interest outstanding pursuant to their respective Convertible Note(s) on the Closing Date; (iii) the portion of the Merger Consideration payable in respect of each share of Company Common Stock; (iv) a calculation of the Convertible Note Adjustment Amount; and (v) for each Stockholder: (A) the number of shares of Company Common Stock held by such Stockholder (including the respective Certificate number of any certificated Company Common Stock held by such Stockholder), (B) the portion of the Stock Merger Consideration required to be paid under the Company Certificate to each Stockholder in respect of such Stockholder’s Company Common Stock, and (C) such Stockholder’s aggregate Per Share Amount. The calculations set forth in the Merger Consideration Schedule shall be prepared in accordance with the Company Certificate, the Convertible Notes and the requirements of the DGCL. Parent shall be entitled to rely (without any duty of inquiry) upon the Merger Consideration Schedule, and a Company Letter of Transmittal shall be required to be delivered by each Stockholder as a condition to receipt of any Merger Consideration and shall include a waiver of, among other things, any and all claims (i) that the Merger Consideration Schedule did not accurately reflect the terms of the Company Certificate, and (ii) in connection with the issuance of any Company Common Stock (including any rights to indemnities from the Company or any of its Affiliates pursuant to any Contract entered into by such Stockholder in connection with such issuance).

 

(c) Parent shall be entitled to review and comment upon the Closing Date Statement and the Merger Consideration Schedule delivered by the Company pursuant to this Section 2.4, and the Company shall consider Parent’s comments thereto in good faith (and, in the event of any such adjustments based on the comment of Parent, all references in this Agreement to the Closing Date Statement or the Merger Consideration Schedule shall be deemed to be references to such documents after giving effect to such adjustments).

 

Section 2.5 Merger Consideration. The aggregate consideration to be paid to the Stockholders shall be the Aggregate Consideration Value (as defined below), as calculated below. The Aggregate Consideration Value will be paid to the Stockholders in the form of the Stock Merger Consideration, the Earnout Share Rights and the Adjustment Escrow Share Rights. The Merger Consideration shall be allocated among the Stockholders in accordance with the terms of the Company Certificate (as reflected in the Merger Consideration Schedule). Subject to the post-Closing adjustments contemplated by and set forth in Section 2.7, the “Aggregate Consideration Value” shall be calculated as follows:

 

(a) $1,300,000,000.00, plus

 

(b) the amount of Estimated Closing Date Cash, plus

 

(c) the Pre-Paid Company Transaction Expense Amount, minus

 

(d) the Estimated Closing Date Indebtedness, minus

 

(e) the Convertible Note Adjustment Amount, minus

 

(f) the LTIP Value.

 

5

 

 

Section 2.6 Exchange Procedures.

 

(a) At the Closing, Parent shall deliver to (i) the Stockholders, at the reasonable direction of Stockholder Representative, that number of shares of Parent Common Stock necessary to make payment of the Stock Merger Consideration to the Stockholders (without giving effect to the Merger Consideration Adjustment) and (ii) the Escrow Agent, that number of shares of Parent Common Stock necessary to fund the Adjustment Escrow Amount and the Earnout Release.

 

(b) As soon as reasonably practicable following the date hereof, the Company shall mail or otherwise deliver to each Stockholder (i) a letter of transmittal in the form attached hereto as Exhibit J (“Company Letter of Transmittal”), and (ii) instructions for use in receiving the applicable portion of the Merger Consideration in respect of the Company Common Stock held by such Stockholder. After the Effective Time, each Stockholder, upon surrender of a Company Letter of Transmittal, shall be entitled to receive in exchange therefor such portion of the Merger Consideration into which such holder’s Company Common Stock (as applicable) shall have been converted as a result of the Merger (and, for the avoidance of doubt, without giving effect to any Merger Consideration Adjustment). If any Stockholder’s shares of Company Common Stock are certificated, such Stockholder shall be required to surrender and deliver to Parent all Certificates for such Company Common Stock, or a duly completed affidavit of loss (in a customary form reasonably acceptable to Parent) with respect to any lost, stolen, or destroyed Certificate, together with such Stockholder’s Company Letter of Transmittal, before such Stockholder shall be entitled to receive the applicable portion of the Merger Consideration pursuant to this Section 2.6(b). Pending such surrender of a Stockholder’s Certificate(s), such Certificate(s) shall be deemed for all purposes to evidence such Stockholder’s right to receive the portion of the Merger Consideration into which such Company Common Stock shall have been converted as a result of the Transactions and pursuant to the terms of this Agreement.

 

(c) Notwithstanding anything to the contrary contained herein, no fractional shares of Parent Common Stock shall be issued (whether in book-entry form or otherwise) in exchange for Parent Common Stock or Company Common Stock. In lieu of the issuance of any such fractional share, Parent shall pay to each former holder of Parent Common Stock or Stockholder who otherwise would be entitled to receive such fractional share an amount in cash (rounded up to the nearest whole cent) determined by multiplying (i) the Reference Price, by (ii) the fraction of a share (rounded to the nearest thousandth when expressed in decimal form) of Parent Common Stock which such holder would otherwise be entitled to receive pursuant to this Article II. For the avoidance of doubt, the calculation of any cash in lieu of fractional shares to be paid pursuant to this Section 2.6(c) shall be made with respect to the aggregate shares of Parent Common Stock, to which such former holder of Parent Common Stock or Stockholder would otherwise be entitled pursuant to this Agreement, and not with respect to the conversion of each share of Parent Common Stock or Company Common Stock, respectively. For illustrative purposes only, if, pursuant to this Agreement, a Stockholder would be entitled to 1.5 shares of Parent Common Stock in exchange for each share of Company Common Stock held by such Stockholder, and such Stockholder holds 11 shares of Company Common Stock, such Stockholder would be entitled to cash in lieu of .5 shares of Parent Common Stock (i.e., 16.5 minus 16).

 

(d) After the Effective Time, each remaining Stockholder and each record holder of outstanding shares of Parent Common Stock prior to the Effective Time shall be entitled to look only to Parent (subject to abandoned property, escheat, and other similar Laws) as a general creditor thereof with respect to such shares and warrants and dividends and distributions thereon to which he, she, or it is entitled upon surrender of his, her, or its Certificates.

 

6

 

 

Section 2.7 Merger Consideration Adjustment.

 

(a) The Merger Consideration may be increased or reduced as set forth in this Section 2.7. Any increase or decrease in the Merger Consideration pursuant to this Section 2.7 shall be referred to as a “Merger Consideration Adjustment”. Any payments made in respect of any Merger Consideration Adjustment pursuant to this Section 2.7 shall be treated as an adjustment to the Merger Consideration for all Tax purposes unless otherwise required by any applicable Law.

 

(b) As soon as reasonably practicable following the Closing Date, and in any event within ninety (90) days of the Closing Date, Parent shall prepare and deliver to the Stockholder Representative (A) an unaudited consolidated balance sheet of the Company and its Subsidiaries (the “Final Closing Balance Sheet”), and (B) a statement (the “Closing Statement”) setting forth Parent’s good faith calculations of (with reasonable supporting detail): (x) the aggregate amount of all Indebtedness of the Company as of immediately prior to the Closing on the Closing Date (“Closing Date Indebtedness”) and, (y) the aggregate Cash of the Company as of immediately prior to the Closing on the Closing Date (“Closing Date Cash”), in each case, calculated in accordance with the definitions set forth in this Agreement. The Final Closing Balance Sheet shall be prepared using the Accounting Principles. From the Closing Date through the final determination and delivery of the Merger Consideration pursuant to this Section 2.7, Parent shall provide the Stockholder Representative and its representatives reasonable access (during normal business hours and upon reasonable advance notice and at the sole cost and expense of the Stockholder Representative) to the records, properties, personnel and (subject to the execution of customary work paper access letters if requested) auditors of the Company and its Subsidiaries relating to the preparation of the Final Closing Balance Sheet and shall cause the personnel of the Company and its Subsidiaries to reasonably cooperate with the Stockholder Representative in connection with its review of the Final Closing Balance Sheet; provided, however, that Parent shall not be required to provide any information the disclosure of which would violate applicable Law (including competition or antitrust Law) or that would, based on the advice of counsel, result in the waiver of attorney client privilege. If Parent does not provide information pursuant to the proviso of the preceding sentence, Parent will provide notice to the Stockholder Representative that such information is being withheld and Parent will use its reasonable best efforts to communicate, to the extent feasible, the applicable information in a way that will not violate the applicable privilege or applicable Law.

 

7

 

 

(c) If the Stockholder Representative disagrees with the calculations of Closing Date Indebtedness and/or Closing Date Cash set forth in the Closing Statement, it shall notify Parent of such disagreement in writing (a “Disagreement Notice”), setting forth in reasonable detail the particulars of such disagreement within thirty (30) days after its receipt of the Closing Balance Sheet and the Closing Statement. If the Stockholder Representative does not provide a notice of disagreement within such thirty (30)-day period, the Stockholder Representative and Parent shall be deemed to have agreed to the Closing Balance Sheet and the calculations of Closing Date Indebtedness and Closing Date Cash set forth in the Closing Statement, which shall be final, binding and conclusive for all purposes hereunder. If any Disagreement Notice is timely provided, Parent and the Stockholder Representative shall use commercially reasonable efforts for a period of thirty (30) days (or such longer period as they may mutually agree) to resolve any disagreements with respect to the calculations of Closing Date Indebtedness or Closing Date Cash. If, at the end of such period, they are unable to resolve such disagreements, then any such remaining disagreements shall be resolved by Grant Thornton LLP or such other independent accounting or financial consulting firm of recognized national standing as may be mutually selected by Parent and the Stockholder Representative (such firm, subject to the following proviso, the “Accounting Referee”). Each of Parent and the Stockholder Representative shall promptly provide their respective assertions regarding Closing Date Indebtedness and Closing Date Cash and, to the extent relevant thereto, the Final Closing Balance Sheet in writing to the Accounting Referee and to each other; provided, that no Party shall disclose to the Accounting Referee any settlement discussions (or the contents thereof) between the Parties without the prior consent of the other Party. The Accounting Referee shall be instructed to render its determination with respect to such disagreements as soon as reasonably possible (which the Parties agree should not be later than thirty (30) days following the day on which the disagreement is referred to the Accounting Referee). The Accounting Referee shall base its determination solely on (i) the written submissions of the Parties and shall not conduct an independent investigation and (ii) the extent (if any) to which Closing Date Indebtedness or Closing Date Cash require adjustment (only with respect to the remaining disagreements submitted to the Accounting Referee) in order to be determined in accordance with Section 2.7 (including the definitions of the defined terms used in Section 2.7), and the Parties shall instruct the Accounting Referee to make all determinations in accordance with the definitions set forth in this Agreement. The Accounting Referee may not assign a value greater than the greatest value for a disputed item claimed by either Party or smaller than the smallest value for such item claimed by either Party. The determination of the Accounting Referee shall be final, conclusive and binding on the Parties. The date on which Closing Date Indebtedness and Closing Date Cash are finally determined in accordance with this Section 2.7(c) is hereinafter referred to as the “Determination Date.” All fees and expenses of the Accounting Referee relating to the work, if any, to be performed by the Accounting Referee hereunder shall be borne pro rata as between Parent, on the one hand, and the Stockholder Representative, on the other hand, in proportion to the allocation of the dollar value of the amounts in dispute as between Parent and the Stockholder Representative (as set forth in the written submissions to the Accounting Referee) made by the Accounting Referee such that the Party prevailing on the greater dollar value of such disputes pays the lesser proportion of the fees and expenses. For example, if the Stockholder Representative challenges items underlying the calculations of Closing Date Indebtedness and Closing Date Cash in the net amount of $1,000,000, and the Accounting Referee determines that Parent has a valid claim for $400,000 of the $1,000,000, Parent shall bear sixty percent (60%) of the fees and expenses of the Accounting Referee and the Stockholder Representative shall bear the remaining forty percent (40%) of the fees and expenses of the Accounting Referee.

 

(d) The “Adjustment Amount,” which may be positive or negative, shall mean (i) Estimated Closing Date Indebtedness, minus Closing Date Indebtedness (as finally determined in accordance with Section 2.7(c)), plus (ii) Closing Date Cash (as finally determined in accordance with Section 2.7(c)), minus Estimated Closing Date Cash. If the Adjustment Amount is a positive number, then the Merger Consideration shall be increased by the Adjustment Amount, and if the Adjustment Amount is a negative number, then the Merger Consideration shall be decreased by the absolute value of the Adjustment Amount. The Adjustment Amount shall be paid in accordance with Section 2.7(e) or Section 2.7(f), as applicable.

 

8

 

 

(e) If the Adjustment Amount is a positive number, then, promptly following the Determination Date, and in any event within three (3) Business Days after the delivery by the Stockholder Representative of the updated Merger Consideration Schedule required to be delivered pursuant to Section 2.7(g), (i) Parent shall deliver to the Stockholder Representative for further delivery to each Stockholder a number of shares of Parent Common Stock equal to (A) the Adjustment Amount, divided by (B) the Reference Price, and (ii) the Parties shall jointly instruct the Escrow Agent in writing to release from the Escrow Account to the Stockholder Representative (for further delivery to each Stockholder) all of the shares of Adjustment Escrow Stock; provided, that, notwithstanding the foregoing, in no event shall Parent be required pursuant to subclause (i) to issue or deliver an amount of Parent Common Stock that exceeds the quotient of the Adjustment Escrow Amount divided by the Reference Price.

 

(f) If the Adjustment Amount is a negative number (the absolute value of such amount, the “Deficit Amount”), then, promptly following the Determination Date, and in any event within three (3) Business Days of the Determination Date, the Parties shall jointly instruct the Escrow Agent in writing to deliver, from the Escrow Account to Parent that number of shares of Adjustment Escrow Stock that is equal to (A) the Deficit Amount divided by (B) the Reference Price. If, after release of the Adjustment Escrow Stock to Parent in accordance with the preceding sentence, any Adjustment Escrow Stock remains in the Escrow Account, the Parties shall jointly instruct the Escrow Agent to release such balance to the Stockholder Representative (for further delivery to each Stockholder). The Adjustment Escrow Stock in the Escrow Account shall be Parent’s sole recourse for any Deficit Amount.

 

(g) If the Adjustment Amount is a positive number, then within three (3) Business Days after the Determination Date, the Stockholder Representative shall prepare and deliver to Parent a certified update to the Merger Consideration Schedule, prepared in accordance with the terms of the Company Certificate (the “Updated Merger Consideration Schedule”). The Updated Merger Consideration Schedule shall give effect to the Merger Consideration Adjustment, the Adjustment Amount and specify in detail the portion of any such additional Parent Common Stock or released Adjustment Escrow Stock that each Stockholder is entitled to receive as a result. The Stockholder Representative, Parent and each of their respective agents and Affiliates shall be entitled to rely (without any duty of inquiry) upon the Updated Merger Consideration Schedule.

 

Section 2.8 Section 16 Matters. Prior to the Closing, the Parent Board, or an appropriate committee of non-employee directors thereof, shall adopt a resolution consistent with the interpretive guidance of the SEC so that the issuance of shares of Parent Common Stock by the Parent pursuant to this Agreement or the Escrow Agreement to any officer, director or stockholder (by reason of “director by deputization”) of the Company or Parent who is expected to become a “covered person” of Parent for purposes of Section 16 of the Exchange Act and the rules and regulations thereunder (“Section 16”) shall be an exempt transaction for purposes of Section 16.

 

Section 2.9 Tax Consequences of the Merger. It is intended that the Merger shall qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and that this Agreement be, and hereby is, adopted as a “plan of reorganization” for purposes of Sections 354, 361 and 368 of the Code and within the meaning of Section 1.368-2(g) of the United States Treasury Regulations (the “Intended Tax Treatment”).

 

9

 

 

Section 2.10 Earnout.

 

(a) After the Closing, subject to the terms and conditions set forth herein, the Stockholders shall have the contingent right to receive additional consideration from Parent based on the performance of Parent and its Subsidiaries if the requirements as set forth in this Section 2.10 are achieved. If during the thirty-six (36) month period following the Closing Date (the “Earnout Period”), the closing price per share of Parent Common Stock on any twenty (20) trading days in any thirty (30) consecutive day trading period (i) equals or exceeds Fourteen Dollars ($14.00) (the “First Share Price Trigger”), or (ii) equals or exceeds Sixteen Dollars ($16.00) (the “Second Share Price Trigger” and, together with the First Share Price Trigger, each a “Share Price Trigger” and collectively, the “Share Price Triggers”) then, for each Share Price Trigger that is achieved, the holders of Company Common Stock as of immediately prior to the Effective Time shall receive additional consideration (in accordance with their Pro Rata Share) from Parent (each, an “Earnout Release”) of Two Million Five Hundred Thousand (2,500,000) shares of Parent Common Stock released from the Escrow Account (which shall be equitably adjusted for stock splits, stock dividends, combinations, recapitalizations and the like that occur after the Closing and prior to the relevant Earnout Release) (collectively, the “Earnout Shares”). For the avoidance of doubt and notwithstanding anything contained in this Agreement, the holders of Company Common Stock shall have the right to receive no more than two Earnout Releases, an Earnout Release may only be achieved once with respect to any Share Price Trigger and the aggregate sum of all Earnout Releases issuable hereunder (assuming both Share Price Triggers are achieved), shall be a maximum of Five Million (5,000,000) shares of Parent Common Stock in the aggregate (which shall be equitably adjusted for stock splits, stock dividends, combinations, recapitalizations and the like that occur after the Closing and prior to the relevant Earnout Release).

 

(b) If, during the Earnout Period, there is a Change of Control, then any Earnout Release that has not previously been released from escrow to the Stockholder Representative (whether or not previously earned) shall be deemed earned (and the applicable Share Price Trigger(s) achieved, as applicable); provided, however, that such Earnout Release shall be deemed earned (and the applicable Share Price Trigger(s) achieved, as applicable) only (i) if such Change of Control has been approved by a majority of the independent directors on the Parent Board; and (ii) to the extent the price per share of Parent Common Stock in the Change of Control exceeds the applicable Share Price Trigger. Upon such Change of Control if applicable, Parent and the Stockholder Representative shall jointly direct the Escrow Agent to release from the Escrow Account to Stockholder Representative a number of shares equal to such remaining Earnout Release(s) within ten (10) Business Days following the date of such Change of Control.

 

(c) If, during the Earnout Period, there is a Final Determination in accordance with this Section 2.10 that the Stockholders are entitled to receive a Earnout Release, then Parent and the Stockholder Representative shall jointly direct the Escrow Agent to release from the Escrow Account to Stockholder Representative a number of shares equal to such Earnout Release within ten (10) Business Days following the date on which the applicable Share Price Trigger was met or exceeded.

 

(d) With respect to any Earnout Shares that have not been released during the Earnout Period pursuant to this Section 2.10 within five (5) Business Days following the date that it is finally determined that the Stockholders are not entitled to or eligible to receive any further Earnout Releases under this Agreement, Parent and the Stockholder Representative shall jointly direct the Escrow Agent to release from the Escrow Account to Parent for immediate cancellation all such Earnout Shares that have not been released.

 

10

 

 

Section 2.11 Closing Deliverables.

 

(a) Mutual Deliverables. At the Closing:

 

(i) Each of Parent and the Stockholder Representative shall deliver to each other and the Escrow Agent, an executed copy of the Escrow Agreement;

 

(ii) Each of the Company and Parent shall deliver the applicable Incumbency Certificates;

 

(iii) The Certificate of Merger shall be executed and delivered (x) to Parent by the Company, and (y) to the Company by Parent;

 

(iv) Each of Company and Parent shall deliver to each other, an executed copy of the director nomination agreement substantially in the form attached as Exhibit K (the “Director Nomination Agreement”).

 

(b) Company Deliverables. At or prior to the Closing, the Company shall deliver or cause to be delivered (unless delivered previously) to Parent the following:

 

(i) the Closing Date Statement and the Merger Consideration Schedule, each prepared and delivered in accordance with Article II;

 

(ii) a certificate of the Secretary of State of the State of Delaware dated as of a date not more than ten (10) Business Days prior to the Closing Date, certifying as to the good standing of the Company;

 

(iii) the Amended and Restated Registration Rights Agreement, duly executed by each Person set forth on Schedule A-2;

 

(iv) a duly executed certificate conforming to the requirements of Treasury Regulations Sections 1.897-2(h)(1)(i) and 1.1445-2(c)(3)(i), and a notice to be delivered to the United States Internal Revenue Service as required under Treasury Regulations Section 1.897-2(h)(2), each dated no more than thirty (30) days prior to the Closing Date and in substantially the form attached hereto as Exhibit L;

 

(v) copies of customary payoff letters in connection with the repayment of Funded Indebtedness and copies of invoices marked final in connection with the repayment of Company Transaction Expenses, in each case in form reasonably satisfactory to Parent; and

 

(vi) any other document reasonably requested by Parent to be delivered by or on behalf of the Company at Closing.

 

(c) Parent Deliverables. At the Closing, Parent shall deliver or cause to be delivered (unless delivered previously) the following:

 

(i) the Certificate of Merger to the Company;

 

(ii) the Adjustment Escrow Stock (i.e., Two Hundred Fifty Thousand (250,000) shares of Parent Common Stock) to the Escrow Agent, to be held in the Escrow Account in accordance with the terms of the Escrow Agreement;

 

11

 

 

(iii) the Earnout Shares (i.e., Five Million (5,000,000) shares of Parent Common Stock) to the Escrow Agent, to be held in the Escrow Account in accordance with the terms of the Escrow Agreement;

 

(iv) shares of Parent Common Stock to the holder(s) of each Convertible Note pursuant to the terms and conditions set forth in Section 5.28;

 

(v) the Amended and Restated Registration Rights Agreement, duly executed by Parent;

 

(vi) the shares of Parent Common Stock described in Section 2.6;

 

(vii) a certificate of the Secretary of State of the State of Delaware dated as of a date not more than ten (10) Business Days prior to the Closing Date, certifying as to the good standing of Parent; and

 

(viii) any other document reasonably requested by the Company to be delivered by or on behalf of Parent at Closing.

 

(d) Payment of Other Amounts at Closing. At the Closing, Parent:

 

(i) shall, on behalf of the Company, pay or cause to be paid to such account or accounts as the Company specifies to Parent pursuant to the Closing Date Statement, the Company Transaction Expenses for which invoices have been delivered pursuant to Section 2.11(b)(v) above which have not been paid prior to the Closing; provided, that any Company Transaction Expenses payable to any director, officer or employee of the Company (including any director, officer, or employee bonuses) shall instead be deposited with the Company and paid on the next regularly scheduled payroll date;

 

(ii) shall pay or cause to be paid the Parent Transaction Expenses by wire transfer of immediately available funds; and

 

(iii) may, in its sole discretion, elect to pay or cause to be paid to any holder of Funded Indebtedness (including any Stockholder who holds Funded Indebtedness) for which payoff letters have been delivered pursuant to Section 2.11(b)(v) above, an amount sufficient to repay such Funded Indebtedness, with the result that immediately following the Closing there will be no further monetary obligations of the Company or any of its Subsidiaries with respect to such Funded Indebtedness outstanding immediately prior to the Closing.

 

12

 

 

Article III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as set forth in the corresponding sections or subsections of the disclosure letter delivered to Parent by the Company prior to the Execution Date (the “Company Disclosure Letter”), the Company hereby represents and warrants to Parent with respect to the Company as of the Execution Date and as of the Closing (or in the case of representations and warranties that speak of a specified date, as of such specified date) as follows:

 

Section 3.1 Organization, Good Standing and Qualification. The Company (a) is a legal entity duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization; (b) has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted; and (c) is qualified to do business and, to the extent such concept is applicable, is in good standing as a foreign corporation or other legal entity in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except in the case of clause (b) and (c) where the failure to be so qualified or in good standing, or to have such power or authority, could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company has made available to Parent prior to the Execution Date complete and correct copies of the Company’s Organizational Documents and each as so delivered is in full force and effect.

 

Section 3.2 Capital Structure.

 

(a) The authorized capital stock of the Company consists of 200,000 shares of Company Common Stock, of which 100,000 shares were issued and outstanding, and no shares of Company Common Stock were issued and held by the Company in its treasury.

 

(b) All of the outstanding shares of Company Common Stock have been duly authorized and are validly issued, fully paid and nonassessable, and not subject to any preemptive rights, anti-dilution, down-valuation or similar rights. The Company does not have outstanding any bonds, debentures, notes or other obligations, the holders of which have the right to vote (or convert into or exercise for securities having the right to vote) with the stockholders of the Company on any matter. Except for this Agreement and the Company’s Organizational Documents, the Company Common Stock is not subject to any voting trust agreements, proxies, or other Contracts with respect to the voting, purchase, repurchase, dividend rights, disposition or transfer of the shares of Company Common Stock. The Company is not party to any Contract that provides for any preemption, anti-dilution, down-valuation or similar protections in respect of Company Common Stock or Parent Capital Stock.

 

(c) Section 3.2 of the Company Disclosure Letter contains a true and correct (i) description of the number of shares of Company Common Stock held by each Stockholder as of the Execution Date and that will be held by each Stockholder as of immediately prior to the Effective Time; and (ii) description of the principal amount of each Convertible Note held by each Convertible Note Holder as of the Execution Date.

 

(d) The Company has no Subsidiaries, and does not directly or indirectly own or hold any: (i) equity interests, including any partnership, limited liability company or joint venture interests, in any other Person; (ii) securities convertible into or exchangeable for equity interests of any other Person; or (iii) options or other rights to acquire equity interests of any other Person.

 

13

 

 

Section 3.3 Authority; Approval.

 

(a) The Company has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and, subject to receipt of the Initial Stockholder Consent, perform its obligations under this Agreement and each of the Transaction Documents to which it is a party. This Agreement has been, and each of the Transaction Documents to which the Company is a party will be at Closing, duly executed and delivered by the Company and, when executed and delivered by the Parent and the other parties hereto and thereto, will constitute a valid and binding agreement of the Company enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance, preferential transfer, reorganization, moratorium and similar Laws relating to or affecting creditors’ rights and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at Law) (the “Bankruptcy and Equity Exception”).

 

(b) The Company’s board of directors has, at a duly convened and held meeting, unanimously determined that the Merger is in the best interests of the Company and its stockholders, approved and declared advisable this Agreement, the Merger and the other Transactions. Other than the Initial Stockholder Consent, no other approvals are necessary to authorize this Agreement or to consummate the Transactions. The Company’s board of directors has taken all necessary action to ensure that Parent will not be an “interested stockholder” or prohibited from entering into or consummating a “business combination” with the Company (in each case, as such term is used in Section 203 of the DGCL), as a result of the execution of this Agreement or the consummation of the Transactions in the manner contemplated hereby. No Takeover Statute is applicable to the Company, the Company Common Stock or the Transactions.

 

(c) The Initial Stockholder Consent, upon delivery to the Company as provided in Section 228 of the DGCL and subject to the notice requirements thereof, shall be sufficient to adopt this Agreement and approve the Merger on behalf of the Company pursuant to Delaware Law.

 

Section 3.4 Governmental Filings; No Violation; Certain Contracts.

 

(a) Other than the expirations of waiting periods and the filings, notices, reports, consents, registrations, approvals, permits and authorizations under the HSR Act, any applicable requirements under applicable securities Laws, and the DGCL, no expirations of waiting periods under applicable Antitrust Laws nor any notices, reports or other filings are required to be made by the Company with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by the Company from, any Governmental Entity in connection with the execution, delivery and performance of this Agreement and the Transaction Documents by the Company or the consummation of the Transactions, or in connection with the continuing operation of the business of the Company immediately following the Execution Date, except those that the failure to make or obtain would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(b) The execution, delivery and performance by the Company of this Agreement and the Transaction Documents to which it is a party do not, and the consummation of the Transactions will not, conflict with, or result in any breach or violation of or default (with or without notice, lapse of time, or both) under, or give rise to any right of termination, loss of rights, adverse modification of provisions, cancellation or acceleration of any obligation under, or result in the creation of a Lien (except for any Permitted Lien) on any of the assets of the Company under any provision of (i) the Organizational Documents of the Company; (ii) any Contract; or (iii) assuming (solely with respect to performance of this Agreement and the Transaction Documents and consummation of the Transactions) compliance with the matters referred to in Section 3.4(a) any Laws to which the Company is subject, except, in the case of clauses (ii) and (iii) above, for any breach, violation, default, termination, loss, adverse modification, cancellation, acceleration or creation that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Section 3.4(b) of the Company Disclosure Letter sets forth a correct and complete list of Material Contracts pursuant to which consents, notices or waivers are or may be required prior to consummation of the Transactions (whether or not subject to the exception set forth with respect to clauses (ii) and (iii) above).

 

14

 

 

Section 3.5 Financial Statements.

 

(a) Correct and complete copies of the following financial statements have been made available to Parent or its Representatives prior to the Execution Date: (i) the audited combined carve-out balance sheets of the ECV Operations as of December 31, 2019 and December 31, 2018 and the related audited combined carve-out statements of (A) operations and comprehensive loss, (B) parent’s net investment and (C) cash flows, in each case, for the periods ended December 31, 2019 and December 31, 2018; and (ii) the unaudited condensed combined carve-out balance sheets of the ECV Operations as of September 30, 2020 and December 31, 2019 and the related unaudited condensed combined carve-out statements of (A) operations and comprehensive loss, (B) parent’s net investment and (C) cash flows, in each case, for the nine months ended September 30, 2020 and 2019 (i) and (ii) (collectively, the “Financial Statements”).

 

(b) The Financial Statements (including the related notes and schedules thereto) (i) are materially true, complete and correct, (ii) were prepared from and are consistent with the books and records of SERES, and (iii) fairly present in all material respects the financial position of the ECV Operations as of the date or period set forth therein and the combined balance sheets, combined statements of operations and comprehensive loss, parent’s net investment and cash flows included in the Financial Statements (including any related notes and schedules thereto) fairly present in all material respects the financial condition, results of operations, changes in parent’s net investment and cash flows of ECV Operations for the periods set forth therein, in each case, in accordance with GAAP, consistently applied during the periods involved, except as may be noted therein.

 

(c) Prior to the Closing, the Company will use its reasonable best efforts to establish and, from the date of such establishment through the Closing Date, use its reasonable best efforts to maintain: (i) a system of internal accounting controls sufficient, in all material respects, to provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP; (ii) a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act) as required by Rule 13a-15 promulgated under the Exchange Act sufficient to provide reasonable assurances regarding the reliability of financial reporting for the Company for external purposes in accordance with GAAP; and (iii) disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that comply with the requirements of the Exchange Act; such disclosure controls and procedures will be designed to ensure that material information relating to the Company and its Subsidiaries is made known to the Company’s principal executive officer and principal financial officer by others within those entities; and at Closing, such disclosure controls and procedures will be effective in all material respects to perform the functions for which they were established.

 

(d) The Company is not a party to, or has any commitment to become a party to, any “off balance sheet arrangements” that would be required to be disclosed under Item 303(a) of Regulation S-K promulgated by the SEC or any “variable interest entities” (within the meaning Accounting Standards Codification 810). Since the date of the Company’s formation (the “Applicable Date”), to the Knowledge of the Company, no material complaints from any source regarding accounting, internal accounting controls or auditing matters, including with respect to the Financial Statements, have been received by the Company. To the Company’s Knowledge, since the Applicable Date, the Company has not identified or been made aware of any fraud, whether or not material, that involves the management or other employees of the Company or any of its Subsidiaries that have a significant role in the Company’s internal control over financial reporting and the preparation of the Financial Statements.

 

15

 

 

Section 3.6 Absence of Certain Changes. Since the Applicable Date, except as set forth in Section 5.1(a) of the Company Disclosure Letter:

 

(a) the Company has conducted its business in the ordinary course of business, consistent with past practices in all material respects (except for the negotiation and execution of this Agreement);

 

(b) there has not been any Material Adverse Effect; and

 

(c) there has not been any action taken by the Company that, if taken during the period from the Execution Date through the Closing Date without Parent’s consent, would constitute a breach of Section 5.1(b).

 

Section 3.7 No Undisclosed Liabilities. The Company does not have any obligations or liabilities (whether accrued, absolute, contingent, unknown or otherwise) other than liabilities that (a) have been adequately reserved against or reflected in the Financial Statements; (b) were incurred since the Applicable Date in the ordinary course of business consistent with past practice and which are not material; (c) were incurred since the Applicable Date in accordance with Section 5.1(a) of the Company Disclosure Letter; (d) constitute obligations for future performance under any Contract to which the Company is a party; or (e) have been incurred as expressly required by this Agreement.

 

Section 3.8 Litigation.

 

(a) There are no Actions pending or threatened in writing against the Company (nor has any Governmental Entity notified the Company in writing of its intention to initiate an Action) that have had or would reasonably be expected to have a Material Adverse Effect.

 

(b) The Company is not a party to or subject to the provisions of any Order that restricts the manner in which the Company conducts its businesses which has had, or would, individually or in the aggregate, reasonably be expected to have, a Material Adverse Effect.

 

Section 3.9 Employee Benefits.

 

(a) Section 3.9(a) of the Company Disclosure Letter sets forth a correct and complete list of each Benefit Plan currently sponsored, maintained or required to be contributed to by the Company.

 

(b) With respect to each Benefit Plan, the Company has made available to Parent, to the extent applicable, correct and complete copies of (i) the Benefit Plan document, including any amendments thereto, and all related trust documents, insurance Contracts or other funding vehicle documents; (ii) a written description of such Benefit Plan if such plan is not set forth in a written document; (iii) the most recently prepared actuarial report and (iv) all material correspondence to or from any Governmental Entity received with respect to any Benefit Plan.

 

16

 

 

(c) (i) Each Benefit Plan (including any related trusts), other than “multiemployer plans” within the meaning of Section 3(37) of ERISA (each, a “Multiemployer Plan”), has been established, operated and administered in compliance in all material respects with its terms and applicable Laws, including, without limitation, ERISA and the Code; (ii) all contributions or other amounts payable by the Company with respect to each Benefit Plan in respect of current or prior plan years have been paid or accrued in accordance with GAAP in all material respects; and (iii) there are no pending or, to the Knowledge of the Company, claims (other than routine claims for benefits) or proceedings threatened by a Governmental Entity by, on behalf of or against any Benefit Plan or any trust related thereto.

 

(d) With respect to each ERISA Plan, the Company has made available to Parent, to the extent applicable, correct and complete copies of (i) the most recent summary plan description together with any summaries of all material modifications thereto; (ii) the most recent IRS determination or opinion letter; and (iii) the most recent annual reports (Form 5500 or 990 series and all schedules and financial statements attached thereto).

 

(e) Each ERISA Plan that is intended to be qualified under Section 401(a) of the Code has been the subject of a favorable determination or opinion letter from the IRS to that effect and, to the Knowledge of the Company, nothing has occurred that would reasonably be expected to adversely affect the qualification or tax exemption of any such Benefit Plan. With respect to any ERISA Plan, the Company has not engaged in a transaction in connection with which the Company reasonably could be subject to either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code.

 

(f) Except as set forth on Section 3.9(f) of the Company Disclosure Letter, neither the Company, nor any ERISA Affiliate, contributes, has contributed (or has or had any obligation or liability of any sort) to a plan that is subject to Section 412 of the Code or Section 302 or Title IV of ERISA.

 

(g) Neither the Company nor any ERISA Affiliate has maintained, established, participated in or contributed to, or is or has been obligated to contribute to, or has otherwise incurred any material obligation or material liability (including any contingent liability) under, any Multiemployer Plan.

 

(h) No Benefit Plan is or has been a “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA).

 

(i) Except as required by applicable Law, no Benefit Plan provides retiree or post-employment medical, disability, life insurance or other welfare benefits to any Person.

 

(j) Each Benefit Plan that is a “nonqualified deferred compensation plan” (within the meaning of Section 409A of the Code) is in all material respects in documentary compliance with, and has been operated and administered in all material respects in compliance with, Section 409A of the Code and the guidance issued by the IRS provided thereunder.

 

17

 

 

(k) Except as set forth in Section 3.9(k) of the Company Disclosure Letter or pursuant to actions contemplated by this Agreement, neither the execution and delivery of this Agreement, stockholder or other approval of this Agreement nor the consummation of the Transactions could, either alone or in combination with another event; (i) entitle any Employee to severance pay or any increase in severance pay; (ii) accelerate the time of payment or vesting, or materially increase the amount of compensation due to any such Employee or any independent contractor; (iii) directly or indirectly cause the Company to transfer or set aside any assets to fund any material benefits under any Benefit Plan; (iv) otherwise give rise to any material liability under any Benefit Plan; or (v) limit or restrict the right to merge, materially amend, terminate or transfer the assets of any Benefit Plan on or following the Closing.

 

(l) Except as set forth in Section 3.9(l) of the Company Disclosure Letter, neither the execution and delivery of this Agreement, stockholder or other approval of this Agreement nor the consummation of the Transactions could, either alone or in combination with another event, result in the payment of any amount that could, individually or in combination with any other such payment, constitute an “excess parachute payment” as defined in Section 280G(b)(1) of the Code.

 

(m) The Company does not have any obligation to provide, and no Benefit Plan provides any individual with the right to, a gross up, indemnification, reimbursement or other payment for any excise or additional taxes, interest or penalties incurred pursuant to Section 409A or Section 4999 of the Code or due to the failure of any payment to be deductible under Section 280G of the Code.

 

(n) No Benefit Plan is maintained outside the jurisdiction of the United States or covers any employees or other service providers of the Company who reside or work outside of the United States.

 

Section 3.10 Labor Matters.

 

(a) Except as set forth on Section 3.10(a) of the Company Disclosure Letter, the Company is not a party to, negotiating, required to negotiate, or bound by any collective bargaining agreement or other agreement with a labor union or like organization, and to the Knowledge of the Company, no labor organization or labor union is actively seeking signed authorization cards or other written expressions of support from the Company’s employees.

 

(b) There is no, and has not been since Applicable Date, any strike, lockout, slowdown, work stoppage, unfair labor practice or other material labor dispute, or material arbitration or grievance pending or, to the Knowledge of the Company, threatened, that may interfere in any material respect with the respective business activities of the Company. The Company is in compliance in all material respects with all applicable Laws respecting labor, employment and employment practices, terms and conditions of employment, wages and hours (including classification of employees and independent contractors, discrimination, harassment and equitable pay practices), and occupational safety and health. The Company has not incurred any liability or obligation under the Federal Worker Adjustment and Retraining Notification Act or any similar state or local Law that remains unsatisfied.

 

(c) To the Knowledge of the Company, since the Applicable Date, no allegations of sexual harassment have been made to the Company or any Governmental Entity regarding any executive-level employee in his or her capacity as a director, owner, employee or other service provider of the Company.

 

18

 

 

Section 3.11 Compliance with Laws; Licenses. The business of the Company has been, and is being, conducted in compliance in all material respects of all applicable Laws. The Company has not received any written communication alleging any material noncompliance with any such Laws that has not been cured. The Company has obtained and is in compliance in all material respects with all material permits, licenses, certifications, approvals, registrations, consents, authorizations, franchises, variances, exemptions and orders issued or granted by a Governmental Entity necessary to conduct its business as presently conducted.

 

Section 3.12 Material Contracts.

 

(a) Section 3.12(a) of the Company Disclosure Letter sets forth a true, correct and complete list of each of the following Contracts to which the Company is a party, or by which the Company or any of its tangible or intangible assets is bound, excluding for this purpose, any purchase orders submitted by customers to the Company or purchase orders submitted by the Company to any supplier, in each case, in the ordinary course of business (each, a “Material Contract” and collectively, the “Material Contracts”):

 

(i) each Contract pursuant to which the Company currently leases or subleases real property to or from any Person;

 

(ii) each Contract (or group of related Contracts with respect to a single transaction or series of related transactions) pursuant to which the Company currently leases personal property to or from any Person providing for lease payments in excess of $250,000 per annum;

 

(iii) each Contract (or group of related Contracts with respect to a single transaction or series of related transactions) with any Significant Supplier;

 

(iv) each Contract that involves a payment or receipt of amounts of more than $250,000 in the aggregate, calculated based on the revenues of the Company (i) that actually occurred in the twelve (12)-month period ended November 30, 2020; and (ii) that cannot be terminated by the Company on less than ninety (90) days’ prior notice (without a monetary penalty);

 

(v) each Contract pursuant to which (A) any license, covenant not to sue, release, waiver, option or other right is granted under any material Company IP, other than nonexclusive licenses or nonexclusive sublicenses of any Company IP granted by the Company to its customers in the ordinary course of business consistent with past practice on standard terms and conditions or (B) any Person has granted to the Company any license, covenant not to sue, release, waiver, option or other right under any Intellectual Property Rights to the Company that is material to the Company’s business, other than nonexclusive licenses for uncustomized, off-the-shelf Software for less than $75,000 annually or in the aggregate that have been granted on standardized, generally available terms;

 

19

 

 

(vi) all management contracts (excluding Contracts for employment) and contracts with other consultants, including any contracts involving the payment of royalties or other amounts calculated based upon the revenues or income of the Company or income or revenues related to any product of the Company;

 

(vii) each Contract concerning the establishment or operation of a partnership, strategic alliance, joint venture, limited liability company or similar agreement or arrangement;

 

(viii) each Contract entered into at any time prior to the Execution Date pursuant to which the Company acquired another operating business;

 

(ix) each Contract that contains a put, call, right of first refusal, right of first offer or similar right pursuant to which the Company could be required to, directly or indirectly, purchase or sell, as applicable, any securities, capital stock or other interests, assets or business of any other Person;

 

(x) each Contract evidencing financial or commodity hedging or similar trading activities, including any interest rate swaps, financial derivatives master agreements or confirmations, or futures account opening agreements and/or brokerage statements or similar Contract;

 

(xi) each Contract containing any standstill or similar agreement pursuant to which a Person has agreed not to acquire assets or securities of another Person;

 

(xii) each Contract that prohibits the payment of dividends or distributions in respect of the capital stock or other equity interests of the Company, the pledging of the capital stock or other equity interests of the Company or the incurrence of indebtedness by the Company;

 

(xiii) (A) each Contract that limits or purports to limit, directly or indirectly, the freedom of the Company (or, after the Closing, Parent or any of its Subsidiaries) to compete in any line of business or with any Person or engage in any line of business within any geographic area, or restricts, directly or indirectly, the Company’s (or, after the Closing, Parent or its Subsidiaries’) ability to solicit or hire any Person or solicit business from any Person; and (B) each Contract that, by its express terms, could require the disposition of any material assets or line of business of the Company (or, after the Closing, Parent or its Subsidiaries); provided, that customary confidentiality obligations, use restrictions, and non-solicitation and no-hire provisions contained in standard form confidentiality agreements and other Contracts will not alone require a Contract to be disclosed pursuant to clause (A) above;

 

(xiv) each Contract that relates to the direct or indirect acquisition or disposition of any securities, capital stock or other similar interests, assets or business (whether by merger, sale of stock, sale of assets or otherwise);

 

(xv) each Contract obligating the Company to purchase or otherwise obtain any product or service exclusively from a single third party or granting any third party the exclusive right to develop, market, sell or distribute any of the Company’s products or services;

 

(xvi) each Contract creating indebtedness for borrowed money or guaranteeing any such obligations;

 

20

 

 

(xvii) each Contract creating or granting a material Lien on any assets of the Company, other than purchase money security interests in connection with the acquisition of equipment in the ordinary course of business consistent with past practice;

 

(xviii) each Contract containing covenants requiring the Company to make material capital expenditures;

 

(xix) each Contract with current or former officers, directors or employees of the Company, in each case in respect of which the Company has any (A) ongoing base compensation obligations in excess of $150,000 on an annual basis; or (B) indemnification obligations;

 

(xx) each Contract between the Company, on the one hand, and any director or officer of the Company or any Person beneficially owning (5%) or more of the outstanding Company Common Stock of any of their respective Affiliates, on the other hand, in each case, excluding Contracts for employment;

 

(xxi) each Contract related to any settlement of any proceeding;

 

(xxii) each Contract providing for indemnification or any guarantee by the Company of any Person or pursuant to which any indemnification or guarantee obligations of the Company remain outstanding (excluding indemnification obligations in respect of representations and warranties and covenants that survive indefinitely or for periods equal to a statute of limitations and excluding obligations to indemnify directors and officers or other individuals performing similar functions pursuant to the Transaction Documents) or otherwise survive as of the Execution Date;

 

(xxiii) each collective bargaining agreement or Contract with any union, staff association, works council or other agency or representative body certified or otherwise recognized for the purposes of bargaining collectively with respect to Employees of the Company;

 

(xxiv) each Contract under which the consequences of a default, non-renewal or termination would reasonably be expected to have a Material Adverse Effect; and

 

(xxv) each Contract between the Company or any of its Subsidiaries, on the one hand, and any member of the SERES Group and any of its Predecessors or their respective Affiliates, on the other hand.

