AltEnergy Acquisition Corp 10-K for FY2024
AltEnergy Acquisition Corp (AEAE)
About this 10-K
AltEnergy Acquisition Corp filed this 10-K on March 28, 2025, covering the fiscal year ended December 31, 2024 (FY2024).
Headline figures
Fiscal year ended December 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $2.7M
- compared with net income of $2.47M a year earlier
Table of Contents
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
(Address of Principal Executive Offices) |
(Zip Code) | |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
one-half of one redeemable warrant |
||||
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
| Emerging growth company | ||||||
Table of Contents
Table of Contents
Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTOR SUMMARY
Certain statements in this annual report on Form 10-K (this “Form 10-K”) may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Form 10-K may include, for example, statements about:
| • | our ability to complete our initial business combination; |
| • | our expectations around the performance of the prospective target business or businesses; |
| • | our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination; |
| • | our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination, as a result of which they would then receive expense reimbursements; |
| • | our potential ability to obtain additional financing to complete our initial business combination; |
| • | our pool of prospective target businesses; |
| • | our public securities’ potential liquidity and trading; |
| • | the lack of a market for our securities; |
| • | the use of proceeds not held in the trust account (as described below) or available to us from interest income on the trust account balance; |
| • | the trust account not being subject to claims of third parties; or |
| • | our financial performance. |
The forward-looking statements contained in this Form 10-K are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the section of this Form 10-K entitled “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
1
Table of Contents
PART I
References in this report to “we,” “us” or the “Company” refer to AltEnergy Acquisition Corp.. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to AltEnergy Acquisition Sponsor, LLC, a Delaware limited liability company and an affiliate of Russell Stidolph, our Chief Executive Officer.
Item 1. Business. Introduction
AltEnergy Acquisition Corp. is a blank check company formed in February, 2021, as a Delaware corporation for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar transaction with one or more businesses, which we refer to throughout this Annual Report on Form 10-K as our initial business combination. We have neither engaged in any operations nor generated any revenue to date. Based on our business activities, the Company is a “shell company” as defined under the Exchange Act of 1934 (the “Exchange Act”) because we have no operations and nominal assets consisting almost entirely of cash.
On November 2, 2021, we consummated our initial public offering (the “initial public offering”) of 23,000,000 units (the “Units”), including 3,000,000 Units sold pursuant to the exercise by the underwriters of their over-allotment option. Each Unit consists of one share of Class A common stock, par value $0.0001 per share (“Class A Common Stock”) and one-half of one redeemable warrant (“Warrants”), each whole Warrant entitling the holder thereof to purchase one share of Class A Common Stock at an exercise price of $11.50 per share, subject to adjustment. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds to the Company of $230,000,000. On November 2, 2021, simultaneously with the consummation of the initial public offering, we consummated a private placement (“the private placement”) of an aggregate of 12,000,000 warrants (the “private placement warrants”) at a price of $1.00 per private placement warrant, to the Sponsor and B. Riley Principal Investments, LLC (“BRPI”) an affiliate of B. Riley Securities, Inc. (“B. Riley”), an underwriter in the initial public offering, generating total gross proceeds of $12,000,000. Such securities were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
Prior to the consummation of the initial public offering, on March 25, 2021, we issued an aggregate of 5,750,000 shares (the “founder shares”) of the Company’s Class B common stock for an aggregate purchase price of $25,000.
We paid a total of $4,600,000 in underwriting discounts and commissions and $635,000 for other costs and expenses related to the initial public offering. B. Riley received a portion of the underwriting discounts and commissions related to the initial public offering. The total net proceeds from our initial public offering and the sale of the private placement warrants was approximately $236,765,000, of which $234,600,000 (or $10.20 per unit sold in the initial public offering) was placed in a U.S.-based trust account (the “trust account”) at Morgan Stanley, maintained by Continental Stock Transfer & Trust Company, acting as trustee.
Non-Redemption Agreement
On April 26, 2023 and April 27, 2023, the Company and the Sponsor entered into non-redemption agreements (each, a “Non-Redemption Agreement”) with certain unaffiliated third parties (each, a “Holder,” and collectively, the “Holders”) in exchange for the Holder or Holders agreeing either not to request redemption in connection with the Extension (as defined below) or to reverse any previously submitted redemption demand in connection with the Extension with respect to an aggregate of 1,250,000 Class A common stock, par value $0.0001 per share (the “Class A Shares”), of the Company sold in its initial public offering at the special meeting of stockholders called by the Company to consider and act upon a proposal to extend the date by which the Company has to consummate an initial business combination (the “Termination Date”) from May 2, 2023 to May 2, 2024.
2
Table of Contents
In consideration of the foregoing agreement, immediately prior to, and substantially concurrently with, the closing of an initial business combination, (i) the Sponsor (or its designees) will surrender and forfeit to the Company for no consideration an aggregate of 250,000 shares of the Company’s Class B common stock, par value $0.0001 per share, held by the Sponsor (the “Forfeited Shares”) and (ii) the Company shall issue to the Holders a number of Class A Shares equal to the Forfeited Shares.
The foregoing description of the Non-Redemption Agreements do not purport to be complete and is qualified in its entirety by reference to the form of Non-Redemption Agreement filed as Exhibit 10.1 to our Current Report on Form 8-K filed on April 27, 2023 and incorporated herein by reference.
On April 28, 2023, following the approval by the stockholders of the Company at a special meeting of stockholders, the Company filed an amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware to extend the date from May 2, 2023 (18 months from the closing of the Initial Public Offering), to May 2, 2024 (30 months from the closing of the Initial Public Offering) (the “Extension,”) by which the Company must (1) consummate a business combination or (2) cease its operations except for the purpose of winding up if it fails to complete such initial business combination, and redeem all of the Class A Shares included as part of the units sold in the Company’s Initial Public Offering. Stockholders holding 21,422,522 Class A Shares exercised their right to redeem such shares for a pro rata portion of the funds in the Company’s Trust Account in connection with the Extension. As a result, $222,484,624 (approximately $10.38 per share) was removed from the Trust Account on or about May 15, 2023 to pay such holders, and an additional $855,762 (including $100,000 reserved to pay dissolution costs and expenses discussed below) was removed from the Trust Account on or about May 9, 2023 and deposited into a restricted investment account.
On April 16, 2024, the Company held a special meeting of stockholders (the “April 2024 Special Meeting”). As of March 5, 2024, the record date of the April 2024 Special Meeting, there were 7,327,478 issued and outstanding shares of common stock of the Company, par value $0.0001 per share (the “Common Stock”) comprised of 7,077,478 shares of the Company’s Class A common stock, par value $0.0001 per share (“Class A Shares”), and 250,000 shares of the Company’s Class B common stock, par value $0.0001 per share. At the April 2024 Special Meeting, the Company’s stockholders approved the proposal to file an amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware (the “Amendment”) to extend the date from May 2, 2024 to November 2, 2024 (the “Extended Date”) and to allow the board of directors of the Company (the “Board”), without another stockholder vote, to elect to further extend the date to consummate an initial business combination after the Extended Date up to six times, by an additional month each time, upon two days’ advance notice prior to the applicable deadline, up to May 2, 2025 (the “Additional Extension Date” and together with the Extended Date the “Extension” and such proposal, the “Extension Proposal”); by which the Company must (1) consummate a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (an “initial business combination”) or (2) cease its operations except for the purpose of winding up if it fails to complete such initial business combination, and redeem all of the Class A Shares included as part of the units sold in the Company’s initial public offering. On April 17, 2024, to effectuate the Extension, the Company filed the Amendment with the Secretary of State of the State of Delaware.
At the April 2024 Special Meeting, the Company’s stockholders also approved a proposal to amend our amended and restated certificate of incorporation to eliminate the limitation that the Company shall not redeem Class A Common Stock included as part of the units sold in the IPO (including any shares issued in exchange thereof, the “public shares”) to the extent that such redemption would cause our net tangible assets to be less than $5,000,001 (the “Redemption Limitation”) to allow us to redeem public shares irrespective of whether such redemption would exceed the Redemption Limitation.
Stockholders holding 839,332 Class A Shares exercised their right to redeem such shares for a pro rata portion of the funds in the Company’s trust account (“Trust Account”) in connection with the Extension. As a result, $9,513,007. (approximately $11.33 per share) was removed from the Trust Account to pay such holders.
3
Table of Contents
Additional Extensions
Pursuant to the amendment to AltEnergy’s Amended and Restated Certificate of Incorporation referred to above, the Board (i) on October 30, 2024, approved an extension of the date by which AltEnergy is required to complete an initial business combination from November 2, 2024 to December 2, 2024; (ii) on November 25, 2024, approved an extension of the date by which AltEnergy is required to complete an initial business combination from December 2, 2024 to January 2, 2025; (iii) on December 20, 2024, approved an extension of the date by which AltEnergy is required to complete an initial business combination from January 2, 2025 to February 2, 2025; (iv) on January 28, 2025, approved an extension of the date by which AltEnergy is required to complete an initial business combination from February 2, 2025 to March 2, 2025; (v) on February 25, 2025, approved an extension of the date by which AltEnergy is required to complete an initial business combination from March 2, 2025 to April 2, 2025; and (vi) on March 26, 2025, approved an extension of the date by which AltEnergy is required to complete an initial business combination from April 2, 2025 to May 2, 2025.
The Company has scheduled a meeting for April 23, 2025, for the purpose of amending the Amended and Restated Certificate of Incorporation to further extend the date by which the Company is required to complete an initial business combination from May 2, 2025 to May 1, 2026.
Sponsor Warrant Forfeiture
On December 31, 2024, Sponsor forfeited 4,000,000 of the 11,600,000 private placement warrants purchased in connection with the Company’s IPO for no consideration.
Amended and Restated Merger Agreement
As previously disclosed, on February 21, 2024, we entered into an Agreement and Plan of Merger (the “Original Merger Agreement”), by and among AltEnergy, Car Tech Merger Sub, LLC, a Delaware limited liability company (“Merger Sub I”), and Car Tech, LLC, an Alabama limited liability company (“Car Tech”).
On February 14, 2025, we entered into an Amended and Restated Merger Agreement (the “Merger Agreement”) by and among AltEnergy, Merger Sub I, Car Tech Merger Sub II, LLC, a Delaware limited liability company (“Merger Sub II” and, together with Merger Sub I, “Merger Subs”), and Car Tech, which amended and restated the Original Merger Agreement in its entirety.
The Mergers
Upon the terms and subject to the conditions set forth in the Merger Agreement and in accordance with the Delaware Limited Liability Company Act (Car Tech having been converted to a Delaware limited liability company), (a) Merger Sub I will merge with and into Car Tech, with Car Tech surviving as a wholly-owned subsidiary of AltEnergy (the “First Merger”), and (b) immediately following the effective time of the First Merger, Car Tech will merge with and into Merger Sub II, with Merger Sub II surviving as a wholly-owned subsidiary of AltEnergy (the “Second Merger” and, together with the First Merger, the “Mergers”). Upon the consummation of the Mergers, subject to approval by AltEnergy’s stockholders and other customary closing conditions, the combined company (“New Car Tech”) will be renamed and is expected to list on The Nasdaq Capital Market.
Consideration
Subject to the terms and conditions set forth in the Merger Agreement, in consideration of the Merger, membership interests in Car Tech (the “Car Tech Units”) will be converted into the right to receive for each Car Tech Unit owned (I) a number of shares of AltEnergy’s common stock (the “Parent Common Stock”) obtained by dividing (i) a fraction equal to (a) the quotient of (x) the Closing Share Consideration divided by (y) ten dollars ($10.00), by (ii) the number of Car Tech Units that are issued and outstanding immediately prior to the effective time of the First Merger and (II) a number of warrants to purchase Common Stock equal to the quotient of (A) six million (6,000,000) divided by (B) the number of Car Tech Units that are issued and outstanding immediately prior to the effective time of the First Merger (the “Merger Consideration Warrants”).
“Closing Share Consideration” means (1) $80,000,000, plus (2) an additional $40,000,000 (the “Earn Out Consideration”).
Pursuant to the Lock-up Agreements described below, all of the shares of Parent Common Stock to be issued to holders of Car Tech Units (other than 500,000 shares issued pursuant to clause (I) of the definition of Closing Share Consideration) will be subject to time based restrictions on transfer, and the 4,000,000 shares of Parent Common Stock to be issued to holders of Car Tech Units based on the Earn Out Consideration will be subject to additional transfer restrictions, release and forfeiture terms.
4
Table of Contents
Representations and Warranties
The Merger Agreement contains customary representations and warranties of the parties thereto with respect to the parties, the transactions contemplated by the Merger Agreement and their respective business operations and activities, including, with respect to Car Tech, its material properties, leases, and contracts. The representations and warranties of the parties do not survive the closing.
Covenants
The Merger Agreement contains customary covenants of the parties thereto, including: (a) conduct of business pending the Merger, (b) preparation and filing of a Form S-4 with respect to the Parent Common Stock issuable under the Merger Agreement (the “Form S-4”), which Form S-4 will contain a proxy statement for AltEnergy’s stockholders, (c) the requirement to make appropriate filings and obtain clearance pursuant to the HSR Act, if required, and (d) the preparation and delivery of updated audited financial statements for Car Tech.
The Merger Agreement also contains mutual exclusivity provisions prohibiting the parties thereto and their respective representatives and subsidiaries from soliciting initiating, continuing or otherwise encouraging or participating in an Acquisition Proposal (as defined in the Merger Agreement), or entering into any contracts or agreements in connection therewith.
Conditions to Consummation of the Transactions
Consummation of the transactions contemplated by the Merger Agreement is subject to conditions of the respective parties that are customary for a transaction of this type, including, among others: (a) obtaining approval of the Mergers by the holders of a majority in voting power of the Parent Common Stock; (b) obtaining approval of the Mergers by the holders of a majority of the Car Tech Units; (c) there being no laws or injunctions by governmental authorities or other legal restraint prohibiting consummation of the transactions contemplated under the Merger Agreement; (d) if required, the required filings under the HSR Act having been completed and the waiting period applicable to the Merger under the HSR Act having expired or terminated; (e) the Parent Common Stock being listed on Nasdaq; (f) the Form S-4 having become effective and no stop order suspending the effectiveness of the Form S-4 having been issued by the SEC; (g) the accuracy of the representations and warranties, measured by a material adverse effect standard, and the performance of the covenants and agreements, of AltEnergy and Car Tech, respectively, subject to customary materiality qualifications; (h) the delivery of customary closing certificates by officers of AltEnergy and Car Tech, as well as satisfaction of the condition that Shinyoung Co., Ltd. shall have provided a customary notice filing concerning the Merger with the Bank of Korea, as required by applicable law, and shall have received confirmation from the Bank of Korea that such notice filing has been accepted; and (i) AltEnergy shall have received a Transaction Financing in an amount and on terms reasonably acceptable to AltEnergy and Car Tech.
A “Transaction Financing” means a financing transaction with one or more investors that will commit to make secured loans or provide other financing to AltEnergy, which debt or financing will be guaranteed by Shinyoung Co., Ltd., unless such requirement is waived by AltEnergy.
Additional conditions to Car Tech’s obligations to consummate the Mergers pursuant to the Merger Agreement, subject to written waiver by Car Tech include, among others, that in accordance with the Non-Redemption Agreements, (i) the Sponsor shall have surrendered and forfeited to AltEnergy for no consideration 250,000 shares of Class B Common Stock (after which there shall be no shares of Class B Common Stock outstanding), and (ii) AltEnergy shall have issued to the appropriate unaffiliated third parties 250,000 shares of Class A Common Stock. The obligations of AltEnergy to consummate the Merger pursuant to the Merger Agreement are also subject to additional conditions, which may be waived in writing by AltEnergy, including, among others, that (a) no material adverse effect has occurred with respect to Car Tech and (b) the transactions contemplated by the Contribution and Exchange Agreement have been consummated.
5
Table of Contents
Termination
The Merger Agreement may be terminated under certain customary and limited circumstances prior to the closing of the Merger, including: (a) by mutual written consent of AltEnergy and Car Tech; (b) by either party if the closing has not occurred prior to May 2, 2025; (c) there is a final non-appealable order issued by a governmental authority preventing or making illegal the consummation of the transactions contemplated by the Merger Agreement; (d) by Car Tech if AltEnergy fails to obtain the requisite stockholder approvals; (e) by AltEnergy if Car Tech fails to obtain the requisite member approvals; and (f) by either party if, subject to certain exceptions, any of the representations and warranties of the other party are not true and correct or if the other party fails to perform any of its respective covenants or agreements set forth in the Merger Agreement such that certain conditions to the obligations of such party cannot be satisfied and the breach (or breaches) of such representations or warranties or failure (or failures) to perform such covenants or agreements, as applicable, are not cured or cannot be cured within certain specified time periods.
If the Merger Agreement is validly terminated, none of the parties will have any liability or any further obligation under the Merger Agreement with certain limited exceptions, including liability arising out of fraud or willful material breach of the Merger Agreement.
Governance
Pursuant to the Merger Agreement, following the Merger AltEnergy’s board will consist of seven members, with Car Tech appointing five directors, including Ho Gap Kang, Jonghoon Ha and three independent directors (as defined under applicable Nasdaq rules), one of whom will be Dohyung Kim, and the sponsor of AltEnergy (the “Sponsor”) appointing two directors, including Russell Stidolph and one independent director (as defined under applicable Nasdaq rules). Unless otherwise agreed by Car Tech and the Sponsor prior to the effective time of the Frist Merger, Car Tech, AltEnergy, Merger Sub I and Merger Sub II shall take all such actions as may be necessary or appropriate to establish staggered three year terms for service on AltEnergy’s board, with (i) Ho Gap Kang and Russell Stidolph holding initial three-year terms, (ii) Jonghoon Ha and Dohyung Kim holding initial two-year terms, and (iii) Peter Hasenkamp, Robert Mancini and John Craig holding initial one-year terms.
The foregoing description of the Merger Agreement 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 filed as Exhibit 2.2 to this Annual Report and is incorporated by this reference.
Certain Related Agreements
Contribution and Exchange Agreement
Contemporaneously with the execution of the Merger Agreement, Shinyoung Co., Ltd, a corporation organized in the Republic of Korea (“Shinyoung”) and AltEnergy entered into a contribution and exchange agreement (the “Contribution and Exchange Agreement”) pursuant to which prior to the effective time of the Merger, Shinyoung will contribute to the capital of Car Tech all indebtedness owed by Car Tech to Shinyoung in exchange for Car Tech Units with a fair market value equal to the aggregate amount Car Tech is obligated to pay pursuant to such indebtedness. Shinyoung is a 78.32% holder of the Car Tech Units and is a holder of a significant portion of the Company’s outstanding indebtedness. Pursuant to the Contribution and Exchange Agreement Shinyoung also has agreed to issue the Shinyoung Guaranty.
The foregoing description of the Contribution and Exchange Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the Contribution and Exchange Agreement, a copy of which is filed as Exhibit 10.13 to this Form 10-K and incorporated by reference herein.
6
Table of Contents
Support Agreement
Contemporaneously with the execution of the Merger Agreement, AltEnergy and Car Tech entered into a support agreement (the “Support Agreement”) with the Sponsor and certain members of Car Tech (the “Support Parties”), whereby the Support Parties have agreed, among other things, to vote in favor of the adoption of the Merger Agreement and approval of the Merger and the other transactions contemplated hereby.
The foregoing description of the Support Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the form of Support Agreement, a copy of which is filed as Exhibit 10.14 to this Form 10-K and incorporated by reference herein
Lock-up Agreements
The Merger Agreement contemplates that following the execution of the Merger Agreement, holders of Company Units, shares of AltEnergy Common Stock, or Private Placement Warrants, as applicable, (the “Lock-up Holders”) will enter into lock-up agreements (each, a “Lock-up Agreement”) with Car Tech and AltEnergy. Pursuant to the Lock-up Agreements, the Lock-up Holders will agree, among other things, that the Restricted Securities (as defined in the Lock-up Agreements), held following consummation of the Merger shall be subject to a lock-up restriction that will terminate with respect to (i) 50% of such shares on the 12 month anniversary of the closing date, (ii) 25% of such shares on the 18 month anniversary of the closing date, and (iii) 25% of such shares on the 24 month anniversary of the closing date.
Under the terms of the Lock-up Agreement, upon completion of the Merger, 4,000,000 shares of AltEnergy Common Stock to be held by the Sponsor (the “Sponsor Earn Out Shares”) and 4,000,000 of the Restricted Securities designated as Earn Out Shares under the Merger Agreement to be held by holders of Car Tech Units (the “Company Member Earn Out Shares”; and together with the Sponsor Earn Out Shares, the “Earn Out Shares”) will be subject to additional transfer restrictions, release and forfeiture terms. A block of fifty percent (50%) of the Earn Out Shares (2,000,000 shares of AltEnergy Common Stock held by each of Sponsor and 2,000,000 shares of AltEnergy Common Stock held by holders of Car Tech Units) (the “Block A Earn Out Shares,” of which 1,850,000 held by each are designated as Block A-1 Earn Out Shares and the balance are designated as Block A-2 Earn Out Shares) may not be transferred unless and until either (i) the closing price of shares of AltEnergy Common Stock on the principal securities exchange or securities market on which the AltEnergy Common Stock is then traded equals or exceeds $14.00 per share for any 20 trading days within any consecutive 30-trading day period during the Earn Out Period (as defined below) or (ii) immediately prior to the consummation of a Block A Change of Control (as defined below) during the Earn Out Period (each of clauses (i) and (ii), a “Block A Triggering Event”). If a Block A Triggering Event does not occur or a Block A Forfeiting Change of Control (as defined below) is consummated during the Earn Out Period, the Block A Earn Out Shares shall be automatically forfeited and cancelled for no consideration at the end of the Earn Out Period or immediately prior to the consummation of such Block A Forfeiting Change of Control, as applicable.
7
Table of Contents
The remaining Earn Out Shares (the “Block B Earn Out Shares”) will be subject to a transfer restriction unless and until either (i) the closing share price of shares of AltEnergy Common Stock on the principal securities exchange or securities market on which the AltEnergy Common Stock is then traded equals or exceeds $18.00 per share for any 20 trading days within any consecutive 30-trading day period during the Earn Out Period or (ii) immediately prior to the consummation of a Block B Change of Control (as defined below) during the Earn Out Period (each of clauses (i) and (ii), a “Block B Triggering Event”, and together with a Block A Triggering Event, a “Triggering Event”). If a Block B Triggering Event does not occur or a Block B Forfeiting Change of Control (as defined below) is consummated during the Earn Out Period, the Block B Earn Out Shares shall be automatically forfeited and cancelled for no consideration at the end of the Earn Out Period or immediately prior to the consummation of such Block B Forfeiting Change of Control, as applicable.
For purposes of the Lock-up Agreements:
“Earn Out Period” means (A) with respect to the Block A-1 Earn Out Shares, the period from (and excluding) the closing date of the Merger to (and including) the day that is the fifth (5th) anniversary of the closing date, and (B) with respect to the Block A-2 Earn Out Shares and the Block B Earn Out Shares, the period from (and excluding) the closing date to (and including) the day that is the tenth (10th) anniversary of the closing date.
“Block A Change of Control” means a Cashout Change of Control (as defined below) which implies a value per share of Parent Common Stock that equals or exceeds $14.00 per share.
“Block A Forfeiting Change of Control” means a Cashout Change of Control which implies a value per share of Parent Common Stock that is less than $14.00 per share.
“Block B Change of Control” means a Cashout Change of Control which implies a value per share of Parent Common Stock that equals or exceeds $18.00 per share.
“Block B Forfeiting Change of Control” means a Cashout Change of Control which implies a value per share of Parent Common Stock that is less than $18.00 per share.
“Cashout Change of Control” means a Change of Control where all of the Parent Common Stock and other equity securities of AltEnergy outstanding immediately prior to such Change of Control is sold, transferred, exchanged or redeemed exclusively for cash, and not for other securities or non-cash consideration.
“Change of Control” means, other than the transactions contemplated by the Merger Agreement, (i) any transaction or series of related transactions that results in any person or “group” (within the meaning of Section 13(d)(3) of the Exchange Act) acquiring equity securities that represent more than 50% of the total voting power of AltEnergy (for the avoidance of doubt, excluding Shinyoung, the Sponsor or their affiliates), or (ii) a sale or disposition of all or substantially all of the assets of AltEnergy and its subsidiaries on a consolidated basis, in each case that results in shares of AltEnergy Common Stock being converted into cash or other consideration (including equity securities of another person) (other than a transaction or series of related transactions where shares of AltEnergy Common Stock are converted into equity securities of another person who has substantially similar equity ownership to AltEnergy immediately prior to such transaction or series of related transactions).
In addition to the foregoing, 500,000 of the Restricted Shares subject to only time-based restrictions on trading and the Earnout Shares, in each case owned by our Sponsor are restricted from trading until the Shinyoung Guaranty is terminated.
The foregoing description of the form of Lock-up Agreement does not purport to be complete and is qualified in its entirety by the terms and conditions of the form of Lock-up Agreement filed as Exhibit 10.15 to this Form 10-K and is incorporated by reference herein.
Additional Information and Where to Find It
In connection with the proposed business combination, AltEnergy filed with the SEC a registration statement on Form S-4, which includes a preliminary proxy statement to be sent to AltEnergy stockholders and a preliminary
8
Table of Contents
prospectus relating to the registration of AltEnergy Common Stock (as amended from time to time, the “S-4 Registration Statement”).. AltEnergy urges investors, stockholders and other interested persons to read, when available, the S-4 Registration Statement as well as other documents filed with the SEC because these documents will contain important information about AltEnergy, Car Tech and the Proposed Business Combination. If and when the S-4 Registration Statement is declared effective by the SEC, the definitive proxy statement/prospectus and other relevant documents will be mailed to stockholders of AltEnergy as of a record date to be established for voting on the Proposed Business Combination. Stockholders and other interested persons will also be able to obtain a copy of the proxy statement, without charge, by directing a request to: AltEnergy Acquisition Corp., 600 Lexington Avenue, 9th Floor, New York, NY 10022. The preliminary and definitive proxy statement/prospectus, once available, can also be obtained, without charge, at the SEC’s website (www.sec.gov). The information contained on, or that may be accessed through, the websites referenced in this Annual Report is not incorporated by reference into, and is not a part of, this Annual Report.
Unless specifically stated, this Annual Report does not give effect to the proposed business combination and does not contain the risks associated with the proposed business combination. Such risks and effects relating to the proposed business combination will be included in the Form S-4 Registration Statement.
Nasdaq Notice
On October 9, 2023, the Company received a written notice (the “Notice”) from the Nasdaq Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) indicating that the Company was not in compliance with Nasdaq Listing Rule 5450(a)(2), which requires the Company to maintain at least 400 total holders for continued listing on the Nasdaq Global Market. The Notice is only a notification of deficiency, not of imminent delisting, and has no current effect on the listing or trading of the Company’s securities on the Nasdaq Global Market.
The Company disclosed its receipt of the Notice pursuant to a Form 8-K filed on October 13, 2023, as required by NASDAQ rules. On November 20, 2023, the Company submitted a plan to regain compliance within the required timeframe. If Nasdaq accepts the Company’s plan, Nasdaq may grant the Company an extension of up to 180 calendar days from the date of the Notice to evidence compliance. If Nasdaq does not accept the Company’s plan, the Company will have the opportunity to appeal the decision in front of a Nasdaq Hearings Panel.
On May 7, 2024, the Company received a written notice (the “MVPHS Notice”) from the Nasdaq Listing Qualifications Department (the “Staff”) indicating that the Company was not in compliance with Nasdaq Listing Rule 5450(b)(2)(C), which requires the Company to maintain a Market Value of Publicly Held Shares (“MVPHS”) of no less than $15 million for continued listing on the Nasdaq Global Market. The Notice is only a notification of deficiency, not of imminent delisting, and has no current effect on the listing or trading of the Company’s securities on the Nasdaq Global Market.
In accordance with Nasdaq Listing Rule 5810(c)(3)(D), the Company had 180 calendar days, or until November 3, 2024, to regain compliance. The MVPHS Letter noted that to regain compliance, the Company’s MVPHS must close at or above $15 million for a minimum of ten consecutive business days during the compliance period. The MVPHS Letter further noted that if the Company is unable to satisfy the MVPHS requirement prior to such date, the Company may be eligible to transfer the listing of its securities to The Nasdaq Capital Market (provided that the Company then satisfies the requirements for continued listing on that market).
The Company disclosed its receipt of the MVPHS Notice pursuant to a Form 8-K filed on May 13, 2024, as required by Nasdaq rules.
In connection with the foregoing, the Company transferred from the Nasdaq Global Market to the Nasdaq Capital Market.
On October 29, 2024, the Company, received a written notice from Nasdaq that the Company’s securities would be delisted from The Nasdaq Stock Market by reason of the failure of the Company to complete its initial business combination by October 28, 2024 (36 months from the effectiveness of the Company’s IPO registration statement) as required by IM-5101-2. Accordingly, trading in the Company’s Class A Common Stock, Units and Warrants was suspended at the opening of business on November 5, 2024 and Form 25-NSE was filed with the Securities and Exchange Commission, which removed the Company’s securities from listing and registration on The Nasdaq Stock Market.
9
Table of Contents
The Company’s Class A Common Stock, Units and Warrants continue to be traded in the over-the-counter market.
Effecting Our Initial Business Combination
General
We are not presently engaged in, and we will not engage in, any operations for an indefinite period of time. We intend to effectuate our initial business combination using, the proceeds of the sale of our shares in connection with our initial business combination (pursuant to forward purchase agreements or backstop agreements we may enter into prior to and in connection with our initial business combination), shares issued to the owners of the target, debt issued to bank or other lenders preferred equity issued to investors or a combination of the foregoing.
We may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of our initial business combination, and we may effectuate our initial business combination using the proceeds of such offering. Subject to compliance with applicable securities laws, we would expect to complete such financing only simultaneously with the completion of our initial business combination. There are no prohibitions on our ability to raise funds privately or through loans in connection with our initial business combination. At this time, we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities, the incurrence of debt or otherwise.
Employees
We currently have two officers. These individuals are not obligated to devote any specific number of hours to our matters but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time they will devote in any time period will vary based on whether a target business has been selected for our initial business combination and the stage of the initial business combination process we are in. We do not intend to have any full-time employees prior to the completion of our initial business combination.
Available Information
Our executive offices are located at 600 Lexington Avenue, 9th Floor, New York, New York, and our telephone number is (203) 299-1400. Our corporate website address is https://altenergyacquisition.com. Our website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this annual report. You should not rely on any such information in making your decision whether to invest in our securities.
We are required to file Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q with the SEC on a regular basis, and are required to disclose certain material events in a Current Report on Form 8-K. In accordance with the requirements of the Exchange Act, our annual reports contain financial statements audited and reported on by our independent registered public accountants. The SEC maintains an Internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The SEC’s Internet website is located at www.sec.gov. In addition, the Company will provide copies of these documents without charge upon request from us.
Item 1A. Risk Factors.
In addition to the factors discussed elsewhere in this Report, the following risks and uncertainties could materially and adversely affect the Company’s business, financial condition, results of operations, and cash flows. Additional risks and uncertainties not presently known to the Company also may impair the Company’s business operations and financial condition. Under our amended and restated certificate of incorporation, we may not issue additional securities that can vote on amendments to our amended and restated certificate of incorporation or on our initial business combination or that would entitle holders thereof to receive funds from the trust account. Our initial stockholders will participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement and have the discretion to vote in any manner they choose. Our Sponsor, executive officers and directors
10
Table of Contents
have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination on or prior to May 2, 2025 (unless such date is further extended by an amendment to the Company’s Certificate of Incorporation), or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their shares of Class A Common Stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable) divided by the number of then outstanding public shares. Our Sponsor, officers and directors have entered into a letter agreement with us pursuant to which they have agreed to waive their redemption rights with respect to any founder shares and any public shares held by them in connection with the completion of our initial business combination.
Summary of Risk Factors
This risk factor summary highlights a number of risk factors that we believe are the most important risks associated with our business at this time. It does not contain a summary of all of the risks associated with our business or all of the information that may be important to you. The following summary should be read together with the more detailed discussion of risks and uncertainties set forth following this summary.
| • | We may complete our initial business combination even though a majority of our public stockholders do not support such a combination. |
| • | A public stockholder’s only opportunity to affect an investment decision regarding a potential business combination will be limited to the exercise of such stockholder’s right to redeem shares for cash. |
| • | We will only be able to complete one business combination which will cause us to be solely dependent on a single business which may have a limited number of services and limited operating activities. |
| • | We may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular business combination. |
| • | An active trading market for our common stock may not continue to develop or be sustained. |
| • | If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.20 per share. |
Risk Factors
An investment in our securities involves a high degree of risk. You should carefully consider the risks described below before making an investment decision. Our business, prospects, financial condition, or operating results could be harmed by any of these risks, as well as other risks not known to us or that we consider immaterial as of the date of this Form 10-K. The trading price of our securities could decline due to any of these risks, and, as a result, you may lose all or part of your investment.