 

(b) The Company has previously delivered to, or made available to, Parent current and complete copies of each written Material Contract and a written description of each oral Material Contract. Each Material Contract is valid, binding and enforceable against the Company, and, to the Knowledge of the Company, each other party thereto, and is in full force and effect. To the Knowledge of the Company, there is no breach or violation of, or default under, any such Material Contract by the Company and no event has occurred that, with the lapse of time or the giving of notice or both, would constitute a default thereunder by the Company or would permit or cause the termination, non-renewal or modification thereof or acceleration or creation of any right or obligation thereunder, in each case except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. To the Knowledge of the Company, no counterparty to any Material Contract is in breach or violation thereof.

 

21

 

 

(c) The Company has not altered or amended any Material Contract in response to COVID-19, and no counterparty to any Material Contract has sought to, or threatened in writing to, renegotiate any Material Contract or threatened non-performance under any Material Contract, in each case, as a result of COVID-19.

 

Section 3.13 Real Property.

 

(a) Section 3.13(a) of the Company Disclosure Letter sets forth a correct and complete list of all written or oral agreements to acquire, or other Contracts or arrangement granting to the Company the right to acquire real property (“Owned Real Property”). Other than the right to acquire the Owned Real Property, the Company does not own any real property. Except in any such case as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or as set forth in Section 3.13(a) of the Company Disclosure Letter (i) the Company has the right to acquire the Owned Real Property, (ii) upon the acquisition of the Owned Real Property pursuant to the SERES Lease Agreement (or otherwise), the Company shall have good and marketable title to the Owned Real Property, free and clear of all Liens except for Permitted Liens, (iii) no Owned Real Property or any portion of any Owned Real Property or interest therein shall be subject to any outstanding options or rights of first refusal to purchase except in favor of the Company, (iv) no Owned Real Property shall be subject to any lease, sublease, concession, license, occupancy agreement, outstanding option or right of first refusal to lease, or other Contracts or arrangement granting to any Person other than the Company the right to use or occupy any Owned Real Property, or any portion of any Owned Real Property, and (v) there shall be no Persons other than the Company in possession thereof.

 

(b) Section 3.13(b) of the Company Disclosure Letter sets forth a correct and complete list of all real property that the Company intends to sublease at or prior to the Closing and a list of all leases (the “Leases”) to be entered into by or to be assigned in favor of the Company with respect to real property (the “Leased Real Property” and, together with the Owned Real Property, the “Real Property”). Except in any such case as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) upon the closing pursuant to the SERES Lease Agreement (or otherwise), the Company shall have valid, legally binding and enforceable leasehold interests in all Leased Real Property, free and clear of all Liens except for Permitted Liens, and each Lease shall be in full force and effect, (ii) pursuant to the SERES Lease Agreement (or otherwise), the Company shall have the right to take assignment of the lease for the Leased Real Property or acquire the Leased Real Property, and the Company shall have valid, legally binding and enforceable leasehold interests in all Leased Real Property, free and clear of all Liens except for Permitted Liens, and each Lease shall be in full force and effect, (iii) there shall not be any default or event of default under any of the Leases or any circumstances or events, which with notice, lapse of time or both, would constitute a breach or default under any of the Leases or permit acceleration of rent payments or termination or modification of any of such Leases, and (iv) except for the Leases and Permitted Liens, there shall be no written or oral subleases, concessions, licenses, occupancy agreements, outstanding options or rights of first refusal to lease, or other Contracts or arrangement granting to any Person other than the Company the right to use or occupy the Leased Real Property.

 

(c) The Company, and to the Company’s Knowledge, SERES, is not in breach or default of any restrictive covenant affecting the Real Property, and there has not occurred any event that with the lapse of time or the giving of notice, or both, would constitute such a default under any such restrictive covenant, in each case except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

 

22

 

 

(d) (i) All improvements located on the Real Property (the “Improvements”) are in good condition and repair, except for ordinary wear and tear, in all material respects and are sufficient for the operation of the business of the Company as currently used; and (ii)  there are no facts or conditions affecting any of the Improvements which would interfere in any material respect with the Company’s intended use, occupancy or operation thereof, in each case other than relating to ordinary course wear and tear. Except as set forth in Section 3.13(d) of the Company Disclosure Letter, there are no current construction or alteration projects with respect to any of the Improvements as of the Execution Date.

 

(e) No damage or destruction has occurred with respect to any of the Real Property that would have a Material Adverse Effect, whether or not covered by an enforceable insurance policy.

 

(f) There are no pending or, to the Company’s Knowledge, threatened condemnation, expropriation or eminent domain proceedings with respect to any Real Property.

 

(g) Except as would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect: (i) the use of the land, buildings, structures and improvements on the Real Property are in conformity with all applicable Laws, including, without limitation, all applicable zoning Laws, and with all registered deeds, restrictions of record or other agreements of record affecting such Real Property, and there are no proposed changes therein that would so affect any of the Real Property or its use; (ii) there exists no conflict or dispute with any Governmental Entity, regulatory authority or other Person relating to any Real Property or the activities thereon or the occupancy or use thereof of which the Company has received written notice; and (iii) all requisite certificates of occupancy and other permits or approvals required with respect to the land, buildings, structures and improvements on any of the Real Property and the occupancy and use thereof have been obtained and are currently in effect.

 

(h) Upon the Closing, there will be in effect such insurance policies for the Real Property as are customarily maintained with respect to similar properties utilized for comparable purposes. All premiums due on such insurance policies will be paid by the Company. The Company has not received any written notice or request from any insurance company (i) requesting the performance of any material work or alteration with respect to any Real Property or any portion thereof; or (ii) regarding the pending or threatened denial of insurance coverage for any Real Property or any portion thereof. The Company has not received written notice from any insurance company concerning any, and to the Company’s Knowledge there are no, defects or inadequacies in the Real Property which, if not corrected, would result in the denial of insurance coverage or increase its cost.

 

(i) To the Knowledge of the Company, each parcel of Real Property has direct access to a public street adjoining the Real Property, and such access is not dependent on any land or other real property interest which is not included in the Real Property.

 

(j) To the Knowledge of the Company, none of the Improvements or any portion thereof is dependent for its access, use, or operation on any land, building, improvement or other real property interest which is not included in the Real Property.

 

23

 

 

Section 3.14 Environmental Matters.

 

(a) The Company and all of its operations and property since the Applicable Date have been in material compliance with all applicable Environmental Laws and upon the closing of the acquisition of the Owned Real Property and the assignment of the Leased Real Property, such properties will be operated in material compliance with all applicable Environmental Laws.

 

(b) The Company will use, is using, and has used commercially reasonable efforts to take assignment of or otherwise obtain all permits, licenses, identification numbers, approvals, registrations or other authorizations required or issued under any Environmental Law necessary for the Company’s operations, including its use and occupancy of the Real Property.

 

(c) The Company is not (i) conducting or actually responsible for (pursuant to any contractual obligation or requirement of any Governmental Entity or Environmental Law) any remediation, reporting, investigation, monitoring or other action or (ii) actually responsible for any liability or cost, in each case of (i) or (ii), relating to the presence or any Release or threatened Release of any Hazardous Substance on any Real Property or other property (including of any soil, groundwater, surface water, sediment, building, or aboveground or subsurface structure, third-party property or formerly owned, operated or leased property), including relating to any sampling, installation or operation of vapor intrusion systems or other remedial systems or the imposition of institutional or engineering controls. The Company has not received notice of any allegations that it is responsible for (i) conducting (pursuant to any contractual obligation or requirement of any Governmental Entity or Environmental Law) any remediation, reporting, investigation, monitoring or other action or (ii) any liability or cost, in each case of (i) or (ii), relating to the presence or any Release or threatened Release of any Hazardous Substance on any Real Property or other property (including of any soil, groundwater, surface water, sediment, building, or aboveground or subsurface structure, third-party property or formerly owned, operated or leased property), including relating to any sampling, installation or operation of vapor intrusion systems or other remedial systems or the imposition of institutional or engineering controls.

 

(d) The Company is not subject to any liability for any actual exposure by any Person or damage to any property relating to the Release of any Hazardous Substance and has not received notice of any allegations of liability for such exposure.

 

(e) The Company has not received, nor, to the Knowledge of the Company, has any Predecessor received, any notice, demand, letter, claim or request for information indicating that the Company or any of its Predecessors may be in violation of or, directly or indirectly subject to liability relating to any Environmental Law or the Release of any Hazardous Substance.

 

(f) The Company is not subject to any Order, asset retirement obligation, financial assurance requirement, or indemnity or other agreement with any third party, relating to liability relating to any Environmental Law or the Release of any Hazardous Substance.

 

(g) There are no circumstances or conditions, including the presence of any aboveground or subsurface structures, involving or affecting the Company or, after acquisition of the Owned Real Property and assignment of leases of the Leased Real Property, any Real Property that could reasonably be expected to result in any claim, liability, investigation or cost of the Company relating to any Environmental Law, including any restriction on the ownership, use or transfer of or otherwise relating to the Real Property.

 

24

 

 

(h) The Company has made available to Parent correct and complete copies of all reports, studies, assessments, audits, records, sampling data, notices, correspondence, agreements and other information that it has in its care, custody or control relating both to (i) any Environmental Law or Hazardous Substance and (ii) the Company, any Company Predecessor, or any properties currently or formerly owned or operated by any of them.

 

Section 3.15 Taxes.

 

(a) The Company and each of its Subsidiaries have filed timely or caused to be filed timely with the appropriate taxing authorities all income and other material Tax Returns that are required to be filed by, or with respect to, the Company and its Subsidiaries on or prior to the Closing Date (taking into account any applicable valid extension of time within which to file). Neither the Company nor any of its subsidiaries is currently the beneficiary of any extension of time within which to file any material Tax Return other than extensions of time to file Tax Returns obtained in the ordinary course of business. Such Tax Returns are true, correct and complete in all material respects, and accurately reflect all liability for Taxes of the Company and its Subsidiaries for the periods covered thereby.

 

(b) All income and other material Taxes and all income and other material Tax liabilities of the Company and its Subsidiaries that are due and payable on or prior to the Closing Date have been (or will be) timely paid in full to the appropriate taxing authorities on or prior to the Closing Date.

 

(c) Neither the Company nor any of its Subsidiaries (i) has entered into a written agreement or waiver extending any statute of limitations relating to the payment or collection of Taxes of the Company or such Subsidiary, as applicable, that has not expired or (ii) is presently contesting the Tax liability of the Company or such Subsidiary, as applicable, before any taxing authority or other Governmental Entity.

 

(d) All material Taxes that the Company or its Subsidiaries are (or were) required by Law to withhold or collect in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, member or other Person have been duly withheld or collected, and have been timely paid over to the proper authorities to the extent due and payable. The Company and each of its Subsidiaries have collected all sales and use, value added, goods and services and other similar taxes required to be collected, and have remitted, or will remit on a timely basis, such amounts to the appropriate Governmental Entity, or have been furnished properly completed exemption certificates and have maintained all such records and supporting documents in the manner required by all applicable Laws.

 

(e) No written claim has ever been made by any taxing authority in a jurisdiction where the Company or any of its Subsidiaries does not file Tax Returns that the Company or such Subsidiary, as applicable, is or may be subject to taxation by that jurisdiction.

 

25

 

 

(f) Neither the Company nor any of its Subsidiaries is currently or has been within the past five (5) years the subject of an audit or other examination relating to Taxes by the taxing authorities of any nation, state or locality (and no such audit is pending or, to the Knowledge of the Company, contemplated) nor has the Company or any of its Subsidiaries received any written notices within the past five (5) years from any taxing authority that such an audit or examination is pending or relating to any issue which might affect the Tax liability of the Company or any of its Subsidiaries.

 

(g) To the Knowledge of the Company, there are no unresolved questions or claims concerning the Company’s or any of its Subsidiaries’ Tax liability that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(h) The Company has made available to Parent correct and complete copies, including all amendments thereto, of each of the Tax Returns for income Taxes filed on behalf of the Company since the Applicable Date.

 

(i) There are no Tax Sharing Agreements in effect as between the Company or any Predecessor or Affiliate thereof and any other party (including Stockholders and any of their respective Predecessors or Affiliates) under which Parent, Merger Sub, the Company or any of its Subsidiaries could be liable for any Taxes or other claims of any Person (excluding, for this purpose, Contracts entered into in the ordinary course of business the primary purpose of which is not Tax).

 

(j) Neither the Company nor any of its Subsidiaries has been included in any “consolidated,” “unitary,” or “combined” Tax Return provided for under the Law of the United States, any non-U.S. jurisdiction or any state, province, prefect or locality with respect to Taxes for any taxable period for which the statute of limitations has not expired (other than a group of which the Company and its Subsidiaries are the only members).

 

(k) Neither the Company nor any of its Subsidiaries has any liability for Taxes as a result of having been a member of any affiliated group within the meaning of Section 1504(a) of the Code, or any similar affiliated or consolidated group for Tax purposes under any state, local or foreign Law (other than a group the common parent of which is the Company), or has any liability for the Taxes of any Person (other than the Company and its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar provision of any state, local or foreign Law), or as a transferee or successor, by Contract (other than Contracts entered into in the ordinary course of business, the primary purpose of which is not Tax) or otherwise.

 

(l) Neither the Company nor any of its Subsidiaries has been, within the last five (5) years or otherwise as part of a “plan (or series of related transactions)” within the meaning of Section 355(e) of the Code of which the Merger is also a part, a “distributing corporation” or a “controlled corporation” within the meaning of Section 355(a)(1)(A) of the Code in a distribution of stock intending to qualify for tax-free treatment under Section 355 of the Code.

 

(m) Neither the Company nor any of its Subsidiaries has participated in a “reportable transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(1).

 

(n) At no time during the past five (5) years has the Company been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code.

 

(o) There are no Liens for Taxes on the Company or any of its Subsidiaries or any assets of the Company or any of its Subsidiaries other than Permitted Liens.

 

26

 

 

(p) Neither the Company nor any of its Subsidiaries will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any of the following that occurred or exists on or prior to the Closing Date: (i) a “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Tax Law); (ii) an installment sale or open transaction; (iii) a prepaid amount; (iv) an intercompany item under Treasury Regulations Section 1.1502-13 or an excess loss account under Treasury Regulations Section 1.1502-19; (v) a change in the accounting method of the Company or any of its Subsidiaries, pursuant to Section 481 of the Code or any similar provision of the Code or the corresponding Tax Laws of any nation, state or locality; (vi) an election pursuant to Section 108(i) of the Code; (vii) any inclusion under Section 951(a) or 951A of the Code attributable to (A) “subpart F income,” within the meaning of Section 952 of the Code, (B) direct or indirect holding of “United States property,” within the meaning of Section 956 of the Code, (C) “global intangible low-taxed income,” as defined in Section 951A of the Code, in the case of each of clauses (A), (B) and (C), with the amount existing on or prior to the Closing Date being determined as if the relevant taxable years ended on the Closing Date, or (D) any inclusion under Section 965 of the Code; or (viii) otherwise as a result of a transaction or an accounting method that accelerated an item of deduction that economically accrues after the Closing Date into periods ending on or before the Closing Date (excluding bonus or allowable accelerated methods of depreciation) or a transaction or an accounting method that deferred an item of income that economically accrues on or before the Closing Date into periods beginning after the Closing Date.

 

(q) All transactions entered into between or among the Company, its Subsidiaries and their respective Affiliates have been entered into on terms that would properly be considered arm’s length, consistent in all material respects with what would have been agreed to between unrelated third parties, and no adjustment is required with respect to any such transactions pursuant to Section 482 of the Code or any similar provision of any state, local or foreign Law. Neither the Company nor any of its Subsidiaries has taken any action (nor permitted any action to be taken), or is aware of any fact or circumstance, that would reasonably be expected to prevent, impair or impede the Merger from qualifying for the Intended Tax Treatment.

 

Section 3.16 Intellectual Property.

 

(a) Section 3.16(a) of the Company Disclosure Letter sets forth a correct and complete list of all (i) Company IP that is Registered (the “Company Registered IP”), indicating for each item, the owner, the registration or application number, the registration or application date, and the applicable filing jurisdiction, and (ii) proprietary Software, in each case, that is included in the Company IP and material to the Company or the conduct of the Business

 

(b) The Company owns or has sufficient and valid rights to use all Business IP and all IT Assets used in or necessary for the conduct of the Business, all of which ownership and rights shall survive the execution, delivery, and performance of the Transaction Documents and the consummation of the Transactions, on identical terms and without modification, cancellation, termination, suspension of, or acceleration of any right, obligation or payment with respect to any such Business IP or IT Assets. The Company (i) exclusively owns all right, title, and interest in and to all Company IP owned or purported to be owned by the Company, and (ii) is the exclusive licensee of all other Company IP, in each case, free and clear of all Liens other than Permitted Liens. The Company has in its possession all know-how, information, and embodiments of all Company IP, in each case, necessary and sufficient to enable the Company to use, practice, and exploit the in-licensed Business IP as contemplated to be used, practiced, and exploited in the conduct of the Business.

 

27

 

 

(c) All Company Registered IP is subsisting, valid and enforceable. Neither the Company nor any of the Company IP is subject to any outstanding Order materially adversely affecting the validity or enforceability of, or the Company’s ownership or exclusive use of, or exclusive rights in or to, any such Company IP or otherwise restricting or materially adversely affecting the Company’s right to own, license or use any Business IP. All Company Registered IP has been maintained effective by the filing of all necessary filings, maintenance and renewals and timely payment of requisite fees. No loss or expiration of any Company Registered IP is threatened, pending or reasonably foreseeable that would be materially adverse to the conduct of the Business.

 

(d) The Company has used commercially reasonable efforts and implemented sufficient measures to protect the confidentiality, integrity, and availability to the Company of all trade secrets or other confidential information material to the Company or the conduct of the Business. No such trade secret or confidential information has been disclosed by the Company to any Person (other than pursuant to a written confidentiality agreement with provisions reasonably restricting the use and disclosure thereof). To the Knowledge of the Company, each Person who is or was an employee or independent contractor of the Company or SERES and (i) involved in the development or creation of any Intellectual Property Rights for or on behalf of the Company (including any Company IP) has signed a valid and enforceable agreement containing an irrevocable present assignment to Company, its Subsidiary, SERES or other member of the SERES Group, as appropriate, of all such Intellectual Property Rights; or (ii) privy to any trade secrets or other confidential information material to the Company or the conduct of the Business has signed a valid and enforceable written confidentiality agreement with provisions reasonably restricting the use and disclosure thereof. No such Person retains any right, title or interest in or to any such Intellectual Property Rights or is in violation of any such assignment or confidentiality agreement.

 

(e) Neither the Company nor, to the Knowledge of the Company, SERES has received any written claim, notice, invitation to license or similar communication (i) contesting or challenging the use, validity, enforceability or ownership by the Company or SERES of any Business IP, or (ii) alleging that the Company or its current or planned products or services or the conduct of the Business infringes, misappropriates or otherwise violates (or will infringe, misappropriate, or otherwise violate) the Intellectual Property Rights of any Person, whether directly or indirectly.

 

(f) The Company, the conduct of the Business, the currently contemplated conduct of the Business following the Closing, and the current or planned products or services of the Company (including the use, manufacture, marketing, sale, offering for sale, importation, or other commercialization thereof), in each case, (i) to the Knowledge of the Company, currently do not infringe, misappropriate or otherwise violate and have not infringed, misappropriated or otherwise violated any Intellectual Property Rights of any Person; and (ii) do not constitute and have not constituted unfair competition or trade practices under the Laws of any relevant jurisdiction.

 

28

 

 

(g) In the past six (6) years, to the Company’s Knowledge, no Person has infringed, misappropriated or otherwise violated any Company IP, whether directly or indirectly.

 

(h) No funding, facility or personnel of any Governmental Entity, university, college, other educational institution or research center was used in the development of any Company IP.

 

(i) The IT Assets owned, leased, outsourced, or licensed by the Company (including through cloud-based or other third-party service providers) in the operation of its Business are sufficient in all material respects for the current conduct of the Business, and the IT Assets are free from any disabling codes or instructions, spyware, Trojan horses, worms, viruses or other software routines designed to facilitate or cause unauthorized access to, or disruption, significant impairment, disablement, or destruction of, Software, data or other materials. Prior to the Execution Date, there has been no unauthorized access to or unauthorized use of (i) any such IT Assets, (ii) any information stored on or processed by such IT Assets, or (iii) any confidential or proprietary information that is in the Company’s possession, custody, or control.

 

(j) Prior to the Closing, the Company will use commercially reasonable efforts to implement and, from the date of such implementation through the Closing Date, use commercially reasonable efforts to maintain commercially reasonable security designed to safeguard the confidentiality, availability, security and integrity of the IT Assets and all data and information stored thereon.

 

(k) No source code of any material Software owned by, or purported to be owned by, the Company has been disclosed or delivered to any escrow agent or, except pursuant to a written confidentiality Contract, otherwise provided or disclosed to any third party. Neither this Agreement, nor the Transactions will, and to the Company’s Knowledge, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time, or both) will, result in the disclosure or release of such source code to any third-party. The Company has not used any material Software licensed in such a way that would subject any Company IP to Copyleft Terms.

 

(l) Prior to the Closing, the Company will use commercially reasonable efforts to establish and implement and, from the date of such establishment and implementation through the Closing Date, use commercially reasonable efforts to maintain written policies and organizational, physical, administrative and technical measures regarding, the integrity and availability of the systems, privacy, cyber security and data security that are commercially reasonable for an enterprise of the size and nature of the Company, taken as a whole, and at least consistent with applicable industry standards, and consistent in all material respects with (i) any contractual commitments of the Company relating to privacy, cyber security and data security, and (ii) any public facing statements or policies adopted by the Company relating to privacy, cyber security and data security (such policies and measures, collectively, the “Privacy and Security Policies”).

 

(m) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, since the (i) Applicable Date the Company has complied in all material respects with all applicable privacy, cyber security and data security Laws and Contracts, including with respect to the collection, use, storage, processing, transmission, transfer (including cross-border transfers), disclosure and protection of Personal Information its possession or control and (ii) since the establishment and implementation of the Privacy and Security Policies has complied in all material respects with its Privacy and Security Policies.

 

29

 

 

(n) The Company will implement prior to Closing commercially reasonable measures consistent in all material respects with standard industry practices designed to ensure the confidentiality, privacy and security of Personal Information in its possession or control from authorized access by any Person.

 

Section 3.17 Insurance. The Company has made available to Parent true and correct copies of all material fire and casualty, general liability, business interruption, product liability and sprinkler and water damage insurance policies maintained by the Company (“Insurance Policies”). All Insurance Policies are with reputable insurance carriers, provide full and adequate coverage for all normal risks incident to the business of the Company and its properties and assets, except for any such failures to maintain insurance policies that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except for Insurance Policies that have expired under their terms in the ordinary course of business, each Insurance Policy is in full force and effect, subject to the Bankruptcy and Equity Exception, and all premiums due with respect to all Insurance Policies have been paid, and, to the extent applicable, the Company has not taken any action or failed to take any action that (including with respect to the Transactions), with or without notice, lapse of time or both, would constitute or result in a breach or violation of, or default under, any of the Insurance Policies or would permit or cause the termination, non-renewal or modification thereof or acceleration or creation of any right or obligation thereunder, in each case as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 3.18 Suppliers.

 

(a) Section 3.18(a) of the Company Disclosure Letter sets forth a complete and accurate list of the top five (5) suppliers of the Company for the twelve (12)-month period ended on the Execution Date based on the Dollar value purchased from each supplier during such period (each, a “Significant Supplier”).

 

(b) No Significant Supplier or other material supplier, vendor, collaborator, distributor or licensor of the Company has cancelled or otherwise terminated its relationship with the Company or has materially altered, in a manner adverse to the Company, its relationship with the Company. To the Knowledge of the Company, no such Significant Supplier or other material supplier, vendor, collaborator, distributor or licensor has any plan or intention, and has not threatened to terminate, cancel or otherwise materially modify in a manner adverse to the Company its relationship with the Company.

 

Section 3.19 Related Party Transactions. No stockholder, officer or director of the Company or to the Company’s Knowledge, any immediate family member thereof (a) is presently a party or has a direct or indirect interest in any Person (other than publicly traded securities) party to any Contract with the Company; (b) owns any direct or any indirect, interest in any material assets of the Company; or (c) has any cause of action or other claim against, or owes any amounts to, the Company except for claims of employees in the ordinary course of business, including for bona-fide employment-related compensation, expense reimbursements, or accrued vacation pay or for accrued benefits under a Benefit Plan maintained by the Company. Except as set forth on Section 3.19 of the Company Disclosure Letter, there are no outstanding notes payable to, accounts receivable from or advances by the Company, and the Company is not otherwise a creditor of, any option holder or Stockholder or any Affiliate of such Stockholder or option holder (or any director, officer, stockholder, member, manager or partner thereof).

 

30

 

 

Section 3.20 Brokers and Finders. The Company has not, nor has any of its directors or employees (including any officers), employed any investment banker, broker or finder or incurred or will incur any obligation or liability for any brokerage fees, commissions or finders’ fees or other similar payments in connection with the Transactions.

 

Section 3.21 Information Supplied; Proxy Statement. The information supplied or to be supplied by the Company expressly for inclusion or incorporation by reference in the Proxy Statement will not, (a) at the time the Proxy Statement is first mailed to the stockholders of Parent, (b) at the time of the Parent Special Meeting to be held in connection with the Transactions after giving effect to any supplements or updates to the Proxy Statement and (c) at the Effective Time after giving effect to any supplements or updates to the Proxy Statement, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, no representation or warranty is made by the Company with respect to statements made or incorporated by reference in the Proxy Statement based on information that was supplied by Parent or its Representatives.

 

Section 3.22 Anti-Corruption; Sanctions.

 

(a) Since the Applicable Date, the Company has complied with all applicable anti-bribery, anti-corruption and anti-money laundering Laws, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, or any rules or regulations thereunder, (collectively, the “Anti-Corruption Laws”), except where the failure to be in compliance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(b) Neither the Company nor any director or officer of the Company, nor, to the Knowledge of the Company, any employee, agent or representative of the Company has, directly or indirectly, violated any, or been subject to actual or, to the Knowledge of the Company, pending or threatened Actions, demand letters, settlements or enforcement actions relating to any Anti-Corruption Law or any Law related to terrorism financing.

 

(c) Neither the Company nor any director or officer of the Company, nor, to the Knowledge of the Company, any employee, agent or representative of the Company has, directly or indirectly, given, made, offered or received or agreed to give, make, offer or receive any payment, gift, contribution, commission, rebate, promotional allowance, expenditure or other economic advantage: (i) which would violate any applicable Anti-Corruption Law; or (ii) to or for a Public Official with the intention of (A) unlawfully influencing any official act or decision of such Public Official; (B) inducing such Public Official to do or omit to do any act in violation of their lawful duty; (C) securing any unlawful advantage; or (D) inducing such Public Official to influence or affect any act or decision of any Governmental Entity or commercial enterprise owned or controlled by any Governmental Entity, in each case, in order to assist the Company, or, to the Knowledge of the Company, any employee, agent or representative of the Company in obtaining or retaining business for or with, or in directing business to, the Company or any other Person.

 

31

 

 

(d) Neither the Company nor any director or officer of the Company, nor, to the Knowledge of the Company, any employee, agent or representative of the Company, is a Person that is the subject of economic sanctions administered by OFAC (including the designation as a “Specially Designated National or Blocked Person” thereunder), Her Majesty’s Treasury, the European Union, the Bureau of Industry Security of the U.S. Department of Commerce, or any applicable sanctions measures under the U.S. International Emergency Economic Powers Act, the U.S. Trading with the Enemy Act, the U.S. Iran Sanctions Act, the U.S. Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010, the U.S. Iran Threat Reduction and Syria Human Rights Act of 2012, the U.S. National Defense Authorization Act of 2012 or the U.S. National Defense Authorization Act of 2013, or any executive order, directive or regulation pursuant to the authority of any of the foregoing, including the regulations of the U.S. Department of the Treasury set forth under 31 CFR, Subtitle B, Chapter V, or any orders or licenses issued thereunder (collectively, “Sanctions”), nor, to the Knowledge of the Company, are any of the foregoing designated as a Specially Designated National or Blocked Person by OFAC. Since the Applicable Date, the Company has not been in material violation of applicable Sanctions.

 

Section 3.23 Accredited Investors. To the Knowledge of the Company, each Stockholder and Convertible Note Holder is an Accredited Investor.

 

Section 3.24 Sufficiency of the Assets.

 

(a) The Company has good and valid title or, in the case of leased or licensed assets, a valid leasehold interest in or valid license with respect to, free and clear of all Liens, except for Permitted Liens, to all of the Company’s material assets and all other material tangible personal property (including all plants, machinery, equipment, tools, supplies, furniture, furnishings, vehicles, IT Assets and other fixed assets) and real property, used (or held for use) in the conduct of the Business as of the Closing.

 

(b) Effective on the Closing Date (assuming that, upon Closing, Parent has unrestricted cash on hand equal to or in excess of $125,000,000): (i) the Company IP; and (ii) the material items of tangible and intangible personal property (including the IT Assets, intellectual property, buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles) and real property, in each case, currently owned, leased or licensed by the Company, together with the rights, licenses, and services to be provided to the Company under the Key Contracts, will be sufficient, in all material respects, for the conduct of the Business by the Company following the Closing in the manner presently contemplated to be conducted (as of the Execution Date).

 

(c) The buildings, plants, structures, fixtures, machinery, equipment, vehicles, tangible IT Assets, and other material items of tangible personal property of the Company used in the Business as presently conducted are structurally sound, in good operating condition and repair (normal wear and tear excepted), and, to the Knowledge of the Company, have been maintained in accordance with normal industry practice in all material respects.

 

32

 

 

Section 3.25 No Other Representations or Warranties.

 

(a) Except for the representations and warranties expressly set forth in this Article III (as modified by the Company Disclosure Letter), neither the Company nor any other Person makes or has made (and the Company and its Affiliates hereby disclaim) any other express or implied representation or warranty with respect to the Company or any of its Affiliates (including any implied warranties that may otherwise be applicable because of the provisions of the Uniform Commercial Code or any other applicable Law, including the warranties of merchantability and fitness for a particular purpose), or any of their respective businesses, operations, assets, liabilities or financial condition. Parent and its Affiliates have not relied on any representation or warranty other than those expressly set forth in Article III of this Agreement (as modified by the Company Disclosure Letter). Without limiting the generality of the foregoing, except as set forth in this Agreement, neither the Company nor any other Person on behalf of the Company has made or makes, any representation or warranty, whether express or implied, with respect to any financial projections, forecasts or estimates relating to the Company, any of its Affiliates or any of their respective businesses, operations, assets, liabilities or financial condition. Notwithstanding the foregoing, nothing in this Section 3.25(a) shall limit Parent’s remedies with respect to claims of fraud.

 

(b) The Company acknowledges and agrees that, except for the representations and warranties expressly set forth in Article IV of this Agreement, neither Parent nor any other Person has made any express or implied representation or warranty with respect to the Transaction or any other transaction contemplated by this Agreement (including any implied warranties that may otherwise be applicable because of the provisions of the Uniform Commercial Code or any other applicable Law, including the warranties of merchantability and fitness for a particular purpose) or with respect to the accuracy or completeness of any other information provided, or made available, to the Company or any of its Affiliates in connection with the Transactions and the Company has not relied on any representation or warranty other than those expressly set forth in Article IV of this Agreement; provided; however, that notwithstanding anything to the contrary set forth in the foregoing provisions of this Section 3.25(b), nothing in this Section 3.25(b) shall limit the Company’s remedies with respect to claims of fraud in connection with, arising out of or otherwise related to the express written representations and warranties made by Parent in this Agreement and in any Transaction Document.

 

Article IV

REPRESENTATIONS AND WARRANTIES OF PARENT

 

Except as set forth in (i) Parent Reports filed prior to the Execution Date, but excluding, in each case, any disclosures set forth or referenced in any risk factor or forward-looking statement (or similarly captioned section) and any other disclosures therein to the extent they are of a predictive or cautionary nature or related to forward-looking statements (it being acknowledged that nothing disclosed in the Parent Reports will be deemed to modify or qualify the representations and warranties set forth in Section 4.1 (Organization; Good Standing and Qualification), Section 4.2 (Capital Structure), and Section 4.3 (Authority; Approval)); or (ii) the corresponding sections or subsections of the disclosure letter delivered to the Company by Parent prior to the Execution Date (the “Parent Disclosure Letter”), Parent hereby represents and warrants to the Company as of the Execution Date and as of the Closing (or in the case of representations and warranties that speak of a specified date, as of such specified date) as follows:

 

Section 4.1 Organization, Good Standing and Qualification. Each of Parent and Merger Sub (a) is a legal entity duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization; (b) has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted; and (c) is qualified to do business and, to the extent such concept is applicable, is in good standing as a foreign corporation or other legal entity in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except in the case of clauses (b) and (c) where the failure to be so qualified or in good standing or to have such power or authority, could not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect. Parent has made available to the Company prior to the Execution Date complete and correct copies of Parent’s and Merger Sub’s Organizational Documents, and each as so delivered is in full force and effect.

 

33

 

 

Section 4.2 Capital Structure.

 

(a) Without taking into effect the PIPE Investment or the conversion of Convertible Notes, the authorized capital stock of Parent consists of 100,000,000 shares of Parent Class A Common Stock, of which 25,741,250 shares were issued and outstanding as of the Execution Date, 10,000,000 shares of Parent Class B Common Stock, of which 6,250,000 shares were issued and outstanding as of the Execution Date, and 1,000,000 shares of preferred stock, par value $0.0001 per share (“Parent Preferred Stock”), of which no shares were issued or outstanding as of the Execution Date, and there were 8,333,333 public warrants (the “Public Warrants”) and 247,083 private placement warrants (together with the Public Warrants, the “Warrants”) issued and outstanding as of the Execution Date, in each case, entitling the holder thereof to purchase one share of Parent Class A Common Stock at an exercise price of $11.50 per share of Parent Class A Common Stock pursuant to, and subject to adjustments as provided by, the terms of the Warrants. Other than (A) the Parent Class B Common Stock, (B) the Warrants set forth in Schedule 4.2(a), and (C) the PIPE Investment, there are (i) no securities of Parent convertible into or exchangeable for shares of capital stock or voting securities of Parent; and (ii) no options, warrants, or other rights to acquire from Parent, and no obligations of Parent to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of Parent. At the Effective Time, each share of Parent Class B Common Stock will automatically convert into one share of Parent Class A Common Stock.

 

(b) All of the outstanding shares of Parent Capital Stock have been duly authorized, are validly issued, fully paid and nonassessable, and were issued in compliance with all applicable Laws and are not subject to and were not issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL, the Organizational Documents of Parent or any Contract to which Parent is a party or otherwise bound. All outstanding Warrants have been duly authorized and validly issued, are fully paid and were issued in compliance with all applicable Laws and are not subject to and were not issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL, the Organizational Documents of Parent or any Contract to which Parent is a party or otherwise bound. Other than the Warrants, Parent does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convert into or exercise for securities having the right to vote) with the stockholders of Parent on any matter. Except for this Agreement, the Parent’s Organizational Documents and the documents listed on Schedule 4.2(b)(i), Parent is not party to, and the Parent Capital Stock is not subject to, any voting trust agreements, proxies, or other Contracts with respect to the voting, purchase, repurchase, redemption, dividend rights, disposition or transfer of the shares of Parent Capital Stock. Other than the Parent’s Organizational Documents and the documents listed on Schedule 4.2(b)(ii), Parent is not party to any Contract that provides for any preemptive, anti-dilution, down-valuation or similar protections in respect of Parent Capital Stock.

 

34

 

 

(c) Each holder of any of the shares of Parent Common Stock initially issued prior to Parent’s initial public offering (i) is obligated to vote all of such shares of Parent Common Stock in favor of adopting this Agreement and approving the Merger and (ii) is not entitled to elect to redeem any of such shares of Parent Common Stock pursuant to Parent’s certificate of incorporation, as amended.

 

(d) The authorized capital stock of Merger Sub consists of 1,000 shares of common stock, par value $0.0001 per share, of which 100 shares are validly issued and outstanding, fully paid and nonassessable. All of the issued and outstanding capital stock of Merger Sub was duly authorized, was issued in compliance with all applicable Laws and is not subject to and was not issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL, the Organizational Documents of Merger Sub or any Contract to which Merger Sub is a party or otherwise bound.

 

(e) Other than the equity interests set forth in Schedule 4.2(e), there are no equity interests of Merger Sub issued and outstanding. All of the issued and outstanding capital stock of Merger Sub is, and at the Effective Time will be, owned by Parent, free and clear of all Liens (other than such Liens as contemplated under this Agreement or created by Merger Sub’s Organizational Documents or applicable securities Laws), and there are (i) no other shares of capital stock or voting securities of Merger Sub; (ii) no securities of Merger Sub convertible into or exchangeable for shares of capital stock or voting securities of Merger Sub; and (iii) no options or other rights to acquire from Merger Sub, and no obligations of Merger Sub to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of Merger Sub. Merger Sub has not conducted any business prior to the date of this Agreement and has no, and prior to the Effective Time will have no, assets, liabilities or obligations of any nature other than those incident to its formation and pursuant to this Agreement and the Transactions.

 

(f) Other than Merger Sub, Parent has no Subsidiaries and does not, directly or indirectly, own, hold or control or have the right to acquire any (i) equity interests, including any partnership, limited liability company or joint venture interests, in any other Person; (ii) securities convertible into or exchangeable for equity interests of any other Person; or (iii) options or other rights to acquire equity interests of any other Person.

 

Section 4.3 Authority; Approval.

 

(a) Each of Parent and Merger Sub has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform its obligations under this Agreement and each of the Transaction Documents to which it is a party and to consummate the Transactions, subject only to adoption of this Agreement by Parent as the sole stockholder of Merger Sub, the consents, approvals, authorizations and other requirements described in Section 4.4 and the obtaining of approval of the Parent Stockholder Proposals by the holders of a majority of the outstanding shares of Parent Common Stock voting on such matter at a stockholders’ meeting duly called and held for such purpose (the “Requisite Parent Vote” and such meeting, the “Parent Special Meeting”). Other than the Requisite Parent Vote, there are no other votes of the holders of Parent Common Stock or of any other class or series of the capital stock of Parent necessary with respect to the Transactions or any related matters. This Agreement has been duly executed and delivered by each of Parent and Merger Sub and constitutes a valid and binding agreement of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its terms, subject to the Bankruptcy and Equity Exception. Each of the Transaction Documents to which Parent and/or Merger Sub is a party will be, at Closing, duly executed and delivered by Parent and/or Merger Sub, as applicable, and, when executed and delivered by the Company and the other parties thereto, will constitute a valid and binding agreement of Parent and/or Merger Sub, as applicable, enforceable against Parent and/or Merger Sub, as applicable, in accordance with its terms, subject to the Bankruptcy and Equity Exception.

 

35

 

 

(b) The Parent Board has, at a duly convened and held meeting, (i) unanimously determined that the Merger is in the best interests of Parent and its stockholders, approved and declared advisable this Agreement, the Merger and the other Transactions and resolved to recommend that the holders of shares of Parent Common Stock vote in favor of the Parent Stockholder Proposals, subject to a Change in Recommendation as set forth in Section 5.6; and (ii) directed that this Agreement and the other Parent Stockholder Proposals be submitted to the holders of shares of Parent Common Stock for their approval (the “Parent Board Recommendation”). No Takeover Statute is applicable to Parent, the Parent Common Stock or the Transactions.

 

(c) Prior to the Effective Time, Parent will have taken all necessary action to permit it to issue the number of shares of Parent Common Stock required to be issued by it pursuant to Article II of this Agreement. Such shares of Parent Common Stock, when issued, will be duly authorized, validly issued, fully paid and nonassessable, and will be issued free and clear of any Liens (other than such Liens as contemplated under this Agreement or created by Parent’s Organizational Documents or applicable securities Laws) and any preemptive rights, and no stockholder of Parent will have any preemptive right, repurchase right or subscription right in respect thereof. As of the Effective Time, the Parent Common Stock will be registered pursuant to Section 12(b) under the Exchange Act.

 

Section 4.4 Governmental Filings; No Violations; Certain Contracts.

 

(a) Other than the expirations of waiting periods and the filings, notices, reports, consents, registrations, approvals, permits and authorizations under the HSR Act, any applicable requirements under applicable securities Laws, and the DGCL, no expirations of waiting periods are required under applicable Antitrust Laws, nor are any notices, reports or other filings required to be made by Parent with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by Parent from, any Governmental Entity in connection with the execution, delivery and performance of this Agreement and the Transaction Documents by Parent or Merger Sub or the consummation of the Transactions, except those that the failure to make or obtain would not, individually or in the aggregate, reasonably be expected to be material or to prevent, materially delay or materially impair the consummation of the Transactions.

 

(b) The execution, delivery and performance by Parent and Merger Sub of this Agreement and the Transaction Documents to which they are a party do not, and the consummation of the Transactions will not, conflict with, or result in any breach or violation of, or default (with or without notice, lapse of time or both) under, or give rise to any right of termination, loss of rights, adverse modification of provisions, cancellation or acceleration of any obligations under, or result in the creation of a Lien on any of the assets of Parent or Merger Sub under any provision of (i) their respective Organizational Documents; (ii) any Contract binding upon Parent or Merger Sub or any of their respective properties or assets; or (iii) assuming (solely with respect to performance of this Agreement and the Transaction Documents and consummation of the Transactions) compliance with the matters referred to in Section 4.4(a), any Law to which Parent or Merger Sub is subject, except, in the case of clauses (ii) and (iii) above, for any such breach, violation, default, termination, loss, adverse modification, cancellation, acceleration or creation that would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect.

 

36

 

 

Section 4.5 Parent Reports; Financial Statements; Internal Controls.

 

(a) Parent has filed or furnished, as applicable, on a timely basis, all forms, schedules, statements, certifications, reports and other documents, including any exhibits thereto, required to be filed with the SEC, including pursuant to the Exchange Act or the Securities Act, since its incorporation and will file, on a timely basis, all such forms, schedules, statements, certifications, reports and other documents required to be filed with the SEC subsequent to the date of this Agreement (collectively, and together with any exhibits and schedules thereto and other information incorporated therein, and including any amendments, restatements or supplements thereto, the “Parent Reports”). Each of the Parent Reports, at the time of its filing and, if amended, as of the date of the most recent amendment, complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act and any rules and regulations promulgated thereunder applicable to the Parent Reports. Except to the extent available on the SEC’s web site through EDGAR, Parent has delivered to the Company copies, in the form filed with the SEC, of all Parent Reports. As of their respective dates of filing (and, if amended, as of the date of filing such amendment), no Parent Report contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. As of the date hereof, there are no outstanding or unresolved comments in comment letters received from the SEC with respect to the Parent Reports. Each director and executive officer of Parent has filed with the SEC on a timely basis all documents required with respect to Parent by Section 16(a) of the Exchange Act and the rules and regulations promulgated thereunder.

 

(b) Parent has complied in all material respects with the applicable listing and corporate governance rules and regulations of The Nasdaq Stock Market LLC (“NASDAQ”). As of the date hereof, the issued and outstanding shares of Parent Class A Common Stock are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on NASDAQ. There is no legal proceeding pending or, to the Knowledge of Parent, threatened, in each case, by NASDAQ or the SEC with respect to any intention by such entity to deregister the Parent Class A Common Stock or prohibit or terminate the listing of the Parent Class A Common Stock on NASDAQ. Parent has not taken any action that is designed to terminate the registration of the Parent Class A Common Stock under the Exchange Act. Except as permitted by the Exchange Act, including Sections 13(k)(2) and 13(k)(3) thereunder, or the rules and regulations promulgated by the SEC, Parent has not taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.

 

37

 

 

(c) Except as not required in reliance on exemptions from various reporting requirements by virtue of Parent’s status as an “emerging growth company” within the meaning of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, Parent has established and maintains disclosure controls and procedures (as such terms are defined in paragraph (e) of Rule 13a-15 and paragraph (e) of Rule 15d-15 under the Exchange Act) as required by Rules 13a-15 and 15d-15 under the Exchange Act. Parent’s disclosure controls and procedures are designed to ensure that all information (both financial and non-financial) required to be disclosed by Parent in the reports that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such information is accumulated and communicated to Parent’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act.

 

(d) Each of the consolidated balance sheets included in or incorporated by reference into the Parent Reports (including the related notes and schedules) fairly presents the consolidated financial position of Parent and its consolidated Subsidiaries as of its date and each of the consolidated statements of operations, changes in stockholders’ equity and cash flows included in or incorporated by reference into the Parent Reports (including any related notes and schedules) fairly presents the results of operations, changes in stockholders’ equity, cash flows, retained earnings (loss) and changes in financial position, as applicable, of Parent and its consolidated Subsidiaries for the periods set forth therein (subject, in the case of unaudited financial statements, to normal year-end audit adjustments that will not be material in amount or effect), in each case prepared in accordance with GAAP consistently applied during the periods involved, except as may be noted therein or in the notes thereto and comply in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act in effect as of the respective dates thereof.

 

(e) Parent has established and maintained a system of internal control over financial reporting (as defined in Rule 13a-15 or 15d-15, as applicable, under the Exchange Act) as required by Rules 13a-15 and 15d-15 under the Exchange Act that are sufficient to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

 

(f) (i)  To the Knowledge of Parent, the Parent has not identified or been made aware of any significant deficiency or material weakness in the design or operation of internal controls that would reasonably be expected to adversely affect Parent’s ability to record, process, summarize and report financial information for inclusion in the applicable financial statements; and (ii) since the date of Parent’s formation, to the Knowledge of Parent, the Parent has not identified or been made aware of any fraud, whether or not material, that involves the management or other employees of Parent who have a significant role in Parent’s internal control over financial reporting. Since the date of Parent’s formation, to the Knowledge of Parent, no material complaints from any source regarding accounting, internal accounting controls or auditing matters have been received by Parent.

 

Section 4.6 Absence of Certain Changes. Since Parent’s incorporation, (a) Parent has conducted its business in the ordinary course of business, consistent with past practices in all material respects (except for the negotiation and execution of this Agreement); and (b) there has not been any Parent Material Adverse Effect.

 

38

 

 

Section 4.7 Litigation and Liabilities.

 

(a) There are no Actions pending, threatened in writing, or, to the Knowledge of Parent, otherwise threatened, against Parent or any of its Subsidiaries (and no Governmental Entity has notified Parent of its intention to initiate an Action), except as would not, individually or in the aggregate, reasonably be expected to prevent, materially delay or materially impair the ability of Parent to consummate the Transactions.

 

(b) Since its date of incorporation, neither Parent nor Merger Sub has carried on any business or conducted any operations other than: (i) directed towards the accomplishment of a business combination; and (ii) the execution of this Agreement and the other Transaction Documents to which it is a party, the performance of its obligations hereunder and thereunder and matters ancillary thereto. Neither Parent nor Merger Sub has any obligations or liabilities (whether accrued, absolute, contingent, unknown or otherwise), other than liabilities that (i) have been adequately reserved against or reflected in the financial statements included in or incorporated by reference into the Parent Reports (including the related notes and schedules); (ii) were incurred in the ordinary course of business consistent with past practice and which are not material; or (iii) have been incurred as expressly required by this Agreement. Parent is not a party to or subject to the provisions of any Order that restricts the manner in which Parent conducts its business except as would not, individually or in the aggregate, reasonably be expected to prevent, materially delay or materially impair the ability of Parent to consummate the Transactions.

 

Section 4.8 Parent Trust Account. As of the Execution Date, Parent has no less than $250,000,000 in the account established by Parent for the benefit of its stockholders at Deutsche Bank Trust Company Americas (the “Parent Trust Account”), such monies being invested in U.S. Government treasury bills or money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940, as amended, and held in trust pursuant to that certain Investment Management Trust Agreement, dated as of August 18, 2020, between Parent and Continental Stock Transfer & Trust Company, as trustee (the “Parent Trust Agreement”). The Parent Trust Agreement is valid and in full force and effect and enforceable in accordance with its terms, subject to the Bankruptcy and Equity Exception, and has not been amended or modified. Parent has complied in all material respects with the terms of the Parent Trust Agreement and is not in breach thereof or default thereunder and there does not exist under the Parent Trust Agreement any event which, with the giving of notice or the lapse of time, would constitute such a breach or default by Parent or the trustee under the Parent Trust Agreement (the “Trustee”). There are no separate Contracts, side letters or other arrangements or understandings (whether written or unwritten, express or implied) that would cause the description of the Parent Trust Agreement in the Parent Reports to be inaccurate in any material respect or that would entitle any Person (other than pursuant to a Parent Share Redemption or with respect to the Deferred Discount (as defined in the Parent Trust Agreement)) to any portion of the proceeds in the Parent Trust Account. There are no proceedings pending or, to the Knowledge of Parent, threatened with respect to the Parent Trust Account. Upon the consummation of the Merger and notice thereof to the Trustee pursuant to the Parent Trust Agreement, Parent shall cause the Trustee to, and the Trustee shall thereupon be obligated to, release to Parent as promptly as practicable, the funds in the Parent Trust Account in accordance with the Parent Trust Agreement at which point the Parent Trust Account shall terminate; provided, however, that the liabilities and obligations of Parent due and owing or incurred at or prior to the Effective Time shall be paid as and when due, including all amounts payable: (a) to stockholders of Parent who shall have exercised applicable redemption rights; (b) with respect to filings, applications and/or other actions taken pursuant to this Agreement required under Law; and (c) to the Trustee for fees and costs incurred in accordance with the Parent Trust Agreement. Assuming the accuracy of the representations and warranties of the Company herein and the compliance by the Company with its respective obligations hereunder, the conditions to the use of funds in the Parent Trust Account will be satisfied and the funds available in the Parent Trust Account will be available to Parent at the Effective Time.

 

39

 

 

Section 4.9 PIPE Investments. Parent has made available to the Company prior to the Execution Date true, correct and complete copies of the Subscription Agreements. As of the Execution Date, each Subscription Agreement (a) is in full force and effect without amendment or modification; (b) is the valid, binding and enforceable obligation of Parent or its applicable Affiliate and, to the Knowledge of Parent, each other party thereto (except, in any case, as may be limited by Bankruptcy and Equity Exception); and (c) have not been withdrawn, terminated or rescinded in any respect. There are no other Contracts between Parent and any PIPE Investor relating to any Subscription Agreement, that would reasonably be expected to affect the obligations of the PIPE Investors to contribute to Parent the applicable portion of the PIPE Investment set forth in the Subscription Agreements, and, to the Knowledge of Parent, no facts or circumstances exist that may reasonably be expected to result in any of the conditions set forth in any Subscription Agreement not being satisfied, or the PIPE Investment not being available to Parent, on the Closing Date. No event has occurred that, with or without notice, lapse of time or both, would constitute a default or breach on the part of Parent, or to the Knowledge of Parent, on the part of any PIPE Investor, under any material term or condition of any Subscription Agreement, and, as of the Execution Date, Parent has no reason to believe that it will be unable to satisfy in all material respects, on a timely basis, any term or condition of Closing to be satisfied by it contained in any Subscription Agreement. The Subscription Agreements contain all of the conditions precedent (other than the conditions contained in this Agreement or the Transaction Documents) to the obligations of the PIPE Investors to contribute to Parent the applicable portion of the PIPE Investment set forth in the Subscription Agreements on the terms therein.

 

Section 4.10 [RESERVED].

 

Section 4.11 Investment Intent. Parent is acquiring the Company Common Stock solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof. Parent acknowledges that the Company Common Stock is not registered under the Securities Act, any state securities Laws or any other applicable securities Laws, and that the shares of Company Common Stock may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to state securities Laws and regulations and any other applicable securities Laws, as applicable.

 

Section 4.12 Brokers and Finders. Neither Parent nor any of its Subsidiaries, nor any of their respective directors or employees (including any officers), as applicable, has employed any investment banker, broker or finder or has incurred or will incur any obligation or liability for any brokerage fees, commissions or finders fees or other similar payments in connection with the Transactions.

 

40

 

 

Section 4.13 Information Supplied; Proxy Statement. The information supplied or to be supplied by Parent expressly for inclusion or incorporation by reference in the Proxy Statement will not, (a) at the time the Proxy Statement is first mailed to the stockholders of Parent, (b) at the time of the Parent Special Meeting to be held in connection with the Transactions after giving effect to any supplements or updates to the Proxy Statement, and (c) at the Effective Time after giving effect to any supplements or updates to the Proxy Statement, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, no representation or warranty is made by Parent with respect to statements made or incorporated by reference in the Proxy Statement based on information that was supplied by the Company or its Representatives expressly for inclusion or incorporation by reference in the Proxy Statement.

 

Section 4.14 Taxes. Parent and Merger Sub (a) have prepared in good faith and duly and timely filed (taking into account any extension of time within which to file) all income and all other material Tax Returns required to be filed by any of them and all such filed Tax Returns are complete and accurate in all material respects and accurately reflect all liability for Taxes of Parent and Merger Sub for the periods covered thereby; (b) have paid all income and all other material Taxes that are required to be paid, except with respect to current Taxes not yet due and payable or otherwise being contested in good faith; and (c) have not waived any statute of limitations with respect to material Taxes or agreed to any extension of time with respect to a material Tax assessment or deficiency. Any such Taxes or Tax liabilities of Parent and Merger Sub that relate to a Pre-Closing Tax Period that are not yet due and payable (i) for periods covered by the financial statements included in the Parent Report have been properly accrued and adequately disclosed on such financial statements in accordance with GAAP, and (ii) for periods not covered by such financial statements have been properly accrued on the books and records of Parent and Merger Sub in accordance with GAAP. All material Taxes that Parent and Merger Sub are (or were) required by Law to withhold or collect in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, member or other Person have been duly withheld or collected, and have been timely paid over to the proper authorities to the extent due and payable. As of the Execution Date, there are no pending or, to the Knowledge of Parent or Merger Sub, threatened in writing, audits, examinations, investigations or other proceedings in respect of material Taxes or Tax matters of Parent or Merger Sub. To the Knowledge of Parent or Merger Sub, there are no unresolved questions or claims concerning the Parent’s or Merger Sub’s Tax liability that would, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect. Neither Parent nor Merger Sub is a party to or bound by any Tax Sharing Agreement. Parent and Merger Sub (A) have not been a member of an affiliated group filing a consolidated federal income Tax Return for which the statute of limitations is open (other than a group the common parent of which was Parent); and (B) do not have any liability for the Taxes of any person under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise. Parent and Merger Sub have not been, within the last two years or otherwise as part of a “plan (or series of related transactions)” within the meaning of Section 355(e) of the Code of which the Merger is also a part, a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock intending to qualify for tax-free treatment under Section 355 of the Code. Parent and Merger Sub have not participated in a “reportable transaction” within the meaning of Treasury Regulation Sections 1.6011-4(b)(1). At no time during the past five years has Parent or Merger Sub been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code. Neither Parent nor Merger Sub is aware of any fact or circumstance that would reasonably be expected to prevent the Merger from qualifying for the Intended Tax Treatment.

 

41

 

 

Section 4.15 Material Contracts. Except for those Contracts filed (or incorporated by reference) as exhibits to the Parent Reports and except for the documents to be executed by Parent in connection with the PIPE Investment and the other Transactions, neither Parent nor any of its Subsidiaries is party to any Contract that would be required to be filed (or incorporated by reference) as an exhibit to Parent’s Annual Report on Form 10-K pursuant to Item 601(b)(10) of Regulation S-K.

 

Section 4.16 Benefit Plans. Neither Parent nor any of its Subsidiaries maintains, sponsors or contributes to, or has any actual or contingent obligation or liability under, any Plan (including, without limitation, any multiemployer plan (within the meaning of Section 3(37) of ERISA) or any pension plan subject to Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code), nor does Parent or any of its Subsidiaries have any obligation or commitment to create or adopt any Plan, except as contemplated pursuant to Section 5.14 of this Agreement. For purposes of this section only, “Plan” shall have the same meaning as “Benefit Plan”, except that references to the “Company” shall be replaced with “Parent”.

 

Section 4.17 Compliance with Laws. Parent has, at all times since its incorporation, been and is in compliance in all material respects with all Laws and Orders applicable to it or to its businesses or operations. Parent has not received any written notice or, to the Knowledge of Parent, oral notice to the effect that a Governmental Entity has claimed or alleged that Parent was not in compliance in all material respects with all Laws and Orders applicable to it or to its business or properties.

 

Section 4.18 Investment Company Act. Parent is not an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company”, in each case within the meaning of the Investment Company Act of 1940, as amended.

 

Section 4.19 Investigation and Reliance. Unless any such information is expressly and specifically included in a representation or warranty contained in Article III of this Agreement, neither the Company nor any of its stockholders, Affiliates or Representatives shall have any liability to Parent, Merger Sub or any of their respective stockholders, Affiliates or Representatives resulting from the use of any projections, forecasts or estimates made available to Parent or its Representatives, including projections, forecasts or estimates of future revenues, future results of operations (or any component thereof), future cash flows or future financial condition (or any component thereof) of the Company (the “Projections”), whether or not included in any management presentation, in any materials provided in connection with the PIPE Investment, or in any other information made available to Parent or its Representatives. Notwithstanding anything in this Section 4.19, nothing in this Agreement (including this Section 4.19) shall limit (i) the obligation of the Company to ensure the accuracy of all information that is not a Projection and which is provided by or on behalf of the Company for inclusion in the Proxy Statement, (ii) the liability of the Company and its Subsidiaries for the inaccuracy of any Projection provided by or on behalf of the Company for inclusion in the Proxy Statement if such Projection was made or approved by a Person with actual knowledge that the Projection was false or misleading, or (iii) the ability and right of the Parent to rely upon the express representations and warranties set forth in Article III.

 

42

 

 

Section 4.20 No Other Representations or Warranties.

 

(a) Except for the representations and warranties expressly set forth in this Article IV (as modified by the Parent Disclosure Letter), neither Parent nor any other Person makes or has made any other express or implied representation or warranty with respect to Parent (including any implied warranties that may otherwise be applicable because of the provisions of the Uniform Commercial Code or any other applicable Law, including the warranties of merchantability and fitness for a particular purpose), or its businesses, operations, assets, liabilities or financial condition. The Company and its Affiliates have not relied on any representation or warranty other than those expressly set forth in Article IV of this Agreement (as modified by the Parent Disclosure Letter). Without limiting the generality of the foregoing, except as set forth in this Agreement, neither Parent nor any other Person on behalf of Parent has made or makes, any representation or warranty, whether express or implied, with respect to any financial projections, forecasts or estimates relating to Parent or any of its businesses, operations, assets, liabilities or financial condition. Notwithstanding the foregoing, nothing in this Section 4.20(a) shall limit the Company’s remedies with respect to claims of fraud.

 

(b) Parent acknowledges and agrees that, except for the representations and warranties expressly set forth in Article III of this Agreement (as modified by the Company Disclosure Letter), neither the Company nor any other Person makes or has made any other express or implied representation or warranty with respect to the Company, its businesses, operations, assets, liabilities or financial condition, the Transaction or any other transaction contemplated by this Agreement (including any implied warranties that may otherwise be applicable because of the provisions of the Uniform Commercial Code or any other applicable Law, including the warranties of merchantability and fitness for a particular purpose) or with respect to the accuracy or completeness of any other information provided, or made available, to Parent in connection with the Transactions and Parent has not relied on any representation or warranty other than those expressly set forth in Article III of this Agreement (as modified by the Company Disclosure Letter); provided; however, that notwithstanding anything to the contrary set forth in the foregoing provisions of this Section 4.20(b), nothing in this Section 4.20(b) shall limit Parent’s remedies with respect to claims of fraud in connection with, arising out of or otherwise related to the express written representations and warranties made by the Company in this Agreement and in any Transaction Document.

 

Article V

COVENANTS

 

Section 5.1 Interim Operations of the Company.

 

(a) Except as described in Section 5.1(a) of the Company Disclosure Letter, or as otherwise expressly required or permitted by this Agreement, Key Contract or any Transaction Document, the Company covenants and agrees that, during the period from the Execution Date until the Closing, unless Parent shall otherwise request in writing or approve in writing (such approval not to be unreasonably withheld, conditioned or delayed) and except as required by applicable Laws or required by any quarantine, “shelter-in-place”, “stay at home”, workforce reduction, social distancing, shutdown, closure, sequester or any other similar Law or Order, by any Governmental Entity in connection with or in response to COVID-19 (the “COVID-19 Measures”), the business of the Company shall be conducted in the ordinary course of business in all material respects consistent with past practice, including with respect to working capital practices and procedures, and the Company shall use its reasonable best efforts to preserve its business organization substantially intact and maintain existing relations with customers, suppliers, licensors, creditors, employees and Governmental Entities.

 

43

 

 

(b) Without limiting the generality of, and in furtherance of, the foregoing, from the Execution Date until the Closing, except (w) as otherwise expressly required or permitted by this Agreement or any Transaction Document; (x) as described in the corresponding subsection of Section 5.1(a) of the Company Disclosure Letter; (y) as required by applicable Law (including any action required to be taken prior to the Closing in order for Parent to be in compliance with the rules and regulations of the SEC and NASDAQ as of the Closing) or to comply with COVID-19 Measures; or (z) as Parent may request in writing or approve in writing (such approval not to be unreasonably withheld, conditioned or delayed), the Company will not:

 

(i) adopt any change in its or their Organizational Documents;

 

(ii) merge or consolidate with any other Person, except for any such transactions among wholly owned Subsidiaries of the Company, or restructure, reorganize, dissolve or completely or partially liquidate or otherwise enter into any agreements or arrangements imposing material changes or restrictions on its assets, operations or businesses;

 

(iii) acquire assets outside of the ordinary course of business from any other Person with a value or purchase price in the aggregate in excess of $250,000 or acquire any business or Person, by merger or consolidation, purchase of substantially all assets or equity interests or by any other manner, in each case, in any transaction or series of related transactions;

 

(iv) transfer, sell, lease, license, sublicense, covenant not to assert, mortgage, pledge, surrender, encumber, divest, cancel, abandon, allow to lapse or expire or otherwise dispose of any of its material tangible or intangible assets, properties, intellectual property, licenses, operations, rights, product lines, businesses or interests therein, except for (A) sales or other dispositions of tangible assets in the ordinary course of business consistent with past practice and (B) sales, leases, licenses or other dispositions of tangible assets with a fair market value not in excess of $250,000 in the aggregate; and (C) non-exclusive licenses of Company IP granted to customers in the ordinary course of business consistent with past practice;

 

(v) issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer or encumbrance of, any shares of capital stock of the Company, or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock;

 

(vi) reclassify, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock;

 

44

 

 

(vii) declare, set aside, make or pay any non-cash dividend or other non-cash distribution with respect to any of its capital stock or enter into any agreement with respect to the voting of its capital stock;

 

(viii) create or incur any Lien material to the Company other than Permitted Liens incurred in the ordinary course of business consistent with past practice;

 

(ix) make any loans, advances, guarantees or capital contributions to or investments in any Person (other than the Company or any direct or indirect wholly owned Subsidiary of the Company);

 

(x) incur any indebtedness for borrowed money or guarantee any such indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to acquire any debt security of the Company, except for indebtedness for borrowed money incurred in the ordinary course of business consistent with past practice, not to exceed $250,000 in the aggregate;

 

(xi) fail to make or authorize any budgeted capital expenditures or make or authorize any unbudgeted capital expenditures in excess of $250,000 in the aggregate;

 

(xii) enter into any Contract that, if entered into prior to the Execution Date, would have constituted a Material Contract described in Section 3.12(a)(i), (v), (vii)-(xv), (xx), (xxiv) and (xxv) (the “Restricted Contracts”);

 

(xiii) materially amend or modify or terminate any Material Contract that is a Restricted Contract;

 

(xiv) other than in the ordinary course of business consistent with past practice, amend, modify, cancel, or waive any debts or claims held by it or waive any rights;

 

(xv) make any changes with respect to its accounting policies or procedures, except as required by changes in Law or GAAP;

 

(xvi) settle any Action against the Company, except for settlements involving solely the payment of monetary damages of less than $125,000, individually, or $250,000, in the aggregate, in each case, in excess of the proceeds actually received from any insurance policies, subrogation or other third-party sources in connection with such payment;

 

(xvii) make, change or revoke any material Tax election, prepare any material Tax Return in a manner which is inconsistent with the past practices of the Company or any of its Subsidiaries with respect to the treatment of items on such Tax Returns, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to the Company or any of its Subsidiaries, file any amended material Tax Return or a claim for refund of material Taxes with respect to the income, assets or operations of the Company or any of its Subsidiaries or settle or compromise any material income Tax liability;

 

45

 

 

(xviii) except as required pursuant to the terms of any Benefit Plan in effect as of the date of this Agreement or as required pursuant to any collective bargaining agreement that the Company is required to assume or to which the Company is required to become a party, in each case, in accordance with a Key Contract, (A) increase in any manner the compensation or consulting fees, bonus, material fringe benefits, severance or termination pay of any Employee except, with respect to Employees who are not officers, increases in annual salary or wage rate in the ordinary course of business that do not exceed 5% individually or 3% in the aggregate, (B) become a party to, establish, adopt, amend, commence participation in or terminate any Benefit Plan (or any arrangement that would have been a Benefit Plan had it been entered into prior to this Agreement) that provides cash incentive compensation, equity-based compensation, nonqualified deferred compensation, defined benefit pension plan benefits, retiree welfare benefits, severance pay, or material fringe benefits, (C) grant any new incentive-based awards, or amend or modify the terms of any outstanding incentive-based awards, under any Benefit Plan, (D) take any action to accelerate the vesting or lapsing of restrictions or payment, or fund or in any other way secure the payment, of compensation or benefits under any Benefit Plan, (E) hire any employee or engage any independent contractor (who is a natural person) if such individual would receive an annual salary or wage rate or consulting fees in excess of $150,000 per annum, or (F) terminate the employment or engagement, other than for cause, of any Employee with an annual salary or wage rate in excess of $150,000; provided, that with respect to any action set forth in this Section 5.1(b)(xviii) that is required pursuant to any collective bargaining agreement that the Company is required to assume or to which the Company is required to become a party, in each case, in accordance with a Key Contract, the Company shall (1) provide advance written notice of such requirement to Parent as soon as reasonably practicable, (2) use its reasonable best efforts to update Parent of the status of negotiations or other material discussions in connection with such requirement, and (3) consider Parent’s input and comments in good faith;

 

(xix) become a party to, establish, adopt, amend, commence participation in or enter into any collective bargaining agreement or other labor union Contract;

 

(xx) fail to pay or satisfy when due any material account payable or other material liability, other than in the ordinary course of business consistent with past practice or any such liability that is being contested in good faith by the Company;

 

(xxi) fail to keep current and in full force and effect, or to comply in all material respects with the requirements of, any material permit, approval, authorization, consent, license, registration or certificate issued to the Company by any Governmental Entity;

 

(xxii) take any steps for liquidation, winding-up, receivership, freeze of proceedings, arrangements with creditors (other than extensions of trade payables agreed to in the ordinary course of business) or any similar action or proceeding by or in respect of the Company;

 

(xxiii) file any prospectus supplement or registration statement or consummate any offering of securities that requires registration under the Securities Act or that includes any actual or contingent commitment to register such securities under the Securities Act in the future;

 

(xxiv) take any actions or omit to take any actions that would, individually or in the aggregate, reasonably be expected to result in any of the conditions set forth in Article VI not being satisfied;

 

(xxv) form any Subsidiary;

 

46

 

 

(xxvi) except for those actions contemplated in, and permitted by, Section 5.29, materially amend or modify or terminate any Material Contract;

 

(xxvii) (A) subject any Company IP to Copyleft Terms; or (B) disclose any trade secrets and any other confidential information material to the Company or the conduct of the Business to any Person (other than pursuant to a written confidentiality agreement with provisions reasonably restricting the use and disclosure thereof);

 

(xxviii) take any action which would reasonably be expected to cause any of the Transactions to be a “covered transaction” as defined at 31 C.F.R. § 800.213; or

 

(xxix) agree, authorize or commit to do any of the foregoing.

 

(c) Nothing contained in this Agreement is intended to give Parent or Merger Sub, directly or indirectly, the right to control or direct any of the Company’s operations prior to the Closing Date.

 

Section 5.2 Conduct of Parent.

 

(a) Except as described in Section 5.2(a) of the Parent Disclosure Letter, or as otherwise expressly required or permitted by this Agreement or any Transaction Document (including as contemplated by the PIPE Investment), Parent covenants and agrees as to itself and Merger Sub that, during the period from the Execution Date until the Closing, unless the Company shall otherwise approve in writing (such approval not to be unreasonably withheld or delayed) and except as required by applicable Laws or to comply with COVID-19 Measures: (i) the business of it and Merger Sub shall be conducted in the ordinary course in all material respects consistent with past practice; and (ii) Parent and Merger Sub shall have no other activity.

 

(b) Without limiting the generality of, and in furtherance of, the foregoing, from the Execution Date until the Closing: except (x) as otherwise expressly required by this Agreement or as described in Section 5.2(a) of the Parent Disclosure Letter, (y) as the Company may approve in writing (such approval not to be unreasonably withheld or delayed) or (z) as required by applicable Law, or to comply with COVID-19 Measures, Parent will not and will not permit Merger Sub to:

 

(i) adopt any change in their Organizational Documents, amend the Parent Trust Agreement, make any other agreement related to the Parent Trust Account, or make any distribution of amounts held in the Parent Trust Account, other than in connection with the Parent Stock Redemption;

 

(ii) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock or repurchase or redeem any Parent Common Stock, other than in connection with the Parent Stock Redemption, the PIPE Investment or the conversion of Convertible Notes;

 

(iii) issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer or encumbrance of, any shares of capital stock of Parent or Merger Sub (other than the issuance of shares by a wholly owned Subsidiary of Parent to Parent or another wholly owned Subsidiary of Parent), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, other than in connection with the Parent Stock Redemption or the PIPE Investment or the conversion of Convertible Notes;

 

47

 

 

(iv) reclassify, recapitalize, exchange, split, combine, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock, other than in connection with the Parent Stock Redemption or the PIPE Investment or the conversion of Convertible Notes;

 

(v) enter into, or permit any of the assets owned or used by it to become bound by, any Contract, other than as expressly required in connection with the Transactions;

 

(vi) make any loans, advances, guarantees or capital contributions to or investments in any Person (other than the Company or any direct or indirect wholly owned Subsidiary of the Company);

 

(vii) make any changes with respect to its accounting policies or procedures, except as required by changes in Law or GAAP;

 

(viii) make, change or revoke any material Tax election, prepare any material Tax Return in a manner which is inconsistent with the past practices of Parent or Merger Sub with respect to the treatment of items on such Tax Returns, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to Parent or Merger Sub, file any amended material Tax Return or a claim for refund of material Taxes with respect to the income, assets or operations of Parent or Merger Sub or settle or compromise any material income Tax liability;

 

(ix) take any steps for liquidation, winding-up, receivership, freeze of proceedings, arrangements with creditors or any similar action or proceeding by or in respect of Parent of Merger Sub;

 

(x) take any actions or omit to take any actions that would, individually or in the aggregate, reasonably be expected to result in any of the conditions set forth in Article VI not being satisfied;

 

(xi) incur any indebtedness for borrowed money or guarantee any such indebtedness of another Person or Persons, as applicable, enter into any “keep well” or other agreements to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing, in each case, except in the ordinary course of business consistent with past practice or except a loan from Sponsor or an affiliate thereof or certain of Parent’s officers and directors to finance Parent’s transaction costs in connection with the transactions contemplated hereby; or

 

(xii) agree, authorize or commit to do any of the foregoing.

 

48

 

 

Section 5.3 Parent Trust Account Matters.

 

(a) Trust Account. Prior to the Closing, none of the funds held in the Parent Trust Account may be used or released except (i) for the withdrawal of interest to pay any Tax obligation owed by Parent as a result of assets owned by Parent, including franchise Taxes prior to the Closing; and (ii) to effectuate the Parent Share Redemption. Following the Closing, and upon notice to the trustee of the Parent Trust Account (the “Parent Trustee”) and the satisfaction of the requirements for release set forth in the Parent Trust Agreement, the Parent Trustee shall be obligated to release as promptly as practicable any and all amounts still due to holders of shares of Parent Common Stock who have exercised their redemption rights with respect to shares of Parent Common Stock, and, thereafter, release the remaining funds in the Parent Trust Account to Parent to be reflected on Parent’s consolidated balance sheet and the Parent Trust Account shall thereafter be terminated.

 

(b) Trust Account Waiver. The Company acknowledges and agrees that (i) Parent is a blank check company with the power and privileges to effect a merger, asset acquisition, reorganization or similar business combination involving the Company and one or more businesses or assets; and (ii) Parent’s sole assets consist of the cash proceeds of Parent’s initial public offering and private placements of its securities, and that substantially all of these proceeds have been deposited in the Parent Trust Account for the benefit of Parent’s public stockholders until the Closing. For and in consideration of Parent entering into this Agreement, the receipt and sufficiency of which are hereby acknowledged, Company on behalf of itself and any of its managers, directors, officers, affiliates, members, stockholders and trustees, hereby irrevocably waives any right, title, interest or claim of any kind they have or may have in the future in or to any monies in the Parent Trust Account, and agrees not to seek recourse against the Parent Trust Account or any funds distributed therefrom in accordance with the terms of this Agreement as a result of, or arising out of, any claims against Parent arising under this Agreement (it being agreed that such waiver shall automatically terminate without further action by any party hereto at the Closing and shall not apply following the Closing to the Parent Trust Account funds that are released from the Parent Trust Account to Parent pursuant to Section 5.3(a)).

 

(c) Parent Share Redemption. At the Closing, Parent shall use its reasonable best efforts to cause the Parent Trustee to pay as and when due all amounts payable to stockholders of Parent holding shares of the Parent Common Stock sold in Parent’s initial public offering who shall have validly elected to redeem their shares of Parent Common Stock (and who have not rescinded such election) pursuant to Parent’s Organizational Documents and shall use its reasonable best efforts to cause the Parent Trustee to pay, as and when due, the Deferred Discount (as defined in the Parent Trust Agreement) pursuant to the terms of the Parent Trust Agreement.

 

Section 5.4 [RESERVED]

 

Section 5.5 Proxy Filing; Information Supplied.

 

(a) As promptly as reasonably practicable after the date of this Agreement, Parent shall prepare and file with the SEC the Proxy Statement. Each of Parent and the Company shall use its commercially reasonable efforts to (i) cause the Proxy Statement to comply in all material respects with the applicable rules and regulations promulgated by the SEC; and (ii) promptly notify the other of, cooperate with each other with respect to and respond promptly to any comments of the SEC or its staff.

 

49

 

 

(b) After all the comments received from the SEC have been cleared by the SEC staff and all information required to be contained in the Proxy Statement has been included therein by Parent and the Company, Parent shall file the Proxy Statement in definitive form with the SEC in accordance with the rules and regulations under the Exchange Act and mail the Proxy Statement to holders of record of Parent Common Stock, as of the record date to be established by the board of directors of Parent. Each of the Company and Parent shall furnish all information concerning such Party and its Affiliates to the other Party, and provide such other assistance, as may be reasonably requested in connection with the preparation, filing and distribution of the Proxy Statement, and the Proxy Statement shall include all information reasonably requested by such other Party to be included therein. The Parent shall promptly notify the Company of the receipt of all comments (written or oral) from the SEC and of any request (written or oral) by the SEC for any amendment or supplement to the Proxy Statement or for additional information and shall promptly provide to the Company copies of all correspondence between it or any of its Representatives and the SEC with respect to the Proxy Statement. Prior to responding to any comments or requests from the SEC, Parent will make available to the Company drafts of any such response and provide the Company with a reasonable opportunity to comment on such drafts (including the proposed final version of such document or response); provided, that Company shall be required to provide any comments on such drafts reasonably promptly (but in no event later than the end of the fifth (5th) Business Day following the Company’s receipt thereof).

 

(c) Each of Parent and the Company will provide its respective legal counsel with a reasonable opportunity to review and comment on drafts of the Proxy Statement and other documents related to the Parent Special Meeting or the Parent Stockholder Proposals, prior to filing such documents with the applicable Governmental Entity and mailing such documents to the stockholders of Parent. Each Party will include in the Proxy Statement and such other documents related to Parent Special Meeting all comments reasonably and promptly proposed by the other Party or its legal counsel and each agrees that all information relating to Parent and Merger Sub included in the Proxy Statement shall be in form and content satisfactory to Parent, acting reasonably, and all information relating to the Company included in the Proxy Statement shall be in form and content satisfactory to the Company, acting reasonably.

 

(d) Each of Parent and the Company shall ensure that none of the information supplied by or on its behalf for inclusion or incorporation by reference in the Proxy Statement will, as of the date the Proxy Statement (or any amendment or supplement thereto) is first mailed to the Parent Stockholders, at the time of the Parent Special Meeting, or at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading. If at any time prior to the Parent Special Meeting there shall be discovered any information that should be set forth in an amendment or supplement to the Proxy Statement so that the Proxy Statement would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, Parent shall promptly transmit to its stockholders an amendment or supplement to the Proxy Statement containing such information. If, at any time prior to the Effective Time, the Company discovers any information, event or circumstance relating to the Company, its Subsidiaries or any of their respective Affiliates, officers, directors or employees that should be set forth in an amendment or a supplement to the Proxy Statement so that the Proxy Statement would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, then the Company shall promptly inform Parent of such information, event or circumstance and shall promptly provide all information required for Parent to transmit to the holders of its capital stock an amendment or supplement to the Proxy Statement containing such information.

 

50

 

 

(e) The Company shall provide Parent, as promptly as reasonably practicable, with all information (including applicable financial statements prepared in accordance with Regulation S-X of the SEC to the extent required by applicable SEC rules and regulations) concerning the Company, its Subsidiaries and the ECV Operations as required by the SEC or as reasonably requested by Parent for inclusion in the Proxy Statement and any amendment or supplement to the Proxy Statement (if any). The Company shall cause the officers and employees of the Company and its Subsidiaries to be reasonably available to Parent and its counsel in connection with the drafting of the Proxy Statement and responding in a timely manner to comments on the Proxy Statement from the SEC.

 

Section 5.6 Parent Meeting. Parent will use its reasonable best efforts to take, in accordance with applicable Law, NASDAQ rules and its Organizational Documents, all action necessary to convene the Parent Special Meeting as promptly as reasonably practicable after the SEC advises it has no further comments on the Proxy Statement (the “SEC Clearance Date”) (and will commence the mailing of the Proxy Statement to the Parent Stockholders as promptly as practicable after the SEC Clearance Date and schedule such meeting for a date that is no more than thirty-five (35) days after the Proxy Statement is mailed), to (i) consider and vote upon the approval of the Parent Stockholder Proposals and to cause such vote to be taken; and (ii) provide Parent Stockholders with the opportunity to elect to effect a Parent Share Redemption. Parent may only elect to postpone or adjourn such meeting on one or more occasions if (x) a postponement or adjournment is required by Law, (y) as of the time for which the Parent Special Meeting is originally scheduled (as set forth in the Proxy Statement) there are insufficient shares of Parent Common Stock represented (either in person or by proxy) and voting to approve the Parent Stockholder Proposals or to constitute a quorum necessary to conduct the business of the Parent Special Meeting or (z) Parent determines the payments for the Parent Share Redemption could reasonably be expected to cause the conditions in Section 6.1(d) to not be satisfied at the Closing; provided, that in the event of a postponement or adjournment pursuant to clauses (x) or (y) above, the Parent Special Meeting shall be reconvened as promptly as practicable following such time as the matters described in the applicable clause have been resolved. Parent shall use its reasonable best efforts to solicit from its stockholders proxies as promptly as possible in favor of the Parent Stockholder Proposals and shall include in the Proxy Statement the Parent Board Recommendation; provided, that, notwithstanding the foregoing, subject to compliance by Parent, its Affiliates and their Representatives with Section 5.15(b), at any time prior to obtaining approval of the Parent Stockholder Proposals, the Parent Board may fail to make, amend, change, withdraw, modify, withhold or qualify the Parent Board Recommendation (any such action, a “Change in Recommendation”) if the Parent Board shall have determined in good faith, after consultation with its outside legal counsel and financial advisors, and without any violation by Parent, its Affiliates or any of their respective Representatives of Section 5.15(b), that a failure to make a Change in Recommendation would violate its fiduciary duties under applicable Law and following such Change in Recommendation the obligation to solicit proxies in favor of the Parent Stockholder Proposals shall terminate; provided, however, that the Parent Board may not make such Change in Recommendation unless (1) the Parent Board has provided prior written notice to the Company (a “Parent Recommendation Change Notice”) that it is prepared to effect a Change in Recommendation at least ten (10) Business Days prior to taking such action, which notice shall specify the basis for such Change in Recommendation, (2) during the five (5) Business Day period after delivery of the Parent Recommendation Change Notice, the Company may propose to Parent any revisions to this Agreement that the Company proposes to make and Parent will engage in good faith discussions with the Company regarding such proposal(s), (3) at the end of such five (5) Business Day period and taking into account any changes to the terms of this Agreement committed to in writing by the Company, the Parent Board determines in good faith (after consultation with its outside legal counsel and financial advisors) that the failure to make such a Change in Recommendation would constitute a breach of its fiduciary duties to Parent Stockholders under applicable Law. For the avoidance of doubt, a Change in Recommendation will not affect Parent’s obligations pursuant to this Section 5.6 (other than as set forth in the immediately preceding sentence) or elsewhere in this Agreement.