Risks Relating to Searching for and Consummating a Business Combination
We may complete our initial business combination even though a majority of our public stockholders do not support such a combination.
We may complete our initial business combination even if holders of a majority of our public shares do not approve of the initial business combination we complete.
11
Table of Contents
Our sponsor, officers and directors have agreed to vote in favor of our initial business combination, regardless of how our public stockholders vote.
Pursuant to the letter agreement, our sponsor, officers and directors have agreed to vote their founder shares, as well as any public shares purchased during or after the initial public offering (including in open market and privately negotiated transactions), in favor of our initial business combination. As a result, in addition to our initial stockholders’ founder shares and private shares, we would not need any of the 738,146 remaining shares that were sold in the initial public offering to be voted in favor of an initial business combination in order to have our initial business combination approved.
A public stockholder’s only opportunity to affect the investment decision regarding a potential business combination will be limited to exercising such stockholder’s redemption rights in connection with any potential business combination.
If a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed. If we do not complete our initial business combination, our public stockholders may receive only approximately $10.20 per share on our redemption of our public shares, or less than such amount in certain circumstances, and our warrants will expire worthless.
We will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender offer documents, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares, which may include the requirement that a beneficial holder must identify itself. For example, we may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents mailed to such holders, or up to two business days prior to the vote on the proposal to approve the initial business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically. In the event that a stockholder fails to comply with these or any other procedures, its shares may not be redeemed.
If we do not complete our initial business combination, our public stockholders may receive only approximately $10.20 per share on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.20 per share upon our liquidation.
Stockholders will be unable to ascertain the merits or risks of any particular target business’s operations.
To the extent we complete our initial business combination, we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment in our stock will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any stockholders who choose to remain stockholders following our initial business combination could suffer a reduction in the value of their securities. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the business combination contained an actionable material misstatement or material omission.
12
Table of Contents
Past performance by members of our management team may not be indicative of future performance of an investment in us or in the future performance of any business that we may acquire.
Past performance by members of our management team is not a guarantee either (i) of success with respect to any business combination we may consummate or (ii) that we will be able to locate a suitable candidate for our initial business combination. You should not rely on the historical record of members of our management team’s performance as indicative of our future performance of an investment in the company or the returns the company will, or is likely to, generate going forward.
We are not required to obtain an opinion from an independent investment banking firm or from an independent accounting firm, and consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our company from a financial point of view.
Unless we complete our initial business combination with an affiliated entity or our board cannot independently determine the fair market value of the target business or businesses, we are not required to obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm that the price we are paying is fair to our company from a financial point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors, who will determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed in our proxy materials or tender offer documents, as applicable, related to our initial business combination.
We are dependent upon our officers and directors and their departure could adversely affect our ability to operate.
Our operations are dependent upon a relatively small group of individuals and, in particular, our officers and directors. We believe that our success depends on the continued service of our officers and directors, at least until we have completed our initial business combination. We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or officers. The unexpected loss of the services of one or more of our directors or officers could have a detrimental effect on us.
We will only be able to complete one business combination which will cause us to be solely dependent on a single business which may have a limited number of services and limited operating activities. This lack of diversification may negatively impact our operating results and profitability.
We will only be able to effectuate our initial business combination with only one target business. By completing our initial business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we will not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry.
Accordingly, the prospects for our success may be:
| • | solely dependent upon the performance of a single business, property or asset, or |
| • | dependent upon the development or market acceptance of a single or limited number of products, processes or services. |
This lack of diversification will subject us to numerous economic, competitive, and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and other governing instruments, including their warrant agreements. While we previously amended our amended and restated certificate of incorporation on April 16, 2024 we cannot assure you that we will not seek to further amend our amended and restated certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our initial business combination that our stockholders may not support.
13
Table of Contents
In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments, including their warrant agreements. For example, blank check companies have amended the definition of business combination, increased redemption thresholds and extended the time to consummate an initial business combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities. Amending provisions in our amended and restated certificate of incorporation that relate to our pre-initial business combination activity will require the approval of holders of 65% of our common stock, and amending our warrant agreement will require a vote of holders of at least 50% of the then outstanding public warrants and, solely with respect to any amendment to the terms of the private warrants or any provision of the warrant agreement with respect to the private warrants, 50% of the number of the then outstanding private warrants. In addition, our amended and restated certificate of incorporation requires us to provide our public stockholders with the opportunity to redeem their public shares for cash if we propose an amendment to our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination on or prior to May 2, 2025 (unless such date is further extended by an amendment to the Company’s Certificate of Incorporation) or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity. Our Sponsor, which beneficially owns approximately 78% of our common stock, will participate in any vote to amend our amended and restated certificate of incorporation and will have the discretion to vote in any manner it chooses. As a result, we may be able to amend the provisions of our amended and restated certificate of incorporation which govern our pre-initial business combination behavior more easily than some other blank check companies. We cannot assure you that we will not seek to amend our charter or governing instruments or extend the time to consummate an initial business combination in order to effectuate our initial business combination.
The provisions of our amended and restated certificate of incorporation that relate to our pre-initial business combination activity (and corresponding provisions of the agreement governing the release of funds from our trust account), including an amendment to permit us to withdraw funds from the trust account such that the per share amount investors will receive upon any redemption or liquidation is substantially reduced or eliminated, may be amended with the approval of holders of 65% of our common stock, which is a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation and the trust agreement to facilitate the completion of an initial business combination that some of our stockholders may not support.
Our amended and restated certificate of incorporation provides that any of its provisions related to pre-initial business combination activity (including the requirement to deposit proceeds of the initial public offering and the private placement of warrants into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described herein and including to permit us to withdraw funds from the trust account such that the per share amount investors will receive upon any redemption or liquidation is substantially reduced or eliminated) may be amended if approved by holders of 65% of our common stock entitled to vote thereon, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our common stock entitled to vote thereon. In all other instances, our amended and restated certificate of incorporation may be amended by holders of a majority of our outstanding common stock entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules. We may not issue additional securities that can vote on amendments to our amended and restated certificate of incorporation. Our Sponsor, which beneficially owns approximately 78% of our common stock, will participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner it chooses. As a result, we may be able to amend the provisions of our amended and restated certificate of incorporation which govern our pre-initial business combination behavior more easily than some other blank check companies, and this may increase our ability to complete an initial business combination with which stockholders do not agree. Our stockholders may pursue remedies against us for any breach of our amended and restated certificate of incorporation.
Our sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100%
14
Table of Contents
of our public shares if we do not complete our initial business combination on or prior to May 2, 2025 (unless such date is further extended by an amendment to the Company’s Certificate of Incorporation) or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay taxes, divided by the number of then outstanding public shares. These agreements are contained in a letter agreement that we have entered into with our sponsor, officers and directors. Our stockholders are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies against our sponsor, officers or directors for any breach of these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action, subject to applicable law.
We may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular business combination.
We may be required to seek additional financing to complete a proposed initial business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to complete our initial business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target business candidate. If we do not complete our initial business combination, our public stockholders may receive only approximately $10.20 per share plus any pro rata interest earned on the funds held in the trust account and not previously released to us to pay our taxes on the liquidation of our trust account and our warrants will expire worthless. In addition, even if we do not need additional financing to complete our initial business combination, we may require such financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or stockholders is required to provide any financing to us in connection with or after our initial business combination.
Our initial stockholders may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
Our initial stockholders currently own approximately 78% of our issued and outstanding shares of common stock. Accordingly, they may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that public stockholders do not support, including amendments to our amended and restated certificate of incorporation and approval of major corporate transactions. In addition, our board of directors, whose members were elected by certain of our initial stockholders, is and will be divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. We may not hold an annual meeting of stockholders to elect new directors prior to the completion of our initial business combination, in which case all of the current directors will continue in office until at least the completion of the initial business combination. If there is an annual meeting, as a consequence of our “staggered” board of directors, only a minority of the board of directors will be considered for election and our initial stockholders, because of their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will continue to exert control at least until the completion of our initial business combination.
Our public warrants, founder shares and private placement warrants (including the securities contained therein) may have an adverse effect on the market price of our Class A common stock.
We issued warrants to purchase 11,500,000 shares of our Class A common stock at a price of $11.50 per share (subject to adjustment as provided herein), as part of the units offered by the initial public offering and, simultaneously with the closing of our initial public offering, we issued in a private placement an aggregate of 12,000,000 private warrants, each exercisable to purchase one share of Class A common stock at $11.50 per share, subject to adjustment as provided herein.
Our sponsor currently owns an aggregate of 5,500,000 shares of Class A common stock and 250,000 shares of Class B common stock. In addition, if our sponsor made working capital loans, up to $1,500,000 of such loans may
15
Table of Contents
be converted into warrants, at the price of $1.00 per warrant at the option of the lender. Such warrants would be identical to the private placement warrants. The issuance of a substantial number of additional shares of Class A common stock upon exercise of these warrants will increase the number of issued and outstanding shares of our Class A common stock and reduce the value of the shares of Class A common stock issued to complete the initial business combination.
Our warrants are accounted for as a warrant liability and are recorded at fair value upon issuance with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of our Common Stock.
We issued 11,500,000 warrants as part of the units offered by the initial public offering and, simultaneously with the closing of the initial public offering, we issued in a private placement, 12,000,000 private placement warrants of which 8,000,000 remain outstanding following the forfeiture of 4,000,000 private placement warrants by our Sponsor on December 31, 2024 for no consideration. We account for both the warrants underlying the units offered by the initial public offering and the private placement warrants as a warrant liability. At each reporting period (1) the accounting treatment of the warrants will be re-evaluated for proper accounting treatment as a liability or equity and (2) the fair value of the liability of the public warrants and the private placement warrants will be remeasured and the change in the fair value of the liability will be recorded as other income (expense) in our income statement. The impact of changes in fair value on earnings may have an adverse effect on the market price of our common stock.
Subsequent to the completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price, which could cause stockholders to lose some or all of their investment.
Even if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will surface all material issues that may be present inside a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining debt financing to partially finance the initial business combination. Accordingly, any stockholders who choose to remain stockholders following the initial business combination could suffer a reduction in the value of their securities.
Our management may not be able to maintain control of a target business after our initial business combination.
Even if the post-transaction company in which our public stockholders own shares representing 50% or more of the voting securities of the target business, our stockholders prior to the initial business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the initial business combination. For example, we could pursue a transaction in which we issue a substantial number of new shares of Class A common stock in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent to such transaction. In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s stock than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain our control of the target business. We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
16
Table of Contents
We may have a limited ability to assess the management of a prospective target business and, as a result, may affect our initial business combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company, which could, in turn, negatively impact the value of our stockholders’ investment in us.
When evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any stockholders who choose to remain stockholders following the initial business combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
Our ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
Our ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management or advisory positions following our initial business combination, it is likely that some or all of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we employ after our initial business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements. In addition, the officers and directors of an initial business combination candidate may resign upon completion of our initial business combination. The departure of an initial business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business. The role of an initial business combination candidate’s key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we contemplate that certain members of an initial business combination candidate’s management team will remain associated with the initial business combination candidate following our initial business combination, it is possible that members of the management of an initial business combination candidate will not wish to remain in place. The loss of key personnel could negatively impact the operations and profitability of our post- combination business.
Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.”
We have until May 2, 2025, unless such date is further extended by an amendment to the Company’s Certificate of Incorporation, to consummate an initial business combination. Although we intend to complete a business combination prior to such deadline, it is uncertain that we will be able consummate an initial business combination by either date. If an initial business combination is not consummated by the required dates, there will be a mandatory liquidation and subsequent dissolution. In connection with our assessment of going concern considerations in accordance with the authoritative guidance in ASC Topic 205-40, “Presentation of Financial Statements - Going Concern,” management has determined that the mandatory liquidation, and subsequent dissolution, should we be unable to complete a business combination, raises substantial doubt about our ability to continue as a going concern. The financial statements contained elsewhere in this report do not include any adjustments that might result from our inability to continue as a going concern.
We have identified material weaknesses in our disclosure controls and procedures and internal controls over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of disclosure controls and procedures and internal controls, which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.
17
Table of Contents
We are required to comply with the Securities and Exchange Commission’s (“SEC”) rules implementing Sections 302 and 404 of The Sarbanes-Oxley Act (“SOXA”), which require management to certify financial and other information in our quarterly and annual reports. Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to reasonably detect and prevent fraud. We are also required to report any material weakness in such internal control. A material weakness is a deficiency, or a combination of deficiencies, in disclosure controls and procedures or internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected and corrected on a timely basis.
As disclosed under “Item 9A. Controls and Procedures” of this Annual Report, (i) during the course of preparing our audited financial statements for our Annual Report on Form 10-K for the year ended December 31, 2022, our principal executive officer and principal financial officer concluded that certain disclosure controls and procedures were not effective as of December 31, 2022, due to a material weakness that existed related to our accounting for complex financial instruments and our accounting and reporting for the completeness and accuracy of warrant liabilities and the corresponding change in the fair value of the warrant liability; (ii) during the course of preparing our audited financial statements for this Annual Report, our principal executive officer and principal financial and accounting officer identified as it relates to the material weakness relating to accounting for complex financial instruments, a failure to properly record in the Company’s financial statements included in our Quarterly Reports on Form 10-Q for the quarterly periods ended June 30, 2023, and September 30, 2023, the capital contributions and related costs associated with non-redemption agreements entered into with certain stockholders of the Company in connection with the special meeting of stockholders of the Company held on April 28, 2023; and (iii) during the course of preparing our audited financial statements for this Annual Report, our principal executive officer and principal financial officer identified a material weakness in relation to the accounting of contractual liabilities which led to errors in the accounting of consulting fees pursuant to a consulting agreement with our chief financial officer in our financial statements included in our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2023, June 30, 2023, and September 30, 2023. Our principal executive officer and principal financial officer concluded that certain disclosure controls and procedures were not effective as of December 31, 2024.
While as discussed in “Item 9A. Controls and Procedures” we have implemented and plan to implement changes to remediate the material weaknesses identified above, we cannot predict the success of such plan or the outcome of our assessment of this plan at this time. If our steps are insufficient to successfully remediate the material weaknesses and otherwise establish and maintain an effective system of disclosure controls and procedures and internal controls over financial reporting, the reliability of our financial reporting, investor confidence in us, and the value of our common stock could be materially and adversely affected. We can give no assurance that this implementation will remediate these deficiencies in disclosure controls and procedures and internal controls or that additional material weaknesses in our disclosure controls and procedures and internal controls over financial reporting will not be identified in the future. Our failure to implement and maintain effective disclosure controls and procedures and internal controls over financial reporting could result in errors in our financial statements that could result in a restatement of our financial statements or cause us to fail to meet our periodic reporting obligations.
For as long as we are an “emerging growth company” under The Jumpstart Our Business Startup Act (“JOBS Act”), our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404.
Risks Relating to Conflicts of Interest of our Officers, Directors and Others
Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our key personnel may be able to remain with the company after the completion of our initial business combination only if they are able to negotiate employment or consulting agreements in connection with the initial business combination. Such negotiations would take place simultaneously with the negotiation of the initial business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to us after the completion of the initial business combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a
18
Table of Contents
target business. However, we believe the ability of such individuals to remain with us after the completion of our initial business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination. There is no certainty, however, that any of our key personnel will remain with us after the completion of our initial business combination. We cannot assure you that any of our key personnel will remain in senior management or advisory positions with us. The determination as to whether any of our key personnel will remain with us will be made at the time of our initial business combination.
Our officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and our search for an initial business combination and their other businesses. We do not intend to have any full-time employees prior to the completion of our initial business combination. Each of our officers is engaged in other business endeavors for which he may be entitled to substantial compensation and our officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors may also serve as officers or board members for other entities. If our officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business combination.
Certain of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular business opportunity should be presented.
Until we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses. Our sponsor and officers and directors are, and may in the future become, affiliated with entities (such as operating companies or investment vehicles) that are engaged in a similar business.