 

51

 

 

Section 5.7 Approval of Sole Stockholder of Merger Sub. Immediately following approval of the Parent Stockholder Proposals, Parent shall execute and deliver, in accordance with applicable Law and its Organizational Documents, in its capacity as sole stockholder of Merger Sub, a written consent adopting the plan of merger contained in this Agreement.

 

Section 5.8 Required Stockholder Approval. In accordance with applicable Laws, and the Company’s Organizational Documents, promptly following the execution of this Agreement, the Company shall seek and shall use its reasonable best efforts to obtain (a) as promptly as practicable, and in any event, within twenty-four (24) hours following the execution of this Agreement (the “Stockholder Support Delivery Period”), the Initial Stockholder Consent; and (b) as promptly as practicable, Support Agreements from Stockholders holding 100% of the Company Common Stock issued and outstanding as of the Execution Date, in each case, in lieu of a meeting pursuant to Section 228 of the DGCL for the purposes of (i) adopting this Agreement and approving the Merger; (ii) acknowledging that the adoption and approvals are irrevocable and result in the waiver of any right of such stockholders to demand appraisal in connection with the Merger pursuant to Delaware Law; and (iii) such other matters set forth therein. As promptly as practicable and, in any event, prior to the expiration of the Stockholder Support Delivery Period, if the Initial Stockholder Consent is obtained, the Company shall deliver to Parent a copy thereof (including by facsimile or other electronic image scan transmission), certified as correct and complete by an executive officer of the Company.

 

Section 5.9 Information Statement. If applicable, promptly, and in any case at the same time as any Support Agreement is solicited from any Stockholder (other than the Initial Stockholder Consents), the Company shall prepare (with the cooperation of Parent) and mail to each Stockholder an information statement regarding the transactions contemplated by this Agreement, which shall be in a form reasonably acceptable to Parent (as it may be amended or supplemented from time to time, the “Information Statement”). If applicable, the Information Statement shall constitute an information statement for the Company’s solicitation of consent of the Stockholders with respect to the adoption of this Agreement and the approval of the Merger and shall include (a) a statement to the effect that the Company’s board of directors had unanimously recommended that the Stockholders vote in favor of the adoption of this Agreement and the approval of the Merger; and (b) such other information as Parent and the Company reasonably agree is required or advisable under applicable Law to be included therein. The Company shall, with the cooperation of Parent (to the extent reasonably required), prepare any other necessary documentation required or advisable to be provided to Stockholders pursuant to the DGCL. None of the information supplied or to be supplied by Parent or the Company for inclusion in the Information Statement or any amendment or supplement thereto will contain, as of the date of the delivery of such document, any untrue statement of a material fact, or will omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.

 

52

 

 

Section 5.10 Regulatory Filings/Approvals.

 

(a) Exchanging Information. The Company and Parent shall each, upon request by the other, furnish the other with all information concerning itself, its Subsidiaries, directors, officers and stockholders and such other matters as may be reasonably necessary or advisable in connection with any statement, filing, notice or application made by or on behalf of Parent, the Company or any of their respective Subsidiaries to any Governmental Entity in connection with the Transactions.

 

(b) Initial Submissions. The Company and Parent shall prepare and file as promptly as reasonably practicable all documentation to effect all necessary notices, reports and other filings and to obtain as promptly as practicable all consents, clearances, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any Governmental Entity in order to consummate the Transactions. Without limiting the foregoing, each of the Company and Parent shall make its respective filing pursuant to the HSR Act with respect to the Transactions as promptly as reasonably practicable after the Execution Date. The Company and Parent shall submit a request to obtain early termination of the waiting period with respect to the Transactions under the HSR Act.

 

(c) Subsequent Submissions. The Company and Parent shall promptly provide all documents requested by any Governmental Entity to the extent reasonably necessary or advisable to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from such Governmental Entity in order to consummate the Transactions.

 

(d) Conduct of Interactions with Government Entities. Subject to applicable Laws relating to the exchange of information, Parent shall have the right to direct all matters with any Governmental Entity consistent with its obligations under this Section 5.10; provided, that Parent and the Company shall have the right to review in advance and, to the extent practicable, each will consult with the other on and consider in good faith the views of the other in connection with, all the information relating to Parent or the Company, as the case may be, and any of their respective Subsidiaries, that appears in any filing made with, or written materials submitted to, any Governmental Entity in connection with the Transactions. In exercising the foregoing rights, the Company and Parent shall act reasonably and as promptly as practicable. With regard to any sharing of information contemplated under this Section 5.10(d), (i) any disclosure of information shall be been done in a manner consistent with applicable Law; (ii) information may be withheld as necessary to address reasonable attorney-client privilege concerns or comply with contractual obligations; (iii) any Party, as it deems advisable or necessary to address reasonable confidentiality concerns, may redact any confidential information or designate such information as for “outside counsel only” and (iv) materials provided to a Party or its counsel may be redacted to remove references concerning the valuation for the Transactions. Neither the Company nor Parent shall permit any of its officers or any other representatives or agents to participate in any pre-scheduled meeting with any Governmental Entity in respect of any filing, investigation or other inquiry relating to the Transactions unless it consults with the other Party in advance and, to the extent permitted by such Governmental Entity, gives the other Party the opportunity to attend and participate thereat.

 

53

 

 

(e) In furtherance and not in limitation of the other provisions contained in this Agreement, the Company and Parent shall use (and shall cause their responsive controlled Affiliates to use) their respective reasonable best efforts to take any and all steps and actions necessary or advisable to avoid or eliminate as promptly as possible each and every impediment under any Antitrust Laws that may exist, arise or be asserted by any antitrust or competition or any other Governmental Entity or any other Person so as to enable the Parties to close the Transactions as promptly as possible, and in any event prior to the Outside Date.

 

(f) Nothing in this Agreement, including Section 5.11(a), shall require Parent or any of its Affiliates to proffer to, agree to, or sell, divest, lease, license, transfer, dispose of or otherwise encumber or hold separate, before or after the Closing, any assets of Parent, the Company or any of their respective Affiliates (or consent thereto), where such action or agreement would be reasonably likely to (i) give rise to a Parent Material Adverse Effect or (ii) have an adverse impact that is material to the business of Parent and the business of the Company, taken as a whole; provided that, any such action or agreement required of Parent or any of its Affiliates is conditioned on the consummation of the Merger.

 

(g) Parent shall pay fifty percent (50%), and the Company shall pay fifty percent (50%), of the filing fees in connection with the HSR Act (collectively, the “Merger Agreement HSR Fees”) required in connection with this Agreement, but not, for avoidance of doubt any regulatory filing fees payable under or in connection with any Key Contract which fees shall be borne solely by the Company; provided, that, at the Closing, Parent shall reimburse the Company for such fifty percent (50%) of the Merger Agreement HSR Fees paid by the Company.

 

Section 5.11 Cooperation and Efforts to Consummate Transactions; Status.

 

(a) Cooperation and Efforts. Upon the terms and subject to the conditions set forth in this Agreement, the Company and Parent shall cooperate with each other and use (and shall cause their responsive controlled Affiliates to use) their respective reasonable best efforts to take or cause to be taken all actions reasonably necessary or advisable on their part under this Agreement to consummate the Transactions as promptly as reasonably practicable and not to take any action after the Execution Date that would reasonably be expected to prevent, materially delay, or materially impair the consummation of the Transactions.

 

(b) Status. Subject to applicable Law and as otherwise required by any Governmental Entity, the Company and Parent each shall keep the other apprised of the status of matters relating to the consummation of the Transactions. The Company shall give prompt notice to Parent of any change, circumstance, condition, development, effect, event, occurrence or state of facts that has had or would reasonably be expected to have a Material Adverse Effect, and the Company and the Parent shall each give prompt notice to the other of any failure of any condition to the other Party’s obligation to consummate the Transactions; provided, that the delivery of any notice pursuant to this Section 5.11 shall not affect or be deemed to modify any representation, warranty, covenant, right, remedy, or condition to any obligation of any Party or update the Company Disclosure Letter or Parent Disclosure Letter, as applicable.

 

54

 

 

Section 5.12 Third-Party Consents.

 

(a) Upon the terms and subject to the conditions set forth in this Agreement, between the Execution Date and the Closing Date, the Company shall, upon the written request of Parent, use commercially reasonable efforts to obtain any consents that are listed on Section 3.4(b) of the Company Disclosure Letter. In connection therewith, neither the Company nor any of its Affiliates shall (i) make any payment of a consent fee, “profit sharing” payment or other consideration (including increased or accelerated payments) or concede anything of monetary or economic value; (ii) amend, supplement or otherwise modify any such Contract; or (iii) agree or commit to do any of the foregoing, in each case, for the purposes of giving, obtaining and/or effecting any third-party consents without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed). The Parties shall each, upon request, furnish the other Party with all information concerning itself and its Representatives and such other matters as may be reasonably necessary, proper or advisable in connection with any statement, filing, notice or application made by or on behalf of the Parties to any third party in connection with obtaining any third-party consents (including, in the case of Parent, such evidence as to financial capability, resources, and creditworthiness as may be reasonably requested by any third party whose consent or approval is sought hereunder).

 

(b) Notwithstanding anything to the contrary contained herein, in no event shall Parent, the Company or any of their respective Affiliates be required to make any payments, incur any liability, commence any litigation, amend, supplement or otherwise modify any Contract, or make any concessions or agree or commit to do any of the foregoing to obtain any consents of third parties contemplated by this Section 5.12, and the failure to receive any such consents shall not be taken into account with respect to whether any conditions to the Closing set forth in Article VI shall have been satisfied (but the accuracy of this Section 5.12(b) will be so taken into account) and no representation, warranty, covenant or agreement of the Company set forth in this Agreement shall be breached or deemed breached.

 

Section 5.13 Access and Reports. Subject to applicable Law and except as required to comply with any COVID-19 Measures, upon reasonable advance notice, the Company shall afford Parent’s officers and other authorized representatives reasonable access, during normal business hours throughout the period prior to the Closing, to its employees, properties, books, contracts and records and, during such period, the Company shall furnish promptly to Parent all information concerning its business, properties and personnel as Parent may reasonably request; provided, that no investigation pursuant to this Section 5.13 shall affect or be deemed to modify any representation made by the Company in Article III; provided, further, that the foregoing shall not require the Company (i) to permit any inspection, or to disclose any information, that in the reasonable judgment of the Company would result in the disclosure of any trade secrets of third parties or violate any of its obligations with respect to confidentiality if the Company shall have used commercially reasonable efforts to obtain the consent of such third party to such inspection or disclosure or (ii) to disclose any privileged information of the Company; provided, further, that Parent and its Representatives shall conduct any such activities in such a manner as not to unreasonably interrupt or interfere with the business or operations of the Company; provided, further, that for so long as any applicable COVID-19 Measures are in effect, the Company shall use commercially reasonable efforts to provide access under this Section 5.13 through virtual or other remote means. All requests for information made pursuant to this Section 5.13 shall be directed to Persons designated by the Company. All such information shall be governed by the terms of the Confidentiality Agreement.

 

55

 

 

Section 5.14 LTIP. Effective as of (and contingent on) the Closing, Parent shall adopt a long-term incentive plan, in substantially the form attached hereto as Exhibit M-1 (the “Forum III LTIP”), which shall initially reserve 29,200,000 shares of Parent Common Stock. Parent shall, (a) prior to the Closing, obtain the approval of the Forum III LTIP from the Parent Stockholders, and (b) immediately upon the effectiveness of a Form S-8 Registration Statement registering shares of Parent Common Stock under the Forum III LTIP, make grants to eligible individuals in the amounts determined by the Parent Board following the Closing and based upon the recommendations of Jason Luo. The grants made in accordance with this Section 5.14 shall be made pursuant to the terms set forth in the form of award agreements attached as Exhibit M-2, Exhibit M-3 and Exhibit M-4, as applicable. It is understood and agreed that at least 15,000,000 of the share reserve contemplated by this Section 5.14 shall be issued immediately upon the effectiveness of such Form S-8 Registration Statement and pursuant to the form of award agreement attached as Exhibit M-2, and such grants shall, subject to the approval of Parent Board, include awards to the individuals and in the amounts set forth on Exhibit M-5.

 

Section 5.15 Exclusivity. From the date of this Agreement until the earlier of the Closing or the termination of this Agreement:

 

(a) The Company shall not take, and shall cause its Affiliates not to take, nor permit any of their Representatives to take, any action to solicit, encourage, initiate or engage in discussions or negotiations with, or provide any information to or enter into any agreement with any Person (other than the Parent) concerning, relating to or which is intended or is reasonably likely to give rise to or result in, any offer, inquiry, proposal or indication of interest, written or oral relating to, any issuance, sale, pledge, disposal of, grant, transfer or encumbrance of any of the Company’s equity securities or any merger, sale of substantial assets, liquidation, dissolution, reorganization, financing, refinancing, recapitalization, or similar transaction involving the Company, or any other transaction that would impede, delay, interfere with or prevent the consummation of the Transactions, other than issuances of equity securities not prohibited by Section 5.1 and assets sold in the ordinary course of business (each such transaction, an “Alternative Transaction”). The Company shall, and shall cause its Affiliates to, and shall cause any of their Representatives to, immediately cease and cause to be terminated all existing discussions, conversations, negotiations and other communications with any Person (other than Parent and its Affiliates) and request the prompt return or destruction of all confidential information previously furnished, in each case with respect to any of the foregoing. Notwithstanding the foregoing, the Company and its Representatives may respond to any unsolicited proposal regarding an Alternative Transaction by indicating that the Company is subject to an exclusivity agreement and are unable to provide any information related to the Company or entertain any proposals or offers or engage in any negotiations or discussions concerning an Alternative Transaction so long as such exclusivity agreement remains in effect. The Company shall promptly (but in any event within forty-eight hours) notify Parent if the Company or any of its Representatives receive any offer for, or any solicitation to discuss or negotiate, an Alternative Transaction which notice shall include a written summary of the material terms and conditions of any such offer, whether conveyed verbally or in writing. The Company represents and warrants to Parent that this Section 5.15(a) does not and will not conflict with or violate any agreement, understanding or arrangement, whether written or oral, to which the Company or any of its Affiliates are currently bound.

 

56

 

 

(b) Parent shall not take, and shall cause its Affiliates and their respective Representatives not to take, any action to solicit, encourage, initiate or engage in discussions or negotiations with, or provide any information to or enter into any agreement with any Person (other than the Company and/or any of its Affiliates) concerning, relating to or which is intended or is reasonably likely to give rise to or result in, any offer, inquiry, proposal or indication of interest, written or oral relating to, any Business Combination (each such transaction, a “Business Combination Transaction”). Parent shall, and shall cause its Affiliates and their respective Representatives to, immediately cease and cause to be terminated all existing discussions, conversations, negotiations and other communications with any Person (other than the Company and its Affiliates) and request the prompt return or destruction of all confidential information previously furnished, in each case with respect to any of the foregoing. Notwithstanding the foregoing, Parent, any of its Affiliates and any of its or their respective Representatives may respond to any unsolicited proposal regarding a Business Combination Transaction by indicating that Parent is subject to an exclusivity agreement and is unable to entertain any proposals or offers or engage in any negotiations or discussions concerning a Business Combination Transaction so long as such exclusivity agreement remains in effect. Parent shall promptly (but in any event within forty-eight hours) notify the Company if Parent or any of its Representatives receives any offer for, or any solicitation to discuss or negotiate, a Business Combination Transaction which notice shall include a written summary of the material terms and conditions of any such offer, whether conveyed verbally or in writing. Parent represents and warrants to the Company that this Section 5.15(b) does not and will not conflict with or violate any agreement, understanding or arrangement, whether written or oral, to which the Parent or any of its Affiliates are currently bound. Solely for purposes of this Section 5.15(b), the term “Affiliates” shall exclude any special purpose acquisition companies that are Affiliates of Parent.

 

Section 5.16 Publicity. Prior to the Closing, the initial press release regarding the Transactions shall be a joint press release and thereafter the Company and Parent each shall consult with each other, provide each other with a reasonable opportunity to review and give due consideration to reasonable comments made by each other prior to issuing any press releases or otherwise making public announcements with respect to the Transactions and prior to making any filings with any third party and/or any Governmental Entity (including any national securities exchange or interdealer quotation service) with respect thereto, except as may be required by Law or by obligations pursuant to any listing agreement with or rules of any national securities exchange or interdealer quotation service or by the request of any Governmental Entity.

 

Section 5.17 Confidentiality. The terms of the Mutual Non-Disclosure Agreement, dated as of August 24, 2020 (the “Confidentiality Agreement”), between the Company and Parent, are hereby incorporated by reference, mutatis mutandis, and, notwithstanding anything contained in the Confidentiality Agreement to the contrary, shall continue in full force and effect until the Closing, at which time such Confidentiality Agreement shall terminate.

 

57

 

 

Section 5.18 Financing. Prior to the earlier of the Closing and the termination of this Agreement in accordance with its terms, the Company shall cause the appropriate officers and employees thereof, to use reasonable best efforts to cooperate in connection with the arrangement of the PIPE Investment as may be reasonably requested by Parent, including by (i) participating in a reasonable number of meetings, presentations, due diligence sessions, drafting sessions and sessions with investors at mutually agreeable times and locations and upon reasonable advance notice; (ii) reasonably assisting with the preparation of customary materials for actual and potential participants in the PIPE Investment, offering documents, private placement memoranda, prospectuses and similar documents required in connection with the PIPE Investment (which shall not include pro forma financial information); (iii) providing financial statements and such other financial information regarding the Company, that is readily available or within its possession and as is reasonably requested in connection with the PIPE Investment; (iv) taking or appointing a representative of the Company to take all corporate actions, subject to the occurrence of the Closing, reasonably requested by the Company to permit the consummation of the PIPE Investment and the issuance of shares of Parent Common Stock immediately following the Closing; (v) reasonably assisting Parent to satisfy the conditions set forth in any document executed in connection with the PIPE Investment; and (vi) otherwise reasonably cooperating in Parent’s efforts to consummate the PIPE Investment.

 

Section 5.19 Subscription Agreements. Parent shall not permit any amendment or modification to be made to, or any waiver of any provision or remedy under, or any replacements of, the Subscription Agreements in a manner adverse to the Company. Parent shall use its commercially reasonable efforts to take, or cause to be taken, all actions and do, or cause to be done, all things reasonably necessary, proper or advisable to consummate the transactions contemplated by the Subscription Agreements on the terms and conditions described therein, including maintaining in effect the Subscription Agreements and using its commercially reasonable efforts to (a) satisfy in all material respects on a timely basis all conditions and covenants applicable to Parent in the Subscription Agreements and otherwise comply with its obligations thereunder; (b) in the event that all conditions in the Subscription Agreements (other than conditions that Parent or any of its Affiliates control the satisfaction of and other than those conditions that by their nature are to be satisfied at the Closing) have been satisfied, consummate the transactions contemplated by the Subscription Agreements at or prior to Closing; and (c) enforce its rights under the Subscription Agreements in the event that all conditions in the Subscription Agreements (other than conditions that Parent or any of its Affiliates control the satisfaction of and other than those conditions that by their nature are to be satisfied at the Closing) have been satisfied, to cause the applicable PIPE Investors to contribute to Parent the applicable portion of the PIPE Investment set forth in the Subscription Agreements at or prior to the Closing. Without limiting the generality of the foregoing, Parent shall give the Company, prompt (and, in any event within three Business Days) written notice: (i) of any amendment to any Subscription Agreement (together with a copy of such amendment); (ii) of any breach or default (or any event or circumstance that, with or without notice, lapse of time or both, could give rise to any breach or default) by any party to any Subscription Agreement known to Parent; (iii) of the receipt of any written notice or other written communication from any party to any Subscription Agreement with respect to any actual, potential or claimed expiration, lapse, withdrawal, breach, default, termination or repudiation by any party to any Subscription Agreement or any provisions of any Subscription Agreement; and (iv) if Parent does not expect to receive all or any portion of the PIPE Investment on the terms, in the manner or from the sources contemplated by the Subscription Agreements.

 

58

 

 

Section 5.20 Takeover Statutes. If any Takeover Statute is or may become applicable to the Transactions, each of Parent and the Company and the Parent Board and the Company Board, respectively, shall grant such approvals and take such actions as are necessary so that the Transactions may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise act to eliminate or minimize the effects of such statute or regulation on the Transactions.

 

Section 5.21 Further Assurances. The Parties shall execute and deliver, or shall cause to be executed and delivered, such documents and other instruments and shall take, or shall cause to be taken, such further actions as may be reasonably required to carry out the provisions of this Agreement and give effect to the Transactions.

 

Section 5.22 Tax Matters.

 

(a) The Parties hereto intend that the transactions contemplated by this Agreement shall qualify for the Intended Tax Treatment. None of the Parties or their respective Affiliates shall knowingly take or knowingly cause to be taken, or knowingly fail to take or knowingly cause to be failed to be taken, any action that would reasonably be expected to prevent qualification for such Intended Tax Treatment. The Parties hereto shall (i) file and retain such information as shall be required under Section 1.368-3 of the United States Treasury Regulations and (ii) file all Tax Returns consistently with the Intended Tax Treatment unless otherwise required by a “determination” within the meaning of Section 1313(a) of the Code (or any similar U.S. state, local or non-U.S. Law) or a change in applicable Law. Each of the Parties agrees to use reasonable best efforts to promptly notify all other Parties of any challenge to the Intended Tax Treatment by any taxing authority.

 

(b) All Transfer Taxes shall be paid by Parent. The Company shall prepare and file, or shall cause to be prepared and filed, in a timely manner, all necessary Tax Returns and other documentation with respect to all Transfer Taxes, and, if required by applicable Law, the Parties will, and will cause their respective Affiliates to, reasonably cooperate and join in the execution of any such Tax Returns and other documentation. The Parties shall reasonably cooperate to establish any available exemption from (or reduction in) any Transfer Tax. Parent shall provide the Company with evidence reasonably satisfactory to the Company that such Transfer Taxes have been paid, or if the relevant transactions are exempt from Transfer Taxes, evidence of the filing of an appropriate certificate or other evidence of exemption.

 

(c) The Stockholders, the Company, and its Subsidiaries shall terminate or cause to be terminated any and all of the Tax Sharing Agreements in effect, written or unwritten, on the Closing Date as between the Stockholders or any Predecessor or Affiliate thereof, on the one hand, and the Company and any of its Subsidiaries, on the other hand, for all Taxes imposed by any taxing authority or other Governmental Entity, regardless of the period in which such Taxes are imposed, and there shall be no continuing obligation to make any payments under any such Tax Sharing Agreements.

 

59

 

 

Section 5.23 Financial Statements and Related Information. To the extent not provided prior to the Execution Date, the Company shall provide to Parent, as promptly as reasonably practicable following the Execution Date (but, in no event, fewer than five (5) days prior to Parent’s filing of the Proxy Statement with the SEC pursuant to Section 5.5(a), provided that, the signed report of the independent registered public accountant to be provided as part of the PCAOB Audited Financial Statements (as defined below) need not be provided until the date on which Parent actually files the Proxy Statement with the SEC pursuant to Section 5.5(a)): (a) the audited combined carve-out financial statements of the ECV Operations, including the audited combined carve-out balance sheets as of December 31, 2019 and December 31, 2018, and the related audited, combined carve-out statements of (i) operations and comprehensive loss, (ii) parent’s net investment and (iii) cash flows, in each case, for the years ended December 31, 2019 and December 31, 2018, together with all related notes and schedules thereto, prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby and Regulation S-X, accompanied by a signed report of the independent registered public accountant with respect thereto, which report shall refer to the standards of the PCAOB (the “PCAOB Audited Financial Statements”); and (b) the unaudited condensed combined carve-out financial statements of ECV Operations, including condensed combined carve-out balance sheets as of September 30, 2020 and December 31, 2019 and the related condensed combined carve-out statements of (i) operations and comprehensive loss, (ii) parent’s net investment and (iii) cash flows, in each case, for the nine months ended September 30, 2020 and September 30, 2019, together with all related notes and schedules thereto, prepared in accordance with GAAP applied on a consistent basis throughout the covered periods and Regulation S-X, and reviewed by the independent auditor in accordance with PCAOB Auditing Standard 4105 (together with the PCAOB Audited Financial Statements, the “PCAOB Financial Statements”). Further, to the extent not provided prior to the Execution Date, the Company shall provide to Parent, as promptly as reasonably practicable after Parent’s written request: (y) all other audited and unaudited financial statements of the ECV Operations and the Company and its Subsidiaries required under the applicable rules and regulations and guidance of the SEC to be included in the Proxy Statement and/or the Form 8-K to be filed with respect to the Closing of the Transactions; and (z) all financial data of the ECV Operations and the Company and its Subsidiaries required by Regulation S-K, in each case, to be included in the Proxy Statement and/or the Form 8-K to be filed with respect to the Closing of the Transactions. The Company shall provide to Parent: (i) the audited combined financial statements of the ECV Operations, including the audited combined balance sheets, combined statements of operations and comprehensive loss, combined statements of owner’s net investment and combined statements of cash flows as of and for the year ended December 31, 2020, together with all related notes and schedules thereto, prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby and Regulation S-X, accompanied by a signed report of the independent auditor with respect thereto, which report shall refer to the standards of the PCAOB, within ninety (90) days following the end of such fiscal year; (ii) unaudited combined financial statements of the ECV Operations, including the unaudited combined balance sheets, combined statements of operations and comprehensive loss, combined statements of owner’s net investment and combined statements of cash flows, together with all related notes and schedules thereto, prepared in accordance with GAAP applied on a consistent basis throughout the covered periods and Regulation S-X and reviewed by the independent auditor in accordance with PCAOB Auditing Standard 4105, for each fiscal quarter of the ECV Operations after December 31, 2020 (and the comparable period in the prior year) and at least forty (40) days prior to the Closing Date, in each case within forty (40) days following the end of each such fiscal quarter; and (iii) all other audited and unaudited financial statements of ECV Operations and the Company and its Subsidiaries required under the applicable rules and regulations and guidance of the SEC to be included in the Proxy Statement and/or the Form 8-K to be filed with respect to the Closing of the Transactions within the time periods prescribed, and with the same scope (to the extent applicable), as set forth in (i) above for audited financial statements and (ii) above for unaudited financial statements. The PCAOB Financial Statements shall not materially deviate, or be materially different, from the Financial Statements.

 

60

 

 

Section 5.24 Directors’ and Officers’ Insurance Policy.

 

(a) Parent shall cause the Company, as of the Closing, to obtain and fully pay the premium for “tail” insurance policies for the extension of (i) the directors’ and officers’ liability coverage of the Company’s existing directors’ and officers’ insurance policies, and (ii) the Company’s existing fiduciary liability insurance policies, in each case with a claims reporting or discovery period of at least six (6) years from and after the Closing from one or more insurance carriers with the same or better credit rating as the Company’s insurance carrier as of the Closing with respect to directors’ and officers’ liability insurance and fiduciary liability insurance (collectively, “D&O Insurance”) with terms, conditions, retentions and limits of liability that are at least as favorable to the insureds as the Company’s existing policies with respect to matters existing or occurring at or prior to the Closing (including in connection with the Transactions). As of the Closing, the Company shall, and Parent shall cause the Company to, continue to maintain in effect for a period of at least six (6) years from and after the Closing the D&O Insurance in place as of the Closing with terms, conditions, retentions and limits of liability that are at least as favorable as provided in the Company’s existing policies as of the Closing, or if the Company obtains the “tail” insurance policies, the Company shall, and Parent shall cause the Company to purchase comparable D&O Insurance for such six (6)-year period with terms, conditions, retentions and limits of liability that are at least as favorable as provided in the Company’s existing policies as of the Closing. Notwithstanding the foregoing, in no event shall Parent be required to pay a premium in excess of three hundred percent (300%) of the current aggregate annual premium paid by the Company for such purpose; and provided, further, that if the cost of such insurance coverage exceeds such amount, Parent shall cause the Company to obtain a policy with the greatest coverage available for a cost not exceeding such amount.

 

(b) During the six (6)-year period from and after the Closing, all rights to indemnification and exculpation from liabilities for acts or omissions occurring prior to the Closing and rights to advancement of expenses relating thereto now existing in favor of any indemnitee as provided in the Organizational Documents of the Company or any indemnification agreement between such indemnitee and the Company (each, an “Indemnitee”), in each case, as in effect on the Execution Date and made available to Parent prior to the date hereof, shall not be amended, restated, amended and restated, repealed or otherwise modified in any manner that would adversely affect any right thereunder of any such Indemnitee.

 

(c) If Parent or the Surviving Corporation or any of their respective legal successors or permitted assigns (i) shall consolidate with or merge into any other Person and shall not be the continuing or surviving Person of such consolidation or merger or (ii) shall transfer all or substantially all of its properties and assets to any Person, then, and in each such case, proper provisions shall be made so that the legal successors and permitted assigns of Parent or the Surviving Corporation shall assume all of the obligations set forth in this Section 5.24. The provisions of this Section 5.24 are intended to be for the benefit of, and from and after the Closing shall be enforceable by, each Indemnitee, who is an intended third-party beneficiary of this Section 5.24. The rights of the Indemnitees under this Section 5.24 shall be in addition to any rights such Indemnitees may have under the Organizational Documents of the Company and the Surviving Corporation, as the case may be, or under any applicable Contracts or Laws and nothing in this Agreement is intended to, shall be construed or shall release or impair any rights to directors’ and officers’ insurance claims under any policy that is or has been in existence with respect to the Company for any of their respective directors, officers or other employees (it being understood and agreed that the indemnification provided for in this Section 5.24 is not prior to or in substitution of any such claims under such policies).

 

61

 

 

(d) At least fifteen (15) days prior to the Effective Time, the Company shall purchase, through a representative at Aon plc designated by Parent, a directors’ and officers’ insurance policy in form and substance reasonably acceptable to Parent.

 

Section 5.25 Supplement to Company Disclosure Letter.

 

(a) Not less than three (3) Business Days prior to the Closing Date, the Company shall have the right to update the following sections of the Company Disclosure Letter: (i) Section 1.2 (Funded Indebtedness); and (ii) Section 3.9(a) (Employee Benefits), Section 3.12(a) (Material Contracts), Section 3.13(a) and Section 3.13(b) (Real Property) and Section 3.16(a) (Intellectual Property); provided, however, that for purposes of subsection (ii), the ability to update those sections of the Company Disclosure Letter is limited only to actions underlying such disclosures taken by the Company to the extent occurring and arising after the date hereof that do not constitute a breach of the Company’s covenants contained in Section 5.1.

 

(b) From time to time prior to the Closing, the Company shall also have the right (but not the obligation) to supplement or amend the Company Disclosure Letter with respect to any matter hereafter arising and first existing or occurring after the Execution Date and not existing or arising prior to the Execution Date that would cause the failure of any closing condition set forth in Section 6.2(a) to be satisfied (each a “Schedule Supplement”) but only to the extent such matter has not arisen as a result of the Company’s breach of any of its covenants contained in this Agreement. Any disclosure in any such Schedule Supplement shall not be deemed to have cured any inaccuracy in or breach of any representation or warranty contained in this Agreement, including for purposes of termination rights contained in this Agreement or of determining whether or not the conditions set forth in Section 6.2 have been satisfied; provided, however, that if Parent has the right to, but does not elect to, terminate this Agreement within fifteen (15) Business Days of its receipt of such Schedule Supplement, then Parent shall be deemed to have irrevocably waived any right to terminate this Agreement with respect to such matter.

 

Section 5.26 Mandatory Disclosure

 

(a) From the Execution Date through the Closing Date, the Company shall disclose to Parent any event, fact or circumstance that would cause the failure of any closing condition set forth in Section 6.2(a) to be satisfied.

 

(b) From the Execution Date through the Closing Date, Parent shall disclose to the Company any event, fact or circumstance that would cause the failure of any closing condition set forth in Section 6.3(a) to be satisfied.

 

62

 

 

Section 5.27 Code Section 280G. If necessary to render Section 280G or 4999 of the Code inapplicable to amounts payable in connection with the Transactions, prior to the Closing Date, the Company shall use its commercially reasonable efforts to seek approval by its stockholders, in accordance with Section 280G(b)(5)(B) of the Code, of the right of any “disqualified individual” to receive or retain any payments that would, in the absence of such stockholder approval, constitute “excess parachute payments” within the meaning of Section 280G of the Code. Prior to seeking such approvals, the Company shall seek, and use its commercially reasonable efforts to obtain, waivers from the intended recipients of such payments such that unless such payments are approved by the stockholders to the extent and in the manner prescribed under Sections 280G(b)(5)(A)(ii) and 280G(b)(5)(B) of the Code, the intended recipients shall have no right or entitlement with respect thereto. At least three (3) days prior to obtaining such waivers, the Company shall provide to Parent (a) drafts of any waivers, disclosure documents and other relevant documents relating to the waiver and vote prepared by or on behalf of the Company in connection with this Section 5.27 and (b) a schedule setting forth in reasonable detail the basis for its determination of the payments and benefits that it is proposing to have waived and disclosed to comply with this Section 5.27. The Company shall incorporate any reasonable comments made by Parent prior to obtaining the waivers and soliciting the stockholder vote. Prior to the Closing Date, the Company shall deliver to Parent evidence that a vote of the Company’s stockholders was solicited in accordance with the foregoing provisions of this Section 5.27 and that either (i) the requisite number of votes was obtained (the “280G Approval”), or (ii) that the 280G Approval was not obtained and, to the extent waived by the recipient thereof, no such excess parachute payment shall be made.

 

Section 5.28 Convertible Notes. Parent hereby agrees to execute and deliver a joinder to each Convertible Note, which joinder shall obligate Parent to issue Parent Common Stock to the holder(s) of each Convertible Note in accordance with the terms thereof as of immediately prior to the Closing, contingent upon the occurrence of the Closing. The Company shall be deemed to have satisfied the payment of all unpaid and outstanding interest (including any PIK interest) associated with such Convertible Notes upon the occurrence of the Closing.

 

Section 5.29 Key Contracts. Without limiting Section 6.2(f) or Section 6.2(i), the Company shall use its reasonable best efforts to as promptly as practicable following the Execution Date enter into the Key Contracts each in form and substance acceptable to Parent (in Parent’s sole discretion).

 

Article VI

CONDITIONS

 

Section 6.1 Conditions to Each Party’s Obligation to Consummate the Transactions. The obligation of each Party to consummate the Transactions is subject to the satisfaction or waiver in writing by Parent and the Company at or prior to the Closing of each of the following conditions:

 

(a) HSR Approval. The waiting period (and any extension thereof) applicable to the consummation of the Transactions under the HSR Act shall have expired or been earlier terminated.

 

63

 

 

(b) Orders and Litigation. No court, arbitrator, mediator or other Governmental Entity of competent jurisdiction shall have enacted, enforced, entered, issued or promulgated any Order or Law (whether temporary, preliminary or permanent) that is in effect and has the effect of (i) making the Transactions illegal or otherwise prohibiting consummation of the Transactions; or (ii) causing the Transactions to be rescinded following their consummation, and no Action brought by any Governmental Entity challenging or seeking to prohibit the consummation of the Transactions shall be pending.

 

(c) Parent Stockholder Approval. The Parent Stockholder Proposals shall have been duly approved by the holders of shares of Parent Common Stock constituting the Requisite Parent Vote in accordance with applicable Law and the Organizational Documents of Parent.

 

(d) Minimum Cash. As of the Closing, after consummation of the PIPE Investment and after distribution of the Parent Trust Account pursuant to Section 5.3(a) deducting all amounts to be paid pursuant to the Parent Share Redemption, Parent shall have unrestricted cash on hand equal to or in excess of $125,000,000 (without, for the avoidance of doubt, taking into account any Company Transaction Expenses, Parent Transaction Expenses and any indebtedness assumed under the Key Contracts).

 

Section 6.2 Conditions to Obligation of Parent. The obligation of Parent to consummate the Transactions is also subject to the satisfaction or waiver in writing by Parent at or prior to the Closing of the following conditions:

 

(a) Representations and Warranties of the Company.

 

(i) The representations and warranties made by the Company in Section 3.1 (Organization, Good Standing and Qualification), Section 3.2 (Capital Structure), Section 3.3 (Authority; Approval), and Section 3.20 (Brokers and Finders) shall be true and correct in all but de minimis respects as of the Execution Date and as of the Closing as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date).

 

(ii) The other representations and warranties of the Company set forth in Article III and any certificates delivered pursuant to this Agreement shall be true and correct (without giving effect to any materiality qualifiers, including Material Adverse Effect, contained therein) as of the Execution Date and as of the Closing Date as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), except where the failure of any such representation and warranty to be so true and correct would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(b) Performance of Obligations of the Company. The Company shall have performed and complied in all material respects with all covenants required to be performed by it under this Agreement on or prior to the Closing Date.

 

(c) Closing Certificate. Parent shall have received at the Closing a certificate signed on behalf of the Company by the President of the Company (solely in his capacity as such and not in their personal capacity, and without personal liability), certifying that the conditions set forth in Section 6.2(a), Section 6.2(b) and Section 6.2(d) have been satisfied.

 

(d) No Material Adverse Effect. Since the Execution Date, there shall not have occurred any Material Adverse Effect.

 

64

 

 

(e) Employment Matters. The employment agreements entered into between the Company and each of Jason Luo and James Taylor on the Execution Date remain in full force and effect, and have not been terminated or rescinded in any respect. Each of Jason Luo and James Taylor shall be employed by the Company and shall not have served any resignations or be subject to pending termination agreements.

 

(f) Key Contracts. Each of the Key Contracts shall have been executed by each of the parties thereto, each in form and substance acceptable to Parent (in Parent’s sole discretion). All conditions precedent to the effectiveness of each Key Contract shall have been satisfied or waived, each of the Key Contracts shall be valid and binding and in full force and effect, no breach or violation of, or default under, any covenant, representation, warranty, or other provision of any Key Contract by the Company, any of its Subsidiaries, or, to the Knowledge of the Company, any counterparty thereto, shall have occurred, no event shall have occurred that, with the lapse of time or the giving of notice or both, would constitute a default thereunder by the Company or any of its Subsidiaries or would permit or cause the termination, non-renewal or modification thereof or acceleration or creation of any right or obligation thereunder, and no counterparty thereto shall have delivered written notice of intent to terminate such Key Contract, and the transactions contemplated by each such Key Contract shall have been consummated (including the expiration or earlier termination of any waiting period (and any extension thereof) applicable to the consummation of the transactions contemplated thereby under the HSR Act).

 

(g) Real Property. The Company shall have (i) acquired a leasehold interest in, or fee simple title to, the Owned Real Property, and (ii) taken assignment of or subleased the Leased Real Property, with the consent of the prime landlord thereunder, or entered into a new lease agreement, on terms and conditions acceptable to the Parent, in Parent’s sole discretion, with respect to the Leased Real Property.

 

(h) Support Agreements. Support Agreements executed and delivered by Stockholders holding 100% of the Company Common Stock issued and outstanding as of the Execution Date shall have been obtained.

 

(i) Intellectual Property.

 

(i) The Company shall have delivered to Parent a fully-executed copy of a software license agreement, in a form reasonably acceptable to Parent, pursuant to which the Company is granted a license to use industry-standard software for the homologation of automobiles to the U.S. market sufficient for the operation of the Business as of the Closing.

 

(ii) The Company shall have delivered to Parent fully-executed copies of Confidential Information and Invention Assignment Agreements, in a form reasonably acceptable to Parent, for each employee of the Company as of the Closing Date.

 

(iii) The Company shall have delivered to Parent evidence, in a form reasonably acceptable to Parent, that the Company (a) has filed U.S. federal trademark applications for “Electric Last Mile Solutions” (in standard character form) and “ELMS” (in standard character form and in logo or design form), and (b) has transferred from SERES to the Company all domain name registrations (if any) that are held by SERES and that are used (or held for use) by or for the Company or that relate to the Business (including electriclastmile.com).

 

65

 

 

(iv) The Company shall have delivered to Parent, in a form reasonably acceptable to Parent, the results of a “patent freedom to operate” analysis evaluating the risks of infringement of third party Intellectual Property Rights by the Company and its planned product offerings as of the Execution Date.

 

(v) The Company shall have delivered to Parent evidence in a form reasonably acceptable to Parent that:

 

(A) (1) all Patents exclusively licensed to the Company pursuant to the SERES Exclusive Patent License Agreement (for clarity, in form and substance acceptable to Parent (in Parent’s sole discretion)) were, as of the earlier of (x) the date of first use or practice by the Company of any such Patents; and (y) the effective date of such SERES Exclusive Patent License Agreement, solely and exclusively owned by SERES and (2) no other Person owns or is licensed or authorized to use any of such licensed Patents in the field of vehicle design, vehicle manufacturing, vehicle marketing, vehicle sales, vehicle offers for sale, vehicle importation, vehicle distribution, or vehicle commercialization in the United States of America (including all territories and possessions), Canada, and Mexico (collectively, the “Territory”); and

 

(B) (1) the Intellectual Property Rights exclusively licensed to the Company pursuant to the SERES Exclusive IP License Agreement (for clarity, in form and substance acceptable to Parent (in Parent’s sole discretion)) includes all Intellectual Property Rights (other than Patents and Trademarks) that SERES or any of its Affiliates own or have rights under in the Territory as of the earlier of (x) the date of first use or practice by the Company of any such Intellectual Property Rights; and (y) the effective date of such SERES Exclusive IP License Agreement and used (or held for use) in or related to electric urban utility or commercial vehicles (including skateboards used for urban utility truck, cargo van, or open bed truck vehicles) (collectively, “Licensed Products”) or the design, manufacture, development, marketing, sale, offering for sell, or commercialization thereof and (2) no other Person owns or is licensed or is authorized to use any of such licensed Intellectual Property Rights in connection with the Licensed Products in the Territory.

 

(j) Closing Deliverables. The Company and the Stockholder Representative shall have delivered (or cause to have been delivered) each of the Closing deliverables to be delivered by it pursuant to Section 2.11.