Our officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe certain fiduciary or contractual duties.
Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.
Our officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into an initial business combination with a target business that is affiliated with our sponsor, our directors or officers, although we do not intend to do so. We do not have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us, including the formation or participation in one or more other blank check companies. Accordingly, such persons or entities may have a conflict between their interests and ours.
We may engage one or more of our underwriters or one of their respective affiliates to provide additional services to us, which may include acting as financial advisor in connection with an initial business combination or as
19
Table of Contents
placement agent in connection with a related financing transaction. Our underwriters are entitled to receive deferred commissions that will be released from the trust only on a completion of an initial business combination. These financial incentives may cause them to have potential conflicts of interest in rendering any such additional services to us.
We may engage one or more of our underwriters or one of their respective affiliates to provide additional services to us after the initial public offering, including, for example, identifying potential targets, providing financial advisory services, acting as a placement agent in a private offering or arranging debt financing. The underwriters are also entitled to receive deferred commissions that are conditioned on the completion of an initial business combination. The underwriters’ or their affiliates’ financial interests tied to the consummation of a business combination transaction may give rise to potential conflicts of interest in providing any such additional services to us, including potential conflicts of interest in connection with the sourcing and consummation of an initial business combination.
Since our sponsor, officers and directors will lose their entire investment in us if our initial business combination is not completed, a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination.
On March 25, 2021, our sponsor purchased an aggregate of 5,750,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.004 per share. An affiliate of B. Riley purchased from our sponsor an aggregate 400,000 founder shares. The founder shares were purchased at a price of $4.00 per founder share, or an aggregate purchase price of $1,600,000, which was payable at the time of the closing of the initial public offering. The founder shares will be delivered by the sponsor to the underwriters upon consummation of our initial business combination and immediately following the expiration of the transfer restrictions applicable to the founder shares. The founder shares will be worthless if we do not complete an initial business combination. In addition, our sponsor and an affiliate of our underwriter purchased 12,000,000 private placement warrants at a price of $1.00 per private placement warrant. Among the private placement warrants, 11,600,000 were purchased by our sponsor at a price of $1.00 per warrant, and 400,000 warrants were purchased by an affiliate of our underwriter at a price of $1.00 per warrant. On December 31, 2024, our sponsor forfeited 4,000,000 private placement warrants to the Company for no consideration. The private placement warrants will also be worthless if we do not complete an initial business combination. Holders of founder shares have agreed (A) to vote any shares owned by them in favor of any proposed initial business combination and (B) not to redeem any founder shares in connection with a stockholder vote to approve a proposed initial business combination. In addition, we may obtain loans from our sponsor, affiliates of our sponsor or an officer or director, and we may pay our sponsor, officers, directors and any of their respective affiliates fees and expenses in connection with identifying, investigating and completing an initial business combination. The personal and financial interests of our officers and directors may influence their motivation in identifying and selecting a target business combination, completing an initial business combination and influencing the operation of the business following the initial business combination.
Risks Relating to Our Securities
We may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public stockholders may only receive $10.20 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
Our amended and restated certificate of incorporation provides that we must complete our initial business combination on or prior to May 2, 2025 (unless such date is further extended by an amendment to the Company’s Certificate of Incorporation). We may not be able to find a suitable target business and complete our initial business combination within such time period. Our ability to complete our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the other risks described herein.
If we have not completed our initial business combination within such time period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not
20
Table of Contents
previously released to us to pay our taxes ), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In such case, our public stockholders may only receive $10.20 per share, and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.20 per share on the redemption of their shares.
21
Table of Contents
Our public stockholders will not have any rights or interests in funds from the trust account, except under certain limited circumstances. Our public stockholders will be entitled to receive funds from the trust account only upon the earliest to occur of: (i) our completion of an initial business combination, and then only in connection with those shares of Class A common stock that such stockholder properly elected to redeem, subject to the limitations described herein, (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination on or prior to May 2, 2025 (unless such date is further extended by an amendment to the Company’s Certificate of Incorporation) or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity and (iii) the redemption of our public shares if we do not complete an initial business combination on or prior to May 2, 2025 (unless such date is further extended by an amendment to the Company’s Certificate of Incorporation), subject to applicable law and as further described herein. In no other circumstances will a public stockholder have any right or interest of any kind in the trust account. Holders of warrants will not have any right to the proceeds held in the trust account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
22
Table of Contents
Because our common stock, units and warrants are quoted on the OTC Pink Open Market, instead of a national securities exchange, our stockholders and warrant holders may experience significant volatility in the market price of our stock, units or warrants and have difficulty selling their such securities.
Our common stock, units and warrants are currently quoted on the OTC Pink Open Mark (the “OTC Pink”), under the ticker symbol “AEAE”, “AEAEU” and “AEAEW.” The OTC Pink is a regulated quotation service that displays real-time quotes and last sale prices in over-the-counter securities. Trading in securities quoted on the OTC Pink is often thin and characterized by volatility. This volatility may be caused by a variety of factors, including the lack of readily available price quotations, the absence of consistent administrative supervision of bid and ask quotations, lower trading volume and market conditions. As a result, there may be wide fluctuations in the market price of our securities for reasons unrelated to operating performance, and this volatility, when it occurs, may have a negative effect on the market price for our securities. Moreover, the OTC Pink is not a stock exchange, and trading of securities on this platform is more sporadic than the trading of securities listed on a national quotation system or stock exchange. Accordingly, our stockholders and warrant holders may not be able to realize a fair price of their shares or warrants when they determine to sell them or may have to hold them for a substantial period of time until the market for such securities improves.
An active trading market for our common stock may not continue to develop or be sustained.
Although our securities are listed on the OTC Pink Open Market, we cannot assure you that an active, liquid trading market for our shares, units or warrants will continue to develop or be sustained. If an active market for any of our securities does not continue to develop or is not sustained, it may be difficult for you to sell shares, units or warrants quickly or without depressing the market price for such securities or to sell your such securities at all.
If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.20 per share.
Our placing of funds in the trust account may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. Making such a request of potential target businesses may make our acquisition proposal less attractive to them and, to the extent prospective target businesses refuse to execute such a waiver, it may limit the field of potential target businesses that we might pursue.
Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we do not complete our initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption.
Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.20 per share initially held in the trust account, due to claims of such creditors. Our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent registered public accounting
23
Table of Contents
firm) for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.20 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.20 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of the initial public offering against certain liabilities, including liabilities under the Securities Act. However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the trust account, the funds available for our initial business combination and redemptions could be reduced to less than $10.20 per public share. In such event, we may not be able to complete our initial business combination, and you would receive such lesser amount per share in connection with any redemption of your public shares. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Our directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public stockholders.
In the event that the proceeds in the trust account are reduced below the lesser of (i) $10.20 per public share and (ii) the actual amount per share held in the trust account as of the date of the liquidation of the trust account if less than $10.20 per share due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced below $10.20 per share.
We may not have sufficient funds to satisfy indemnification claims of our directors and officers.
We have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed to waive any right, title, interest or claim of any kind in or to any monies in the trust account and not to seek recourse against the trust account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination. Our obligation to indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our board may be exposed to claims of punitive damages.
If, after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts
24
Table of Contents
received by our stockholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
The securities in which we invest the funds held in the trust account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the per-share redemption amount received by public stockholders may be less than $10.20 per share.
The proceeds held in the trust account will be invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations. While short-term U.S. government treasury obligations currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United States. In the event that we are unable to complete our initial business combination or make certain amendments to our amended and restated certificate of incorporation, our public stockholders are entitled to receive their pro-rata share of the proceeds held in the trust account, plus any interest income, net of taxes payable (less, in the case we are unable to complete our initial business combination, up to $100,000 of interest to pay dissolution expenses). Negative interest rates could reduce the value of the assets held in trust such that the per-share redemption amount received by public stockholders may be less than $10.20 per share.
If we have not completed an initial business combination within on or prior to May 2, 2025 (unless such date is further extended by an amendment to the Company’s Certificate of Incorporation), our public stockholders may be forced to wait beyond such date before redemption from our trust account.
If we have not completed an initial business combination on or prior to May 2, 2025 (unless such date is further extended by an amendment to the Company’s Certificate of Incorporation), the proceeds then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, if any (less up to $100,000 of the interest to pay dissolution expenses), will be used to fund the redemption of our public shares, as further described herein. Any redemption of public stockholders from the trust account will be effected automatically by function of our amended and restated certificate of incorporation prior to any voluntary winding up. If we are required to wind-up, liquidate the trust account and distribute such amount therein, pro rata, to our public stockholders, as part of any liquidation process, such winding up, liquidation and distribution must comply with the applicable provisions of the DGCL. In that case, investors may be forced to wait beyond such date before the redemption proceeds of our trust account become available to them, and they receive the return of their pro rata portion of the proceeds from our trust account. We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless we complete our initial business combination prior thereto and only then in cases where investors have sought to redeem their Class A common stock. Only upon our redemption or any liquidation will public stockholders be entitled to distributions if we do not complete our initial business combination.
Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
25
Table of Contents
Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination on or prior to May 2, 2025 (unless such date is further extended by an amendment to the Company’s Certificate of Incorporation) may be considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon as reasonably possible following the 30th month from the closing of the initial public offering in the event we do not complete our initial business combination and, therefore, we do not intend to comply with the foregoing procedures.
Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination on or prior to May 2, 2025 (unless such date is further extended by an amendment to the Company’s Certificate of Incorporation) is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
We may not hold an annual meeting of stockholders until after the consummation of our initial business combination, which could delay the opportunity for our stockholders to elect directors.
In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until no later than one year after our first fiscal year end following our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election is made by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
Holders of Class A common stock will not be entitled to vote on any election of directors we hold prior to our initial business combination.
Prior to our initial business combination, only holders of our founder shares will have the right to vote on the election of directors. Holders of our public shares will not be entitled to vote on the election of directors during such time. Accordingly, you may not have any say in the management of our company prior to the consummation of an initial business combination.
26
Table of Contents
We have not registered the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants except on a cashless basis. If the issuance of the shares upon exercise of warrants is not registered, qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless.
We have not registered the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. However, under the terms of the warrant agreement, we have agreed that as soon as practicable, but in no event later than 15 business days after the closing of our initial business combination, we will use our best efforts to file with the SEC a registration statement for the registration under the Securities Act of the shares of Class A common stock issuable upon exercise of the warrants and thereafter will use our best efforts to cause the same to become effective within 60 business days following our initial business combination and to maintain a current prospectus relating to the Class A common stock issuable upon exercise of the warrants, until the expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot assure holders of warrants that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop order. If the shares of Class A common stock issuable upon exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis in which case the number of shares of our Class A common stock that holders of warrants will receive upon cashless exercise will be based on a formula subject to a maximum number of shares equal to 0.361 shares of our Class A common stock per warrant (subject to adjustment). However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. Notwithstanding the foregoing, if a registration statement covering the Class A common stock issuable upon exercise of the warrants is not effective within a specified period following the consummation of our initial business combination, warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable state securities laws and there is no exemption available. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of Class A common stock included in the units. If and when the warrants become redeemable by us, we may not exercise our redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under applicable state blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts to register or qualify such shares of common stock under the blue-sky laws of the state of residence in those states in which the warrants were offered by us in the initial public offering. However, there may be instances in which holders of our public warrants may be unable to exercise such public warrants but holders of our private warrants may be able to exercise such private warrants.
The future exercise of registration rights granted to our initial stockholders may adversely affect the market price of our Class A common stock.
Pursuant to an agreement that was entered into concurrently with the issuance and sale of the securities in the initial public offering, our initial stockholders and their permitted transferees can demand that we register the shares of Class A common stock issuable upon conversion of the founder shares, the private placement warrants, the shares of Class A common stock issuable upon exercise of the private warrants held, or to be held, by them and holders of units that may be issued upon conversion of working capital loans may demand that we register such units, the private shares and private warrants included in such units and the Class A common stock issuable upon exercise of the private warrants included in such units. We will bear the cost of registering these securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our Class A common stock.
27
Table of Contents
We may issue additional shares of Class A common stock or preferred stock to complete our initial business combination or under an employee incentive plan after completion of our initial business combination. Any such issuances would dilute the interest of our stockholders and likely present other risks.
Our amended and restated certificate of incorporation authorizes the issuance of up to 100,000,000 shares of Class A common stock, par value $0.0001 per share, 10,000,000 shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share.
We may issue a substantial number of additional shares of Class A common stock or shares of preferred stock to complete our initial business combination or under an employee incentive plan after completion of our initial business combination (although our amended and restated certificate of incorporation provides that we may not issue securities that can vote with common stockholders on matters related to our pre-initial business combination activity).. However, our amended and restated certificate of incorporation provides, among other things, that prior to or in connection with our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote on any initial business combination. These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and restated certificate of incorporation, may be amended with the approval of our stockholders. However, our officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination on or prior to May 2, 2025 (unless such date is further extended by an amendment to the Company’s Certificate of Incorporation) or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable), divided by the number of then outstanding public shares.
The issuance of additional shares of Class A common stock or shares of preferred stock:
| • | may significantly dilute the equity interest of investors in the initial public offering; |
| • | may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock; |
| • | could cause a change of control if a substantial number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and |
| • | may adversely affect prevailing market prices for our units, Class A common stock and/or warrants. |
We may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of at least 50% of the then outstanding public warrants. As a result, the exercise price of warrants could be increased, the exercise period could be shortened and the number of shares of our Class A common stock purchasable upon exercise of a warrant could be decreased, all without a holder’s approval.
Our warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 50% of the then outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least 50% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash or stock, shorten the exercise period or decrease the number of shares of our Class A common stock purchasable upon exercise of a warrant.
28
Table of Contents
Our warrant agreement designates the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our warrant agreement provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding the foregoing, these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.
This choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
We may redeem unexpired warrants prior to their exercise at a time that is disadvantageous to holders of warrants, thereby making warrants worthless.
We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption and provided certain other conditions are met. If and when the warrants become redeemable by us, we may not exercise our redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under applicable state blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts to register or qualify such shares of common stock under the blue sky laws of the state of residence in those states in which the warrants were offered by us in the initial public offering. Redemption of the outstanding warrants could force a warrant holder (i) to exercise warrants and pay the exercise price therefor at a time when it may be disadvantageous for a warrant holder to do so, (ii) to sell warrants at the then-current market price when such warrant holder might otherwise wish to hold such warrant holder’s warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of warrants.
None of the private placement warrants will be redeemable by us so long as they are held by the sponsor, the underwriters or their permitted transferees.
29
Table of Contents
Provisions in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class A common stock and could entrench management.
Our amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These provisions include a staggered board of directors and the ability of the board of directors to designate the terms of and issue new series of preferred shares, which may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel, which may have the effect of discouraging lawsuits against our directors, officers, other employees or stockholders.
Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel except any action (A) as to which the Court of Chancery in the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, (C) for which the Court of Chancery does not have subject matter jurisdiction, or (D) any action arising under the Securities Act, as to which the Court of Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
Our amended and restated certificate of incorporation provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
General Risks
We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
30
Table of Contents
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the aggregate worldwide market value of our Class A common stock held by non-affiliates equals or exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our Class A common stock held by non-affiliates equals or exceeds $250 million as of the prior June 30th, and (2) our annual revenues equaled or exceeded $100 million during such completed fiscal year or the market value of our Class A common stock held by non-affiliates equals or exceeds $700 million as of the prior June 30th. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
Cyber incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of third parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As an early-stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business and lead to financial loss.
If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
31
Table of Contents
If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
| • | restrictions on the natures of our investments; and |
| • | restrictions on the issuance of securities, each of which may make it difficult for us to complete our initial business combination. |
In addition, we may have imposed upon us burdensome requirements, including:
| • | registration as an investment company; |
| • | adoption of a specific form of corporate structure; and |
| • | reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations. |
In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business will be to identify and complete an initial business combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
We do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the trust account may only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act. The trust account is intended as a holding place for funds pending the earliest to occur of: (i) the completion of our initial business combination; (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination on or prior to May 2, 2025 (unless such date is further extended by an amendment to the Company’s Certificate of Incorporation) or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity; or (iii) absent an initial business combination on or prior to May 2, 2025 (unless such date is further extended by an amendment to the Company’s Certificate of Incorporation), our return of the funds held in the trust account to our public stockholders as part of our redemption of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete an initial business combination or may result in our liquidation. If we do not complete our initial business combination, our public stockholders may receive only approximately $10.20 per share on the liquidation of our trust account and our warrants will expire worthless.
Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial business combination and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly.
32
Table of Contents
Table of Contents
Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Overview
We are a blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “initial business combination”). We intend to effectuate our business combination using cash from the proceeds of our initial public offering and the private placement that occurred simultaneously with the completion of our initial public offering to the extent any funds remain available after any redemptions effected in connection with the initial business combination, our capital stock, debt or a combination of cash, stock and debt.
As discussed under Item 1 of this Form 10-K, we expect to issue additional shares in connection with the proposed initial business combination to the owners of the target or other investors, with the following consequences:
| • | significant dilution of the equity interest of holders of our common stock; |
| • | Potential subordination of the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock; |
| • | a change in control, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and will likely result in the resignation or removal of one or more of our present officers and directors; |
| • | potential delay or prevention of a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and |
| • | potentially adversely affecting prevailing market prices for our Class A common stock and/or warrants. |
Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in:
| • | default and foreclosure on our assets if our operating revenues after our initial business combination are insufficient to repay our debt obligations; |
| • | acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
| • | our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; |
| • | our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding; |
| • | our inability to pay dividends on our common stock; |
| • | using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes; |
| • | limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
| • | increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; |
35
Table of Contents
| • | limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and |
| • | other purposes and other disadvantages compared to our competitors who have less debt. |
In the short term, we are incurring costs in the pursuit of our initial business combination plans. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful.
Extension of Combination Period
April 2023 Special Meeting
On April 28, 2023, the Company held a special meeting of stockholders (the “April 2023 Special Meeting”). As of April 10, 2023, the record date of the April 2023 Special Meeting, there were 28,750,000 issued and outstanding shares of common stock, par value $0.0001 per share (the “Common Stock”) comprised of 23,000,000 shares of the Company’s Class A common stock, par value $0.0001 per share (“Class A Shares”), and 5,750,000 shares of the Company’s Class B common stock, par value $0.0001 per share. At the April 2023 Special Meeting, the Company’s stockholders approved the proposal to file an amendment to AltEnergy’s Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware (the “Amendment”) to extend the date from May 2, 2023, to May 2, 2024 (the “Extension,” and such proposal, the “Extension Proposal”) by which the Company must (1) consummate a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (an “initial business combination”) or (2) cease its operations except for the purpose of winding up if it fails to complete such initial business combination, and redeem all of the Class A Shares included as part of the units sold in the Company’s IPO that was consummated on November 2, 2021. On April 28, 2023, to effectuate the Extension, the Company filed the Amendment with the Secretary of State of the State of Delaware. Stockholders holding 21,422,522 Class A Shares exercised their right to redeem such shares for a pro rata portion of the funds in the Company’s trust account (“Trust Account”) in connection with the Extension. As a result, $222,484,624 (approximately $10.38 per share) was removed from the Trust Account on or about May 15, 2023 to pay such holders, and an additional $855,761 was removed from the Trust Account on or about May 9, 2023. As of December 31, 2023 there was $17,591,536 (or approximately $11.15 per share of Class A common stock that is subject to redemption) held in the Trust Account.
On April 28, 2023, following the April 2023 Special Meeting, 5,500,000 shares of Class B Common Stock were converted into Class A Shares, which Class A Shares are not subject to redemption.
April 2024 Special Meeting
On April 16, 2024, the Company held a special meeting of stockholders (the “April 2024 Special Meeting”). As of March 5, 2024, the record date of the April 2024 Special Meeting, there were 7,327,478 issued and outstanding shares of Common Stock comprised of 7,077,478 shares of the Company’s Class A Shares, and 250,000 shares of the Company’s Class B common stock, par value $0.0001 per share. At the April 2024 Special Meeting, AltEnergy’s stockholders approved the proposal to file an amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware (the “Amendment”) to extend the date from May 2, 2024, to November 2, 2024 (the “Extended Date”) and to allow the board of directors of the Company (the “Board”), without another stockholder vote, to elect to further extend the date to consummate an initial business combination after the Extended Date up to six times, by an additional month each time, upon two days’ advance notice prior to the applicable deadline, up to May 2, 2025 (the “Additional Extension Date” and together with the Extended Date the “Extension” and such proposal, the “Extension Proposal”); by which the Company must (1) consummate a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (an “initial business combination”) or (2) cease its operations except for the purpose of winding up if it fails to complete such initial business combination, and redeem all of the Class A Shares included as part of the units sold in the Company’s IPO that was consummated on November 2, 2021. On April 17, 2024, to effectuate the Extension, the Company filed the Amendment with the Secretary of State of the State of Delaware.
At the April 2024 Special Meeting, the Company’s stockholders also approved a proposal to amend our amended
36
Table of Contents
and restated certificate of incorporation to eliminate the limitation that the Company shall not redeem Class A Common Stock included as part of the units sold in the IPO (including any shares issued in exchange thereof, the “public shares”) to the extent that such redemption would cause our net tangible assets to be less than $5,000,001 (the “Redemption Limitation”) to allow us to redeem public shares irrespective of whether such redemption would exceed the Redemption Limitation.
As a result of the April 2024 Special Meeting, stockholders holding 839,332 Class A Shares exercised their right to redeem such shares for a pro rata portion of the funds in the Company’s trust account (“Trust Account”) in connection with the Extension. As a result, $9,513,007 (approximately $11.20 per share) was removed from the Trust Account on or about April 23, 2024 to pay such holders. As of April 30, 2024 there was $8,344,700 (or approximately $11.30 per share of Class A common stock that is subject to redemption) held in the Trust Account.
Additional Extensions
Pursuant to the amendment to the Company’s Amended and Restated Certificate of Incorporation referred to above, the Board (i) on October 30, 2024, approved an extension of the date by which the Company is required to complete an initial business combination from November 2, 2024 to December 2, 2024; (ii) on November 25, 2024, approved an extension of the date by which the Company is required to complete an initial business combination from December 2, 2024 to January 2, 2025; (iii) on December 20, 2024, approved an extension of the date by which the Company is required to complete an initial business combination from January 2, 2025 to February 2, 2025; January 28, 2025, approved an extension of the date by which AltEnergy is required to complete an initial business combination from February 2, 2025 to March 2, 2025; (v) on February 25, 2025, approved an extension of the date by which AltEnergy is required to complete an initial business combination from March 2, 2025 to April 2, 2025; (vi) on March 26, 2025 approved an extension of the date by which AltEnergy is required to complete an initial business combination from April 2, 2025 to May 2, 2025.
The Company has scheduled a meeting for April 23, 2025 for the purpose of amending the Amended and Restated Certificate of Incorporation to further extend the date by which the Company is required to complete an initial business combination from May 2, 2025 to May 1, 2026.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception were organizational activities, those necessary to prepare for the initial public offering, and identifying a target company for a business combination. We do not expect to generate any operating revenues until after the completion of our business combination. We generate non-operating income in the form of interest income on marketable securities. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with completing a business combination.
Our net loss for the year ended December 31, 2024 consisted of interest income earned on the funds held in Trust in the amount of $576,286, interest earned on the operating and investment accounts of $4,285 and a gain of $858,100 on the change in fair value of the derivative warrant liabilities associated with the warrants issued as part of the Units sold in the Public Offering and the Private Placement Warrants offset by operating expenses that total $3,942,881, interest expense of $102,355 and income tax expense of $91,276.
Our net loss for the year ended December 31, 2023 consisted of interest income earned on the funds held in Trust in the amount of $4,216,411, interest earned on the operating and investment accounts of $11,337 and a gain of $1,410,000 on the change in fair value of the derivative warrant liabilities associated with the warrants issued as part of the Units sold in the Public Offering and the Private Placement Warrants offset by operating expenses that total $2,283,526, interest expense of $19,404 and income tax expense of $861,417.
Going Concern Considerations, Liquidity and Capital Resources
As of December 31, 2024 there was $8,544,857 (or approximately $11.58 per share) held in the Trust Account. Cash of $18,458 was held outside of the Trust Account on December 31, 2024 and was available for working capital purposes. As of December 31, 2024, there was $101,511 held in the restricted investment account which together with interest earned thereon and after payment of associated taxes and account fees up to $100,000 is reserved to pay dissolution costs and expenses in the event the Company fails to complete an initial business combination and is dissolved. To the extent such funds in the restricted investment account are insufficient (less than $100,000), additional funds will be dispersed from the Trust up to a combined total of $100,000. Any amount in the restricted
37
Table of Contents
investment account in excess of $100,000 will be for the benefit of the Trust. If an initial business combination is consummated all funds then held in the restricted investment account, including amounts previously reserved to pay dissolution costs and expenses in the event the Company fails to complete an initial business combination will be for the benefit of the Trust. As described in Note 6 to the financial statements, the $8,050,000 deferred underwriting fees are contingent upon the consummation of the Business Combination.
We intend to use all of such funds held outside the Trust Account other than the $100,000 reserved to pay dissolution costs and expenses primarily to perform business, legal and financial due diligence in connection with our business combination agreement as described in Item 1 of this Form 10-K, and structure, negotiate and complete the business combination.
For the year ending December 31, 2024, cash used in operating activities was $1,765,142, consisting primarily of net loss of $2,697,841, including interest income on the funds held in the Trust of $576,286, interest income earned on the operating and investment accounts of $4,285 and a gain on the change in the fair value of the warrant liabilities of $858,100 offset by changes in operating assets and liabilities providing $2,371,370 of cash from operating activities.
In connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the Company may lack the financial resources it needs to sustain operations for a reasonable period of time, which is considered to be one year from the issuance date of the financial statements. Management has also determined that , in accordance with the Company’s amended and restated articles of incorporation, unless the Company completes a business combination on or prior to May 2, 2025 or the Company’s articles of incorporation are further amended to extend such date beyond May 2, 2025, the Company will cease all operations, redeem the public shares and thereafter liquidate and dissolve. These conditions raise substantial doubt about the ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The accompanying financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern.
The Company intends to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account, excluding the deferred underwriting commissions, and amounts paid to redeem public shares, to complete an initial business combination. To the extent that capital stock or debt is used, in whole or in part, as consideration to complete an initial business combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue growth strategies. If an initial business combination agreement requires the Company to use a portion of the cash in the Trust Account to pay the purchase price or requires the Company to have a minimum amount of cash at closing, the Company will need to reserve a portion of the cash in the Trust Account to meet such requirements or arrange for third-party financing.
We may have insufficient funds available to operate our business prior to our business combination. Moreover, we may need to obtain additional financing either to complete our business combination or because we become obligated to redeem a significant number of public shares upon completion of our business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Convertible Working Capital Loan
In order to fund working capital deficiencies or finance transaction costs in connection with a business combination, the Sponsor or an affiliate of the Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a business combination, we would repay such loaned amounts. In the
38
Table of Contents
event that a business combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such working capital loans may be convertible into private placement units at a price of $1.00 per warrant at the option of the lender. There is no outstanding balance as of December 31, 2024 and 2023.
Loan Payable — Sponsor
Additionally, per a Commitment Letter, dated July 19, 2022, the Sponsor undertook upon the Company’s written request to make available an aggregate amount of up to $250,000 to provide the Company funds for working capital purposes to ensure that the Company would continue as a going concern for at least 12 months. A second Commitment Letter was dated May 4, 2023 for up to an additional $750,000. A third Commitment Letter was dated December 20, 2023 for up to an additional $800,000. The Sponsor is charging interest at the mid-term applicable federal rate at the time of funding. During the year ended December 31, 2024, the Sponsor loaned an aggregate of $1,335,000 to the Company for working capital purposes. As of December 31, 2024 and 2023, $2,335,000 and $1,000,000 remained outstanding, respectively. As of December 31, 2024 and 2023, there was accrued interest of $91,688 and $19,404, respectively.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of December 31, 2024. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities, other than an agreement to pay an affiliate of the Sponsor a monthly fee of $15,000 for office space, utilities, and administrative support to the Company. We began incurring these fees on October 28, 2021. On January 28, 2023 this agreement was amended to provide that, rather than be payable on a monthly basis, the payments due thereunder commencing with the monthly payment payable on or about February 28, 2023 shall accrue and be payable on the completion of a business combination or the Company’s liquidation.
The Underwriting Agreement with B. Riley Securities, Inc., provides that upon the consummation of our initial business combination, we will pay B. Riley Securities, Inc. out of the funds in the Trust Account a cash fee in an amount equal to 3.5% of the gross proceeds of the Public Offering (exclusive of any applicable finders’ fees which might become payable). No fee will be due if we do not complete an initial business combination.
Critical Accounting Estimates
The preparation of the financial statements in conformity with US GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the balance sheet, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these financial statements is the determination of the fair value of the warrant liabilities and the fair value of the non-redemption agreements. Accordingly, the actual results could differ significantly from those estimates.
39
Table of Contents
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policy:
Common stock subject to possible redemption
The Company accounts for its shares of Class A common stock subject to possible redemption in accordance with the guidance enumerated in ASC 480 “Distinguishing Liabilities from Equity”. Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The shares of the Company’s Class A common stock feature certain redemption rights that are considered by the Company to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, at December 31, 2024 and December 31, 2023, the shares of Class A common stock subject to possible redemption in the amount of $8,646,368 and $17,700,146 are presented as temporary equity, outside of the stockholders’ deficit section of the Company’s balance sheets, respectively. The shares of Class A common stock that were issued upon conversion of shares of Class B common stock are not subject to redemption and accordingly are presented in the stockholders’ deficit section of the Company’s balance sheets.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging.” The Company’s derivative instruments are recorded at fair value as of the closing date of the Initial Public Offering (November 2, 2021) and re-valued at each reporting date, with changes in the fair value reported in the statements of operations. Derivative assets and liabilities are classified on the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. The Company has determined the Public Warrants and the Private Placement Warrants are derivative instruments. As the Public Warrants and the Private Placement Warrants meet the definition of a derivative, the Public Warrants and the Private Placement Warrants are measured at fair value at issuance and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in the statement of operations in the period of change.
Warrants Instruments
We evaluated the Warrants in accordance with ASC 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity” and concluded that a provision in the Warrant Agreement related to certain tender or exchange offers as well as provisions that provided for potential changes to the settlement amounts dependent upon the characteristics of the holder of the warrant, precludes the Warrants from being accounted for as components of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815 and are not eligible for an exception from derivative accounting, the Warrants are recorded as derivative liabilities on the Balance Sheet. Upon consummation of the Initial Public Offering, the Company used a Monte Carlo simulation model to value the Public Warrants and a modified Black-Scholes model to value the Private Placement Warrants. The Company allocated the proceeds received from (i) the sale of Units (which is inclusive of one share of Class A common stock and one-half of one Public Warrant), (ii) the sale of Private Warrants, and (iii) the issuance of shares of Class B common stock, first to the warrants based on their fair values as determined at initial measurement, with the remaining proceeds allocated to shares of Class A common stock subject to possible redemption (temporary equity) and Class B common stock (permanent equity) based on their relative fair values at the initial measurement date. The Public Warrants and the Private Placement Warrants were classified within Level 3 of the fair value hierarchy at the measurement dates due to the use of unobservable inputs.
As of December 31, 2024 and 2023, the Public Warrants were valued using the publicly available price for the Warrant and are classified as Level 1 on the Fair Value Hierarchy. As of December 31, 2024 and 2023, the
40
Table of Contents
Company used a modified Black-Scholes model to value the Private Placement Warrants. The Company relied upon the implied volatility of the Public Warrants and the implied volatilities of comparable companies and the closing price as of December 31, 2024 and 2023 per Public Warrant to estimate the volatility for the Private Placement Warrants. As of December 31, 2024 and 2023, the Private Placement Warrants were classified within Level 3 of the Fair Value Hierarchy at the measurement dates due to the use of unobservable inputs.
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid to transfer of a liability, in an orderly transaction between market participants at the measurement date. US GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| • | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| • | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| • | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
Net income (loss) per share
Net income (loss) per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. The Company applies the two-class method in calculating earnings per share. Earnings and losses are shared pro rata between the two classes of shares. The calculation of diluted income (loss) per share of common stock does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) the private placement since the exercise of the warrants is contingent upon the occurrence of future events. As of December 31, 2024, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company. As a result, diluted net income per common share is the same as basic net income per common share for the period presented. As of December 31, 2024, the warrants are exercisable to purchase 19,500,000 shares of Class A common stock in the aggregate.
Recent accounting pronouncements
In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, “Improvements to Income Tax Disclosures” (“ASU 2023-09”). The ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in the ASU address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 will be effective for us in the annual period beginning January 1, 2025, though early adoption is permitted. The Company is still evaluating the presentational effect that ASU 2023-09 will have on its financial statements, but we expect changes to our income tax footnote.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
As a “smaller reporting company,” we are not required to provide the information called for by this Item.
41
Table of Contents
Page |
||||
F-2 |
||||
Financial Statements: |
||||
F-3 |
||||
F-4 |
||||
F-5 |
||||
F-6 |
||||
F-7 |
||||
December 31, 2024 |
December 31, 2023 |
|||||||
ASSETS |
||||||||
Current Assets: |
||||||||
Cash |
$ | $ | ||||||
Prepaid expenses – Short-Term |
||||||||
Income tax receivable |
||||||||
Other investments held for trading |
||||||||
Total Current Assets |
||||||||
Investments held in the Trust Account |
||||||||
Total Assets |
$ |
$ |
||||||
LIABILITIES, COMMON STOCK POSSIBLE REDEMPTION AND STOCKHOLDERS’ DEFICIT |
||||||||
Current Liabilities: |
||||||||
Accounts payable and accrued expenses |
$ | $ | ||||||
Accrued Tax Payable – Franchise Tax |
||||||||
Accrued Tax Payable – Excise Tax |
||||||||
Other accrued expenses – deferred |
||||||||
Due to related party |
||||||||
Loan payable – Sponsor |
||||||||
Total Current Liabilities |
||||||||
Derivative warrant liabilities |
||||||||
Deferred underwriting commission |
||||||||
Total liabilities |
||||||||
COMMITMENTS AND CONTINGENCIES (Note 6) |
||||||||
Class A common stock subject to possible redemption; |
||||||||
Stockholders’ deficit: |
||||||||
Preferred stock, $ |
||||||||
Class A common stock, $ (excluding |
||||||||
Class B common stock, $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated deficit |
( |
) | ( |
) | ||||
Total Stockholders’ Deficit |
( |
) | ( |
) | ||||
Total Liabilities, Common Stock Subject to Possible Redemption and Stockholders’ Deficit |
$ |
$ |
||||||
For the Year Ended December 31, |
||||||||
2024 |
2023 |
|||||||
| EXPENSES |
||||||||
| Administrative fee - related party |
$ | $ | ||||||
| Non-redemption agreement expense |
||||||||
| Consulting fees – related party |
||||||||
| Business combination expenses |
||||||||
| General and administrative |
||||||||
| |
|
|
|
|||||
| TOTAL EXPENSES |
||||||||
| |
|
|
|
|||||
| OTHER INCOME (EXPENSE) |
||||||||
| Income earned on investments held in Trust Account |
||||||||
| Income earned on cash and investment accounts |
||||||||
| Change in fair value of warrant liabilities |
||||||||
| Interest expense |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| TOTAL OTHER INCOME, NET |
||||||||
| |
|
|
|
|||||
| Net income (loss) before income tax provision |
( |
) | ||||||
| |
|
|
|
|||||
| Income tax provision |
( |
) | ( |
) | ||||
| |
|
|
|
|||||
| Net income (loss) |
$ |
( |
) |
$ |
||||
| |
|
|
|
|||||
| Weighted average number of shares of Class A common stock outstanding, basic and diluted |
||||||||
| |
|
|
|
|||||
| Basic and diluted net income (loss) per share of Class A common stock |
$ | ( |
) | $ | ||||
| |
|
|
|
|||||
| Weighted average number of shares of Class B common stock outstanding, basic and diluted |
||||||||
| |
|
|
|
|||||
| Basic and diluted net income (loss) per share of Class B common stock |
$ | ( |
) | $ | ||||
| |
|
|
|
|||||
Class A Common Stock |
Class B Common Stock |
Additional Paid In Capital |
Accumulated Deficit |
Stockholders’ Deficit |
||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||
Balance, January 1, 2024 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
Remeasurement of Class A common stock subject to possible redemption to redemption amount |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||
Excise tax imposed on common stock redemptions |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Balance, December 31, 2024 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
Class A Common Stock |
Class B Common Stock |
Additional Paid In Capital |
Accumulated Deficit |
Stockholders’ Deficit |
||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||
Balance, January |
$ | $ | $ | $ | ( |
) | $ | ( |
) | |||||||||||||||||||
Remeasurement of Class A common stock subject to possible redemption to redemption amount |
— | — | — | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
Excise tax imposed on common stock redemptions |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Contribution - Non-redemption agreement |
— | — | — | — | — | |||||||||||||||||||||||
Class B common stock converted to Class A common stock |
( |
) | ( |
) | — | — | — | |||||||||||||||||||||
Net income |
— | — | — | — | — | |||||||||||||||||||||||
Balance, December 31, 2023 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
For the Year Ended December 31, 2024 |
For the Year Ended December 31, 2023 |
|||||||
Cash Flows From Operating Activities: |
||||||||
Net income (loss) |
( |
) | ||||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
||||||||
Investment income earned on investments held in the Trust Account |
( |
) | ( |
) | ||||
Gain on change in fair value of derivative liabilities |
( |
) | ( |
) | ||||
Interest income earned on investment account |
( |
) | ( |
) | ||||
Non-redemption agreement expense |
||||||||
Changes in operating assets and liabilities: |
||||||||
Prepaid expenses |
||||||||
Income tax receivable |
( |
) | ||||||
Other deferred expenses |
||||||||
Consulting fees payable - related party |
||||||||
Accrued income taxes payable |
( |
) | ||||||
Accounts payable and accrued expenses |
( |
) | ||||||
Net Cash Used In Operating Activities |
( |
) | ( |
) | ||||
Cash Flows From Investing Activities: |
||||||||
Taxes paid from trust |
||||||||
Cash withdrawn from Trust Account to redeeming stockholders |
||||||||
Cash withdrawn from Trust Account for taxes payable and dissolution expenses |
||||||||
Funds deposited into held to maturity investment account |
( |
) | ( |
) | ||||
Funds withdrawn from held to maturity investment account |
||||||||
Net Cash Provided by Investing Activities |
||||||||
Cash Flows From Financing Activities: |
||||||||
Redemption of Class A common stock |
( |
) | ( |
) | ||||
Proceeds from loan payable - Sponsor |
||||||||
Proceeds from related party advances |
||||||||
Net Cash Used In Financing Activities |
( |
) | ( |
) | ||||
Net change in cash |
( |
) | ( |
) | ||||
Cash at beginning of period |
||||||||
Cash at end of period |
$ |
$ |
||||||
Supplemental Schedule of Cash Flow Information: |
||||||||
Cash paid for income taxes |
$ | $ | ||||||
Supplemental Schedule of Non-cash Financing Activities: |
||||||||
Remeasurement of Class A common stock subject to possible redemption to redemption amount |
$ | $ | ||||||
Excise tax liability accrued for common stock redemptions |
$ | $ | ||||||
Class A common stock subject to possible redemption at December 31, 2021 |
$ | |||
Remeasurement adjustment of Class A common stock to redemption value |
||||
Class A common stock subject to possible redemption at December 31, 2022 |
$ | |||
Remeasurement adjustment of Class A common stock to redemption value |
||||
Class A common stock subject to possible redemption at March 31, 2023 |
$ | |||
Remeasurement adjustment of Class A common stock to redemption value |
||||
Redemption of Class A common stock |
( |
) | ||
Class A common stock subject to possible redemption at June 30, 2023 |
$ | |||
Remeasurement adjustment of Class A common stock to redemption value |
||||
Class A common stock subject to possible redemption at September 30, 2023 |
$ | |||
Remeasurement adjustment of Class A common stock to redemption value |
||||
Class A common stock subject to possible redemption at December 31, 2023 |
$ | |||
Remeasurement adjustment of Class A common stock to redemption value |
||||
Class A common stock subject to possible redemption at March 31, 2024 |
$ | |||
Remeasurement adjustment of Class A common stock to redemption value |
||||
Redemption of Class A common stock |
( |
) | ||
Class A common stock subject to possible redemption at June 30, 2024 |
$ | |||
Remeasurement adjustment of Class A common stock to redemption value |
||||
Class A common stock subject to possible redemption at September 30, 2024 |
$ | |||
Remeasurement adjustment of Class A common stock to redemption value |
||||
Class A common stock subject to possible redemption at December 31, 2024 |
$ |
|||
For the Year Ended December 31, 2024 |
||||||||
Class A |
Class B |
|||||||
Basic and diluted net loss per share of common stock |
||||||||
Numerator: |
||||||||
Allocation of net loss |
$ | ( |
) | $ | ( |
) | ||
Denominator: |
||||||||
Basic and diluted weighted average shares outstanding |
||||||||
| Basic and diluted net loss per share of common stock |
$ | ( |
) | $ | ( |
) | ||
For the Year Ended December 31, 2023 |
||||||||
Class A |
Class B |
|||||||
Basic and diluted net income per share of common stock |
||||||||
Numerator: |
||||||||
Allocation of net income |
$ | $ | ||||||
Denominator: |
||||||||
Basic and diluted weighted average shares outstanding |
||||||||
Basic and diluted net income per share of common stock |
$ | $ | ||||||
| • | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| • | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| • | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
| • | in whole and not in part; |
| • | at a price of $ |
| • | upon a minimum of 30-day redemption period to each warrant holder; and |
| • | if, and only if, the last reported sale price of the Class A common stock equals or exceeds $ |
| Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. | |
| Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. | |
| Level 3: | Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. | |
Description: |
Level |
December 31, 2024 |
December 31, 2023 |
|||||||||
Assets: |
||||||||||||
Investments Held for Trading |
1 | $ | $ | |||||||||
Investments held in Trust Account |
1 | $ | $ | |||||||||
Liabilities: |
||||||||||||
Warrant liability – Private Placement Warrants |
3 | $ | $ | |||||||||
Warrant liability – Public Warrants |
1 | $ | $ | |||||||||
Fair Value Measurement Using Level 3 Inputs Total |
||||
Balance, fair value at December 31, 2022 |
$ | |||
| ( |
) | |||
Balance, fair value at December 31, 2023 |
$ | |||
Fair Value Measurement Using Level 3 Inputs Total |
||||
Balance, fair value at December 31, 2023 |
$ | |||
| ( |
) | |||
Forfeiture of |
( |
|||
Balance, fair value at December 31, 2024 |
$ | |||
December 31, 2024 |
December 31, 2023 |
|||||||
Risk-free interest rate |
% | % | ||||||
Expected volatility of underlying shares |
% | % | ||||||
Dividend yield |
% | % | ||||||
Probability of business combination |
% | % | ||||||
Private Placement Warrants |
Public Warrants |
Total |
||||||||||
Fair value at December 31, 2022 |
$ | $ | $ | |||||||||
| ( |
) | ( |
) | ( |
) | |||||||
Fair value at December 31, 2023 |
$ | $ | $ | |||||||||
Forfieture of |
( |
) | ( |
) | ||||||||
| ( |
) | ( |
) | ( |
) | |||||||
Fair value at December 31, 2024 |
$ | $ | $ | |||||||||
December 31, 2024 |
December 31, 2023 |
|||||||
Deferred tax assets: |
||||||||
Startup/organizational costs |
$ | $ | ||||||
Total deferred tax assets |
||||||||
Valuation Allowance |
( |
) | ( |
) | ||||
Deferred tax asset, net of allowance |
$ | $ | ||||||
For the Year Ended December 31, 2024 |
For the Year Ended December 31, 2023 |
|||||||
Federal |
||||||||
Current |
$ | $ | ||||||
Deferred |
( |
) | ( |
) | ||||
State and local |
||||||||
Current |
||||||||
Deferred |
||||||||
Change in valuation allowance |
||||||||
Income tax provision |
$ | $ | ||||||
For the Year Ended December 31, 2024 |
For the Year Ended December 31, 2023 |
|||||||
U.S. federal statutory rate |
% | % | ||||||
Change in fair value of warrants |
% | ( |
)% | |||||
Non-deductible transaction costs |
( |
)% | % | |||||
Other |
( |
)% | % | |||||
Valuation allowance |
( |
)% | % | |||||
Income tax provision |
( |
)% | % | |||||
Name |
Age |
Position | ||
| Russell Stidolph | 49 | Chief Executive Officer and Chairman | ||
| Jonathan Darnell | 65 | Chief Financial Officer | ||
| William Campbell | 77 | Director | ||
| Kimberly Heimert | 55 | Director | ||
| Michael Salvator | 53 | Director | ||
| Daniel Shribman | 41 | Director |
| • | the appointment, compensation, retention, replacement, and oversight of the work of the independent registered public accounting firm engaged by us; |
| • | pre-approving all audit and permitted non-audit services to be provided by the independent registered public accounting firm engaged by us, and establishing pre-approval policies and procedures; |
| • | setting clear hiring policies for employees or former employees of the independent registered public accounting firm, including but not limited to, as required by applicable laws and regulations; |
| • | setting clear policies for audit partner rotation in compliance with applicable laws and regulations; |
| • | obtaining and reviewing a report, at least annually, from the independent registered public accounting firm describing (i) the independent registered public accounting firm’s internal quality-control procedures, (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues and (iii) all relationships between the independent registered public accounting firm and us to assess the independent registered public accounting firm’s independence; |
| • | meeting to review and discuss our annual audited financial statements and quarterly financial statements with management and the independent registered public accounting firm, including reviewing our specific disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; |
| • | reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and |
| • | reviewing with management, the independent registered public accounting firm, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities. |
| • | reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, if any is paid by us, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation; |
| • | reviewing and making recommendations on an annual basis to our board of directors with respect to (or approving, if such authority is so delegated by our board of directors) the compensation, if any is paid by us, and any incentive-compensation and equity-based plans that are subject to board approval, of our other officers; |
| • | reviewing on an annual basis our executive compensation policies and plans; |
| • | implementing and administering our incentive compensation equity-based remuneration plans; |
| • | assisting management in complying with our proxy statement and annual report disclosure requirements; |
| • | approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees; |
| • | if required, producing a report on executive compensation to be included in our annual proxy statement; and |
| • | reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors. |
| • | identifying, screening and reviewing individuals qualified to serve as directors and recommending to the board of directors candidates for nomination for election at the annual meeting of stockholders or to fill vacancies on the board of directors; |
| • | developing and recommending to the board of directors and overseeing implementation of our corporate governance guidelines; |
| • | coordinating and overseeing the annual self-evaluation of the board of directors, its committees, individual directors and management in the governance of the company; and |
| • | reviewing on a regular basis our overall corporate governance and recommending improvements as and when necessary. |
| • | None of our officers or directors is required to commit his or her full time to our affairs and, accordingly, may have conflicts of interest in allocating his or her time among various business activities. |
| • | In the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to us as well as the other entities with which they are affiliated. Our management may have conflicts of interest in determining to which entity a particular business opportunity should be presented. |
| • | Our sponsor, officers and directors have agreed to waive their redemption rights with respect to any founder shares and any public shares held by them in connection with the consummation of our initial business combination. Additionally, our initial stockholders have agreed to waive their redemption rights with respect to any founder shares held by them if we fail to consummate our initial business combination within 30 months after the closing of this offering. If we do not complete our initial business combination within such applicable time period, the proceeds of the sale of the private placement warrants held in the trust account will be used to fund the redemption of our public shares, and the private warrants will expire worthless. With certain limited exceptions, the founder shares will not be transferable, assignable by our sponsor until the earlier of: (A) one year after the completion of our initial business combination or (B) subsequent to our initial business combination, (x) if the last reported sale price of our Class A 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 our initial business combination, or (y) the date on which we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property. |
| • | Our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination. |
| • | Our sponsor, officers or directors may have a conflict of interest with respect to evaluating a business combination and financing arrangements as we may obtain loans from our sponsor or an affiliate of our sponsor or any of our officers or directors to finance transaction costs in connection with an intended initial business combination. Up to $1,500,000 of such loans may be convertible into warrants at a price of $1.00 per warrant at the option of the lender. Such warrants would be identical to the private placement warrants. |
| • | the corporation could financially undertake the opportunity; |
| • | the opportunity is within the corporation’s line of business; and |
| • | it would not be fair to our company and its stockholders for the opportunity not to be brought to the attention of the corporation. |
Individual |
Entity |
Entity’s Business |
Affiliation | |||
| Russell Stidolph | AltEnergy, LLC | Private Equity | Managing Director | |||
| Eos Energy Enterprises, Inc. | Energy Equipment | Chair | ||||
| Hulett Bancorp | Bank Holding Company | Director | ||||
| Tres Amigas, LLC | Utilities | Director | ||||
| Jonathan Darnell | AltEnergy, LLC | Private Equity | Managing Director | |||
| Green Century Funds | Mutual Funds | Trustee | ||||
| Lime Rock New Energy Management LP | Private Equity | Managing Director | ||||
| Accelerate Change, Inc. | Digital Media Lab | Director | ||||
| William Campbell | I Squared Capital Advisors (US) LLC | Investment Advisor | Senior Counsel for Strategic Affairs | |||
| Silvertip Resources Holdings, LLC | Private Equity | Director | ||||
| Michael Salvator | SCI Capital Partners LP | Private Equity Firm | Senior Partner and Chief Operating Officer | |||
| Stone Canyon Industries, LLC | Industrial Holding Company | Director | ||||
| SCIH Salt Parent, Inc. | Producer & Supplier of Salt | Director | ||||
| SCIH Salt Intermediate Holdings Inc. | Producer & Supplier of Salt | Director | ||||
| SCIH Salt Holdings Inc. | Producer & Supplier of Salt | Director | ||||
| Daniel Shribman | Hildene Holdings LLC | Financial Services | Chief Executive Officer | |||
| Alta Equipment Group Inc. | Construction Equipment | Director | ||||
| Great American Group | Valuation & Appraisal Services | Director | ||||
| Kimberly Heimert | Energy Transition Advisory Group LLC | Advisory Services | Chief Executive Officer | |||
| • | each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock; |
| • | each of our officers and directors that beneficially owns shares of our common stock; and |
| • | all of our officers and directors as a group. |
Name and Address of Beneficial Owner (1) Directors, Executive Officers and Founders |
Number of Shares Beneficially Owned |
Approximate Percentage of Outstanding Common Stock |
||||||
AltEnergy Acquisition Sponsor, LLC (3) |
5,750,000 | (2) |
78.5 | % | ||||
Russell Stidolph (3) |
5,750,000 | (2) |
78.5 | % | ||||
Jonathan Darnell |
||||||||
William Campbell |
||||||||
Kimberly Heimert |
||||||||
Michael Salvator |
||||||||
Daniel Shribman |
||||||||
All officers and directors as a group (six individuals) |
5,750,000 | (2) |
78.5 | % | ||||
Five Percent Holders |
||||||||
American Financial Group |
500,000 | (4) |
7.0 | % | ||||
| (1) | Unless otherwise noted, the business address of each of the following entities or individuals is 600 Lexington Ave, 9th Floor, New York, NY 10022. |
| (2) | Interests shown include 250,000 founder shares, classified as shares of Class B common stock. Such shares are convertible into shares of Class A common stock on a one-for-one |
| (3) | Our sponsor is the record holder of such shares. Mr. Stidolph is the manager of our sponsor, and as such, has voting and investment discretion with respect to the common stock held of record by our sponsor and may be deemed to have beneficial ownership of the common stock held directly by our sponsor. Mr. Stidolph disclaims beneficial ownership of such securities except to the extent of his pecuniary interest therein. |
| (4) | According to a Schedule 13G filed with the SEC on January 26, 2024, American Financial Group, Inc, has voting and dispositive power over 500,000 shares of the Company’s Class A common stock. The business address of this reporting person is Great American Insurance Group Tower, 301 East Fourth Street, Cincinnati, Ohio 45202. |
Table of Contents
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Founder Shares
On March 25, 2021, our sponsor purchased 5,750,000 founder shares for an aggregate price of $25,000. Of such shares, 5,500,000 shares were converted into Class A Common Stock in April, 2023. The remaining founder shares will automatically convert into Class A common stock upon the consummation of a business combination on a one-for-one basis, subject to adjustments.