 

Section 6.3 Conditions to Obligations of the Company. The obligation of the Company to consummate the Transactions is also subject to the satisfaction or waiver in writing by the Company at or prior to the Closing of the following conditions:

 

(a) Representations and Warranties of the Parent:

 

(i) The representations and warranties of Parent set forth in Section 4.1 (Organization, Good Standing and Qualification), Section 4.2 (Capital Structure), Section 4.3 (Authority; Approval) and Section 4.12 (Brokers and Finders) shall be true and correct in all but de minimis respects as of the Execution Date and as of the Closing as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date).

 

66

 

 

(ii) The other representations and warranties of Parent contained in Article IV and any certificates delivered pursuant to this Agreement shall be true and correct (without giving effect to any materiality qualifiers, including Material Adverse Effect, contained therein) as of the Execution Date and as of the Closing Date as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), except where the failure of any such representation and warranty to be so true and correct would not, individually or in the aggregate, reasonably be expected to prevent, materially delay or materially impair the ability of Parent to consummate the Transactions.

 

(b) Performance of Obligations of Parent. Parent shall have performed and complied in all material respects with all covenants required to be performed by it under this Agreement on or prior to the Closing Date.

 

(c) Closing Certificate. The Company shall have received at the Closing a certificate signed on behalf of Parent by a duly authorized officer of Parent (solely in their capacity as such and not in their personal capacity, and without personal liability), certifying that the conditions set forth in Section 6.3(a), Section 6.3(b), Section 6.3(d) and Section 6.3(f) have been satisfied.

 

(d) Listing. The shares of Parent Common Stock described in Section 2.6 and to be issued pursuant to Section 2.6 shall have been approved for listing on NASDAQ, subject only to official notice of issuance.

 

(e) Closing Deliverables. The Parent shall have delivered (or cause to have been delivered) each of the Closing deliverables to be delivered by it pursuant to Section 2.11 other than any payments to be made pursuant thereto, which payments shall be made at the Closing.

 

(f) Sponsor Support Agreement. Since the Execution Date, there shall not have occurred any amendment or modification to the Sponsor Support Agreement, other than as consented to in writing by the Company.

 

(g) No Parent Material Adverse Effect. Since the Execution Date, there shall not have occurred any Parent Material Adverse Effect.

 

Section 6.4 Frustration of Closing Conditions. A Party may not rely on the failure of any condition set forth in Section 6.1, Section 6.2 or Section 6.3, as the case may be, to be satisfied if such failure was due to the failure of such Party to perform any of its obligations under this Agreement.

 

67

 

 

Article VII

TERMINATION

 

Section 7.1 Termination. This Agreement may be terminated at any time prior to the Closing:

 

(a) by written agreement of Parent and the Company;

 

(b) by either Parent or the Company, by giving written notice of such termination to the other Party, if:

 

(i) the Closing shall not have occurred on or prior to the Outside Date; provided, that the right to terminate this Agreement pursuant to this Section 7.1(b)(i) shall not be available to any Party that has breached in any material respect its obligations under this Agreement in any manner that shall have proximately contributed to the failure of the Closing to have occurred on or prior to the Outside Date; or

 

(ii) any Order permanently enjoining or otherwise prohibiting the consummation of the Transactions shall become final and non-appealable; provided, that the right to terminate this Agreement pursuant to this Section 7.1(b)(ii) shall not be available to any Party that has breached in any material respect its obligations under this Agreement, including Section 5.10 (Regulatory Filings/Approvals), in any manner that proximately contributed to such Order becoming final and non-appealable; or

 

(iii) the Requisite Parent Vote shall not have been obtained at the Parent Special Meeting or at any adjournment or postponement thereof taken in accordance with this Agreement;

 

(c) by the Company if Parent shall have breached or failed to perform in any material respect any of its covenants or other agreements contained in this Agreement, or any of its representations and warranties shall have become untrue after the Execution Date, which breach or failure to perform or be true (i) would give rise to the failure of a condition set forth in Section 6.1 or Section 6.3; and (ii) is not curable or, if curable, is not cured by the earlier of (A) thirty (30) days after written notice thereof is given by the Company to Parent; and (B) the Outside Date; provided, that the Company shall not have the right to terminate this Agreement pursuant to this Section 7.1(c) if the Company is then in material breach of any of its representations, warranties, covenants or other agreements hereunder such that it would give rise to the failure of a condition set forth in Section 6.1 or Section 6.2;

 

(d) by Parent if the Initial Stockholder Consent has not been delivered to Parent prior to the end of the Stockholder Support Delivery Period (provided, that if the Initial Stockholder Consent is subsequently delivered to Parent at any time prior to termination of this Agreement, then Parent shall no longer have the right to terminate this Agreement pursuant to this Section 7.1(d));

 

(e) by Parent if the Company shall have breached or failed to perform in any material respect any of its covenants or other agreements contained in this Agreement, or any of its representations and warranties shall have become untrue after the Execution Date, which breach or failure to perform or be true (i) would give rise to the failure of a condition set forth in Section 6.1 or Section 6.2, respectively; and (ii) is not curable or, if curable, is not cured by the earlier of (A) thirty (30) days after written notice thereof is given by Parent to the Company; and (B) the Outside Date; provided, that Parent shall not have the right to terminate this Agreement pursuant to this Section 7.1(e) if Parent is then in breach of any of its representations, warranties, covenants or other agreements hereunder such that it would give rise to the failure of a condition set forth in Section 6.1 or Section 6.3;

 

68

 

 

(f) by the Company if Parent has made a Change in Recommendation in accordance with the terms and conditions set forth in Section 5.6; or

 

(g) by Parent on or after January 31, 2021, if at such time any of the Key Contracts has not been executed by each of the parties thereto in form and substance acceptable to Parent (in Parent’s sole discretion).

 

Section 7.2 Effect of Termination and Abandonment. In the event of termination of this Agreement pursuant to this Article VII, this Agreement shall become void and of no effect with no liability to any Person on the part of any Party (or of any of its representatives or Affiliates); provided, however, that (a) no such termination shall relieve any Party of any liability or damages to the other Party resulting from any willful and material breach of this Agreement; and (b) the provisions set forth in this Section 7.2, Article IX and the Confidentiality Agreement shall survive the termination of this Agreement; and provided, further, that in the event this Agreement is terminated by Parent pursuant to Sections 7.1(b), 7.1(d), 7.1(e), 7.1(f) or 7.1(g), for any reason and at the time of such termination any of the conditions set forth in Section 6.2(f) have not been satisfied, then the Company shall indemnify, defend and hold harmless Parent and its Representatives, Subsidiaries, direct and indirect parent companies, shareholders, partners, members, managers, officers, directors and Affiliates (collectively, the “Parent Indemnitees”), and save and hold each of them harmless against, any and all (i) Losses suffered, incurred or sustained by, or imposed upon, the Parent Indemnitees in connection with any third party claim as a result of, arising out of or related to, the failure of such conditions set forth in Section 6.2(f) and (ii) documented, reasonable out-of-pocket costs and expenses incurred by Parent Indemnitees in connection with the Transactions (including the reasonable and documented fees and expenses of Parent’s legal counsel, accountants and other third-party advisors and including the Merger Agreement HSR Fee, if paid) provided, in the case of this clause (ii), that at the time of such termination, all of the conditions set forth in Section 6.1 and Section 6.3 shall have been satisfied (other than those, that by their terms, are capable of being satisfied only at the Closing).

 

Article VIII

STOCKHOLDER REPRESENTATIVE

 

Section 8.1 Designation and Replacement of Stockholder Representative.

 

(a) The Parties have agreed that it is desirable to designate a representative to act on behalf of the Stockholders, as specified herein (the “Stockholder Representative”). The Stockholders have designated Jason Luo as the initial Stockholder Representative, and approval of this Agreement by the Stockholders shall constitute (i) the ratification and approval of such designation, and (ii) the irrevocable appointment of the Stockholder Representative as each Stockholder’s representative, attorney-in-fact and agent, with full power of substitution to act in the name, place and stead of each Stockholder in accordance with the terms and provisions of this Agreement and to act on behalf of each Stockholder in any amendment of or litigation or arbitration involving this Agreement, and to do or refrain from doing all such further acts and things, and to execute all such documents, as the Stockholder Representative shall deem necessary or appropriate in conjunction with any of the Transactions, including the power: (A) to take all action necessary or desirable in connection with the waiver of any condition to the obligations of the Company or each Stockholder to consummate the Transactions; (B) to negotiate, execute and deliver all ancillary agreements, statements, certificates, statements, notices, approvals, extensions, waivers, undertakings, amendments and other documents required or permitted to be given in connection with the consummation of the Transactions; and (C) to give and receive all notices and communications to be given or received under this Agreement and to receive service of process in connection with any claims under this Agreement and the Transactions. As the representative of Stockholders under this Agreement, the Stockholder Representative shall act as the agent for all Stockholders, shall have authority to bind each Stockholder in accordance with this Agreement, and Parent may rely on such appointment and authority until the receipt of notice of the appointment of a successor (as further described in Section 8.1(b) below) upon two (2) Business Days’ prior written notice to Parent. Parent may conclusively rely upon, without independent verification or investigation, all decisions made by the Stockholder Representative in connection with this Agreement in writing and signed by the Stockholder Representative.

 

69

 

 

(b) The Stockholder Representative may resign at any time, and the Stockholder Representative may be removed by the vote of Persons that collectively constituted the requisite Stockholders as of immediately prior to the Effective Time (or, in the case of a termination of this Agreement, as of such termination). If a Stockholder Representative has resigned or been removed, a new Stockholder Representative shall be appointed by a vote of Stockholders constituting the Stockholders as of immediately prior to the Effective Time, such appointment to become effective upon the written acceptance thereof by the new Stockholder Representative. The designation of any Person as the Stockholder Representative is and shall be coupled with an interest, and, except as set forth in this Article VIII, such designation is irrevocable and shall not be affected by the death, incapacity, illness, bankruptcy, dissolution or other inability to act of any of the Stockholders.

 

(c) The Stockholder Representative will not be liable to the Stockholders for any act taken or omitted by it as permitted under this Agreement and the Transactions, except if such act is taken or omitted in bad faith or by willful misconduct. The Stockholder Representative will also be fully protected against the Stockholders in relying upon any written notice, demand, certificate or document that he in good faith believes to be genuine (including facsimiles thereof).

 

(d) The Stockholder Representative is authorized to hold all or any portion of any distributions to the Stockholders pursuant to this Agreement for such period of time as the Stockholder Representative deems advisable in order to provide a source of funds for future expenses to be incurred by the Stockholder Representative. Any such amounts released by the Stockholder Representative shall be distributed to the Stockholders in accordance with the Company’s Organizational Documents.

 

Article IX

MISCELLANEOUS AND GENERAL

 

Section 9.1 Amendment; Waiver. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by both Parent and the Company, or in the case of a waiver, by the Party granting the waiver. No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Law.

 

70

 

 

Section 9.2 Expenses.

 

(a) If the Closing does not occur, (i) the Company shall be responsible for the Company Transaction Expenses and any other fees and expenses of the Company and its Affiliates incurred in connection with this Agreement and the Transactions, and (ii) subject to Section 7.2, Parent shall be responsible for the Parent Transaction Expenses and any other fees and expenses of the Parent and its Affiliates incurred in connection with this Agreement and the Transactions.

 

(b) Upon and subject to the Closing, each of the Company Transaction Expenses and the Parent Transaction Expenses shall be paid by Parent at the Closing.

 

Section 9.3 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement.

 

Section 9.4 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL; SPECIFIC PERFORMANCE.

 

(a) This Agreement, and all Actions (whether in contract, tort or statute) that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), shall be governed by, and enforced in accordance with, the Laws of the State of Delaware, including its statutes of limitations, without giving effect to applicable principles of conflicts of law to the extent that the application of the Laws of another jurisdiction (whether of the State of Delaware or any other jurisdiction would be required thereby).

 

(b) Each Party agrees that it shall bring any Action in respect of any claim based upon, arising out of or relating to this Agreement or any Transaction Document or the transactions contemplated by this Agreement or any Transaction Document exclusively in the courts of the State of Delaware and the federal courts of the United States located in the State of Delaware; and solely in connection with claims arising under or relating to this Agreement or any of the Transaction Documents (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts; (ii) waives any objection to the laying of venue in any such Action in the Chosen Courts; (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any Party hereto; and (iv) agrees that mailing of process or other papers in connection with any such Action in the manner provided in Section 9.5 or in such other manner as may be permitted by Law shall be valid and sufficient service thereof.

 

(c) EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HEREBY ACKNOWLEDGES AND CERTIFIES (I) THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SEEK TO ENFORCE THE FOREGOING WAIVER; (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (iii) IT MAKES THIS WAIVER VOLUNTARILY; AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTION DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS Section 9.4(c).

 

71

 

 

(d) Irreparable damage would occur in the event that any covenant herein was not to be performed in accordance with its terms. Accordingly, each Party shall be entitled to seek one or more injunctions to prevent any breach of covenant and to enforce specifically this Agreement in the Chosen Courts, in addition to any other remedy to which such Party may be entitled at law or in equity. In the event that any Action shall be brought in equity to enforce the provisions of this Agreement, no Party shall allege, and each Party hereby waives the defense, that there is an adequate remedy at law, and each Party agrees to waiver any requirement for the securing or posting of any bond in connection therewith.

 

Section 9.5 Notices. All notices and other communications to be given or made hereunder shall be in writing and shall be deemed to have been duly given or made on the date of delivery to the recipient thereof if received prior to 5:00 p.m. in the place of delivery and such day is a Business Day (or otherwise on the next succeeding Business Day) if (a) served by personal delivery or by an internationally recognized overnight courier to the Person or entity for whom it is intended; (b) delivered by registered or certified mail, return receipt requested; or (c) sent by email, as provided in this Section 9.5; provided, that the email is confirmed orally or in writing by the recipient thereof (excluding out-of-office replies or other automatically generated responses) or is followed up within one Business Day after email by dispatch pursuant to one of the other methods described herein:

 

If to Parent or Merger Sub:

 

Forum Merger III Corporation

1615 South Congress Avenue 

Suite 103 

Delray Beach, FL 33445

Attention: Marshall Kiev

David Boris

Email: mk@mkcapitalpartners.com

david@forummerger.com

 

With a copy, which shall not constitute notice, to:

 

White & Case LLP
1221 Avenue of the Americas

New York, NY 10020

Attention: Joel Rubinstein

Gary Silverman

Email: Joel.Rubinstein@whitecase.com

Gary.Silverman@whitecase.com

 

72

 

 

To Company:

 

Electric Last Mile, Inc.
2541 High Meadow Circle

Suite 170

Auburn Hills, MI 48362

Email: jluo@electriclastmile.com
Attn: Jason Luo, President

 

With a copy, which shall not constitute notice, to:

 

Foley & Lardner LLP
111 Huntington Avenue

Suite 2500

Boston, MA 02199

Email: pbroude@foley.com
Attn: Paul D. Broude

 

or to such other Person or addressees as may be designated in writing by the Party to receive such notice as provided above; provided; however, that copies shall be provided to outside counsel for convenience only, such copies shall not, in and of themselves, constitute notice and the failure to provide any such copy shall not alter the effectiveness of any notice or other communication otherwise duly made or given.

 

Section 9.6 Entire Agreement. This Agreement (including any exhibits or schedules hereto), the Transaction Documents and the Confidentiality Agreement constitute the entire agreement and supersede all other prior agreements, understandings, representations and warranties both written and oral, among the Parties, with respect to the subject matter hereof; provided; however, that each Party acknowledges and agrees that the Confidentiality Agreement shall automatically terminate and be of no further force or effect at and as of the Closing and this Agreement supersedes any provision to the contrary in the Confidentiality Agreement.

 

Section 9.7 No Third-Party Beneficiaries. Except as provided in Section 5.24, there shall be no third-party beneficiaries of this Agreement, any Transaction Document or any exhibit, annex or schedule hereto or thereto, and none of them shall confer on any Person other than the parties hereto and thereto any claim, cause of action, right or remedy.

 

Section 9.8 Obligations of Parent. Whenever this Agreement requires a Subsidiary of Parent to take any action, such requirement shall be deemed to include an undertaking on the part of Parent to cause such Subsidiary to take such action.

 

Section 9.9 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority of competent jurisdiction to be invalid, void or unenforceable, or the application of such provision, covenant or restriction to any Person or any circumstance, is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable; (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision; and (b) the remainder of this Agreement and the application of such provision, covenant or restriction to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application of such provision, in any other jurisdiction and the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

 

73

 

 

Section 9.10 Interpretation; Construction.

 

(a) The table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to an Annex, Exhibit, Section or Schedule, such reference shall be to an Annex, Exhibit, Section or Schedule to this Agreement unless otherwise indicated.

 

(b) If a term is defined as one part of speech (such as a noun), it shall have a corresponding meaning when used as another part of speech (such as a verb). The terms defined in the singular have a comparable meaning when used in the plural and vice versa. Unless the context of this Agreement clearly requires otherwise, words importing any gender shall include all other genders and vice versa. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “or” shall not be exclusive. Currency amounts referenced herein are in Dollars. Any capitalized term used in any Schedule or Exhibit but not otherwise defined therein shall have the meaning given to them as set forth in this Agreement. All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP. References to “written” or “in writing” include documents in electronic form or transmission by email. A reference to any Person includes such Person’s successors and permitted assigns.

 

(c) Except as otherwise specifically provided herein, all references in this Agreement to any Law include the rules and regulations promulgated thereunder, in each case as amended, re-enacted, consolidated or replaced from time to time and in the case of any such amendment, re-enactment, consolidation or replacement, reference herein to a particular provision shall be read as referring to such amended, re-enacted, consolidated or replaced provision and shall also include, unless the context otherwise requires, all applicable guidelines, bulletins or policies made in connection therewith; provided, that for purposes of any representations and warranties contained in this Agreement that are made as of a specific date, references to any Law shall be deemed to refer to such Law as amended as of such date. Any agreement or instrument referred to herein means such agreement or instrument as from time to time amended, modified or supplemented, including by waiver or consent and all attachments thereto and instruments incorporated therein.

 

(d) Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. Whenever any action must be taken hereunder on or by a day that is not a Business Day, then such action may be validly taken on or by the next day that is a Business Day.

 

74

 

 

(e) No specific provision, representation or warranty in this Agreement shall limit the applicability of a more general provision, representation or warranty in this Agreement.

 

(f) The Parties drafted this Agreement jointly through the exchange of drafts hereof, so no presumption or burden of proof favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.

 

(g) Neither the specification of any Dollar amount in any representation or warranty contained in this Agreement nor the inclusion of any specific item in any Schedule is intended to imply that such amount, or higher or lower amounts, or the item so included or other items, are or are not material, and no Party shall use the fact of setting forth of any such amount or the inclusion of any such item in any dispute or controversy between the Parties as to whether any obligation, item or matter not described herein or included in any Schedule is or is not material for purposes of this Agreement. Neither the specification of any item or matter in any representation or warranty contained in this Agreement nor the inclusion of any specific item in any Schedule is intended to imply that such item or matter, or other items or matters, are or are not in the ordinary course of business, and no Party shall use the fact of the setting forth or the inclusion of any specific item or matter in any dispute or controversy between the Parties as to whether any obligation, item or matter not described herein or included in any Schedule is or is not in the ordinary course of business for purposes of this Agreement.

 

Section 9.11 Assignment. The obligations of the Parties under this Agreement are not assignable without the prior written consent of the other Parties, which such Parties may withhold in their discretion. Any purported assignment in violation of this Agreement is void.

 

Section 9.12 Fulfillment of Obligations. Any obligation of any Party under this Agreement or any of the Transaction Documents, which obligation is performed, satisfied or fulfilled completely by an Affiliate of such Party, shall be deemed to have been performed, satisfied or fulfilled by such Party.

 

Section 9.13 Obligations of Merger Sub. Parent hereby guarantees the due and punctual performance and payment (not merely collection) in full of all obligations and liabilities of Merger Sub under this Agreement, as and when due and payable or required to be performed pursuant to any provision of this Agreement.

 

Section 9.14 Non-Survival of Representations, Warranties and Covenants. None of the representations, warranties or covenants in this Agreement shall survive the Effective Time; provided, however, that this Section 9.14 shall not limit any covenant or agreement herein that, by its terms, contemplates performance at or after the Closing (including any obligation to hold a party harmless or any covenant entitling a Person to rely upon any other Person) until such covenant or agreement has been performed or satisfied or any claim based on fraud.

 

75

 

 

Section 9.15 Release of Claims. In consideration of the receipt the Merger Consideration (which may be increased to decreased pursuant to Section 2.7), each Stockholder (in its capacity as a Stockholder of the Company), (collectively, “Releasors”) hereby releases and discharges the Company and its Affiliates and their respective past, present and future directors, officers, employees, agents, representatives and their respective successors and assigns (collectively, “Releasees”) fully, finally and forever, from all and any manner of claims, actions, rights, causes of actions, suits, obligations, liabilities, debts, due sums of money, agreements, promises, damages, judgments, executions, accounts, expenses, costs, attorneys’ fees and demands whatsoever, whether in law, contract or equity, whether known or unknown, matured or unmatured, foreseen or unforeseen, arising out of events existing or occurring contemporaneously with or prior to the Effective Time (including whether or not the Merger Consideration Schedule did not accurately reflect the terms of the Company Certificate) or otherwise relating to such Stockholder’s acquisition, ownership, control or sale of Company Common Stock (including any rights to indemnities from the Company or any of its Affiliates pursuant to any Contract entered into by such Stockholder in connection with such issuance); provided, that nothing contained herein shall operate to release any liabilities of a Releasee based upon, arising out of or relating to, without duplication, (i) the Merger Agreement or any of the Transaction Documents, (ii) the obligations of any insurer under any insurance policy (including any insurance policy obtained pursuant to Section 5.24), (iii) any rights to indemnification to the extent provided for (A) in the Organizational Documents of the Company or any of its Subsidiaries or (B) pursuant to Indemnification Agreement by and between any Stockholder and the Company entered into prior to the date hereof and made available to Parent prior to the date hereof, (iv) if applicable, any rights to compensation or other employment benefits earned or accrued by or for his benefit prior to the Closing in respect of services performed as an employee or consultant of the Company prior to the Closing, solely to the extent not paid by the Company prior to the Closing, (v) any employment agreement or consulting agreement, as applicable, entered into connection with the consummation of the Transactions, in each of clauses (iv) and (v) to the extent such agreements and the agreements underlying such services have been made available to Parent or (vi) any claims, actions, or causes of action that, as a matter of applicable Law, are not waivable.

 

[Signature Page Follows]

 

76

 

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first written above.

 

  FORUM MERGER III CORPORATION

 

By /s/ Marshall Kiev
Name: Marshall Kiev
Title: Co-CEO and President

 

  ELMS MERGER CORP.

 

By /s/ David Boris
Name: David Boris
Title: President and Treasurer

 

  ELECTRIC LAST MILE, INC.

 

By /s/ Benjamin Wu
Name: Benjamin Wu
Title: Secretary

 

  JASON LUO, solely in his capacity as the initial Stockholder Representative hereunder.

 

By /s/ Jason Luo
Name: Jason Luo
Title: Stockholder Representative

 

 

 

 

Exhibit A

DEFINITIONS

 

As used in this Agreement, the following terms have the meanings specified in this Exhibit A:

 

280G Approval” has the meaning set forth in Section 5.27.

 

Accounting Principles” means (a) GAAP, and (b) calculations based exclusively on the facts and circumstances as they exist as of 12:01 a.m. (Eastern Time) on the Closing Date and excluding (i) the effects of any event, act, change in circumstances or similar development arising or occurring at or after Closing and (ii) any purchase accounting or other adjustment arising out of the consummation of the Transactions.

 

Accounting Referee” has the meaning set forth in Section 2.7(c).

 

Accredited Investor” means a Stockholder that (a) is an “accredited investor”, as such term is defined in Rule 501(a) under the Securities Act; and (b) certifies, to the reasonable satisfaction of Parent, that such Stockholder is an Accredited Investor.

 

Action” means any civil, criminal or administrative action, suit, demand, claim, complaint, litigation, investigation, review, audit, formal proceeding, arbitration, hearing or other similar dispute.

 

Adjustment Amount” has the meaning set forth in Section 2.7(d).

 

Adjustment Escrow Amount” means Two Million Five Hundred Thousand Dollars ($2,500,000).

 

Adjustment Escrow Share Rights” has the meaning set forth in the Recitals.

 

Adjustment Escrow Stock” means those shares of Parent Common Stock deposited with the Escrow Agent pursuant to the terms of this Agreement and the Escrow Agreement as collateral for the Merger Consideration Adjustment. The number of such shares of Parent Common Stock initially deposited with the Escrow Agent shall be Two Hundred Fifty Thousand (250,000) (to be the Adjustment Escrow Amount divided by the Reference Price).

 

Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. As used in this definition, the term “controls” (including the terms “controlled by” and “under common control with”) means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through ownership of voting securities, by contract or otherwise. For the avoidance of doubt; (a) prior to the Closing, the Company shall not be an “Affiliate” of Parent; and (b) following the Closing, the Company shall not be an “Affiliate” of any Stockholder.

 

Aggregate Consideration Value” has the meaning set forth in Section 2.5.

 

A-1

 

 

Agreed Form” means the form attached hereto as Exhibit C, subject to de minimis changes agreed to by Parent; provided that, Parent will not unreasonably withhold, condition or delay its agreement to such de minimis changes.

 

Agreement” has the meaning set forth in the Preamble.

 

Alternative Transaction” has the meaning set forth in Section 5.15(a).

 

Amended and Restated Parent Charter” has the meaning set forth in Section 1.4.

 

Amended and Restated Registration Rights Agreement” has the meaning set forth in the Recitals.

 

Anti-Corruption Laws” has the meaning set forth in Section 3.22(a).

 

Antitrust Laws” means the Sherman Antitrust Act of 1890, the Clayton Act of 1914, the HSR Act and all other U.S. and non-U.S. antitrust, competition or other Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition.

 

Applicable Date” has the meaning set forth in Section 3.5(d).

 

Bankruptcy and Equity Exception” has the meaning set forth in Section 3.3(a).

 

Benefit Plan” means any benefit or compensation plan, program, policy, practice, agreement, contract, arrangement or other obligation, whether or not in writing and whether or not funded, in each case, for the benefit of any Employee (or such Employee’s eligible dependent or beneficiary) and that is sponsored or maintained by, or required to be contributed to, or with respect to which any potential liability is borne by the Company. Benefit Plans include, but are not limited to, “employee benefit plans” within the meaning of Section 3(3) of ERISA (“ERISA Plans”), employment, retirement, severance, termination or change in control agreements, deferred compensation, equity-based, incentive, bonus, supplemental retirement, profit sharing, insurance, medical, welfare, fringe or other benefits or remuneration of any kind.

 

Business” means the business of the Company as currently conducted or as currently contemplated to be conducted in the future as of the Execution Date directly related to the design, development, homologation, manufacture, importation, marketing, promotion, distribution, offering for sale, sale and other commercialization of the electric vehicles currently under development or as currently contemplated to be under development as of the Execution Date, including such electric vehicles known as the “Urban Delivery” (Light Duty Platform); “Urban Delivery Variant” (Light Duty Platform); “Urban Utility” (Medium Duty Platform); and “Urban Utility Variant” (Medium Duty Platform).

 

Business Combination” means a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

 

Business Combination Transaction” has the meaning set forth in Section 5.15(b).

 

A-2

 

 

Business Day” means any day other than (a) a Saturday or a Sunday; or (b) a day on which banking and savings and loan institutions are authorized or required by Law to be closed in New York City, New York.

 

Business IP” means, collectively, any and all (a) Company IP and (b) Intellectual Property Rights used (or held for use) in or necessary for the conduct of the Business.

 

CARES Act” means the Coronavirus Aid, Relief, and Economic Security Act.

 

Cash” of any Person as of any date means all cash and cash equivalents (including marketable securities and short term investments), and (i) includes checks, wire transfers and drafts deposited or available for deposit for such Person’s account, as well as petty cash (ii) excludes issued but uncleared checks, wire transfers in transit and drafts issued by such Person, and (iii) excludes Restricted Cash, in each case, calculated in accordance with the Accounting Principles.

 

Certificate” has the meaning set forth in Section 2.1(b).

 

Certificate of Merger” has the meaning set forth in Section 1.3.

 

Change of Control” means the occurrence, in a single transaction or as the result of a series of related transactions, of one or more of the following events: (i) a merger, consolidation, reorganization or similar business combination transaction involving Parent in which the holders of all of the outstanding Equity Interests in Parent immediately prior to the consummation of such transaction do not directly or indirectly (including through Affiliates) own beneficially or of record immediately upon the consummation of such transaction outstanding Equity Interests that represent a majority of the combined outstanding voting securities of the surviving entity in such transaction or of a parent of the surviving entity in such transaction; (ii) a transaction (or series of related transactions) in which a majority of Parent’s voting securities are transferred to any Person, or any two or more Persons acting as a group, and all Affiliates of such Person or Persons (each, a “Group”), that were not directly or indirectly (including through Affiliates), beneficially or of record, equityholders of Parent prior to the consummation of such transactions (other than as a result of Equity Interests transferred in a secondary transaction by any single Stockholder or together with its Affiliates that is not otherwise approved by the disinterested independent directors of the Parent Board) or (iii) the consummation of the sale of all or substantially all of the assets of Parent and its Subsidiaries (including the Company), taken as a whole, to any Group, other than such a sale to a Group in which the equityholders of Parent, directly or indirectly (including through Affiliates), beneficially or of record, own a majority of the combined voting securities.

 

Chosen Courts” means the Court of Chancery of the State of Delaware and any state appellate court therefrom within the State of Delaware (or, if the Court of Chancery of the state of Delaware declines to accept jurisdiction over a particular matter, any federal court within the state of Delaware or, in the event each federal court within the state of Delaware declines to accept jurisdiction over a particular matter, any state court within the state of Delaware).

 

Closing” has the meaning set forth in Section 1.2.

 

Closing Date” has the meaning set forth in Section 1.2.

 

Closing Date Cash” has the meaning set forth in Section 2.7(b).

 

A-3

 

 

Closing Date Indebtedness” has the meaning set forth in Section 2.7(b).

 

Closing Date Statement” has the meaning set forth in Section 2.4(a).

 

Closing Statement” has the meaning set forth in Section 2.7(b).

 

Code” has the meaning set forth in the Recitals.

 

company” includes any company, corporation or body corporate (including a limited liability company), wherever incorporated.

 

Company” has the meaning set forth in the Preamble.

 

Company Board” has the meaning set forth in the Recitals.

 

Company Certificate” means the Certificate of Incorporation of the Company, filed on November 12, 2020 with the Secretary of State of the State of Delaware.

 

Company Common Stock” has the meaning set forth in the Recitals.

 

Company D&O Premium” means the premium payable in connection with obtaining the D&O Insurance pursuant to Section 5.24, inclusive of any underwriting fees, taxes, etc.

 

Company Disclosure Letter” has the meaning set forth in Article III.

 

Company IP” means any and all Intellectual Property Rights owned by or exclusively licensed to the Company, or purported to be owned by or exclusively licensed to the Company.

 

Company Letter of Transmittal” has the meaning set forth in Section 2.6(b).

 

Company Registered IP” has the meaning set forth in Section 3.16(a).

 

Company Transaction Expenses” means the following fees, expenses and amounts payable solely to the extent such fees, expenses and amounts payable are incurred and unpaid as of the Closing: (a) the legal, accounting, financial advisory, and other advisory, transaction or consulting fees and expenses incurred and/or payable by the Company or its Subsidiaries in connection with the Transactions, the preparation, negotiation and execution of this Agreement and the consummation of the Transactions; (b) any severance, change of control, transaction, termination or similar amounts payable to any Employees of the Company or its Subsidiaries as a result of the consummation of the Transactions, together with the employer portion of all payroll Taxes payable thereon or deferred pursuant to Section 2302 of the CARES Act thereon; and (c) fifty percent (50%) of the Merger Agreement HSR Fee payable pursuant to Section 5.10(g).

 

Confidentiality Agreement” has the meaning set forth in Section 5.17.

 

Contract” means any contract, agreement, undertaking, note, mortgage, indenture, arrangement subcontract, lease, sublease, license, sublicense, purchase order, or other obligation, in each case, including any amendment, modification and supplement thereto.

 

A-4

 

 

Convertible Note Adjustment Amount” means (a) the number of shares of Class A Parent Common Stock issuable to the Convertible Note Holders at Closing pursuant to the terms of the Convertible Notes and as set forth in the Merger Consideration Schedule; minus (b) the number of shares of Class A Parent Common Stock equal to (i) the aggregate amount of principal and interest of the Convertible Notes outstanding on the Closing Date divided by (ii) the price per share of Parent Class A Common Stock paid by the PIPE Investors pursuant to the Subscription Agreements; with the difference of (a) and (b) multiplied by $10.00.  For illustrative purposes only, if 110,000 shares of Parent Class A Common Stock are issuable to the Convertible Note Holders at Closing, the aggregate amount of principal and interest of the Convertible Notes outstanding on the Closing Date is $1,000,000, and the price per share of Parent Class A Common Stock paid by the PIPE Investors pursuant to the Subscription Agreements is $10 per share, the Convertible Note Adjustment Amount would be $100,000 (i.e., ((110,000 – ($1,000,000/$10))*$10)).

 

Convertible Note Holders” has the meaning set forth in the Recitals.

 

Convertible Notes” has the meaning set forth in the Recitals.

 

Copyleft Terms” means any terms of a license commonly referred to as an open source, free Software, copyleft, or community source code license (including any Software licensed under the GNU General Public License, GNU Lesser General Public License, Affero General Public License, Apache Software License, or any other public source code license arrangement) or any similar license, in each case that require, as a condition of or in connection with any use, modification, reproduction, or distribution of any Software licensed thereunder (or any proprietary Software or other Company IP that is used by, incorporated into or includes, relies on, is linked to or with, is derived from, or is distributed with such Software), any of the following: (a) the disclosing, making available, distribution, offering or delivering of source code or any information regarding such Software or other Company IP for no or minimal charge; (b) the granting of permission for creating modifications to or derivative works of such Software or other Company IP; (c) the granting of a royalty-free license, whether express, implied, by virtue of estoppel or otherwise, to any Person under Intellectual Property Rights (including without limitation Patents) regarding such Software or other Company IP (whether alone or in combination with other hardware or Software); or (d) the imposition of restrictions on future Patent licensing terms, or other abridgement or restriction of the exercise or enforcement of any Intellectual Property Rights through any means.

 

Copyrights” has the meaning set forth in the definition of “Intellectual Property Rights”.

 

COVID-19” means the outbreak of the novel coronavirus and the associated ongoing public health considerations.

 

COVID-19 Measures” has the meaning set forth in Section 5.1(a).

 

D&O Insurance” has the meaning set forth in Section 5.24(a).

 

Deficit Amount” has the meaning set forth in Section 2.7(f).

 

A-5

 

 

Derivative Rights” means, with respect to any Equity Interests of any Person, any and all options, warrants, rights, convertible or exchangeable securities, “phantom” equity rights, equity appreciation rights, profits interests, equity-based performance units, commitments, Contracts, arrangements or undertakings of any kind to which such Person is a party or is bound obligating such Person to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock of or other equity (or phantom equity) interests in, or any security convertible or exercisable for or exchangeable into any capital stock or other equity interest in, such Person.

 

Determination Date has the meaning set forth in Section 2.7(c).

 

DGCL” has the meaning set forth in the Recitals.

 

Director Nomination Agreement” has the meaning set forth in Section 2.11(a)(iv).

 

Disagreement Notice” has the meaning set forth in Section 2.7(c).

 

Dollars” and “$” mean the lawful currency of the United States of America.

 

Earnout Period” has the meaning specified in Section 2.10(a).

 

Earnout Release” has the meaning specified in Section 2.10(a).

 

Earnout Share Value” means Fifty Million Dollars ($50,000,000).

 

Earnout Shares” has the meaning set forth in Section 2.10(a).

 

ECV Operations” means the U.S. electric commercial vehicle operations component of SERES.

 

Effective Time” has the meaning set forth in Section 1.3.

 

Employee” means any current or former employee (whether full-or part-time), director, officer or independent contractor (who is a natural person) of the Company.

 

Environmental Law” means any Law, now in effect and as amended, and any judicial or administrative interpretation thereof, including any judicial, administrative or other legally-binding order, consent decree or judgment, relating to: (a) the protection, investigation or restoration of the environment, human health and safety, or natural resources; (b)  the handling, use, presence, disposal, Release or threatened Release of any Hazardous Substance; or (c)  wetlands, pollution, contamination or any injury or threat of injury to Persons or property by any Hazardous Substance.

 

Equity Interests” shall mean with respect to any Person, any and all shares, interests, participations, rights in, or other equivalents (however designated and whether voting or non-voting) of, such Person’s capital stock or other equity interests (including partnership or limited liability company interests in a partnership or limited liability company or any other interest or participation right that confers on a Person the right to receive a share of the profits and losses, or distributions of assets, of the issuing Person), and all Derivative Rights with respect to any of the foregoing.

 

ERISA” means the Employee Retirement Income Security Act of 1974.

 

A-6

 

 

ERISA Affiliate” means all employers (whether or not incorporated) that would be treated together with the Company or any of its Subsidiaries as a “single employer” within the meaning of Section 414 of the Code.

 

ERISA Plans” has the meaning set forth in the definition of “Benefit Plan”.

 

Escrow Account” means, collectively, the escrow accounts in the name of the Escrow Agent to be opened in accordance with the Escrow Agreement.

 

Escrow Agent” means Continental Stock Transfer & Trust Company or such other escrow agent designated by Parent and the Company.

 

Escrow Agreement” means the escrow agreement, substantially in the form attached hereto as Exhibit N.

 

Estimated Closing Date Cash” has the meaning set forth in Section 2.4(a).

 

Estimated Closing Date Indebtedness” has the meaning set forth in Section 2.4(a).

 

Exchange Act” means the Securities Exchange Act of 1934.

 

Execution Date” has the meaning set forth in the Preamble.

 

Final Closing Balance Sheet” has the meaning set forth in Section 2.7(b).

 

Final Determination” means, with respect to a dispute, an occurrence where (a) the parties to the dispute have reached an agreement in writing; (b) a court of competent jurisdiction shall have entered a final and non-appealable Order or judgment with respect to a claim; or (c) an arbitration or like panel shall have rendered a final non-appealable determination with respect to disputes the parties have agreed to submit thereto.

 

Financial Statements” has the meaning set forth in Section 3.5(a).

 

First Share Price Trigger” has the meaning set forth in Section 2.10(a).

 

Forum III LTIP” has the meaning set forth in Section 5.14.

 

Fully Diluted Share Number” means the sum of the number of shares of Company Common Stock issued and outstanding immediately before the Closing.

 

Funded Indebtedness” shall mean all Indebtedness listed on Section 1.2 of the Company Disclosure Letter, which may be repaid at Closing pursuant to Section 2.11(d)(iii).

 

GAAP” means United States generally accepted accounting principles.

 

Governmental Entity” means any domestic or non-U.S. legislative, administrative or regulatory authority, agency, commission, body, court or other governmental or quasi-governmental entity of competent jurisdiction, including any supranational body.

 

Group” has the meaning set forth in the definition of “Change of Control”.

 

A-7

 

 

Hazardous Substance” means (a) any chemical, material or substance, including any admixture or solution thereof, that is listed, defined, designated or classified as a “pollutant”, “contaminant” or “waste” or as “hazardous” or “toxic” or that is otherwise, regulated or which could result in liability under or pursuant to any Law, including the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq., the Toxic Substances Control Act, 15 U.S.C. §2601, et seq., or the Hazardous Materials Transportation Act, 49 U.S.C. §5101 et seq., or in regulations promulgated pursuant to such laws, or in applicable state laws and regulations addressing similar subject matter; and (b) without limiting the foregoing, any petroleum, petroleum product, breakdown product or by-product, hexavalent chromium and any other hexavalent chromium compound, tetrachloroethene, arsenic, lead, and any other asbestos, asbestos-containing material, polychlorinated biphenyl, per- and polyfluoroalkyl substance, mold, radioactive material or radon.

 

HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

 

Improvements” has the meaning set forth in Section 3.13(d).

 

Incumbency Certificate” means a certificate delivered by or on behalf of the Company, on the one hand, and Parent, on the other hand, dated as of the Closing Date, signed by an executive officer of such Party on its behalf, certifying as to (i) the incumbency of its and, as applicable, its Subsidiaries’ officers executing this Agreement and the Transaction Documents, (ii) the Organizational Documents of such Person and each of its Subsidiaries and that such Organizational Documents have not been amended or rescinded since the date of such certification and remain in full force and effect immediately prior to the Effective Time, and (iii) the resolutions of the board of directors (or similar governing body) of such Person and, as applicable, authorizing the execution, delivery and performance by such Person of this Agreement and the Transaction Documents to which such Person is party.

 

Indebtedness” means, without duplication, all (a) indebtedness of the Company and its consolidated Subsidiaries for borrowed money (including (x) letters of credit to the extent drawn, and (y) under the existing credit documents), (b) all Funded Indebtedness, (c) all obligations under leases that were, prior to the effectiveness of ASC 842, required to be capitalized under GAAP, (d) indebtedness evidenced by any note, bond, debenture, mortgage, or other debt instrument or debt security, (e) obligations under any interest rate, currency or other hedging agreement (including any swaps, forward contracts, caps, floors, collars and similar Contracts calculated in accordance with the Accounting Principles), (f) obligations under any performance bond, but only to the extent drawn or called prior to the Closing Date, (g) income Taxes accrued but unpaid as of the Closing Date, and the employer portion of any payroll Taxes accrued and otherwise payable on or prior to the Closing Date but deferred by the Company or any Subsidiary pursuant to Section 2302 of the CARES Act, (h) the amounts payable by the Company pursuant to the terms of the SERES Lease Agreement, (i) any governmental filing fees to the extent outstanding or payable in connection with the SERES Lease Agreement, (j) any outstanding obligations under or amounts to be paid by the Company or any Subsidiary pursuant to the Transition Services Agreement to the extent incurred or arising prior to the Closing, and (k) guarantees with respect to any indebtedness of any other Person of a type described in clauses “(a)” through “(j)” above, and (l) for clauses “(a)” through “(j)” above, all accrued and unpaid interest thereon, if any, and any premiums, make-whole amounts, penalties (including in respect of prepayment) and fees owing in respect thereof (but, only to the extent outstanding or payable in connection with the Transaction). For the avoidance of doubt, except as explicitly set forth in this definition, “Indebtedness” shall not include any other amounts pursuant to the Key Contracts.