The holders of the founder shares have agreed, subject to limited exceptions, not to transfer, assign or sell any of the founder shares until the earlier to occur of: (A) one year after the completion of an initial business combination and (B) subsequent to an initial business combination, (x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after an initial business combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the public stockholders having the right to exchange their shares of common stock for cash, securities or other property.
An affiliate of B. Riley entered into a purchase agreement pursuant to which it purchased from our sponsor an aggregate of 400,000 founder shares. The founder shares were purchased at a price of $4.00 per founder share, or an aggregate purchase price of $1,600,000, which was payable at the time of the closing of our initial public offering. The founder shares will be delivered by the sponsor to the affiliate of the underwriter upon consummation of our initial business combination and immediately following the expiration of the transfer restrictions applicable to the founder shares.
As discussed under Item 1 to this Form 10-K, the holders of founders shares have also agreed to additional lock-up terms in connection with our initial business combination.
Related Party Loans
In order to finance transaction costs in connection with an initial business combination, the sponsor or an affiliate of the sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of an initial business combination, without interest, or, at the lender’s discretion, up to $1,500,000 of the notes may be converted upon completion of an initial business combination into warrants at a price of $1.00 per warrant. Such warrants would be identical to the Private Placement Warrants. In the event that an initial business combination does not close, the Company may use a portion of proceeds held outside the trust account to repay the Working Capital Loans but no proceeds held in the trust account would be used to repay the Working Capital Loans. As of December 31, 2024, there were no amounts outstanding under the Working Capital Loans.
Per a Commitment Letter, dated July 19, 2022, the Sponsor undertook upon the Company’s written request to make available an aggregate amount of up to $250,000 to provide the Company funds for working capital purposes to ensure that the Company would continue as a going concern for at least 12 months A second Commitment Letter was dated May 4, 2023 for up to an additional $750,000. A third Commitment Letter was dated July 8, 2024 for up to another $750,000. During the year ended December 31, 2024, the Sponsor loaned an aggregate of $1,335,000 to the Company for working capital purposes. As of December 31, 2024 and 2023, $2,335,000 and $1,000,000 remained outstanding, respectively.
II-11
Table of Contents
Administrative Services Agreement
The Company entered into an agreement, commencing on the effective date of the Initial Public Offering through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay an affiliate of the Sponsor an aggregate of $15,000 per month for office space, utilities, and secretarial, and administrative support services. This agreement was amended on January 28, 2023 to provide that, rather than be payable on a monthly basis, the payments due thereunder commencing with the monthly payment payable on or about February 28, 2023, shall accrue and be payable on the consummation of the Business Combination or the Company’s liquidation. During the year ended December 31, 2024 and 2023, the Company recorded $180,000 in administrative fees. As of December 31, 2024 and 2023, there was a balance of $360,000 and $180,000, respectively, due to the affiliate, which amount is included in due to related party on the accompanying balance sheets.
Consulting Agreement
The Company and its Chief Financial Officer (“CFO”) entered into a consulting agreement pursuant to which the CFO was entitled to receive $15,600 per month for services rendered, commencing February 1, 2021, through the closing of our initial business combination. On April 1, 2022, the agreement with the CFO was amended so that the CFO would be paid $10,400 per month and an additional amount of $5,200 per month beginning April 1, 2022 through the consummation of the initial business combination would become payable upon a successful consummation of a business combination. If a successful business combination does not occur, the Company would not be required to pay this additional contingent amount. The consulting agreement was further amended on January 1, 2023, to provide that commencing on January 1, 2023, 100% of the consulting fee of $15,600 per month shall be accrued by the Company for the CFO’s benefit to be paid upon the closing of a business combination if such closing occurs, and if such business combination does not occur, then the accrued amount shall not be due or paid. For the year ended December 31, 2024 and 2023, the Company recorded $187,200 and $234,000 of compensation for services provided. As of December 31, 2024 and 2023, there was $421,200 and $234,000 accrued, respectively.
Limited Payments
The Company has agreed to pay its Chief Financial Officer a one-time fee of $150,000, upon the consummation of the initial business combination. The amount will only become payable upon a successful business combination. If a successful business combination does not occur, the Company will not be required to pay this contingent fee. There can be no assurances that the Company will complete a business combination.
Item 14. Principal Accountant Fees and Services.
The following is a summary of fees paid or to be paid to Marcum LLP (“Marcum”) for services rendered.
Audit Fees. Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and services that are normally provided by Marcum in connection with regulatory filings. The aggregate fees billed by Marcum for professional services rendered for the audit of our annual financial statements, review of the financial information included in our Forms 10-Q for the respective periods and other required filings with the SEC for the year ended December 31, 2024 and 2023 totaled $277,585 and $212,510, respectively. This amount includes interim procedures and audit fees, as well as attendance at audit committee meetings.
Audit-Related Fees. Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards. We did not pay Marcum any fees for consultations concerning financial accounting and reporting standards during the year ended December 31. 2024.
Tax Fees. We did not pay Marcum for tax planning and tax advice during the year ending December 31, 2024 or December 31, 2023.
II-12
Table of Contents
All Other Fees. We did not pay Marcum for other services during the year ending December 31, 2024 or December 31, 2023.
Pre-Approval Policy
Our audit committee was formed upon the consummation of our initial public offering. As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).
II-13
Table of Contents
PART IV
Item 15. Exhibits, Financial Statement Schedules.
| (a) | The following documents are filed as part of this Annual Report on Form 10-K: |
1. Financial Statements: See “Index to Financial Statements” at “Item 8. Financial Statements and Supplementary Data” herein.
| (b) | Financial Statement Schedules. All schedules are omitted for the reason that the information is included in the financial statements or the notes thereto or that they are not required or are not applicable. |
| (c) | Exhibits: The exhibits listed in the Exhibit Index below are filed or incorporated by reference as part of this Annual Report on Form 10-K. |
II-14
Table of Contents
II-15
Table of Contents
II-16
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on the 28th day of March, 2025.
| AltEnergy Acquisition Corp. | ||
| By: | /s/ Russell Stidolph | |
| Name: | Russell Stidolph | |
| Title: | Chief Executive Officer | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
| Name |
Position |
Date | ||
| /s/ Russell Stidolph |
Chief Executive Officer (Principal executive officer) and Director | March 28, 2025 | ||
| Russell Stidolph | ||||
| /s/ Jonathan Darnell |
Chief Financial Officer (Principal financial and accounting officer) | March 28, 2025 | ||
| Jonathan Darnell | ||||
| /s/ William Campbell |
Director | March 28, 2025 | ||
| William Campbell | ||||
| /s/ Kimberly Heimert |
Director | March 28, 2025 | ||
| Kimberly Heimert | ||||
| /s/ Michael Salvator |
Director | March 28, 2025 | ||
| Michael Salvator | ||||
| /s/ Daniel Shribman |
Director | March 28, 2025 | ||
| Daniel Shribman | ||||
II-17
Exhibit 4.5
FORM OF MERGER WARRANT AGREEMENT
THIS MERGER WARRANT AGREEMENT (this “Agreement”), dated as of [*], 2025, is by and between Car Tech [*] Inc. (formerly known as AltEnergy Acquisition Corp.), a Delaware corporation (the “Company”), and Continental Stock Transfer & Trust Company, a New York limited purpose trust company, as Merger Warrant agent (the “Merger Warrant Agent” and, in its capacity as transfer agent, referred to herein as the “Transfer Agent”).
WHEREAS, the Company is a party to that certain Amended and Restated Agreement and Plan of Merger, dated as of , 2025; by and between the Company, Car Tech Acquisition Corp., Car Tech Merger Sub, LLC, Car Tech Merger Sub II, LLC and Car Tech, LLC (the “Merger Agreement”);
WHEREAS, pursuant to the Merger Agreement, the Company agreed to issue to the members of Car Tech, LLC (each a “Car Tech Member”) as part of the Merger Consideration (as defined in the Merger Agreement), and aggregate six million (6 million) Merger Warrants (the “Merger Warrants”);
WHEREAS, the Company desires the Merger Warrant Agent to act on behalf of the Company, and the Merger Warrant Agent is willing to so act, in connection with the issuance, registration, transfer, exchange, redemption and exercise of the Merger Warrants;
WHEREAS, the Company desires to provide for the form and provisions of the Merger Warrants, the terms upon which they shall be issued and exercised, and the respective rights, limitation of rights, and immunities of the Company, the Merger Warrant Agent, and the holders of the Merger Warrants; and
WHEREAS, all acts and things have been done and performed which are necessary to authorize the execution and delivery of this Agreement and to make the Merger Warrants, when executed on behalf of the Company and countersigned by or on behalf of the Merger Warrant Agent (if a physical certificate is issued), as provided herein, the valid, binding and legal obligations of the Company.
NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:
| 1. | Appointment of Merger Warrant Agent. |
The Company hereby appoints the Merger Warrant Agent to act as agent for the Company for the Merger Warrants, and the Merger Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions set forth in this Agreement.
| 2. | Merger Warrants. |
2.1 Form of Merger Warrant. Each Merger Warrant shall initially be issued in registered form only.
2.2 Effect of Countersignature. If a physical certificate is issued, unless and until countersigned by the Merger Warrant Agent pursuant to this Agreement, a Definitive Merger Warrant Certificate shall be invalid and of no effect and may not be exercised by the holder thereof.
2.3 Registration.
2.3.1 Merger Warrant Register. The Merger Warrant Agent shall maintain books (the “Merger Warrant Register”) for the registration of original issuance and the registration of transfer of the Merger Warrants. Upon the initial issuance of the Merger Warrants, the Merger Warrant Agent shall issue and register the Merger Warrants in the names of the respective holders thereof in such denominations and otherwise in accordance with instructions delivered to the Merger Warrant Agent by the Company. Ownership of beneficial interests in the Merger Warrants shall be shown on, and the transfer of such ownership shall be effected through, records maintained by institutions that have accounts with The Depository Trust Company (the “Depositary”) (such institution, with respect to a Merger Warrant in its account, a “Participant”).
If the Depositary subsequently ceases to make its book-entry settlement system available for the Merger Warrants, the Company may instruct the Merger Warrant Agent regarding making other arrangements for book-entry settlement. In the event that the Merger Warrants are not eligible for, or it is no longer necessary to have the Merger Warrants available in, book-entry form, the Merger Warrant Agent shall provide written instructions to the Depositary to deliver to the Merger Warrant Agent for cancellation each book-entry Merger Warrant, and the Company shall instruct the Merger Warrant Agent to deliver to the Depositary definitive certificates in physical form evidencing such Merger Warrants (“Definitive Merger Warrant Certificates”) which shall be in the form annexed hereto as Exhibit A.
Physical certificates, if issued, shall be signed by, or bear the facsimile signature of, the President, the Chief Executive Officer, the Chief Financial Officer, the Secretary or other principal officer of the Company. In the event the person whose facsimile signature has been placed upon any Merger Warrant shall have ceased to serve in the capacity in which such person signed the Merger Warrant before such Merger Warrant is issued, it may be issued with the same effect as if he or she had not ceased to be such at the date of issuance.
2.3.2 Registered Holder. Prior to due presentment for registration of transfer of any Merger Warrant, the Company and the Merger Warrant Agent may deem and treat the person in whose name such Merger Warrant is registered in the Merger Warrant Register (the “Registered Holder”) as the absolute owner of such Merger Warrant and of each Merger Warrant represented thereby (notwithstanding any notation of ownership or other writing on any physical certificate made by anyone other than the Company or the Merger Warrant Agent), for the purpose of any exercise thereof, and for all other purposes, and neither the Company nor the Merger Warrant Agent shall be affected by any notice to the contrary.
2.4 No Fractional Merger Warrants. The Company shall not issue fractional Merger Warrants.
| 3. | Terms and Exercise of Merger Warrants. |
3.1 Merger Warrant Price. Each Merger Warrant shall entitle the Registered Holder thereof, subject to the provisions of such Merger Warrant and of this Agreement, to purchase from the Company the number of shares of Common Stock stated therein, at the price of $11.50 per share, subject to the adjustments provided in Section 4 hereof and in the last sentence of this Section 3.1. The term “Merger Warrant Price” as used in this Agreement shall mean the price per share (including in cash or by payment of Merger Warrants pursuant to a “cashless exercise” to the extent permitted hereunder) at which shares of Common Stock may be purchased at the time a Merger Warrant is exercised. The Company in its sole discretion may lower the Merger Warrant Price (including by allowing “cashless exercise”) at any time prior to the Expiration Date (as defined below) for a period of not less than twenty (20) Business Days, provided, that the Company shall provide at least three (3) days prior written notice of such reduction to Registered Holders of the Merger Warrants and, provided further that any such reduction shall be identical among all of the Merger Warrants.