 

A-8

 

 

Industry” has the meaning set forth in the definition of “Material Adverse Effect”.

 

Information Statement” has the meaning set forth in Section 5.9.

 

Initial Stockholder Consent” has the meaning set forth in the Recitals.

 

Insurance Policies” has the meaning set forth in Section 3.17.

 

Intellectual Property Rights” means any and all intellectual property or industrial property rights existing, created, arising, or protected under applicable Law anywhere in the world, including all rights, title, and interest in and to any and all: (a) trademarks, service marks, certification marks, brand names, slogans, logos, symbols, trade dress, trade names, corporate and business names, social media identifiers and related accounts, and other indicia of source or origin, all applications and registrations for the foregoing, and all goodwill associated therewith and symbolized thereby, including all renewals of the same (collectively, “Trademarks”); (b) patents, patent applications, patentable inventions, invention disclosures and other patent rights, including provisionals, extensions, divisionals, continuations, continuations-in-part, re-issues, re-examinations, interferences, and counterparts thereof (collectively, “Patents”); (c) confidential information, trade secrets, inventions, know-how, processes, procedures, ideas, research and development, formulas, compositions, algorithms, source code, object code, technology, data and databases, manufacturing and production processes and techniques, specifications, prototypes, models, designs, drawings, customer lists and supplier lists, pricing and cost information, and business and marketing plans and proposals; (d) published and unpublished works of authorship, whether copyrightable or not (including Software, website and mobile content, data, databases and other compilations of information), copyrights, design and database rights, and registrations and applications for any of the foregoing and all renewals, extensions, restorations and reversions thereof, and all moral rights associated with any of the foregoing (collectively, “Copyrights”); (e) mask works and all applications, registrations, and renewals in connection therewith; (f) Internet domain names and URLs; (g) rights recognized under applicable Law that are equivalent or similar to any of the foregoing, including: any and all rights of any kind whatsoever accruing under any of the foregoing provided by applicable law of any jurisdiction, by international treaties and conventions, and otherwise throughout the world; any and all royalties, fees, income, payments, and other proceeds now or hereafter due or payable with respect to any and all of the foregoing; and any and all claims and causes of action with respect to any of the foregoing and all rights to and claims for damages, restitution, and injunctive and other legal and equitable relief for past, present, and future infringement, dilution, misappropriation, or other violation of the foregoing; and (h) copies and tangible embodiments thereof (in whatever form or medium).

 

Intended Tax Treatment” has the meaning set forth in Section 2.9.

 

IRS” means the Internal Revenue Service.

 

IT Assets” means technology devices, computers, hardware, Software (including firmware and middleware), systems, sites, servers, networks, workstations, routers, hubs, circuits, switches, interfaces, websites, platforms, data communications lines, automated processes, and all other information or operational technology, telecommunications, facilities, systems services, or equipment, in each case, owned, leased, licensed or operated by the Company or used (or held for use) in the operation of the Business, and all associated documentation.

 

A-9

 

 

Key Contracts” means collectively, the SERES Exclusive IP License Agreement, the SERES Exclusive Patent License Agreement, the SERES Lease Agreement, the Sokon Supply Agreement and the Transition Services Agreement.

 

Knowledge” means (a) with respect to the Parent, the actual knowledge of Marshall Kiev or David Boris, after reasonable inquiry; and (b) with respect to the Company, the actual knowledge of Jason Luo, James Taylor or Benjamin Wu, after reasonable inquiry.

 

Law” or “Laws” means any law, statute, ordinance, common law, rule, regulation, Order or other legal requirement enacted, issued, promulgated, enforced or entered by a Governmental Entity of competent jurisdiction.

 

Lease” or “Leases” has the meaning set forth in Section 3.13(b).

 

Leased Real Property” has the meaning set forth in Section 3.13(b).

 

Lien” means any lien, charge, pledge, mortgage, easement, hypothecation, usufruct, deed of trust, security interest, claim or other encumbrance, other than, in each case, restrictions on transfer arising solely under applicable federal and state securities Laws.

 

Loss” or “Losses” shall mean, without duplication, (a) actual out-of-pocket losses, damages, liabilities, obligations, or costs, including reasonable fees and expenses of attorneys, accountants and other professional advisors, whether involving a dispute solely between the parties hereto or otherwise, and (b) any actual out-of-pocket losses or costs incurred in investigating, defending or settling any of claim, action or cause of action described in clause (a), whether or not the underlying claim, action or cause of action is actually asserted or is merely alleged or threatened; provided that, “Loss” or “Losses” shall not include any punitive, incidental, consequential, special or indirect damages, including loss of future revenue or income, loss of business reputation or opportunity, or diminution of value or any damages based on any type of multiple, except in the case of punitive damages to the extent awarded to a third party.

 

LTIP Value” means an amount equal to the sum of $142,000,000 plus $150,000,000.

 

made available”, as it pertains to the Company, means documents delivered to Parent or its Representatives or posted to the electronic data room hosted by iDeals relating to the Company and titled “ELM Inc.” at least twenty-four (24) hours prior to the Execution Date except to the extent required as a result of actions taken by the Company in compliance with Section 5.1.

 

A-10

 

 

Material Adverse Effect” means any change, circumstance, condition, development, effect, event, occurrence or state of facts that, individually or taken together with any other change, circumstance, condition, development, effect, event, occurrence or state of facts is, or would reasonably be expected to be, materially adverse to (x) the condition (financial or otherwise), assets, liabilities (contingent or otherwise), business operations or results of operations of the Company, whether known or unknown or (y) the ability of the Company to consummate the Transactions; provided; however, none of the following shall be deemed to constitute or be taken into account in determining whether a Material Adverse Effect is occurring, has occurred or would reasonably be expected to occur:

 

(a) changes, developments, circumstances or facts in or with respect to the economy, credit, capital, securities or financial markets (including changes in interest or exchange rates, prices of any security or market index or commodity or any disruption of such markets) or political, regulatory or business conditions in the geographic markets in which the Company has operations or its products or services are sold;

 

(b) changes, developments, circumstances, facts or effects that are the result of factors generally affecting the electric-powered automobile industry (the “Industry”);

 

(c) any loss of, or adverse change to the relationship of the Company with its customers or suppliers, if and to the extent the Company establishes with reasonable evidence that such loss or adverse change was directly and proximately caused by the entry into, announcement, pendency or performance of this Agreement and the Transactions;

 

(d) changes in applicable accounting standards, including GAAP or in any Law of general applicability, or in the authoritative interpretation by a Governmental Entity thereof, after the Execution Date;

 

(e) any failure by the Company to meet any internal or public projections, forecasts, estimates, milestones or financial or operating predictions of revenues, earnings, cash flow or cash position; provided, that any change, development, circumstance, fact or effect (not otherwise excluded under this definition) underlying such failure may be taken into account in determining whether a Material Adverse Effect is occurring, has occurred or would reasonably be expected to occur;

 

(f) any change, development or effect resulting from acts of war (whether or not declared), sabotage, civil unrest or terrorism, military actions or the escalation of any of the foregoing, whether perpetrated or encouraged by a state or non-state actor or actors (other than cyberattacks), any weather or natural disaster, or any outbreak of an epidemic or pandemic (including COVID-19);

 

(g) any actions taken or not taken by the Company pursuant to this Agreement or with Parent’s prior written consent (except for any obligation to operate in the ordinary course of business or similar obligation);

 

(h) any action not taken by the Company pursuant to this Agreement or with Parent’s prior written consent or at Parent’s written request;

 

provided, further, that, with respect to clauses (a), (b), (d) and (f) of this definition, such changes, circumstances, conditions, developments, effects, events, occurrences or states of facts shall be taken into account in determining whether a “Material Adverse Effect” is occurring, has occurred or would reasonably be expected to occur if it materially disproportionately and adversely affects the Company relative to other companies within the Industry (in which case, only the incremental material disproportionate and adverse impact may be taken into account in determining whether there is a Material Adverse Effect).

 

Material Contract” has the meaning set forth in Section 3.12(a).

 

A-11

 

 

Merger” has the meaning set forth in the Recitals.

 

Merger Agreement HSR Fees” has the meaning set forth in Section 5.10(g).

 

Merger Consideration” has the meaning set forth in Section 2.1(a).

 

Merger Consideration Adjustment” has the meaning set forth in Section 2.7(a).

 

Merger Consideration Schedule” has the meaning set forth in Section 2.4(b).

 

Merger Sub” has the meaning set forth in the Preamble.

 

Multiemployer Plan” has the meaning set forth in Section 3.9(c).

 

OFAC” means the Office of Foreign Assets Control of the U.S. Department of the Treasury.

 

Order” means any administrative decision or award, decree, injunction, judgment, order, quasi-judicial decision or award, ruling or writ of any arbitrator, mediator or Governmental Entity.

 

ordinary course of business” or any similar reference, means: (a) with respect to an action taken or to be taken by any Person, that such action is consistent with the past practices of such Person and is taken in the ordinary course of the normal day-to-day business and operations of such Person and, in any case, is not unreasonable or unusual in the circumstances when considered in the context of the provisions of this Agreement; and/or (b) any action taken by the Company in the ordinary course of the normal day-to-day operations of the Business during the period of the outbreak of the disease, COVID-19, caused by SARS-CoV-2 novel coronavirus, including but not limited to actions taken by the Company: (i) in order to comply with the requirements or guidance of any Governmental Entity or public health agency; (ii) in response to changes in customer demand for the services and products of the Business; and (iii) in response to changes in the Company’s financial condition during this period.

 

Organizational Documents” means (a) the certificate or articles of incorporation, (b) bylaws, (c) any charter, certificate of formation or similar document adopted or filed in connection with the creation, formation or organization of a Person, (d) any limited liability company, partnership or stockholder agreement, and (e) any amendment to any of the foregoing.

 

Outside Date” means June 30, 2021.

 

Owned Real Property” has the meaning set forth in Section 3.13(a).

 

Parent” has the meaning set forth in the Preamble.

 

Parent Board” has the meaning set forth in the Recitals.

 

Parent Board Recommendation” has the meaning set forth in Section 4.3(b).

 

Parent Capital Stock” means the Parent Common Stock and Parent Preferred Stock, collectively.

 

Parent Class A Common Stock” has the meaning set forth in the Recitals.

 

A-12

 

 

Parent Class B Common Stock” has the meaning set forth in the Recitals.

 

Parent Common Stock” means (i) prior to the Effective Time, the Parent Class A Common Stock and the Parent Class B Common Stock, and (ii) at and after the Effective Time, the common stock of Parent, par value $0.0001 per share.

 

Parent Disclosure Letter” has the meaning set forth in Article IV.

 

Parent Indemnitees” has the meaning set forth in Section 7.2.

 

Parent Material Adverse Effect” means any event, change, development, effect or occurrence that has, or would reasonably be expected to have a material adverse effect on the ability of Parent and Merger Sub to enter into, to perform their respective obligations under, or to consummate the Transactions; providedhowever, that in no event will any of the following (or the effect of any of the following), alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or will be, a “Parent Material Adverse Effect”: (i) any change in Law, regulatory policies, accounting standards or principles (including GAAP) or any guidance relating thereto or enforcement philosophy or interpretation thereof; (ii) any change in interest rates or economic, political, business or financial market conditions generally (including any changes in credit, financial, commodities, securities or banking markets); (iii) any change generally affecting any of the industries in which Parent, the Company or any of its Subsidiaries operate or the economy as a whole, including any change in commodity prices; (iv) any acts of terrorism, war or the outbreak or escalation of armed hostilities; or (v) any failure, in and of itself, of Parent, the Company or its Subsidiaries to meet any projections, forecasts or budgets; provided, that this clause (v) shall not prevent a determination that any event, change, development, effect or occurrence underlying such failure to meet projections or forecasts has resulted in a Parent Material Adverse Effect (to the extent such change or effect is not otherwise excluded from this definition of Parent Material Adverse Effect); except, in the case of clauses (i), (ii) and (iii) above, to the extent that any such event, change, development, effect or occurrence has a materially disproportionate and adverse effect on the businesses of the Parent, the Company and its Subsidiaries, taken as a whole, relative to other businesses in the industries in which Parent, the Company and its Subsidiaries operate, taken as a whole (in which case, only the incremental material disproportionate and adverse impact may be taken into account in determining whether there is a Parent Material Adverse Effect).

 

Parent Preferred Stock” has the meaning set forth in Section 4.2(a).

 

Parent Reports” has the meaning set forth in Section 4.5(a).

 

Parent Share Redemption” means the election of an eligible (as determined in accordance with Parent’s Organizational Documents) Parent Stockholder to redeem all or a portion of the shares of Parent Common Stock held by such stockholder at a per-share price, payable in cash, equal to such Parent Stockholder’s pro rata share of the funds held in the Parent Trust Account (as determined in accordance with Parent’s Organizational Documents) in connection with the Transactions.

 

Parent Special Meeting” has the meaning set forth in Section 4.3(a).

 

Parent Stockholder” means a holder of Parent Common Stock.

 

A-13

 

 

Parent Stockholder Proposals” means, collectively, the following proposals to be voted upon at the Parent Special Meeting: (a) approval and adoption of this Agreement, the Transaction Documents and consummation of the Transactions; (b) the approval, for purposes of complying with applicable listing rules of NASDAQ, of the issuance of equity interests of the Parent in connection with the consummation of the Transactions; (c) the approval of the Amended and Restated Parent Charter; (d) the election of the members of the board of directors of Parent in accordance with Section 1.6; (e)  the approval of the Forum III LTIP; and (f) the adjourning of the Parent Special Meeting, if necessary, to permit further solicitation of proxies because there are not sufficient votes to approve and adopt the foregoing proposals.

 

Parent Transaction Expenses” means: (a) the legal, accounting, financial advisory (including Jefferies LLC), and other advisory, transaction or consulting fees and expenses incurred and/or payable by the Parent and its Affiliates in connection with the Transactions; (b) fifty percent (50%) of the Merger Agreement HSR Fees payable pursuant to Section 5.10(g); (c) the fees payable to the Escrow Agent in connection with the Escrow Agreement; (d) all Transfer Taxes to be paid pursuant to Section 5.22(b); and (e) the Company D&O Premium.

 

Parent Trust Account” has the meaning set forth in Section 4.8.

 

Parent Trust Agreement” has the meaning set forth in Section 4.8.

 

Parent Trustee” has the meaning set forth in Section 5.3(a).

 

Parties” or “Party” has the meaning set forth in the Preamble.

 

Patents” has the meaning set forth in the definition of “Intellectual Property Rights”.

 

PCAOB Audited Financial Statements” has the meaning set forth in Section 5.23.

 

PCAOB Financial Statements” has the meaning set forth in Section 5.23.

 

Per Share Amount” means, with respect to any class of Company Common Stock, the portion of the Stock Merger Consideration (without giving effect to the Merger Consideration Adjustment) that is payable with respect to any share of Company Common Stock, as determined in accordance with the Company Certificate and as such determination is certified in the Merger Consideration Schedule.

 

Permitted Liens” means the following Liens: (a) Liens for Taxes not yet due and payable or which are being contested in good faith and by appropriate proceedings and for which adequate reserves have been made with respect thereto in accordance with GAAP; (b) mechanics’, materialmen’s, carriers’, workmen’s, warehousemen’s, repairmen’s or other like common law, statutory or consensual Liens arising or incurred in the ordinary course of business and which do not materially impair the present use and operation of, or materially and adversely affect the value of, the assets to which they relate, or deposits to obtain the release of such Liens; (c) with respect to leasehold interests, mortgages and other Liens incurred, created, assumed or permitted to exist and arising by, through or under a landlord or owner of the Leased Real Property; (d) zoning, building, subdivision, and entitlement restrictions, easements, covenants, rights of way or other similar requirements or restrictions, none of which (i) materially interfere with the present uses of the Real Property; or (ii) materially and adversely affect the value of the specific parcel of Real Property to which they relate; (e) zoning promulgated by Governmental Entities; (f) non-exclusive licenses or sublicenses under Company IP granted by the Company to its customers in the ordinary course of business consistent with past practice on standard terms and conditions; and (g)  other Liens that do not, individually or in the aggregate, materially impair the present use and operation of, or materially and adversely affect the value of, the assets to which they relate.

 

A-14

 

 

Person” means any natural person and any corporation, company, partnership (general or limited), unincorporated association (whether or not having separate legal personality), trust or other entity.

 

Personal Information” means any information that relates, to, describes, identifies, could reasonably be used to identify, or could reasonably be linked directly or indirectly with an individual, browser household or device, including an individual’s combined first and last name, address, telephone number, fax number, email address, social security number or other identifier issued by a Governmental Entity (including any state identification number, driver’s license number, or passport number), geolocation information of an individual or device, biometric data, medical or health information, credit card or other financial information (including bank account information), cookie identifiers, or any other browser-or device-specific number or identifier, or any web or mobile browsing or usage information that is linked to the foregoing.

 

PIPE Investment” means the private placement equity offering conducted by Parent prior to the Closing pursuant to the Subscription Agreements entered into on or prior to the Execution Date.

 

PIPE Investors” has the meaning set forth in the Recitals.

 

Pre-Closing Tax Period” means all taxable years or other taxable periods that end on or before the Closing Date and, with respect to any Straddle Period, the portion of such Straddle Period ending on and including the Closing Date.

 

Pre-Paid Company Transaction Expense Amount” means an amount equal to the aggregate amount of all Company Transaction Expenses paid by the Company or its Subsidiaries after the Execution Date and prior to the Closing.

 

Predecessor” means an entity whose ownership, title and interest, including all rights, benefits, duties and liabilities were acquired in an uninterrupted chain of succession by the Company.

 

Privacy and Security Policies” has the meaning set forth in Section 3.16(l).

 

Pro Rata Share” means with respect to each Stockholder, a fraction expressed as a percentage equal to (i) the portion of the Merger Consideration payable by the Parent to such Stockholder in accordance with the terms of this Agreement, divided by (ii) the total Merger Consideration payable by the Parent to all Stockholders in accordance with the terms of this Agreement.

 

Proxy Statement” means a proxy statement of Parent relating to the Parent Special Meeting in connection with the Transactions, as the same may be amended or supplemented in accordance herewith.

 

A-15

 

 

Public Official” means any Person employed by, representing or acting on behalf of a Governmental Entity or enterprise thereof (including a state-owned or state-controlled enterprise) or a public international organization, any representative or official of a political party or any candidate for any political office.

 

Public Warrants” has the meaning set forth in Section 4.2(a).

 

Real Property” has the meaning set forth in Section 3.13(b).

 

Reference Price” has the meaning set forth in Section 2.1(a).

 

Registered” means issued by, registered with, renewed by or the subject of a pending application before any Governmental Entity or Internet domain name register.

 

Release” means any releasing, spilling, emitting, leaking, pumping, pouring, injection, escaping, depositing, disposing, emptying, discharging, dispersing, dumping, leaching or migration of any Hazardous Substance into, onto, in, on or through the indoor or outdoor environment, including relating to any landfill, basin, subsurface or aboveground pipeline or other structure, wetland, quarry or natural resource (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Substance), including the movement of any Hazardous Substance through indoor or outdoor air, soil, subsurface strata, sediment, surface water or groundwater.

 

Releasees” has the meaning set forth in Section 9.15.

 

“Releasors” has the meaning set forth in Section 9.15.

 

Representative” of a Person means any officer, director or employee of such Person or any investment banker, attorney, accountant or other advisor, agent or representative of such Person.

 

Requisite Parent Vote” has the meaning set forth in Section 4.3(a).

 

Restricted Cash” means (i) any deposits related to security deposits for leased property or equipment and (ii) any Taxes that would be imposed on, or payable with respect to, a distribution of any such cash and cash equivalents held by any direct or indirect non-U.S. Subsidiary of the Company if such cash and cash equivalents were distributed to the Company at the end of the day on the Closing Date.

 

Restricted Contracts” has the meaning set forth in Section 5.1(b)(xii).

 

Sanctions” has the meaning set forth in Section 3.22(d).

 

Schedule Supplement” has the meaning in Section 5.25(b).

 

SEC” means the Securities and Exchange Commission.

 

SEC Clearance Date” has the meaning set forth in Section 5.6.

 

Second Share Price Trigger” has the meaning set forth in Section 2.10(a).

 

Section 16” has the meaning set forth in Section 2.8.

 

A-16

 

 

Securities Act” means the Securities Act of 1933.

 

SERES” means SF Motors Inc. (d/b/a SERES), a Delaware corporation.

 

SERES Exclusive IP License Agreement” means the exclusive Intellectual Property license agreement to be entered into following the date hereof and prior to Closing, by and between SERES and the Company, with Parent’s prior written consent.

 

SERES Exclusive Patent License Agreement” means the exclusive patent license agreement to be entered into following the date hereof and prior to Closing, by and between SERES and the Company, with Parent’s prior written consent.

 

SERES Group” means collectively, Chongqing Jinkang New Energy Automobile / Vehicle Co., Ltd., Chongqing Sokon Motor (Group) Imp. & Exp. Co., Ltd. (“Sokon”), Chongqing Sokon Industry Group Stock Co., LTY., SERES, and their Affiliates.

 

SERES Lease Agreement” means the capital lease agreement to be entered into following the date hereof and prior to Closing, by and between SERES and the Company, with Parent’s prior written consent.

 

Sokon Supply Agreement” means the supply agreement to be entered into following the date hereof and prior to Closing, by and between SERES and the Company, with Parent’s prior written consent.

 

Share Price Trigger” has the meaning set forth in Section 2.10.

 

Significant Supplier” has the meaning set forth in Section 3.18(a).

 

Software” and all (a) computer programs, applications, middleware, firmware, microcode and other software (and all derivative works, foreign language versions, enhancements, versions, releases, fixes, upgrades and updates thereto), including operating systems, algorithms, heuristics, models and methodologies, compilations, development tools, compilers, comments, user interfaces, menus, buttons and icons, application programming interfaces, files, data scripts, architecture, algorithms, and higher level or “proprietary” languages, in each case, whether in source code, object code or other form or format, including code, libraries, subroutines and other components thereof, all documentation relating thereto; (b) testing, validation, verification and quality assurance materials; (c) databases, conversions, interpreters and compilations, including any and all data and collections of data, whether machine readable or otherwise; (d) descriptions, schematics, flow-charts and other work product used to design, plan, organize and develop any of the foregoing; (e) all documentation, including user manuals, web materials and architectural and design specifications and training materials, relating to any of the foregoing; (f) software development processes, practices, methods and policies recorded in permanent form, relating to any of the foregoing; (g) performance metrics, sightings, bug and feature lists, build, release and change control manifests recorded in permanent form, relating to any of the foregoing; and (h) all media and other tangible property necessary for the delivery or transfer of any of the foregoing.

 

Specially Designated National or Blocked Person” has the meaning set forth in Section 3.22(d).

 

Sponsor” means Forum Investors III LLC, a Delaware limited liability company.

 

A-17

 

 

Sponsor Support Agreement” has the meaning set forth in the Recitals.

 

Stock Merger Consideration” has the meaning set forth in Section 2.1(a).

 

Stockholder” means any holder of shares of Company Common Stock immediately prior to the Effective Time.

 

Stockholder Representative” has the meaning set forth in Section 8.1(a).

 

Stockholder Support Delivery Period” has the meaning set forth in Section 5.8.

 

Straddle Period” shall mean the portion of any taxable year or period beginning on or before and ending after the Closing Date.

 

Subscription Agreements” has the meaning set forth in the Recitals.

 

Subsidiary” means, with respect to any Person, any other Person of which at least a majority of the securities or ownership interests having by their terms ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions is directly or indirectly owned or controlled by such Person and/or by one or more of its Subsidiaries.

 

Support Agreements” has the meaning set forth in the Recitals.

 

Surviving Corporation” has the meaning set forth in Section 1.1(b).

 

Takeover Statute” means any “fair price,” “moratorium,” “control share acquisition” or other similar anti-takeover statute or regulation.

 

Tax” or “Taxes” means any and all taxes, including all U.S. federal, state, local, foreign and other income, profits, franchise, gross receipts, customs duty, capital stock, severances, stamp, payroll, sales, employment, unemployment, disability, use, property, withholding, excise, production, value-added, occupancy, escheat and other taxes, and any charges, fees, levies, tariff, duties, assessments, or other governmental charges in the nature of taxes (whether payable directly or by withholding and whether or not requiring the filing of a Tax Return), together with all estimated taxes, deficiency assessments, interest, penalties and additions imposed with respect to such amounts and any interest in respect of such penalties and additions and shall include any liability for such amounts as a result of (a) being a transferee or successor or member of a combined, consolidated, unitary or affiliated group, or (b) a contractual obligation to indemnify any Person (other than any commercial agreement the principal purpose of which is not Taxes).

 

Tax Return” means any and all U.S. federal, state, local and foreign returns, information statements, forms, reports (including elections, declarations, disclosures, schedules, estimates and information returns), claims for refund, or other documents and any amendments thereto, whether or not required to be filed with any taxing authority, relating to Taxes.

 

Tax Sharing Agreement” means any agreement or arrangement (including any provision of a Contract) pursuant to which the Company, any of its Subsidiaries, or Parent is or may be obligated to indemnify any Person for, or otherwise pay, any Tax of, or imposed on, another Person, or indemnify, or pay over to, any other Person any amount determined by reference to actual or deemed Tax benefits, Tax assets, or Tax savings.

 

A-18

 

 

Trademarks” has the meaning set forth in the definition of “Intellectual Property Rights”.

 

Transaction Documents” means this Agreement, the Support Agreements, the Amended and Restated Registration Rights Agreement, the Escrow Agreement, the Subscription Agreements, and the Convertible Notes.

 

Transactions” has the meaning set forth in the Recitals.

 

Transfer Taxes” means all transfer, documentary, sales, use, stamp, registration, notarial fees and other similar Taxes and fees incurred in connection with the Transactions.

 

Transition Services Agreementmeans the Transition Services Agreement, to be entered into following the date hereof and prior to Closing, by and between SERES and the Company, with Parent’s prior written consent.

 

Trustee” has the meaning set forth in Section 4.8.

 

Updated Merger Consideration Schedule” has the meaning set forth in Section 2.7(g).

 

Warrants” has the meaning set forth in Section 4.2(a).

 

A-19

 

 

EXHIBIT B

FORM OF SPONSOR SUPPORT AGREEMENT

 

[See attached.]

 

 

 

 

SPONSOR SUPPORT AGREEMENT

 

This SPONSOR SUPPORT AGREEMENT (this “Agreement”), dated as of December 10, 2020, is entered into by and among Forum Investors III LLC, a Delaware limited liability company (the “Sponsor Holdco”, the Persons set forth on Schedule I hereto (together with the Sponsor Holdco, each a “Sponsor” and, together, the “Sponsors”), Forum Merger III Corporation, a Delaware corporation (“Parent”), and Electric Last Mile, Inc., a Delaware corporation (the “Company” and together with the Sponsors and Parent, each a “Party” and collectively, the “Parties”). Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in the Agreement and Plan of Merger, dated as of December 10, 2020 (as amended, supplemented or otherwise modified from time to time, the “Merger Agreement”), by and among the Company, Parent, ELMS Merger Corp., a Delaware corporation (“Merger Sub”), and Jason Luo, in the capacity as the initial Stockholder Representative thereto in accordance with the terms and conditions of the Merger Agreement.

 

RECITALS

 

WHEREAS, as of the date of this Agreement, the Sponsors are the record holders and the beneficial (as such term is defined in Rule 13d-3 under the Exchange Act, which meaning shall apply for all purposes of this Agreement whenever the term “beneficial” or “beneficially” is used) owners of 616,250 Parent Class A Common Stock, 6,250,000 Parent Class B Common Stock and 205,416 Warrants in the aggregate as set forth on Schedule I attached hereto;

 

WHEREAS, the Company, Parent and Merger Sub have entered into the Merger Agreement, which provides for the merger of Merger Sub with and into the Company (the “Merger”), with the Company surviving the Merger, pursuant to the provisions of the DGCL; and

 

WHEREAS, as an inducement to Parent and the Company to enter into the Merger Agreement and to consummate the transactions contemplated therein, the Parties hereto desire to agree to certain matters as set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements set forth in this Agreement, the Parties agree as follows:

 

Article 1

VOTING AND TRANSFER OF SHARES

 

Section 1.01. Binding Effect of Merger Agreement. Each Sponsor hereby acknowledges that he, she or it has read the Merger Agreement and this Agreement and has had the opportunity to consult with his, her or its tax and legal advisors. Each Sponsor shall be bound by and comply with Sections 5.15 (Exclusivity) and 5.16 (Publicity) of the Merger Agreement (and any relevant definitions contained in any such Sections) as if such Sponsor was an original signatory to the Merger Agreement with respect to such provisions.

 

B-1

 

 

Section 1.02. Voting.

 

(a) Each Sponsor irrevocably and unconditionally agrees, during the period beginning on the date of this Agreement and ending on the Expiration Date (the “Applicable Period”), at each meeting of the stockholders of Parent (a “Meeting”) and at each adjournment or postponement thereof, and in connection with each action or approval by consent in writing of the stockholders of Parent (a “Consent Solicitation”), to cause to be present in person or represented by proxy and to vote or cause to be voted (or express consent or dissent in writing, as applicable) all of his, her or its shares of Parent Common Stock that are entitled to vote (or express consent or dissent in writing, as applicable), in each case as follows:

 

(i) in favor of any proposal for stockholders of Parent to adopt the Merger Agreement and approve any other matters necessary for consummation of the transactions contemplated by the Merger Agreement, including the Merger;

 

(ii) in favor of any proposal to adjourn a Meeting at which there is a proposal for stockholders of Parent to adopt the Merger Agreement to a later date if there are not sufficient votes to adopt the Merger Agreement or if there are not sufficient shares of Parent Common Stock present in person or represented by proxy at such Meeting to constitute a quorum;

 

(iii) against any proposal providing for a Business Combination Transaction or the adoption of an agreement to enter into a Business Combination Transaction;

 

(iv) against any merger agreement or merger (other than the Merger Agreement and the Merger), consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by Parent;

 

(v) against any change in the business, management or Board of Directors of Parent; and

 

(vi) against any action, transaction or agreement that (A) would result in a breach of any representation or warranty or covenant of Parent or the Merger Sub under the Merger Agreement; (B) would reasonably be expected to prevent, delay or impair consummation of the Transactions in any material respect; (C) result in any of the conditions set forth in Article VI of the Merger Agreement not being fulfilled or (D) change in any manner the dividend policy or capitalization of, including the voting rights of any class of capital stock of, Parent.

 

(b) Any vote required to be cast or consent or dissent in writing required to be expressed pursuant to this Section 1.02 shall be cast or expressed in accordance with the applicable procedures relating thereto so as to ensure that it is duly counted for purposes of determining that a quorum is present (if applicable) and for purposes of recording the results of that vote or Consent Solicitation. For the avoidance of doubt, nothing contained herein requires a Sponsor (or entitles any proxy of the Sponsor) to convert, exercise or exchange any options, warrants or convertible securities in order to obtain any underlying shares of Parent Common Stock.

 

B-2

 

 

(c) Each Sponsor agrees not to enter into any commitment, agreement, understanding or similar arrangement with any Person to vote or give voting instructions or express consent or dissent in writing in any manner inconsistent with the terms of this Section 1.02.

 

(d) Each Sponsor shall comply with, and fully perform all of its obligations, covenants and agreements set forth in, that certain Letter Agreement, dated as of August 18, 2020, by and among the Sponsors, Parent and other parties thereto (the “Letter Agreement”), including the obligations of the Sponsors pursuant to Section 1 therein to not redeem any shares of Parent Common Stock owned by such Sponsor in connection with the transactions contemplated by the Merger Agreement.

 

Section 1.03. No Transfers. During the Applicable Period, each Sponsor shall not, directly or indirectly: (a) sell, convey, assign, transfer (including by succession or otherwise by operation of Law), exchange, pledge, hypothecate or otherwise encumber or dispose of any shares of Parent Common Stock or Warrants (or any right, title or interest therein) or any rights to acquire any securities or equity interests of Parent; (b) deposit any shares of Parent Common Stock or Warrants or any rights to acquire any securities or equity interests of Parent into a voting trust or enter into a voting agreement or any other arrangement with respect to any shares of Parent Common Stock or Warrants or any rights to acquire any securities or equity interests of Parent or grant or purport to grant any proxy or power of attorney with respect thereto; (c) enter into any contract, option, call or other arrangement or undertaking, whether or not in writing, with respect to the sale, conveyance, assignment, transfer (including by succession or otherwise by operation of Law), exchange, pledge, hypothecation or other encumbrance or disposition, or limitation on the voting rights, of any shares of Parent Common Stock or Warrants (or any right, title or interest therein) or any rights to acquire any securities or equity interests of Parent; (d) otherwise grant, permit or suffer the creation of any Liens on any shares of Parent Common Stock or Warrants (other than applicable restrictions on transfer under U.S. state or federal securities or “blue sky” Laws) or (e) commit or agree to take any of the foregoing actions (any action described in clauses (a), (b), (c), (d) and (e), a “Transfer”); provided, however, that the foregoing shall not prohibit Transfers between such Sponsor and any Affiliate of such Sponsor so long as, prior to and as a condition to the effectiveness of any such Transfer, such Affiliate or transferee executes and delivers to Parent and the Company a joinder to this Agreement in the form attached hereto as Annex A. Any Transfer or action in violation of this Section 1.03 shall be void ab initio. If any involuntary Transfer of any shares of Parent Common Stock or Warrants occurs, the transferee (and all transferees and subsequent transferees of such transferee) shall take and hold such shares of Parent Common Stock or Warrants subject to all of the restrictions, liabilities and rights under this Agreement, which shall continue in full force and effect during the Applicable Period.

 

Section 1.04. Stop Transfer. No Sponsor shall request that Parent register any transfer of any Certificate or other uncertificated interest representing any shares of Parent Common Stock or Warrants made in violation of the restrictions set forth in Section 1.03 during the Applicable Period.

 

Section 1.05. Waiver of Appraisal Rights. Each Sponsor hereby agrees not to assert, exercise or perfect, directly or indirectly, and irrevocably and unconditionally waives, any appraisal rights (including under Section 262 of the DGCL) with respect to the Merger and any rights to dissent with respect to the Merger (collectively, “Appraisal Rights”).

 

B-3

 

 

Section 1.06. No Agreement as Director or Officer. Each Sponsor is entering into this Agreement solely in such Sponsor’s capacity as record or beneficial owner of shares of Parent Common Stock or Warrants and nothing herein is intended to or shall limit or affect any actions taken by such Sponsor or any employee, officer, director (or person performing similar functions), partner or other Affiliate (including, for this purpose, any appointee or representative of such Sponsor to the board of directors of Parent) of such Sponsor, solely in his or her capacity as a director or officer of Parent (or a Subsidiary of Parent) or other fiduciary capacity for Parent’s stockholders.

 

Section 1.07. New Shares. In the event that (a) any shares of Parent Common Stock, Warrants or other equity securities of Parent are issued to a Sponsor after the date of this Agreement pursuant to any stock dividend, stock split, recapitalization, reclassification, combination or exchange of shares of Parent Common Stock or Warrants of, on or affecting the shares of Parent Common Stock or Warrants owned by such Sponsor or otherwise, (b) a Sponsor purchases or otherwise acquires beneficial ownership of any shares of Parent Common Stock, Warrants or other equity securities of Parent after the date of this Agreement, or (c) a Sponsor acquires the right to vote or share in the voting of any shares of Parent Common Stock or other equity securities of Parent after the date of this Agreement (such shares of Parent Common Stock, Warrants or other equity securities of Parent, collectively the “New Securities”), then such New Securities acquired or purchased by such Sponsor shall be subject to the terms of this Agreement to the same extent as if they constituted the shares of Parent Common Stock or Warrants owned by such Sponsor as of the date hereof.

 

Section 1.08. No Litigation. Each Sponsor hereby agrees not to commence, maintain or participate in, or facilitate, assist or encourage, and agrees to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, suit, proceeding or cause of action, in law or in equity, in any court or before any Governmental Entity (a) challenging the validity of, or seeking to enjoin or delay the operation of, any provision of this Agreement or the Merger Agreement (including any claim seeking to enjoin or delay the consummation of the Merger), (b) alleging a breach of any fiduciary duty of any Person in connection with the Merger Agreement or the Transactions or (c) seeking Appraisal Rights in connection with the Merger. Notwithstanding the foregoing, nothing herein shall be deemed to prohibit a Sponsor from enforcing such Sponsor’s rights under this Agreement.

 

Section 1.09. Further Assurances. Each Sponsor shall execute and deliver, or cause to be executed and delivered, such further certificates, instruments and other documents and to take such further actions as Parent or the Company may reasonably request for the purpose of effectively carrying out the transactions contemplated by this Agreement.

 

B-4

 

 

Article 2

REPRESENTATIONS AND WARRANTIES OF THE SPONSORS

 

Each Sponsor hereby represents and warrants to Parent and the Company (solely with respect to itself, himself or herself and not with respect to any other Sponsor) as follows:

 

Section 2.01. Organization; Authorization. In the event a Sponsor is an individual, such Sponsor has full power, right and legal capacity to execute and deliver this Agreement and to perform his or her obligations hereunder. In the event a Sponsor is a legal entity, (a) such Sponsor is a legal entity duly organized, validly existing and in good standing under the Laws of such Sponsor’s jurisdiction of organization, (b) such Sponsor has all requisite corporate or similar power and authority and has taken all corporate or similar action necessary in order to execute and deliver this Agreement, to perform such Sponsor’s obligations under this Agreement and to consummate the transactions contemplated by this Agreement, and (c) no approval by any holder of such Sponsor’s equity interests is necessary to approve this Agreement. This Agreement has been duly executed and delivered by such Sponsor and, in the event such Sponsor is an individual and is married and any of such Sponsor’s shares of Parent Common Stock or Warrants constitute community property or spousal approval is otherwise required in order for this Agreement to be a valid and binding obligation of such Sponsor, this Agreement has been duly executed and delivered by or on behalf of such Sponsor’s spouse, and this Agreement constitutes a valid and binding agreement of such Sponsor enforceable against such Sponsor in accordance with its terms, subject to the Bankruptcy and Equity Exception.

 

Section 2.02. Governmental Filings; No Violations; Certain Contracts.

 

(a) Except for filings with the SEC under the Exchange Act and such other reports under, and such other compliance with, the Exchange Act as may be required in connection with this Agreement, no filings, notices, reports, consents, registrations, approvals, permits or authorizations are required to be made by such Sponsor with, nor are any required to be made or obtained by such Sponsor with or from any Governmental Entity, in connection with the execution, delivery and performance of this Agreement by such Sponsor and the consummation of the transactions contemplated by this Agreement, except as would not, individually or in the aggregate, reasonably be expected to prevent, delay or impair the ability of such Sponsor to perform such Sponsor’s obligations under this Agreement or to consummate the transactions contemplated by this Agreement.

 

(b) The execution, delivery and performance of this Agreement by such Sponsor does not, and the consummation of the transactions contemplated by this Agreement by such Sponsor shall not, constitute or result in (i) a breach or violation of, or a default under, the Organizational Documents of such Sponsor, if applicable or (ii) with or without notice, lapse of time or both, a breach or violation of, a termination (or right of termination) of or default under, the creation or acceleration of any obligations under or the creation of an Encumbrance on any of the assets of such Sponsor pursuant to, any Contract binding upon such Sponsor or, assuming (solely with respect to performance of this Agreement and consummation of the transactions contemplated by this Agreement) compliance with the matters referred to in Section 2.02(a), under any Law to which such Sponsor is subject, except, in each case, as would not, individually or in the aggregate, reasonably be expected to prevent, delay or impair the ability of such Sponsor to perform his, her or its obligations under this Agreement or consummate the transactions contemplated by this Agreement.

 

B-5

 

 

Section 2.03. Litigation. As of the date of this Agreement, except as would not, individually or in the aggregate, reasonably be expected to prevent, delay or impair the ability of such Sponsor to perform his, her or its obligations under this Agreement or to consummate the transactions contemplated by this Agreement, (a) there are no Actions pending or, to the knowledge of such Sponsor, threatened against such Sponsor or any of its Affiliates and (b) neither such Sponsor nor any of its Affiliates is a party to or subject to the provisions of any judgment, order, writ, injunction, decree or award of any Governmental Entity.

 

Section 2.04. Ownership of Parent Common Stock and Warrants; Voting Power. Schedule I hereto correctly sets forth the number of shares such Sponsor’s shares of Parent Common Stock and Warrants as of the date of this Agreement and, other than such shares of Parent Common Stock and Warrants, as of the date of this Agreement, there are no Parent securities (or any securities convertible, exercisable or exchangeable for, or rights to purchase or acquire, any Parent securities) held of record or beneficially owned by such Sponsor or in respect of which such Sponsor has full voting power. Such Sponsor is the record holder and beneficial owner of all of his, her or its shares of Parent Common Stock and Warrants and has, and shall have throughout the Applicable Period, full voting power and power of disposition with respect to all such shares of Parent Common Stock and Warrants free and clear of any liens, claims, proxies, voting trusts or agreements, options or any other encumbrances or restrictions on title, transfer or exercise of any rights of a stockholder in respect of such shares of Parent Common Stock and Warrants (collectively, “Encumbrances”), except for any such Encumbrance that (a) may be imposed pursuant to (i) this Agreement, (ii) any applicable restrictions on transfer under U.S. state or federal securities or “blue sky” Laws, or (iii) the Parent’s Organizational Documents or the terms of any customary custody or similar agreement applicable to shares of Parent Common Stock or Warrants held in brokerage accounts or (b) would not, individually or in the aggregate, reasonably be expected to prevent, delay or impair the ability of such Sponsor to perform his, her or its obligations under this Agreement or to consummate the transactions contemplated by this Agreement. No Person has any contractual or other right or obligation to purchase or otherwise acquire any of such Sponsor’s shares of Parent Common Stock or Warrants other than pursuant to the Merger Agreement or as set forth in Parent’s Organizational Documents.

 

Section 2.05. Reliance. Each Sponsor understands and acknowledges that Parent and the Company are relying upon such Sponsor’s execution, delivery and performance of this Agreement and upon the representations and warranties and covenants of such Sponsor contained in this Agreement.

 

Section 2.06. Finder’s Fees. No agent, broker, investment banker, finder or other intermediary is or shall be entitled to any fee or commission or reimbursement of expenses from Parent, Merger Sub or the Company or any of their respective Affiliates in respect of this Agreement based upon any arrangement or agreement made by or on behalf of such Sponsor.

 

B-6

 

 

Section 2.07. Affiliate Arrangements. Except as set forth on Schedule II attached hereto, neither such Sponsor nor anyone related by blood, marriage or adoption to such Sponsor or, to the knowledge of such Sponsor, any Person in which such Sponsor has a direct or indirect legal, contractual or beneficial ownership of 5% or greater is party to, or has any rights with respect to or arising from, any Contract with Parent or its Subsidiaries.

 

Section 2.08. No Other Representations or Warranties. Except for the representations and warranties made by such Sponsor in this Article 2, neither such Sponsor nor any other Person makes any express or implied representation or warranty to Parent or the Company in connection with this Agreement or the transactions contemplated by this Agreement, and such Sponsor expressly disclaims any such other representations or warranties.

 

Article 3

REPRESENTATIONS AND WARRANTIES OF PARENT

 

Parent represents and warrants to each Sponsor as follows:

 

Section 3.01. Organization. Parent is a corporation duly organized, validly existing and in good standing under the Laws of Delaware.

 

Section 3.02. Corporate Authority. Parent has all requisite corporate power and authority and has taken all corporate or similar action necessary in order to execute and deliver this Agreement, to perform its obligations under this Agreement and to consummate the transactions contemplated by this Agreement. No approval by any holder of Parent’s equity interests is necessary to approve this Agreement. This Agreement has been duly executed and delivered by Parent and constitutes a valid and binding agreement of Parent enforceable against Parent in accordance with its terms, subject to the Bankruptcy and Equity Exception.

 

Section 3.03. No Other Representations or Warranties. Except for the representations and warranties made by Parent in this Article 3, neither Parent nor any other Person makes any express or implied representation or warranty to such Sponsor in connection with this Agreement or the transactions contemplated by this Agreement, and Parent expressly disclaims any such other representations or warranties.

 

Article 4

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to each Sponsor as follows:

 

Section 4.01. Organization. The Company is a corporation duly organized, validly existing and in good standing under the Laws of Delaware.

 

B-7

 

 

Section 4.02. Corporate Authority. The Company has all requisite corporate power and authority and has taken all corporate or similar action necessary in order to execute and deliver this Agreement, to perform its obligations under this Agreement and to consummate the transactions contemplated by this Agreement. No approval by any holder of the Company’s equity interests is necessary to approve this Agreement. This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding agreement of the Company enforceable against the Company in accordance with its terms, subject to the Bankruptcy and Equity Exception.

 

Section 4.03. No Other Representations or Warranties. Except for the representations and warranties made by the Company in this Article 4, neither the Company nor any other Person makes any express or implied representation or warranty to such Sponsor in connection with this Agreement or the transactions contemplated by this Agreement, and the Company expressly disclaims any such other representations or warranties.

 

Article 5

GENERAL PROVISIONS

 

Section 5.01. Termination. This Agreement, including the voting agreements contemplated by this Agreement, shall automatically be terminated at the earliest to occur of: (a) the Effective Time; (b) the termination of the Merger Agreement pursuant to Article VII thereof; (c) the effective date of a written agreement duly executed and delivered by Parent, the Company and such Sponsor terminating this Agreement; (d) any amendment or modification of, or waiver under, the Merger Agreement, in each case without the prior written consent of such Sponsor, in a manner that extends the Outside Date (the date and time at which the earliest of clause (a), (b), (c), and (d) occurs being, the “Expiration Date”); provided, however, that in the case of any termination pursuant to clause (a) of this sentence, Section 1.05 Waiver of Appraisal Rights, Section 1.08 No Litigation and Section 1.09 Further Assurances and this Article 5 shall survive such termination. Nothing set forth in this Section 5.01 or elsewhere in this Agreement shall relieve any Party of any liability or damages to any other Party for any breach of this Agreement by such Party prior to such termination or fraud in connection with, arising out of or otherwise related to the express representations and warranties set forth in this Agreement or any instrument or other document delivered pursuant to this Agreement.

 

Section 5.02. Notices. All notices, requests, instructions, consents, claims, demands, waivers, approvals and other communications to be given or made hereunder by a Party to the other Party shall be in writing and shall be deemed to have been duly given or made on the date of delivery to the recipient thereof if received prior to 5:00 p.m. in the place of delivery and such day is a Business Day (or otherwise on the next succeeding Business Day) if (a) served by personal delivery or by a nationally recognized overnight courier service upon the Party for whom it is intended, (b) delivered by registered or certified mail, return receipt requested or (c) sent by email; provided that email transmission is promptly confirmed by telephone or otherwise. Such communications shall be sent to the respective Parties at the following street addresses or email addresses or at such other street address, or email address for a Party as shall be specified for such purpose in a notice given in accordance with this Section 5.02:

 

If to Parent:

 

Forum Merger III Corporation

1615 South Congress Avenue

Suite 103

Delray Beach, FL 33445

Attention: Marshall Kiev

David Boris

Email: mk@mkcapitalpartners.com

   david@forummerger.com

 

B-8

 

 

with a copy to (which shall not constitute notice):

 

White & Case LLP
1221 Avenue of the Americas

New York, NY 10020
Attention: Joel Rubinstein

Gary Silverman

Email: Joel.Rubinstein@whitecase.com

 Gary.Silverman@whitecase.com

 

If to the Company:

 

Electric Last Mile, Inc.

2541 High Meadow Circle

Suite 170

Auburn Hills, MI 48362

Attention: Jason Luo, Chairman

Email: jluo@electriclastmile.com

 

with a copy to (which shall not constitute notice):

 

Foley & Lardner LLP
111 Huntington Avenue
Suite 2500

Boston, MA 02199
Attention: Paul D. Broude

Email: pbroude@foley.com

 

If to such Sponsor, to such Sponsor’s address set forth on a signature page hereto.

 

Section 5.03. Miscellaneous. Article IX, other than Sections 9.5, 9.8, 9.13 and 9.14, of the Merger Agreement shall apply to this Agreement mutatis mutandis.

 

[Signature Page Follows]

 

B-9

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first written above.

 

 

Forum Merger III Corporation

   
  By:  
    Name:
    Title:

 

[Signature Page to Support Agreement]

 

B-10

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first written above.

 

 

Electric Last Mile, Inc.

   
  By:  
    Name:
    Title:

 

[Signature Page to Support Agreement]

 

B-11

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first written above.

 

 

FORUM INVESTORS III LLC

   
  By: Forum Capital Management III LLC,  
as managing member
   
  By:  
 

Name:

David Boris

  Title: Managing Member

 

Address: c/o Forum Merger III Corporation,

1615 South Congress Avenue, Suite 103

Delray Beach, Florida 33445

 

[Signature Page to Support Agreement]

 

B-12

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first written above.

 

FORUM CAPITAL MANAGEMENT III LLC
   
  By:  
    Name: David Boris
    Title: Managing Member

 

Address: c/o Forum Merger III Corporation,

1615 South Congress Avenue, Suite 103

Delray Beach, Florida 33445

 

[Signature Page to Support Agreement]

 

B-13

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first written above.

 

  By:  
    Name: Marshall Kiev

 

 

Address: c/o Forum Merger III Corporation,

1615 South Congress Avenue, Suite 103

Delray Beach, Florida 33445

 

 

[Signature Page to Support Agreement]

 

B-14

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first written above.

 

  By:  
    Name:  David Boris

 

Address: c/o Forum Merger III Corporation,

1615 South Congress Avenue, Suite 103

Delray Beach, Florida 33445

 

[Signature Page to Support Agreement]

 

B-15

 

 

Schedule I

 

Sponsor Parent Common Stock and Warrants

 

 

Sponsor

  Parent Class A Common Stock     Parent Class B Common Stock     Warrants  
Forum Investors III LLC     616,250       6,250,000       205,416  
Forum Capital Management III LLC     *       *       *  
Marshall Kiev     *       *       *  
David Boris     *       *       *  

 

* Forum Capital Management III LLC is the managing member of Forum Investors III LLC and has voting and investment discretion with respect to the common stock and warrants held by Forum Investors III LLC. Marshall Kiev and David Boris are the managing members of Forum Capital Management III LLC and may be deemed to have beneficial ownership of the common stock and warrants held directly by Forum Investors III LLC.

 

B-16

 

 

Schedule II

 

Affiliate Agreements

 

Letter Agreement, dated August 18, 2020, by and among Forum Merger III Corporation, each of Forum Merger III Corporation’s officers and directors and Forum Investors III LLC

 

Amended and Restated Promissory Note, dated July 2, 2020, issued to Forum Investors III LLC

 

Investment Management Trust Agreement, dated August 18, 2020, between Continental Stock Transfer & Trust Company and Forum Merger III Corporation

 

Registration Rights Agreement, dated August 18, 2020, among Forum Merger III Corporation, Forum Investors III LLC and the Holders signatory thereto

 

Securities Subscription Agreement, dated June 26, 2019, between Forum Merger III Corporation and Forum Investors III LLC

 

Private Placement Units Purchase Agreement, dated August 18, 2020, between Forum Merger III Corporation and Forum Investors III LLC

 

Administrative Services Agreement, dated August 18, 2020, between Forum Merger III Corporation and Forum Capital Management III LLC

 

Indemnity Agreements, each dated August 18, 2020, between Forum Merger III Corporation and each of the officers and directors of Forum Merger III Corporation

 

Warrant Agreement, dated August 18, 2020, between Continental Stock Transfer & Trust Company and Forum Merger III Corporation

 

B-17

 

 

Annex A

 

FORM OF JOINDER

 

This Joinder Agreement (this “Joinder Agreement”) is made as of the date written below by the undersigned (the “Joining Party”) in accordance with the Sponsor Support Agreement dated as of December 10, 2020 (the “Sponsor Support Agreement”) by and among Parent, the Company and the Sponsors that are party thereto as the same may be amended, supplemented or otherwise modified from time to time. Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in the Sponsor Support Agreement.

 

The Joining Party hereby acknowledges, agrees and confirms that, by its execution of this Joinder Agreement, the Joining Party shall be deemed to be a party to, and a “Sponsor” under, the Sponsor Support Agreement as of the date hereof and shall have all of the rights and obligations of a Sponsor as if he, she or it had executed the Sponsor Support Agreement. The Joining Party hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Sponsor Support Agreement.

 

IN WITNESS WHEREOF, the undersigned has duly executed this Joinder Agreement as of the date written below.

 

Date: [●] [●], 20[●]

 

  By:  
    Name:
    Title:
    Address for Notices:
     
    With copies to:

 

B-18

 

 

EXHIBIT C
FORM OF SUPPORT AGREEMENT

 

[See attached.]

 

 

 

 

SUPPORT AGREEMENT

 

This SUPPORT AGREEMENT (this “Agreement”), dated as of [●], 2020, is entered into by and between Forum Merger III Corporation, a Delaware corporation (“Parent”), and the undersigned stockholder (the “Stockholder” and, together with Parent, each a “Party” and collectively, the “Parties”) of Electric Last Mile, Inc., a Delaware corporation (the “Company”). Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in the Agreement and Plan of Merger, dated as of December 10, 2020 (as amended, supplemented or otherwise modified from time to time, the “Merger Agreement”), by and among the Company, Parent, ELMS Merger Corp., a Delaware corporation (“Merger Sub”) and Jason Luo, in the capacity as the initial Stockholder Representative thereto in accordance with the terms and conditions of the Merger Agreement.

 

RECITALS

 

WHEREAS, as of the date of this Agreement, the Stockholder is the record holder and the beneficial (as such term is defined in Rule 13d-3 under the Exchange Act, which meaning shall apply for all purposes of this Agreement whenever the term “beneficial” or “beneficially” is used) owner of, and has full voting power over, the number of shares of common stock, par value $0.0001 per share (the “Shares”), of the Company set forth on the Stockholder’s signature page hereto;

 

WHEREAS, the Company, Parent and Merger Sub have entered into the Merger Agreement, which provides for the merger of Merger Sub with and into the Company (the “Merger”), with the Company surviving the Merger, pursuant to the provisions of the DGCL;

 

WHEREAS, the Stockholder acknowledges that, as a condition and material inducement to Parent and Merger Sub’s willingness to enter into the Merger Agreement, Parent has required that (i) certain stockholders specified in the Merger Agreement, promptly after the execution and delivery of the Merger Agreement and in any event within twenty-four (24) hours and (ii) prior to the Closing, the holders of 100% of the issued and outstanding Shares enter into Support Agreements, including written consents in the form attached hereto as Annex A (each, a “Written Consent”), and, in order to induce Parent and Merger Sub to enter into the Merger Agreement and consummate the Merger and the other transactions contemplated by the Merger Agreement, the Stockholder is willing to enter into this Agreement;

 

WHEREAS, Parent desires that the Stockholder agree, and the Stockholder is willing to agree, subject to the limitations herein, not to Transfer (as defined below) any of its Shares, and to enter into the Written Consent and otherwise vote its Shares in a manner so as to facilitate consummation of the Merger and the other transactions contemplated by the Merger Agreement, and to undertake certain additional obligations pursuant to this Agreement;

 

C-1

 

  

WHEREAS, concurrently with the execution and delivery of this Agreement, the Stockholder is executing and delivering a Written Consent, constituting the Stockholder’s consent to, and vote to adopt, the Merger Agreement;

 

WHEREAS, concurrently with the execution and delivery of this Agreement, the Stockholder is executing and delivering the Amended and Restated Registration Rights Agreement in the form attached hereto as Annex B; and

 

WHEREAS, Parent and the Stockholder desire to make certain representations, warranties, covenants and agreements in connection with this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements set forth in this Agreement, the Parties agree as follows:

 

Article 1

VOTING AND TRANSFER OF SHARES

 

Section 1.01. Voting.

 

(a)  The Stockholder irrevocably and unconditionally agrees, during the period beginning on the date of this Agreement and ending on the Expiration Date (the “Applicable Period”), at each meeting of the stockholders of the Company (a “Meeting”) and at each adjournment or postponement thereof, and in connection with each action or approval by consent in writing of the stockholders of the Company (a “Consent Solicitation”), to cause to be present in person or represented by proxy and to vote or cause to be voted (or express consent or dissent in writing, as applicable) that number of Shares set forth on the Stockholder’s signature page hereto and any additional Shares that are hereafter held of record or beneficially owned by the Stockholder (collectively, the “Subject Shares”) that are entitled to vote (or express consent or dissent in writing, as applicable), in each case as follows:

 

(i)  in favor of any proposal for stockholders of the Company to adopt the Merger Agreement and approve any other matters necessary for consummation of the transactions contemplated by the Merger Agreement, including the Merger;

 

(ii)  in favor of any proposal to adjourn a Meeting at which there is a proposal for stockholders of the Company to adopt the Merger Agreement to a later date if there are not sufficient votes to adopt the Merger Agreement or if there are not sufficient Shares present in person or represented by proxy at such Meeting to constitute a quorum;

 

(iii)  against any proposal providing for an Alternative Transaction or the adoption of an agreement to enter into an Alternative Transaction;

 

C-2

 

 

(iv)  against any proposal for any amendment or modification of the Company’s Organizational Documents that would change the voting rights of any Shares or the number of votes required to approval any proposal, including the vote required to adopt the Merger Agreement; and

 

(v)  against any action, transaction or agreement that (A) would result in a breach of any representation or warranty or covenant of the Company under the Merger Agreement; (B) would reasonably be expected to prevent, delay or impair consummation of the Transactions in any material respect; or (C) result in any of the conditions set forth in Article VI of the Merger Agreement not being fulfilled.

 

(b)  Any vote required to be cast or consent or dissent in writing required to be expressed pursuant to this Section 1.01 shall be cast or expressed in accordance with the applicable procedures relating thereto so as to ensure that it is duly counted for purposes of determining that a quorum is present (if applicable) and for purposes of recording the results of that vote or Consent Solicitation. For the avoidance of doubt, nothing contained herein requires the Stockholder (or entitles any proxy of the Stockholder) to convert, exercise or exchange any options, warrants or convertible securities in order to obtain any underlying Shares.

 

(c)  The Stockholder agrees not to enter into any commitment, agreement, understanding or similar arrangement with any Person to vote or give voting instructions or express consent or dissent in writing in any manner inconsistent with the terms of this Section 1.01.

 

Section 1.02. No Transfers. During the Applicable Period, the Stockholder shall not, directly or indirectly: (a) sell, convey, assign, transfer (including by succession or otherwise by operation of Law), exchange, pledge, hypothecate or otherwise encumber or dispose of any Subject Shares (or any right, title or interest therein) or any rights to acquire any securities or equity interests of the Company; (b) deposit any Subject Shares or any rights to acquire any securities or equity interests of the Company into a voting trust or enter into a voting agreement or any other arrangement with respect to any Subject Shares or any rights to acquire any securities or equity interests of the Company or grant or purport to grant any proxy or power of attorney with respect thereto; (c) enter into any contract, option, call or other arrangement or undertaking, whether or not in writing, with respect to the sale, conveyance, assignment, transfer (including by succession or otherwise by operation of Law), exchange, pledge, hypothecation or other encumbrance or disposition, or limitation on the voting rights, of any Subject Shares (or any right, title or interest therein) or any rights to acquire any securities or equity interests of the Company; (d) otherwise grant, permit or suffer the creation of any Liens on any Subject Shares (other than applicable restrictions on transfer under U.S. state or federal securities or “blue sky” Laws) or (e) commit or agree to take any of the foregoing actions (any action described in clauses (a), (b), (c), (d) and (e), a “Transfer”); provided, however, that the foregoing shall not prohibit Transfers (i) between the Stockholder and any Affiliate of the Stockholder, (ii) to a trust for the benefit of the Stockholder or to any member of a Stockholder’s immediate family or a trust for the benefit of such immediate family member or (iii) by will, other testamentary document or under the laws of intestacy upon the death of Stockholder, in each case, so long as, prior to and as a condition to the effectiveness of any such Transfer, such Affiliate or transferee executes and delivers to Parent a joinder to this Agreement in the form attached hereto as Annex C. Any Transfer or action in violation of this Section 1.02 shall be void ab initio. If any involuntary Transfer of any of Subject Shares occurs, the transferee (and all transferees and subsequent transferees of such transferee) shall take and hold such Subject Shares subject to all of the restrictions, liabilities and rights under this Agreement, which shall continue in full force and effect during the Applicable Period. For the avoidance of doubt, nothing in this Section 1.02 shall prevent entry into or performance of any obligations pursuant to the Amended and Restated Registration Rights Agreement.

 

C-3

 

 

Section 1.03. Stop Transfer. The Stockholder shall not request that the Company register any transfer of any Certificate or other uncertificated interest representing any Subject Shares made in violation of the restrictions set forth in Section 1.02 during the Applicable Period.

 

Section 1.04. Waiver of Appraisal Rights. The Stockholder hereby agrees not to assert, exercise or perfect, directly or indirectly, and irrevocably and unconditionally waives, any appraisal rights (including under Section 262 of the DGCL) with respect to the Merger and any rights to dissent with respect to the Merger (collectively, “Appraisal Rights”).

 

Section 1.05. Public Announcements; Filings; Disclosures.

 

(a)  The Stockholder (and the Stockholder’s controlled Affiliates) shall not issue any press release or make any other public announcement or public statement (a “Public Communication”) with respect to this Agreement, the Merger Agreement, or the transactions contemplated by this Agreement or the Merger Agreement, without the prior written consent of Parent (which consent may be withheld in Parent’s sole discretion), except (i) as required by applicable Law or court process, in which case the Stockholder shall use its reasonable best efforts to provide Parent and Parent’s legal counsel with a reasonable opportunity to review and comment on such Public Communication in advance of its issuance and shall give reasonable and good faith consideration to any such comments or (ii) with respect to a Public Communication that is consistent with prior disclosures by Parent; provided, that the foregoing shall not apply to any disclosure required to be made by the Stockholder to a Governmental Entity so long as such disclosure is consistent with the terms of this Agreement and the Merger Agreement and the disclosures made by the Company and Parent pursuant to the terms of the Merger Agreement. Notwithstanding anything to the contrary in this Section 1.05(a), if the Stockholder is a director or officer of the Company, in his or her capacity as a director or officer of the Company, he or she may make public statements in such capacity to the extent permitted under the Merger Agreement.

 

(b)  The Stockholder hereby consents to and authorizes the Company and Parent to publish and disclose in any Public Communication or in any disclosure required by the SEC and in the proxy statement prepared by Parent and filed with the SEC relating to the Parent Special Meeting (the “Proxy Statement”) the Stockholder’s identity and ownership of Subject Shares and the Stockholder’s obligations under this Agreement (the “Stockholder Information”), consents to the filing of this Agreement to the extent required by applicable Law to be filed with the SEC or any regulatory authority relating to the Merger, and agrees to cooperate with Parent in connection with such filings, including providing Stockholder Information reasonably requested by Parent. Parent shall use its reasonable best efforts to provide the Stockholder with a reasonable opportunity to review and comment on any Stockholder Information included in such disclosure in advance of its filing. As promptly as practicable, the Stockholder shall notify Parent of any required corrections with respect to any Stockholder Information supplied by the Stockholder, if and to the extent the Stockholder becomes aware that any such Stockholder Information shall have become false or misleading in any material respect.

 

C-4

 

 

Section 1.06. Non-Solicitation.

 

(a)  The Stockholder acknowledges that the Stockholder has read Section 5.15(a) (Exclusivity) of the Merger Agreement. In addition, the Stockholder, solely in the Stockholder’s capacity as a stockholder of the Company, agrees not to, directly or indirectly, take any action that would violate Section 5.15(a) of the Merger Agreement if such Stockholder were deemed a “Representative” of the Company for purposes of Section 5.15(a) of the Merger Agreement; provided, that the foregoing shall not serve to limit or restrict any actions taken by such Stockholder in any capacity other than as a stockholder of the Company, to the extent such actions are in compliance with or required under Section 5.15(a) of the Merger Agreement.

 

(b)  Notwithstanding Section 1.06(a), the Stockholder may participate in discussions and negotiations with any Person making a proposal relating to an Alternative Transaction (or its Representatives) with respect to such proposal if (i) the Company is engaging in discussions or negotiations with such Person in compliance with Section 5.15(a) of the Merger Agreement and (ii) such Stockholder’s negotiations and discussions are in conjunction with and ancillary to the Company’s discussions and negotiations.

 

Section 1.07. No Agreement as Director or Officer. The Stockholder is entering into this Agreement solely in the Stockholder’s capacity as record or beneficial owner of Subject Shares and nothing herein is intended to or shall limit or affect any actions taken by the Stockholder or any employee, officer, director (or person performing similar functions), partner or other Affiliate (including, for this purpose, any appointee or representative of the Stockholder to the board of directors of the Company) of the Stockholder, solely in his or her capacity as a director or officer of the Company (or a Subsidiary of the Company) or other fiduciary capacity for the Company’s stockholders.

 

Section 1.08. Acquisition of Additional Shares. The Stockholder shall promptly (and in any event within two Business Days) notify Parent of the number of any additional Shares with respect to which the Stockholder becomes the holder of record or acquires beneficial ownership, if any, after the execution of this Agreement and before the Expiration Date, which Shares shall, for the avoidance of doubt, automatically become Subject Shares in accordance with Section 1.01.

 

C-5

 

 

Section 1.09. No Litigation. The Stockholder hereby agrees not to commence, maintain or participate in, or facilitate, assist or encourage, and agrees to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, suit, proceeding or cause of action, in law or in equity, in any court or before any Governmental Entity (a) challenging the validity of, or seeking to enjoin or delay the operation of, any provision of this Agreement or the Merger Agreement (including any claim seeking to enjoin or delay the consummation of the Merger), (b) alleging a breach of any fiduciary duty of any Person in connection with the Merger Agreement or the Transactions, or (c) seeking Appraisal Rights in connection with the Merger. Notwithstanding the foregoing, nothing herein shall be deemed to prohibit the Stockholder from enforcing the Stockholder’s rights under this Agreement or the Stockholder’s right to receive the Merger Consideration or any cash in lieu of fractional shares to which it may be entitled pursuant to the Merger Agreement in accordance with the terms thereof.

 

Section 1.10. Further Assurances. The Stockholder shall execute and deliver, or cause to be executed and delivered, such further certificates, instruments and other documents and to take such further actions as Parent may reasonably request for the purpose of effectively carrying out the transactions contemplated by this Agreement.

 

Article 2

REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER

 

The Stockholder hereby represents and warrants to Parent as follows:

 

Section 2.01. Organization; Authorization. In the event the Stockholder is an individual, the Stockholder has full power, right and legal capacity to execute and deliver this Agreement and to perform his or her obligations hereunder. In the event the Stockholder is a legal entity, (a) the Stockholder is a legal entity duly organized, validly existing and in good standing under the Laws of the Stockholder’s jurisdiction of organization, (b) the Stockholder has all requisite corporate or similar power and authority and has taken all corporate or similar action necessary in order to execute and deliver this Agreement, to perform the Stockholder’s obligations under this Agreement and to consummate the transactions contemplated by this Agreement and (c) no approval by any holder of the Stockholder’s equity interests is necessary to approve this Agreement. This Agreement has been duly executed and delivered by the Stockholder and, in the event the Stockholder is an individual and is married and any of the Stockholder’s Subject Shares constitute community property or spousal approval is otherwise required in order for this Agreement to be a valid and binding obligation of the Stockholder, this Agreement has been duly executed and delivered by or on behalf of the Stockholder’s spouse, and this Agreement constitutes a valid and binding agreement of the Stockholder enforceable against the Stockholder in accordance with its terms, subject to the Bankruptcy and Equity Exception.

 

C-6

 

 

Section 2.02. Governmental Filings; No Violations; Certain Contracts.

 

(a)  Except for filings with the SEC under the Exchange Act and such other reports under, and such other compliance with, the Exchange Act as may be required in connection with this Agreement, no filings, notices, reports, consents, registrations, approvals, permits or authorizations are required to be made by the Stockholder with, nor are any required to be made or obtained by the Stockholder with or from any Governmental Entity, in connection with the execution, delivery and performance of this Agreement by the Stockholder and the consummation of the transactions contemplated by this Agreement, except as would not, individually or in the aggregate, reasonably be expected to prevent, delay or impair the ability of the Stockholder to perform the Stockholder’s obligations under this Agreement or to consummate the transactions contemplated by this Agreement.

 

(b)  The execution, delivery and performance of this Agreement by the Stockholder does not, and the consummation of the transactions contemplated by this Agreement by the Stockholder shall not, constitute or result in (i) a breach or violation of, or a default under, the Organizational Documents of the Stockholder, if applicable, or (ii) with or without notice, lapse of time or both, a breach or violation of, a termination (or right of termination) of or default under, the creation or acceleration of any obligations under or the creation of an Encumbrance on any of the assets of the Stockholder pursuant to, any Contract binding upon the Stockholder or, assuming (solely with respect to performance of this Agreement and consummation of the transactions contemplated by this Agreement) compliance with the matters referred to in Section 2.02(a), under any Law to which the Stockholder is subject, except, in each case, as would not, individually or in the aggregate, reasonably be expected to prevent, delay or impair the ability of the Stockholder to perform its obligations under this Agreement or consummate the transactions contemplated by this Agreement.

 

Section 2.03. Litigation. As of the date of this Agreement, except as would not, individually or in the aggregate, reasonably be expected to prevent, delay or impair the ability of the Stockholder perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement, (a) there are no Actions pending or, to the knowledge of the Stockholder, threatened against the Stockholder or any of its Affiliates and (b) neither the Stockholder nor any of its Affiliates is a party to or subject to the provisions of any judgment, order, writ, injunction, decree or award of any Governmental Entity.

 

Section 2.04. Ownership of Company Stock; Voting Power. The Stockholder’s signature page hereto correctly sets forth the number of the Stockholder’s Subject Shares as of the date of this Agreement and, other than such Subject Shares, as of the date of this Agreement, there are no Company securities (or any securities convertible, exercisable or exchangeable for, or rights to purchase or acquire, any Company securities) held of record or beneficially owned by the Stockholder or in respect of which the Stockholder has full voting power. The Stockholder is the record holder and beneficial owner of all of its Subject Shares and has, and shall have throughout the Applicable Period, full voting power and power of disposition with respect to all such Subject Shares free and clear of any liens, claims, proxies, voting trusts or agreements, options or any other encumbrances or restrictions on title, transfer or exercise of any rights of a stockholder in respect of such Subject Shares (collectively, “Encumbrances”), except for any such Encumbrance that (a) may be imposed pursuant to (i) this Agreement, (ii) any applicable restrictions on transfer under U.S. state or federal securities or “blue sky” Laws, or (iii) the Company’s Organizational Documents or the terms of any customary custody or similar agreement applicable to Subject Shares held in brokerage accounts or (b) would not, individually or in the aggregate, reasonably be expected to prevent, delay or impair the ability of the Stockholder perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement. No Person has any contractual or other right or obligation to purchase or otherwise acquire any of the Stockholder’s Subject Shares other than pursuant to the Merger Agreement or as set forth in the Company’s Organizational Documents.

 

C-7

 

 

Section 2.05. Reliance. The Stockholder understands and acknowledges that Parent and Merger Sub are relying upon the Stockholder’s execution, delivery and performance of this Agreement and upon the representations and warranties and covenants of the Stockholder contained in this Agreement.

 

Section 2.06. Finder’s Fees. No agent, broker, investment banker, finder or other intermediary is or shall be entitled to any fee or commission or reimbursement of expenses from Parent, Merger Sub or the Company or any of their respective Affiliates in respect of this Agreement based upon any arrangement or agreement made by or on behalf of such Stockholder.

 

Section 2.07. Proxy Statement. None of the information supplied or to be supplied by the Stockholder for inclusion or incorporation by reference in the Proxy Statement and any amendment or supplement thereto will, at the date of mailing to the stockholders of the Parent and at the time of the Parent Special Meeting contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

Section 2.08. Other Agreements. The Stockholder has not taken or permitted any action that would or would reasonably be expected to (a) constitute or result in a breach hereof, (b) make any representation or warranty of the Stockholder set forth herein untrue or inaccurate or (c) otherwise restrict, limit or interfere with the performance of this Agreement, the Merger Agreement or the transactions contemplated by this Agreement or the Merger Agreement.

 

Section 2.09. Stockholder Has Adequate Information. The Stockholder acknowledges that the Stockholder is a sophisticated investor with respect to the Stockholder’s Subject Shares and has adequate information concerning the business and financial condition of the Company to make an informed decision regarding the transactions contemplated by this Agreement and has, independently and without reliance upon Parent, the Company or any Affiliate of Parent and the Company, and based on such information as the Stockholder has deemed appropriate, made the Stockholder’s own analysis and decision to enter into this Agreement. The Stockholder acknowledges that the Stockholder has had the opportunity to seek independent legal advice prior to executing this Agreement.

 

C-8

 

 

Section 2.10. No Other Representations or Warranties. Except for the representations and warranties made by the Stockholder in this Article 2, neither the Stockholder nor any other Person makes any express or implied representation or warranty to Parent in connection with this Agreement or the transactions contemplated by this Agreement, and the Stockholder expressly disclaims any such other representations or warranties.

 

Article 3

REPRESENTATIONS AND WARRANTIES OF PARENT

 

Parent represents and warrants to the Stockholder as follows:

 

Section 3.01. Organization. Parent is a corporation duly organized, validly existing and in good standing under the Laws of Delaware.

 

Section 3.02. Corporate Authority. Parent has all requisite corporate power and authority and has taken all corporate or similar action necessary in order to execute and deliver this Agreement, to perform its obligations under this Agreement and to consummate the transactions contemplated by this Agreement. No approval by any holder of Parent’s equity interests is necessary to approve this Agreement. This Agreement has been duly executed and delivered by Parent and constitutes a valid and binding agreement of Parent enforceable against Parent in accordance with its terms, subject to the Bankruptcy and Equity Exception.

 

Section 3.03. No Other Representations or Warranties. Except for the representations and warranties made by Parent in this Article 3, neither Parent nor any other Person makes any express or implied representation or warranty to the Stockholder in connection with this Agreement or the transactions contemplated by this Agreement, and Parent expressly disclaims any such other representations or warranties.

 

Article 4

GENERAL PROVISIONS

 

Section 4.01. Termination. This Agreement, including the voting agreements contemplated by this Agreement, shall automatically be terminated at the earliest to occur of: (a) the Effective Time; (b) the termination of the Merger Agreement pursuant to Article VII thereof; (c) the effective date of a written agreement duly executed and delivered by Parent and the Stockholder terminating this Agreement; (d) any amendment or modification of, or waiver under, the Merger Agreement, in each case without the prior written consent of the Stockholder, in a manner that (1) reduces or imposes any restriction on the right of the Stockholder to receive the Merger Consideration, (2) reduces the amount or changes the form of the Merger Consideration, or (3) extends the Outside Date (the date and time at which the earliest of clause (a), (b), (c), and (d) occurs being, the “Expiration Date”); provided, however, that in the case of any termination pursuant to clause (a) of this sentence, Section 1.04 (Waiver of Appraisal Rights), Section 1.05 (Public Announcements; Filings; Disclosures), Section 1.09 (No Litigation) and Section 1.10 (Further Assurances) and this Article 4 shall survive such termination. Nothing set forth in this Section 4.01 or elsewhere in this Agreement shall relieve any Party of any liability or damages to any other Party for any breach of this Agreement by such Party prior to such termination or fraud in connection with, arising out of or otherwise related to the express representations and warranties set forth in this Agreement or any instrument or other document delivered pursuant to this Agreement.

 

C-9

 

 

Section 4.02. Notices. All notices, requests, instructions, consents, claims, demands, waivers, approvals and other communications to be given or made hereunder by a Party to the other Party shall be in writing and shall be deemed to have been duly given or made on the date of delivery to the recipient thereof if received prior to 5:00 p.m. in the place of delivery and such day is a Business Day (or otherwise on the next succeeding Business Day) if (a) served by personal delivery or by a nationally recognized overnight courier service upon the Party for whom it is intended, (b) delivered by registered or certified mail, return receipt requested or (c) sent by email; provided that email transmission is promptly confirmed by telephone or otherwise. Such communications shall be sent to the respective Parties at the following street addresses or email addresses or at such other street address, or email address for a Party as shall be specified for such purpose in a notice given in accordance with this Section 4.02:

 

If to Parent:

 

Forum Merger III Corporation

1615 South Congress Avenue

Suite 103

Delray Beach, FL 33445

Attention: Marshall Kiev

David Boris

Email: mk@mkcapitalpartners.com

 david@forummerger.com

 

with a copy to (which shall not constitute notice):

 

White & Case LLP
1221 Avenue of the Americas

New York, NY 10020
Attention: Joel Rubinstein

Gary Silverman

Email: Joel.Rubinstein@whitecase.com

Gary.Silverman@whitecase.com

 

C-10

 

 

If to the Stockholder, to the Stockholder’s address set forth on a signature page hereto.

 

Section 4.03. Miscellaneous. Article IX, other than Sections 9.5, 9.8, 9.13 and 9.14 of the Merger Agreement, shall apply to this Agreement mutatis mutandis.

 

[Signature Page Follows]

 

C-11

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first written above.

 

Forum Merger III Corporation

   
  By:  
    Name:
    Title:

 

[Signature Page to Stockholder Support Agreement]

 

C-12

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first written above.

 

STOCKHOLDER

   
     
     
     
Signature of Stockholder   Name of Person Signing for the Stockholder (If signing in a representative capacity for a corporation, trust, partnership or other entity)
     
     
     
Printed Name of Stockholder   Title of Person Signing for the Stockholder (If signing in a representative capacity for a corporation, trust, partnership or other entity)
     
     
[Signature of Stockholder’s Spouse]   [Printed Name of Stockholder’s Spouse]

 

Address:    
   

 

  Shares Owned Beneficially       Shares Held of Record   Shares Over Which the Stockholder has Full Voting Power
  [●]       [●]   [●]

 

[Signature Page to Stockholder Support Agreement]

 

C-13

 

 

Annex A

 

ACTION
BY WRITTEN CONSENT
OF THE STOCKHOLDERS
OF
ELECTRIC LAST MILE, INC.

 

In accordance with Sections 228 and 251 of the Delaware General Corporation Law (“DGCL”) and the Amended and Restated Bylaws of Electric Last Mile, Inc., a Delaware corporation (the “Company”), the undersigned stockholders of the Company (the “Stockholders”), having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and representing all of the stockholders of the Company, hereby take the following actions and adopt the following resolutions:

 

APPROVAL OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY

 

WHEREAS, the Stockholders have considered the transactions contemplated by the Agreement and Plan of Merger (the “Merger Agreement”), dated as of December 10, 2020, by and among the Company, Forum Merger III Corporation, a Delaware corporation (“Parent”), ELMS Merger Corp., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”), and Jason Luo, in the capacity as the initial Stockholder Representative thereto, a copy of which has been presented to the Stockholders and is attached hereto as Annex A. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Merger Agreement;

 

WHEREAS, the Merger Agreement provides for, among other things, the merger of Merger Sub with and into the Company (the “Merger”), with the Company as the surviving corporation;

 

WHEREAS, pursuant to the Merger and subject to the terms and conditions of the Merger Agreement, Parent will deliver or cause to be delivered the aggregate Merger Consideration to be allocated among the Stockholders as provided in the Merger Agreement in exchange for all of the issued and outstanding shares of capital stock of the Company;

 

WHEREAS, the Board of Directors of the Company (the “Board”) has approved and declared advisable the Merger Agreement and entered into the Merger Agreement on the date thereof; and

 

WHEREAS, the Board has recommended that the Stockholders vote in favor of the adoption of the Merger Agreement and the transactions contemplated thereby.

 

NOW, THEREFORE, BE IT RESOLVED, that the Merger Agreement, together with all exhibits, annexes and schedules thereto, the transactions contemplated thereby, including the Merger, and any matter required to be approved by the Stockholders in order to facilitate the Merger and the approval of all other transactions contemplated by the Merger Agreement are hereby consented to, adopted, approved and ratified in accordance with the DGCL and the Company’s Amended and Restated Bylaws (the “Bylaws”); and that the Company be, and hereby is, authorized, directed and empowered to (i) perform its obligations under the Merger Agreement and (ii) enter into and/or perform its obligations under each other agreement, instrument, document or certificate required or permitted to be entered into by the Company under the terms of the Merger Agreement;

 

C-14

 

 

RESOLVED FURTHER, that the officers of the Company be, and each of them hereby is, authorized and directed, on behalf and in the name of the Company, to do or cause to be done any and all such further acts and things and to execute and deliver any and all such additional agreements, certificates, documents and instruments as any such officer may deem necessary or appropriate in connection with the transactions contemplated by the Merger Agreement;

 

RESOLVED FURTHER, that the officers of the Company be, and each of them hereby is, authorized and directed, on behalf and in the name of the Company, to cause to be prepared, executed and filed with the appropriate foreign, federal, state or local governmental authorities or instrumentalities, including the filing of the Certificate of Merger, such registrations, declarations or other filings as any such officer may deem necessary or desirable or as may be required by such governmental authorities or instrumentalities in connection with the transactions contemplated by the Merger Agreement;

 

RESOLVED FURTHER, that the Board be, and hereby is, authorized and empowered to amend the Merger Agreement and take any other action with respect to the Merger Agreement permitted under Section 251(d) of the DGCL, as the Board may, in the exercise of its discretion, deem advisable, appropriate and in the best interests of the Company and its Stockholders; and

 

RESOLVED FURTHER, that any rights to receive notice, or any other consent or waiver required in connection with the Merger or the Merger Agreement, under the DGCL, the Company’s Certificate of Incorporation, the Bylaws or any other agreement or provision is hereby waived or granted, as applicable, in all respects.

 

WAIVER OF DISSENTERS’ RIGHTS

 

WHEREAS, under the DGCL, the Stockholders may be entitled to appraisal rights in connection with the Merger.

 

NOW, THEREFORE, BE IT RESOLVED, that each undersigned Stockholder, with respect only to himself, herself or itself, hereby irrevocably waives any appraisal rights under the DGCL and any notice or disclosure requirements related thereto.

 

C-15

 

 

GENERAL AUTHORITY

 

RESOLVED FURTHER, that any of the officers of the Company be, and each hereby is, authorized, directed and empowered, acting on behalf of the Company, to execute and deliver any certificates, documents, agreements and instruments that any officer or officers executing such documents may, in the exercise of such officer’s or officers’ discretion, deem appropriate, advisable and in the best interests of the Company pursuant to the foregoing resolutions, together with such amendments and modifications thereof as shall be made therein with the approval of such officer or officers, the execution of which shall be conclusive evidence of such approval; and

 

RESOLVED FURTHER, that any and all acts heretofore done, and any and all documents, instruments and certificates heretofore executed and delivered, in the name and on behalf of the Company, in connection with the transactions contemplated by the Merger Agreement are hereby ratified and approved.

 

[The remainder of this page has been intentionally left blank.]

 

C-16

 

 

The undersigned has executed this Action By Written Consent of the Stockholders as of the date set forth below.

 

STOCKHOLDER

 

     
Signature of Stockholder   Name of Person Signing for the Stockholder (If signing in a representative capacity for a corporation, trust, partnership or other entity)
     
     
Printed Name of Stockholder   Title of Person Signing for the Stockholder (If signing in a representative capacity for a corporation, trust, partnership or other entity)
     
Date:    

 

[Signature Page to Action By Written Consent of the Stockholders]

 

C-17

 

 

Annex B

 

FORM OF AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

See attached.

 

C-18

 

 

Annex C

 

FORM OF JOINDER

 

This Joinder Agreement (this “Joinder Agreement”) is made as of the date written below by the undersigned (the “Joining Party”) in accordance with the Support Agreement dated as of [●] [●], 20[●] (the “Support Agreement”) by and between Parent and the stockholder of the Company that is party thereto as the same may be amended, supplemented or otherwise modified from time to time. Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in the Support Agreement.

 

The Joining Party hereby acknowledges, agrees and confirms that, by its execution of this Joinder Agreement, the Joining Party shall be deemed to be a party to, and a “Stockholder” under, the Support Agreement as of the date hereof and shall have all of the rights and obligations of a Stockholder as if it had executed the Support Agreement. The Joining Party hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms, provisions and conditions contained in the Support Agreement.

 

IN WITNESS WHEREOF, the undersigned has duly executed this Joinder Agreement as of the date written below.

 

Date: [●] [●], 20[●] 

 

  By:
    Name:
    Title:
    Address for Notices:
     
    With copies to:

 

C-19

 

 

EXHIBIT D
FORM OF Amended and Restated Registration Rights Agreement

 

[See attached.]

 

 

 

 

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

This Amended and Restated Registration Rights Agreement (this “Agreement”) is entered into on [●], 20[●], by and among Forum Merger III Corporation (the “Company”), and the undersigned parties listed on the signature pages hereto (each, an “Investor” and, collectively, the “Investors”) and will be effective as of the Effective Time (as defined in the Merger Agreement (as defined below)).

 

RECITALS

 

WHEREAS, Forum Investors III LLC, a Delaware limited liability company (the “Sponsor”) is a party to a Registration Rights Agreement (the “Initial Agreement”), dated as of August 18, 2020, by and among the Sponsor, the Company, Jefferies LLC (“Jefferies”) and other signatories thereto, pursuant to which the Company provided the Sponsor and Jefferies with certain rights relating to the registration of certain securities of the Company, including the Founder Shares (as defined herein) and Private Placement Units (as defined herein);

 

WHEREAS, prior to the initial public offering (the “IPO”) of the Company, the Sponsor owned shares (the “Founder Shares”) of Class B common stock, par value $0.0001 per share, of the Company (the “Class B common stock”);

 

WHEREAS, the Founder Shares are convertible into shares of Class A common stock, par value $0.0001 per share, of the Company (“Class A common stock”) on the terms provided in the Company’s second amended and restated certificate of incorporation (the “Pre-Merger COI”);

 

WHEREAS, the Sponsor and Jefferies purchased an aggregate of 741,250 units (“Private Placement Units”) consisting of one share of Class A common stock and one-third of one warrant exercisable for one share of Class A common stock (the “Private Placement Warrants”) in a private placement that was completed simultaneously with the consummation of the IPO;

 

WHEREAS, in connection with the IPO, the Company entered into a warrant agreement, dated as of August 18, 2020, pursuant to which the Company agreed to use its commercially reasaonable efforts to file with the U.S. Securities and Exchange Commission (the “Commission”) a registration statement for the registration, under the Securities Act of 1933, as amended (together with the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time, the “Securities Act”), of the shares of Class A common stock issuable upon exercise of the warrants issued to the public investors in the IPO (the “Public Warrant”) and the 247,082 shares of Class A common stock issuable under the Private Placement Warrants;

 

WHEREAS, reference is made to that certain Agreement and Plan of Merger, by and among the Company, Electric Last Mile, Inc., a Delaware corporation (“ELMS”), ELMS Merger Corp., a Delaware corporation (“Merger Sub”), and a wholly-owned subsidiary of the Company, and Jason Luo, in the capacity as the initial Stockholder Representative thereto, dated December 10, 2020 (as amended from time to time in accordance with the terms thereof, the “Merger Agreement”), pursuant to which Merger Sub will merge with and into ELMS, with ELMS continuing as the surviving corporation (the “Merger”);

 

D-1

 

 

WHEREAS, capitalized terms used but not defined herein shall have the respective meanings given to such terms in the Merger Agreement;

 

WHEREAS, in connection with the Merger and pursuant to the Merger Agreement and the other Transaction Documents, the Company, ELMS, the Sponsor, Jefferies LLC and the other signatories to the Initial Agreement have agreed to amend and restate the Initial Agreement in order to provide rights relating to the registration of shares of Common Stock issued or issuable to the holders of equity interests of the Company or ELMS pursuant to the Merger Agreement, the other Transaction Documents and the transactions contemplated thereby;

 

WHEREAS, at the Effective Time, all shares of Class B common stock will automatically convert into shares of Class A common stock in accordance with the Pre-Merger COI and the Merger Agreement;

 

WHEREAS, immediately following the conversion of the Class B common stock into Class A common stock, all shares of Class A common stock will be reclassified as shares of common stock of the Company, $0.0001 par value per share (the “Common Stock”);

 

WHEREAS, pursuant to the Merger Agreement, at the Effective Time, the Company will issue to the stockholders of ELMS (collectively, the “ELMS Holders”) shares of Common Stock as consideration in the Merger (together with any shares of Common Stock issued to the ELMS Holders after the Closing of the Merger pursuant to the Merger Agreement, including, for the avoidance of doubt, any shares of Adjustment Escrow Stock, the Earnout Shares and/or the 15 million shares reserved for issuance pursuant to Section 5.14 of the Merger Agreement, collectively, the “Merger Shares”);

 

WHEREAS, pursuant to Section 5.5 of the Initial Agreement, the provisions, covenants and conditions set forth therein may be amended or modified upon the written consent of holders of at least a majority in interest of the Registrable Securities at the time in question (which majority interest must include Jefferies if such amendment or modification affects in any way the rights of Jefferies thereunder); and

 

WHEREAS, the parties hereto desire to amend and restate the Initial Agreement in order to provide the Investors with certain rights relating to the registration of the Registrable Securities.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

A. The Initial Agreement is hereby amended in its entirety and restated herein. Upon the execution of this Agreement, all provisions of, rights granted and covenants made in the Initial Agreement are hereby waived, released and superseded in their entirety and shall have no further force or effect, including, without limitation, all rights of first refusal and any notice period associated therewith otherwise applicable to the transactions contemplated by the Merger Agreement.

 

D-2

 

 

SECTION 1
Definitions

 

1.1 Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

 

(a) “Agreement” has the meaning set forth in the Preamble.

 

(b) “Affiliate” of any person or entity means any other person or entity that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person or entity. As used in this definition, the term “control,” including the correlative terms “controlled by” and “under common control with,” means (i) the direct or indirect ownership of more than 50% of the voting rights of a person or entity or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or any equity or other ownership interest, by contract or otherwise).

 

(c) “Class A common stock” has the meaning set forth in the Recitals.

 

(d) “Class B common stock” has the meaning set forth in the Recitals.

 

(e) “Closing” means the closing of the transactions contemplated under the Merger Agreement.

 

(f) “Commission” has the meaning set forth in the Recitals.

 

(g) “Common Stock” has the meaning set forth in the Recitals.

 

(h) “Company” has the meaning set forth in the Preamble.

 

(i) “DGCL” means the General Corporation Law of the State of Delaware, as amended.

 

(j) “Dollars” or “$” means the currency of the United States of America.

 

(k) “ELMS” has the meaning set forth in the Recitals.

 

(l) “ELMS Founders” means Jason Luo and James Taylor.

 

(m) “ELMS Holders” has the meaning set forth in the Recitals.

 

(n) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.

 

(o) “FINRA” has the meaning set forth in Section 2.4(q).

 

D-3

 

 

(p) “Founder Shares” has the meaning set forth in the Recitals.

 

(q) “Holder” means an Investor who holds Registrable Securities (including their donees, pledgees, assignees, transferees and other successors) and any holder of Registrable Securities to whom the registration rights conferred by this Agreement have been duly and validly transferred in accordance with Section 2.11 or Section 2.13 of this Agreement.

 

(r) “Indemnified Party” has the meaning set forth in Section 2.7(c).

 

(s) “Indemnifying Party” has the meaning set forth in Section 2.7(c).

 

(t) “Initial Agreement” has the meaning set forth in the Recitals.

 

(u) “Initiating Holders” means either (i) any Holder or Holders who, in the aggregate, hold not less than a majority of the Registrable Securities issued to the Sponsor or (ii) any Holder or Holders who, in the aggregate, hold not less than twenty percent (20%) of the Merger Shares that constitute Registrable Securities.

 

(v) “Investors” has the meaning set forth in the Preamble.

 

(w) “IPO” has the meaning set forth in the Recitals.

 

(x) “Merger” has the meaning set forth in the Recitals.

 

(y) “Merger Agreement” has the meaning set forth in the Recitals.

 

(z) “Merger Shares” has the meaning set forth in the Recitals.

 

(aa) “Merger Sub” has the meaning set forth in the Recitals.

 

(bb) “Other Selling Stockholders” means persons or entities other than Holders who, by virtue of agreements with the Company, are entitled to include their Other Shares in certain registrations hereunder.

 

(cc) “Other Shares” means securities of the Company, other than Registrable Securities (as defined below), with respect to which registration rights have been granted.

 

(dd) “Pre-Merger COI” has the meaning set forth in the Recitals.

 

(ee) “Private Placement Units” has the meaning set forth in the Recitals.

 

(ff) “Private Placement Warrants” has the meaning set forth in the Recitals.

 

(gg) “Qualified Holder” means each Holder whose Registrable Securities have a market value of at least $5,000,000 based on the average closing price of the Common Stock for the ten (10) days ending on the trading day prior to the date on which notice is sent pursuant to Section 2.2(a)(i).

 

(hh) “Public Warrants” has the meaning set forth in the Recitals.

 

D-4

 

 

(ii) The terms “register,” “registered” and “registration” shall refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.

 

(jj) “Registrable Securities” means shares of Common Stock issued or issuable to the Investors pursuant to the Merger Agreement, including without limitation any (i) Merger Shares and (ii) Private Placement Warrants and shares of Common Stock (including shares of Common Stock issuable upon exercise of Private Placement Warrants) held by the Sponsor or Jefferies immediately after the Closing of the Merger (including without limitation, giving effect to the conversion of shares of Class B common stock into Class A common stock and subsequent conversion into shares of Common Stock upon the closing of the Merger). Registrable Securities include any warrants, shares of capital stock or other securities of the Company issued as a dividend or other distribution with respect to or in exchange for or in replacement of such shares of Common Stock (including shares of Common Stock issuable upon exercise of Private Placement Warrants). As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when: (a) a registration statement with respect to the sale of such securities has become effective under the Securities Act and such securities have been sold, transferred, disposed of or exchanged in accordance with such registration statement; (b) such securities have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer have been delivered by the Company and any subsequent sale, transfer or distribution of them does not require registration under the Securities Act; (c) such securities have ceased to be outstanding; or (d) such securities are freely saleable under Rule 144 without public information requirements or volume limitations.

 

(kk) “Registration Expenses” means all expenses incurred in effecting any registration pursuant to this Agreement, including, without limitation, all registration, qualification and filing fees (including fees with respect to filings required to be made with FINRA, and any fees of the securities exchange or automated quotation system on which the Common Stock is then listed or quoted), printing expenses, escrow fees, fees and disbursements of counsel for the Company, two (2) counsels for the Holders, one selected by Holders holding a majority of the Registrable Securities initially issued to the Sponsor and one selected by Holders holding a majority of the Merger Shares that are Registrable Securities, up to a maximum of $50,000 total per counsel, blue sky fees and expenses (including reasonable fees and disbursements of counsels for the Holders in connection with blue sky compliance), and any fees and disbursements of accountants retained by the Company incident to or required by any such registration, but shall not include Selling Expenses, fees and disbursements of other counsel for the Holders and the compensation of regular employees of the Company, which shall be paid in any event by the Company.

 

(ll) “Representatives” means, with respect to any person, any of such person’s officers, directors, employees, agents, attorneys, accountants, actuaries, consultants, equity financing partners or financial advisors or other person associated with, or acting on behalf of, such person.

 

(mm) “Resale Shelf Registration Statement” has the meaning set forth in Section 2.1(a).

 

D-5

 

 

(nn) “Restricted Securities” means any Registrable Securities that are required to bear a legend restricting transfer or are otherwise prohibited from being sold, transferred or distributed without registration under the Securities Act.

 

(oo) “Rule 144” means Rule 144 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission.

 

(pp) “Rule 145” means Rule 145 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission

 

(qq) “SEC Guidance” means (i) any publicly-available written or oral guidance, or comments, requirements or requests of the Staff and (ii) the Securities Act and the rules and regulations thereunder.

 

(rr) “Securities Act” has the meaning set forth in the Recitals.

 

(ss) “Selling Expenses” means all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities and fees and disbursements of counsel for any Holder (other than the fees and disbursements of counsel to the Sponsor and to the Holders of Merger Shares included in Registration Expenses).

 

(tt) “Staff” means the staff of the Division of Corporation Finance of the Commission.

 

(uu) “Suspension Notice” has the meaning set forth in Section 2.1(f).

 

(vv) “Transfer” means the (a) sale of, offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the Commission promulgated thereunder with respect to, any security, (b) entry into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) public announcement of any intention to effect any transaction specified in clause (a) or (b).

 

(ww) “Underwritten Takedown” means an underwritten public offering of Registrable Securities pursuant to an effective registration statement.

 

D-6

 

 

SECTION 2
Registration Rights

 

2.1 Registration

  

(a) Registration Requirements. The Company shall, not later than thirty (30) days after the Closing, prepare and file with the Commission a registration statement on Form S-1, or Form S-3 if such registration statement form is available to the Company, and take all such other actions as are necessary to ensure that there is an effective “shelf” registration statement containing a prospectus that remains current covering (and to qualify under required U.S. state securities laws, if any) the offer and sale of all Registrable Securities by the Holders on a continuous or delayed basis pursuant to Rule 415 of the Securities Act (the registration statement, the “Resale Shelf Registration Statement”). The Company shall use reasonable best efforts to cause the Commission to declare the Resale Shelf Registration Statement effective as soon as possible thereafter, but in any event within three (3) days after the Commission advises the Company that it has completed its review of such registration statement, and to remain effective and the prospectus contained therein current until all Holders cease to hold Registrable Securities. The Resale Shelf Registration Statement shall provide for any method or combination of methods of resale of Registrable Securities legally available to, and requested by, the Holders, and shall comply with the relevant provisions of the Securities Act and Exchange Act.

 

(b) Request for Underwritten Takedowns. The Holders that qualify as Initiating Holders will be entitled to Underwritten Takedowns with respect to their Registrable Securities in accordance with this Section 2.1. If the Company shall receive from any Initiating Holder a written request signed by such Initiating Holder that the Company effect any Underwritten Takedown with respect to all or a part of the Registrable Securities (such request shall state the number of shares of Registrable Securities proposed to be disposed of by such Initiating Holder), the Company will:

 

(i) promptly, and in any event, within five (5) days after receiving such request, give written notice of the proposed Underwritten Takedown to all other Qualified Holders; and

 

(ii) as soon as practicable, use its reasonable best efforts to cause the Commission to declare such Underwritten Takedown effective within ninety (90) days thereafter (including, without limitation, filing post-effective amendments, one or more prospectus supplements, appropriate qualifications under any applicable blue sky or other state securities laws, and appropriate compliance with the Securities Act) and to permit and facilitate the sale and distribution in an underwritten offering of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within ten (10) days after such written notice from the Company is mailed or delivered.

 

(c) Limitations on Underwritten Takedowns. The Company shall not be obligated to effect any Underwritten Takedown pursuant to this Section 2.1:

 

(i) If the Initiating Holder, together with the holders of any other securities of the Company entitled to inclusion in such Underwritten Takedown, propose to sell Registrable Securities and such other securities (if any), the aggregate proceeds of which are anticipated to be less than $20,000,000;

 

D-7

 

 

(ii) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification, or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

 

(iii) If the Company has effected two (2) such Underwritten Takedowns in any given twelve (12) month period;

 

(iv) If the Initiating Holder proposes to dispose of shares of Registrable Securities that may be registered on Form S-3 pursuant to the request made pursuant to Section 2.2;

 

(v) If the Initiating Holder does not request that such offering be firmly underwritten by underwriters selected by the Initiating Holder (subject to the consent of the Company); or

 

(vi) If the Company and the Initiating Holder are unable to obtain the commitment of the underwriter described in clause (v) above to firmly underwrite the offer.

 

(d) Other Shares. Any Underwritten Takedown may, subject to the provisions of Section 2.1(f), include Other Shares, and may include securities of the Company being sold for the account of the Company, provided that, any Other Shares or securities of the Company to be included in an Underwritten Takedown must be the subject of an effective shelf registration statement at the time the Company receives the request for an Underwritten Takedown from the Initiating Holder.

 

(e) Underwriting; Cutback. If the Company requests inclusion in any Underwritten Takedown of securities to be sold for its own account, or if other persons request inclusion of Other Shares in any Underwritten Takedown, the Initiating Holder shall, on behalf of all Holders, offer to include such securities in the underwriting and such offer shall be conditioned upon the participation of the Company or such other persons in such underwriting and the inclusion of the Company’s and such other person’s securities of the Company and their acceptance of the applicable provisions of this Section 2. The Company shall (together with all Holders and other persons proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected for such underwriting by the Company, which underwriters are reasonably acceptable to a majority-in-interest of Holders that qualify as Initiating Holders. No Holder (or its permitted transferee or assignee under Section 2.11 or Section 2.13) shall be required to make any representations or warranties to, or agreements with, the Company or the underwriters other than representations, warranties or agreements regarding such Holder’s (or such transferee’s or assignee’s) authority to enter into such underwriting agreement and to sell, and its ownership of, the securities being registered on its behalf, its intended method of distribution and any other representation required by law.

 

D-8

 

 

Notwithstanding any other provision of this Section 2.1, if the underwriters, in good faith, advise the Initiating Holder in writing that marketing factors require a limitation on the number of securities of the Company to be underwritten, the number of Registrable Securities and Other Shares that may be so included shall be allocated as follows: (i) first, among Initiating Holders requesting to include Registrable Securities in such Underwritten Takedown based on the pro rata percentage of Registrable Securities held by such Initiating Holders (determined based on the aggregate number of Registrable Securities held by each such Initiating Holder), provided that not less than 20% of the allocation in this clause (i) shall be for the Sponsor or its permitted transferees under Section 2.11 or Section 2.13; (ii) second, among all other Holders requesting to include Registrable Securities in such Underwritten Takedown based on the pro rata percentage of Registrable Securities held by such Holders (determined based on the aggregate number of Registrable Securities held by each such Holder); (iii) third, to the Company, which the Company may allocate, at its discretion, for its own account, or for the account of other Holders or employees of the Company, and (iv) fourth, to any Other Selling Stockholders requesting to include Other Shares in such Underwritten Takedown.

 

If a person who has requested inclusion in such Underwritten Takedown as provided above does not agree to the terms of any such underwriting, such person shall be excluded therefrom by written notice to the Company, the underwriter or the Initiating Holders, and the securities so excluded shall also be withdrawn from the Underwritten Takedown. If securities are so withdrawn from the Underwritten Takedown and if the number of shares to be included in such Underwritten Takedown was previously reduced as a result of marketing factors pursuant to this Section 2.1(e), then the Company shall offer to all Holders who have retained rights to include securities in the Underwritten Takedown the right to include additional Registrable Securities in the offering in an aggregate amount equal to the number of shares so withdrawn, with such shares to be allocated among such Holders requesting additional inclusion, as set forth above.

 

(f) Deferral; Suspension. Notwithstanding anything in this Agreement to the contrary, if the Company furnishes to the Holders a certificate (the “Suspension Notice”) signed by an executive officer of the Company stating that, in the good faith judgment of the Company’s Board of Directors, effecting a registration (whether by the filing of a registration statement or by taking any other action) or the offering or disposition of Registrable Securities thereunder (including, for the avoidance of doubt, through an Underwritten Takedown) should be postponed or suspended because such registration, offering or disposal would (1) materially impede, delay or interfere with a pending material acquisition, corporate reorganization, or other similar transaction involving the Company; (2) require premature disclosure of material non-public information that the Company has a material bona fide business purpose for preserving as confidential; or (3) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then by delivery of the Suspension Notice to the Holders, then (in addition to the limitations set forth in Section 2.1(c) of this Agreement) the Company may so postpone effecting a registration or require the Holders to refrain from offering or disposing of Registrable Securities for a period of not more than sixty (60) days, and, provided further, that the Company shall not suspend usage of a registration statement in this manner more than once in any twelve (12) month period.

 

D-9

 

 

2.2 Company Registration

 

(a) Company Registration/Underwritten Offering. If the Company determines to (1) register any of its securities either for its own account or the account of Other Selling Stockholders (or a combination of the foregoing) during a period in which a Resale Shelf Registration Statement covering a Holder’s Registrable Securities is not then effective, other than: a registration pursuant to Section 2.1; a registration relating to the shares of Common Stock underlying the Public Warrants; a registration relating solely to employee benefit plans; a registration relating to the offer and sale of non-convertible debt securities; a registration relating to a corporate reorganization or other Rule 145 transaction; or a registration on any registration form that does not permit secondary sales, or (2) effect an underwritten public offering of securities, either for its own account or the account of Other Selling Stockholders (or a combination of the foregoing), the Company will:

 

(i) promptly give written notice (in any event not later than ten (10) days prior to the filing of the registration statement or preliminary prospectus to which such offering relates) of the proposed registration or offering, as applicable, to all Holders; and

 

(ii) use its reasonable best efforts to include in such registration or offering, as applicable, and any related qualification under blue sky laws or other compliance, except as set forth in Section 2.2(b), and in any underwriting involved therein, all of such Registrable Securities as are specified in a written request or requests made by any Holder or Holders received by the Company within five (5) days after receipt of such written notice from the Company. Such written request may specify all or a part of a Holder’s Registrable Securities; provided however, that notwithstanding anything to the contrary herein, only Qualified Holders shall be entitled to notice of and to participate in underwritten public offerings contemplated by clause (ii) of this Section 2.2(a).

 

(b) Underwriting; Cutback. If the registration or offering of which the Company gives notice is for an underwritten public offering, the Company shall so advise the Qualified Holders who have elected to participate (and include the names of the proposed underwriters) as a part of the written notice given pursuant to Section 2.2(a)(2)(i). All Qualified Holders proposing to distribute their securities through such underwriting shall (together with the Company and the Other Selling Stockholders with registration rights to participate therein) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected by the Company. No Qualified Holder (or its permitted transferee or assignee under Section 2.11 or Section 2.13) shall be required to make any representations or warranties to, or agreements with, the Company or the underwriters other than representations, warranties or agreements regarding such Qualified Holder’s (or such transferee’s or assignee’s) authority to enter into such underwriting agreement and to sell, and its ownership of, the securities being registered on its behalf, its intended method of distribution and any other representation required by law.

 

D-10

 

 

Notwithstanding any other provision of this Section 2.2, if the underwriters in good faith advise the Company and the Qualified Holders of Registrable Securities participating in the offering in writing that marketing factors require a limitation on the number of shares to be underwritten, the underwriters may (subject to the limitations set forth below) limit the number of Registrable Securities to be included in the registration and underwriting. The Company shall so advise all holders of securities requesting registration, and the number of shares of securities that are entitled to be included in the registration and underwriting shall be allocated (1) if the underwritten offering is for the Company’s account, (m) first, to the Company; (n) second, to the Qualified Holders requesting to include Registrable Securities in such offering based on the pro rata percentage of Registrable Securities held by such Qualified Holders (determined based on the aggregate number of Registrable Securities held by each such Qualified Holder); and (o) third, to the Other Selling Stockholders, if any, requesting to include Other Shares in such underwritten offering pursuant to piggyback rights and (2) if the underwritten offering is for the account of Other Selling Stockholders, then (x) first, to the Other Selling Stockholders, (y) second, to the Qualified Holders requesting to include Registrable Securities in such offering based on the pro rata percentage of Registrable Securities held by such Qualified Holders (determined based on the aggregate number of Registrable Securities held by each such Qualified Holder); and (z) third, to the Company.

 

If a person who has requested inclusion in such registration as provided above does not agree to the terms of any such underwriting, such person shall be excluded therefrom by written notice to the Company and the underwriter. Any Registrable Securities or Other Shares excluded or withdrawn from such underwriting shall be withdrawn from such registration. Notwithstanding anything to the contrary, the Company shall be responsible for the Registration Expenses prior to any such withdrawal.

 

(c) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.2 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration.

 

(d) Limitations. The Company shall not be obligated to effect any registrations pursuant to this Section 2.2:

 

(i) After the Company has initiated five (5) such Underwritten Takedowns pursuant to this Section 2.2 (counting for these purposes only (x) registrations in which Registrable Securities are not excluded or reduced pursuant to Section 2.2(b) and which have been declared or ordered effective and pursuant to which securities have been sold, and (y) withdrawn registrations);

 

(ii) If the Initiating Holders propose to dispose of shares of Registrable Securities that may be registered on Form S-3 pursuant to the request made pursuant to Section 2.1;

 

(iii) If the Initiating Holders do not request that such offering be firmly underwritten by underwriters selected by such Initiating Holders (subject to the consent of the Company); or

 

(iv) If the Company and the Initiating Holders are unable to obtain the commitment of the underwriter described in clause (iii) above to firmly underwrite the offer.

 

D-11

 

 

2.3 Expenses of Registration. All Registration Expenses incurred in connection with registrations pursuant to this Section 2 shall be borne by the Company; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Sections 2.1 and 2.2 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered or because a sufficient number of Holders shall have withdrawn so that the minimum offering conditions set forth in Sections 2.1 and 2.2 are no longer satisfied (in which case all participating Holders shall bear such expenses pro rata among each other based on the number of Registrable Securities requested to be so registered), unless the Holders of a majority of the Registrable Securities agree to forfeit their right to a demand registration pursuant to Section 2.1; provided, however, if a withdrawal by the Holders is based upon material adverse information relating to the Company that is different from the information known or available (upon request from the Company or otherwise) to the Holders requesting registration at the time of their request for registration under Section 2.1, such registration shall not be treated as a counted registration for purposes of Section 2.1, even though the Holders do not bear the Registration Expenses for such registration. All Selling Expenses relating to securities registered on behalf of the Holders and the holders of any Other Shares shall be borne by the Holders and any holders of any Other Shares included in such registration pro rata among each other on the basis of the number of Registrable Securities and Other Shares, respectively, registered on their behalf.

 

2.4 Registration Procedures. In the case of each registration of Registrable Securities pursuant to Section 2, the Company will keep each Holder advised in writing as to the initiation of each registration and as to the completion thereof. At its sole expense, the Company will:

 

(a) Prepare each registration statement, including all exhibits and financial statements required under the Securities Act to be filed therewith, and before filing such registration statement, any prospectus or any amendments or supplements thereto, furnish to the Holders of the Registrable Securities copies of all documents prepared to be filed, which documents shall be subject to the review of such Holders and their respective counsel;

 

(b) As soon as reasonably practicable, file with the Commission the registration statement relating to the Registrable Securities, including all exhibits and financial statements required by the Commission to be filed therewith, and use its reasonable best efforts to cause such registration statement(s) to become effective under the Securities Act as soon as practicable;

 

(c) Prepare and file with the Commission such amendments, post-effective amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be requested by the Holders or any underwriter of Registrable Securities or as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement;

 

(d) Notify the participating Holders of Registrable Securities, and confirm such notice in writing and provide copies of the relevant documents, as soon as reasonably practicable after notice thereof is received by the Company (a) when the applicable registration statement or any amendment thereto has been filed or becomes effective, and when the applicable prospectus or any amendment or supplement to such prospectus has been filed, (b) of any written comments by the Commission or any request by the Commission or any other federal or state governmental authority for amendments or supplements to such registration statement, prospectus or for additional information (whether before or after the effective date of the registration statement), (c) of the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or any order by the Commission or any other regulatory authority preventing or suspending the use of any preliminary or final prospectus or the initiation or threatening of any proceedings for such purposes, and (d) of the receipt by the Company of any notification with respect to the suspension of any Registrable Securities for offering or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;

 

D-12

 

 

(e) Furnish such number of prospectuses, including any preliminary prospectuses, and other documents incident thereto, including any amendment of or supplement to the prospectus, as a Holder (or its counsel) from time to time may reasonably request;

 

(f) Register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders; provided, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions where it would not otherwise be required to qualify or when it is not then otherwise subject to service of process;

 

(g) Notify each seller of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading or incomplete in the light of the circumstances under which they were made, and following such notification promptly prepare and file a post-effective amendment to such registration statement or a supplement to the related prospectus or any document incorporated therein by reference, and file any other required document that would be incorporated by reference into such registration statement and prospectus, so that such registration statement does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that such prospectus does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and, in the case of a post-effective amendment to a registration statement, use reasonable best efforts to cause it to be declared effective as promptly as is reasonably practicable, and give to the Holders listed as selling security holders in such prospectus a written notice of such amendment or supplement, and, upon receipt of such notice, each such Holder agrees not to sell any Registrable Securities pursuant to such registration statement until such Holder’s receipt of copies of the supplemented or amended prospectus or until it receives further written notice from the Company that such sales may re-commence;

 

(h) Use its reasonable best efforts to prevent, or obtain the withdrawal of, any order suspending the effectiveness of any registration statement (and promptly notify in writing each Holder covered by such registration statement of the withdrawal of any such order);

 

D-13

 

 

(i) Provide a transfer agent or warrant agent, as applicable, and registrar for all Registrable Securities registered pursuant to such registration statement and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;

 

(j) if requested, cooperate with the selling Holders of Registrable Securities to facilitate the timely preparation and delivery of certificates or establishment of book entry notations representing Registrable Securities to be sold and not bearing any restrictive legends, including without limitation, procuring and delivering any opinions of counsel, certificates, or agreements as may be necessary to cause such Registrable Securities to be so delivered;

 

(k) Cause all such Registrable Securities registered hereunder to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed;

 

(l) In connection with any underwritten offering pursuant to a registration statement filed pursuant to Section 2.1 or 2.2, enter into and perform its obligations under an underwriting agreement in form reasonably necessary to effect the offer and sale of the Registrable Securities subject to such underwriting, provided, that such underwriting agreement contains reasonable and customary provisions;

 

(m) Furnish to each Holder of Registrable Securities included in such registration statement a signed counterpart, addressed to such Holder, of (1) any opinion of counsel to the Company delivered to any underwriter dated the effective date of the registration statement or, in the event of an underwritten offering, the date of the closing under the applicable underwriting agreement, in customary form, scope, and substance, at a minimum to the effect that the registration statement has been declared effective and that no stop order is in effect, which counsel and opinions shall be reasonably satisfactory to the Holders and their respective counsel and (2) any comfort letter from the Company’s independent public accountants delivered to any underwriter in customary form and covering such matters of the type customarily covered by comfort letters as the managing underwriter or underwriters reasonably request. If no legal opinion is delivered to any underwriter, the Company shall furnish to each Holder of Registrable Securities included in such registration statement, at any time that such Holder elects to use a prospectus, an opinion of counsel to the Company to the effect that the registration statement containing such prospectus has been declared effective and that no stop order is in effect and any other matters as the Holders or underwriter may reasonably request and as are customarily included;

 

(n) Promptly identify to the selling Holders any underwriter(s) participating in any disposition pursuant to such registration statement and any attorney or accountant or other agent retained by any such underwriter or selected by the selling Holders, make available for inspection by the selling Holders all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such registration statement and to conduct appropriate due diligence in connection therewith;

 

D-14

 

 

(o) Reasonably cooperate, and cause each of its principal executive officer, principal financial officer, principal accounting officer, and all other officers and members of the management to fully cooperate in any offering of Registrable Securities hereunder, which cooperation shall include, without limitation, assisting with the preparation of any registration statement or amendment thereto with respect to such offering and all other offering materials and related documents, and participation in meetings with underwriters, attorneys, accountants and potential stockholders;

 

(p) Otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission and make available to its stockholders an earnings statement (in a form that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act or any successor rule thereto) no later than thirty (30) days after the end of the 12-month period beginning with the first day of the Company’s first full fiscal quarter after the effective date of such registration statement, which earnings statement shall cover said 12-month period, and which requirement will be deemed to be satisfied if the Company timely files complete and accurate information on Forms 10-K, 10-Q and 8-K under the Exchange Act and otherwise complies with Rule 158 under the Securities Act or any successor rule thereto;

 

(q) Reasonably cooperate with each Holder and each underwriter or agent, if any, participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the Financial Industry Regulatory Authority, Inc. (“FINRA”), and use its reasonable best efforts to make or cause to be made any filings required to be made by an issuer with FINRA in connection with the filing of any registration statement;

 

(r) In the event of any underwritten public offering of Registrable Securities, cause senior executive officers of the Company to participate in customary “road show” presentations that may be reasonably requested by the managing underwriter in any such underwritten offering and otherwise to facilitate, cooperate with, and participate in each proposed offering contemplated herein and customary selling efforts related thereto;

 

(s) Take all reasonable action to ensure that any “free writing prospectus” (as defined in the Securities Act) utilized in connection with any registration of Registrable Securities complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related prospectus, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and

 

(t) Take all such other reasonable actions as are necessary or advisable in order to expedite or facilitate the disposition of such Registrable Securities.

 

D-15

 

 

2.5 Price and Underwriting Discounts. In the case of an underwritten offering requested by Holders pursuant to Section 2.1, the price, underwriting discount and other financial terms of the related underwriting agreement for the Registrable Securities shall be determined by the participating Holders holding a majority of the Registrable Securities. In the case of any underwritten offering pursuant to Section 2.2, such price, discount and other terms shall be determined by the Company, subject to the right of the Holders to withdraw their request to participate in the registration pursuant to Section 2.2 after being advised of such price, discount and other terms.

 

2.6 “Market Stand-Off” Agreement. The Holders shall not sell, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to, any Common Stock (or other securities of the Company) held by the Holders (other than those included in the registration) for a period specified by the representatives of the managing underwriter or underwriters of Common Stock (or other securities of the Company convertible into Common Stock) not to exceed five (5) days prior and ninety (90) days following any Underwritten Takedown. Each of the Holders that is a director or officer of the Company or that owns more than five percent (5%) of the Company’s Common Stock also shall execute and deliver any “lock-up” agreement reasonably requested by the managing underwriter of such Underwritten Takedown, but only to the extent as is required generally of any executive officers, directors or five percent (5%) or greater stockholder by such managing underwriter.

 

2.7 Indemnification.

 

(a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder, and each shareholder, member, limited or general partner thereof, each shareholder, member, limited or general partner of each such shareholder, member, limited or general partner, each of their respective Affiliates, officers, directors, shareholders, employees, advisors, and agents and each Person who controls (within the meaning of Section 15 of the Securities Act) such Persons and each of their respective Representatives, and each underwriter, if any, and each person or entity who controls within the meaning of Section 15 of the Securities Act any underwriter, against all reasonable out-of-pocket expenses, claims, judgments, suits, costs, penalties, losses, damages and liabilities (or actions, proceedings or settlements in respect thereof) arising out of or based on: (i) any untrue statement (or alleged untrue statement) of a material fact contained or incorporated by reference in any prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to any such registration, qualification or compliance, (ii) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (iii) any violation (or alleged violation) by the Company of the Securities Act, Exchange Act, any state securities laws or any rule or regulation thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any offering covered by such registration, qualification or compliance, and the Company will reimburse each Holder, and each shareholder, member, limited or general partner thereof, each shareholder, member, limited or general partner of each such shareholder, member, limited or general partner, each of their respective Affiliates, officers, directors, shareholders, employees, advisors, and agents and each Person who controls such persons and each of their respective Representatives, and each underwriter, if any, and each person or entity who controls any underwriter, for any legal and any other expenses reasonably incurred in connection with investigating and defending or settling any such claim, judgment, suit, penalty, loss, damage, liability or action; provided that the Company will not be liable in any such case to the extent that any such claim, judgment, suit, penalty loss, damage, liability, or action arises out of or is based on any untrue statement or omission based upon written information furnished to the Company by such Holder, any of such Holder’s Representatives, any person or entity controlling such Holder, such underwriter or any person or entity who controls any such underwriter, and stated to be specifically for use therein; provided, further that, the indemnity agreement contained in this Section 2.7(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld). This indemnity shall be in addition to any liability the Company may otherwise have. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any indemnified party and shall survive the transfer of such securities by such Holder.

 

D-16

 

 

(b) To the extent permitted by law, each selling Holder, severally and not jointly, will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify and hold harmless the Company, each of its directors, officers, employees, partners, legal counsel and accountants and each underwriter, if any, of the Company’s securities covered by such a registration statement, each person or entity who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, each other such Holder, and each of their officers, directors and partners, and each person or entity controlling each other such Holder, and each of their respective Representatives, against all claims, judgments, penalties losses, damages and liabilities (or actions in respect thereof) arising out of or based on: (i) any untrue statement (or alleged untrue statement) of a material fact contained or incorporated by reference in any prospectus, offering circular or other document (including any related registration statement, notification, or the like) incident to any such registration, qualification or compliance made in reliance upon and in conformity with information furnished in writing by or on behalf of such selling Holder expressly for use in connection with such registration, (ii) any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case made in reliance upon and in conformity with information furnished in writing by or on behalf of such selling Holder expressly for use in connection with such registration, or (iii) any violation (or alleged violation) by the Company of the Securities Act, any state securities laws or any rule or regulation thereunder applicable to the Holder and relating to action or inaction required of the Holder in connection with any offering covered by such registration, qualification or compliance, and will reimburse the Company and such Holders, directors, officers, partners, legal counsel and accountants, persons, underwriters, or control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement or omission (i) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by such Holder and stated to be specifically for use therein and (ii) has not been corrected in a subsequent writing prior to or concurrently with the sale of the Registrable Securities to the person asserting the claim; provided, however, that the obligations of such Holder hereunder shall not apply to amounts paid in settlement of any such claims, losses, damages or liabilities (or actions in respect thereof) if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld); and provided that in no event shall any indemnity under this Section 2.7 exceed the net proceeds from the offering received by such Holder, except in the case of fraud or willful misconduct by such Holder.

 

D-17

 

 

(c) Each party entitled to indemnification under this Section 2.7 (the “Indemnified Party”) shall (i) give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought  (provided, that any delay or failure to so notify the indemnifying party shall relieve the Indemnifying Party of its obligations hereunder only to the extent, if at all, that it is actually and materially prejudiced by reason of such delay or failure), and (ii) permit the Indemnifying Party to assume the defense of such claim or any litigation resulting therefrom; provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party’s expense unless (w) the Indemnifying Party has agreed in writing to pay such fees or expenses, (x) the Indemnifying Party has failed to assume the defense of such claim within a reasonable time after receipt of notice of such claim from the Indemnified Party hereunder and employ counsel reasonably satisfactory to the Indemnified Party, (y) the Indemnified Party has reasonably concluded (based upon advice of its counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the Indemnifying Party, or (z) in the reasonable judgment of any such person (based upon advice of its counsel) a conflict of interest may exist between such person and the Indemnifying Party with respect to such claims (in which case, if the person notifies the Indemnifying Party in writing that such Person elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense of such claim on behalf of such person). No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with defense of such claim and litigation resulting therefrom.

 

(d) If the indemnification provided for in this Section 2.7 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage, or expense referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. No Holder will be required under this Section 2.7(d) to contribute any amount in excess of the net proceeds from the offering received by such Holder, except in the case of fraud or willful misconduct by such Holder. No person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

 

D-18

 

 

The obligations of the Company and Holders under this Section 2.7 shall survive the completion of any offering of Registrable Securities in a registration under this Section 2.7 and otherwise shall survive the termination of this Agreement until the expiration of the applicable period of the statute of limitations.

 

2.8 Information by Holder. Each Holder of Registrable Securities shall furnish to the Company such information regarding such Holder and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification, or compliance referred to in this Section 2.

 

2.9 Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Restricted Securities to the public without registration, the Company agrees to:

 

(a) Make and keep adequate current public information with respect to the Company available in accordance with Rule 144 under the Securities Act;

 

(b) File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

 

(c) So long as a Holder owns any Restricted Securities, furnish to the Holder forthwith upon written request a written statement by the Company as to its compliance with the reporting requirements of Rule 144 and of the Securities Act and the Exchange Act, or that it qualifies as registrant whose securities may be resold pursuant to Form S-3 (at any time after the Company so qualifies), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed as a Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such securities without registration. The Company further covenants that it shall take such further action as any Holder may reasonably request to enable such Holder to sell from time to time shares of Common Stock held by such Holder without registration under the Securities Act within the limitation of the exemptions provided by Rule 144, including providing at the Company’s expense any legal opinions.

 

2.10 No Inconsistent Agreements.  The Company has not entered, as of the date hereof, nor shall the Company, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders of Registrable Securities or otherwise conflict with the provisions hereof. Unless the Company receives the consent of each of (i) the Holders holding a majority of the Registrable Securities issued to the Sponsor and (ii) the Holders holding a majority of the Merger Shares that are Registrable Securities, the Company shall not enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders of Registrable Securities or otherwise conflict with the provisions hereof.

 

D-19

 

 

2.11 Transfer or Assignment of Rights. This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part. The rights granted to a Holder by the Company under this Section 2 may be transferred or assigned (but only with all related obligations) by a Holder only to a transferee of Registrable Securities; provided, that (x) such transfer or assignment of Registrable Securities is effected in accordance with applicable securities laws, (y) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred and (z) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement.

 

2.12 Lock-up Period.

 

(a) The Sponsor agrees that it shall not Transfer Founder Shares (or shares of Common Stock issuable upon conversion thereof) held by the Sponsor until the date that is the earlier of (1) the twelve month anniversary of the Closing, (2) the last sale price of the Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Merger and (3) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of Common Stock for cash, securities or other property. Each of Sponsor and Jefferies agree that they shall not Transfer Private Placement Units (or any securities underlying the Private Placement Units, including the shares of Common Stock and Private Placement Warrants included in the Private Placement Units and the shares of Common Stock issued