3.2 Duration of Merger Warrants. A Merger Warrant may be exercised only during the period (the “Exercise Period”) (A) commencing on the date that is thirty (30) days following the date Merger Warrants are first issued pursuant to this Agreement, and (B) terminating at the earliest to occur of (x) 5:00 p.m., New York City time, on the date that is five (5) years after such date, or (y) other than with respect to Merger Warrants to the extent then held by the Car Tech Members or their Permitted Transferees (as defined below), with respect to a redemption pursuant to Section 6.1 hereof, 5:00 p.m., New York City time on the Redemption Date (as defined below) as provided in Section 6.2 hereof (the “Expiration Date”); provided, however, that the exercise of any Merger Warrant shall be subject to the satisfaction of any applicable conditions, as set forth in subsection 3.3.2 below, with respect to an effective registration statement or a valid exemption therefrom being available. Except with respect to the right to receive the Redemption Price (as defined below) (other than with respect to a Merger Warrant then held by a Car Tech Member or a Permitted Transferee in connection with a redemption pursuant to Section 6.1 hereof) in the event of a redemption (as set forth in Section 6 hereof), each outstanding Merger Warrant (other than a Merger Warrant then held by a Car Tech Member or a Permitted Transferee in the event of
2
a redemption pursuant to Section 6.1 hereof) not exercised on or before the Expiration Date shall become void, and all rights thereunder and all rights in respect thereof under this Agreement shall cease at 5:00 p.m., New York City time, on the Expiration Date. The Company in its sole discretion may extend the duration of the Merger Warrants by delaying the Expiration Date; provided, that the Company shall provide at least twenty (20) days prior written notice of any such extension to Registered Holders of the Merger Warrants and, provided further that any such extension shall be identical in duration among all the Merger Warrants.
3.3 Exercise of Merger Warrants.
3.3.1 General. Subject to the provisions of the Merger Warrant and this Agreement, a Merger Warrant may be exercised by the Registered Holder thereof by delivering to the Merger Warrant Agent at its corporate trust department (i) the Definitive Merger Warrant Certificate evidencing the Merger Warrants to be exercised, or, in the case of a Merger Warrant represented by a book-entry, the Merger Warrants to be exercised (the “Book-Entry Merger Warrants”) on the records of the Depositary to an account of the Merger Warrant Agent at the Depositary designated for such purposes in writing by the Merger Warrant Agent to the Depositary from time to time, (ii) an election to purchase any share of Common Stock pursuant to the exercise of a Merger Warrant, properly completed and executed by the Registered Holder on the reverse of the Definitive Merger Warrant Certificate or, in the case of a Book-Entry Merger Warrant, properly delivered by the Participant in accordance with the Depositary’s procedures, and (iii) the payment in full of the Merger Warrant Price for each share of Common Stock as to which the Merger Warrant is exercised and any and all applicable taxes due in connection with the exercise of the Merger Warrant, the exchange of the Merger Warrant for the shares of Common Stock and the issuance of such shares of Common Stock, as follows:
(a) in lawful money of the United States, in good certified check or wire payable to the Merger Warrant Agent;
(b) in the event of a redemption pursuant to Section 6.1 hereof in which the Company’s board of directors (the “Board”) has elected to require all holders of the Merger Warrants to exercise such Merger Warrants on a “cashless basis,” by surrendering the Merger Warrants for that number of shares of Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Common Stock underlying the Merger Warrants, multiplied by the excess of the “Fair Market Value”, as defined in this subsection 3.3.1(b), over the Merger Warrant Price by (y) the Fair Market Value. Solely for purposes of this subsection 3.3.1(b), Section 6.1 and Section 6.3, the “Fair Market Value” shall mean the average closing price of the Common Stock for the ten (10) trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of the Merger Warrants, pursuant to Section 6.1 hereof;
(c) with respect to any Merger Warrant held by the Car Tech Members or a Permitted Transferee (as defined below), by surrendering Merger Warrants exercisable for that number of shares of Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Common Stock underlying the Merger Warrants, multiplied by the excess of the “Merger Exercise Fair Market Value”, as defined in this subsection 3.3.1(c), over the Merger Warrant Price by (y) the “Merger Exercise Fair Market Value”. Solely for purposes of this subsection 3.3.1(c), the “Merger Exercise Fair Market Value” shall mean the average last reported sale price of the Common Stock for the ten (10) trading days ending on the third trading day prior to the date on which notice of exercise of the Merger Warrant is sent to the Merger Warrant Agent; or
(d) on a cashless basis, as provided in Section 7.4 hereof.
For purposes hereof, with respect to any Transfer by a Car Tech Member or Permitted Transferee thereof, “Permitted Transferees” shall include the following:
(1) the Company’s officers or directors, any affiliates or family members of any of the Company’s officers or directors, any affiliate of a Car Tech Member or any employees of such affiliates, or any member(s) of such Car Tech Member or any affiliates of such members;
3
(2) in the case of an individual, a member of such individual’s immediate family or a trust, the beneficiary of which is a member of such individual’s immediate family, or an affiliate of such individual or a charitable organization;
(3) in the case of an individual, any Person(s) receiving such Merger Warrants by virtue of the laws of descent and distribution upon death of such individual;
(4) in the case of an individual, any Person(s) receiving such Merger Warrants pursuant to a qualified domestic relations order;
(5) in the case of a Car Tech Member, any Person(s) receiving such Merger Warrants by virtue of the laws of such entity’s jurisdiction of formation or the entity’s governing documents upon dissolution of such entity; or
(6) in the event of the Company’s liquidation, merger, capital stock exchange, reorganization or other similar transaction which results in all of the Company’s stockholders having a right to exchange their shares of Common Stock for cash, securities or other property, any Person(s) participating in such exchange;
provided, however, that in each case the Merger Warrant Agent shall be presented with written documentation pursuant to which any such prospective Permitted Transferee must enter into a written agreement with the Company agreeing to be bound by the transfer restrictions in this Agreement.
3.3.2 Issuance of Shares of Common Stock upon Exercise. As soon as practicable after the exercise of any Merger Warrant and the clearance of the funds in payment of the Merger Warrant Price (if payment is pursuant to subsection 3.3.1(a)), the Company shall issue to the Registered Holder of such Merger Warrant a book-entry position or certificate, as applicable, for the number of full shares of Common Stock to which he, she or it is entitled, registered in such name or names as may be directed by him, her or it, and if such Merger Warrant shall not have been exercised in full, a new book-entry position or countersigned Merger Warrant Certificate, as applicable, for the number of shares of Common Stock as to which such Merger Warrant shall not have been exercised. Notwithstanding the foregoing, the Company shall not be obligated to deliver any shares of Common Stock pursuant to the exercise of a Merger Warrant and shall have no obligation to settle such Merger Warrant exercise unless a registration statement under the Securities Act with respect to the shares of Common Stock underlying the Merger Warrants is then effective and a prospectus relating thereto is current or a valid exemption from registration being available. No Merger Warrant shall be exercisable and the Company shall not be obligated to issue shares of Common Stock upon exercise of a Merger Warrant unless the Common Stock issuable upon such Merger Warrant exercise has been registered, qualified or deemed to be exempt from registration or qualification under the securities laws of the state of residence of the Registered Holder of the Merger Warrants. Subject to Section 4.6 of this Agreement, a Registered Holder of Merger Warrants may exercise its Merger Warrants only for a whole number of shares of Common Stock. The Company may require holders of Merger Warrants to settle the Merger Warrant on a “cashless basis” pursuant to Section 7.4. If, by reason of any exercise of Merger Warrants on a “cashless basis”, the holder of any Merger Warrant would be entitled, upon the exercise of such Merger Warrant, to receive a fractional interest in a share of Common Stock, the Company shall round down to the nearest whole number, the number of shares of Common Stock to be issued to such holder.
3.3.3 Valid Issuance. All shares of Common Stock issued upon the proper exercise of a Merger Warrant in conformity with this Agreement shall be validly issued, fully paid and non-assessable.
3.3.4 Date of Issuance. Each person in whose name any book-entry position or certificate, as applicable, for shares of Common Stock is issued shall for all purposes be deemed to have become the holder of record of such shares of Common Stock on the date on which the Merger Warrant, or book-entry position representing such Merger Warrant, was surrendered and payment of the Merger Warrant Price was made, irrespective of the date of delivery of such certificate in the case of a certificated Merger Warrant, except that, if
4
the date of such surrender and payment is a date when the share transfer books of the Company or book-entry system of the Merger Warrant Agent are closed, such person shall be deemed to have become the holder of such shares of Common Stock at the close of business on the next succeeding date on which the share transfer books or book-entry system are open.
3.3.5 Maximum Percentage. A holder of a Merger Warrant may notify the Company in writing in the event he, she or it elects to be subject to the provisions contained in this subsection 3.3.5; however, no holder of a Merger Warrant shall be subject to this subsection 3.3.5 unless he, she or it makes such election. If the election is made by a holder, the Merger Warrant Agent shall not effect the exercise of the holder’s Merger Warrant, and such holder shall not have the right to exercise such Merger Warrant, to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the Merger Warrant Agent’s actual knowledge, would beneficially own in excess of 4.9% or 9.8% (as specified by such holder) (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such person and his, her or its affiliates or any such other person or group shall include the number of shares of Common Stock issuable upon exercise of the Merger Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock that would be issuable upon (x) exercise of the remaining, unexercised portion of the Merger Warrant beneficially owned by such person and his, her or its affiliates and (y) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such person and his, her or its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this subsection 3.3.5, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For purposes of this subsection 3.3.5, in determining the number of outstanding shares of Common Stock, the holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission (the “Commission”)as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written request of the holder of the Merger Warrant, the Company shall, within two (2) Business Days, confirm orally and in writing to such holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of equity securities of the Company by the holder and his, her or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. By written notice to the Company, the holder of a Merger Warrant may from time to time increase or decrease the Maximum Percentage applicable to such holder to any other percentage specified in such notice; provided, however, that any such increase shall not be effective until the sixty first (61st) day after such notice is delivered to the Company.
| 4. | Adjustments. |
4.1 Stock Dividends.
4.1.1 Split-Ups. If after the date hereof, and subject to the provisions of Section 4.6 below, the number of outstanding shares of Common Stock is increased by a stock dividend payable in shares of Common Stock, or by a split-up of shares of Common Stock or other similar event, then, on the effective date of such stock dividend, split-up or similar event, the number of shares of Common Stock issuable on exercise of each Merger Warrant shall be increased in proportion to such increase in the outstanding shares of Common Stock. A rights offering to holders of the Common Stock entitling holders to purchase shares of Common Stock at a price less than the “Historical Fair Market Value” (as defined below) shall be deemed a stock dividend of a number of shares of Common Stock equal to the product of (i) the number of shares of Common Stock actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into
5
or exercisable for the Common Stock) and (ii) one (1) minus the quotient of (x) the price per share of Common Stock paid in such rights offering divided by (y) the Historical Fair Market Value. For purposes of this subsection 4.1.1, (i) if the rights offering is for securities convertible into or exercisable for Common Stock, in determining the price payable for Common Stock, there shall be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) “Historical Fair Market Value” means the volume weighted average price of the Common Stock as reported during the ten (10) trading day period ending on the trading day prior to the first date on which the shares of Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive such rights. No shares of Common Stock shall be issued at less than their par value.
4.1.2 Extraordinary Dividends. If the Company, at any time while the Merger Warrants are outstanding and unexpired, shall pay a dividend or make a distribution in cash, securities or other assets to all or substantially all of the holders of the Common Stock on account of such shares of Common Stock (or other shares of the Company’s capital stock into which the Merger Warrants are convertible), other than (a) as described in subsection 4.1.1 above, or (b) Ordinary Cash Dividends (as defined below), (any such non-excluded event being referred to herein as an “Extraordinary Dividend”), then the Merger Warrant Price shall be decreased, effective immediately after the effective date of such Extraordinary Dividend, by the amount of cash and/or the fair market value (as determined by the Board in good faith) of any securities or other assets paid on each share of Common Stock in respect of such Extraordinary Dividend. For purposes of this subsection 4.1.2, “Ordinary Cash Dividends” means any cash dividend or cash distribution which, when combined on a per share basis with the per share amounts of all other cash dividends and cash distributions paid on the Common Stock during the 365-day period ending on the date of declaration of such dividend or distribution (as adjusted to appropriately reflect any of the events referred to in other subsections of this Section 4 and excluding cash dividends or cash distributions that resulted in an adjustment to the Merger Warrant Price or to the number of shares of Common Stock issuable on exercise of each Merger Warrant) does not exceed $0.50.
4.2 Aggregation of Shares. If after the date hereof, and subject to the provisions of Section 4.6 hereof, the number of outstanding shares of Common Stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of Common Stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of Common Stock issuable on exercise of each Merger Warrant shall be decreased in proportion to such decrease in outstanding shares of Common Stock.
4.3 Adjustments in Exercise Price.
4.3.1 Whenever the number of shares of Common Stock purchasable upon the exercise of the Merger Warrants is adjusted, as provided in subsection 4.1.1 or Section 4.2 above, the Merger Warrant Price shall be adjusted (to the nearest cent) by multiplying such Merger Warrant Price immediately prior to such adjustment by a fraction (x) the numerator of which shall be the number of shares of Common Stock purchasable upon the exercise of the Merger Warrants immediately prior to such adjustment, and (y) the denominator of which shall be the number of shares of Common Stock so purchasable immediately thereafter.
4.3.2 If (x) the Company issues additional shares of Common Stock or securities convertible into or exercisable or exchangeable for shares of Common Stock for capital raising purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Common Stock, with such issue price or effective issue price to be determined in good faith by the Board (and in the case of any such issuance to the Sponsor or its affiliates, without taking into account any shares of Class B common stock of the Company, par value $0.0001 per share (the “Class B common stock”), held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of an initial Business Combination on the date of the consummation of such initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Common
6
Stock during the twenty (20) trading day period starting on the trading day prior to the day on which the Company consummates an initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the Merger Warrant Price will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price (as described in Section 6.1) will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
4.4 Replacement of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding shares of Common Stock (other than a change under Section 4.1 or Section 4.2 hereof or that solely affects the par value of such shares of Common Stock), or in the case of any merger or consolidation of the Company with or into another entity or conversion of the Company as another entity (other than a consolidation or merger in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding shares of Common Stock), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the holders of the Merger Warrants shall thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the Merger Warrants and in lieu of the shares of Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the Merger Warrants would have received if such holder had exercised his, her or its Merger Warrant(s) immediately prior to such event (the “Alternative Issuance”); provided, however, that (i) if the holders of the Common Stock were entitled to exercise a right of election as to the kind or amount of securities, cash or other assets receivable upon such consolidation or merger, then the kind and amount of securities, cash or other assets constituting the Alternative Issuance for which each Merger Warrant shall become exercisable shall be deemed to be the weighted average of the kind and amount received per share by the holders of the Common Stock in such consolidation or merger that affirmatively make such election, and (ii) if a tender, exchange or redemption offer shall have been made to and accepted by the holders of the Common Stock under circumstances in which, upon completion of such tender or exchange offer, the maker thereof, together with members of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange Act (or any successor rule)) of which such maker is a part, and together with any affiliate or associate of such maker (within the meaning of Rule 12b-2 under the Exchange Act (or any successor rule)) and any members of any such group of which any such affiliate or associate is a part, own beneficially (within the meaning of Rule 13d-3 under the Exchange Act (or any successor rule)) more than 50% of the outstanding shares of Common Stock, the holder of a Merger Warrant shall be entitled to receive as the Alternative Issuance, the highest amount of cash, securities or other property to which such holder would actually have been entitled as a stockholder if such Merger Warrant holder had exercised the Merger Warrant prior to the expiration of such tender or exchange offer, accepted such offer and all of the Common Stock held by such holder had been purchased pursuant to such tender or exchange offer, subject to adjustments (from and after the consummation of such tender or exchange offer) as nearly equivalent as possible to the adjustments provided for in this Section 4; provided, further, that if less than 70% of the consideration receivable by the holders of the Common Stock in the applicable event is payable in the form of common stock in the successor entity that is listed for trading on a national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted immediately following such event, and if the Registered Holder properly exercises the Merger Warrant within thirty (30) days following the public disclosure of the consummation of such applicable event by the Company pursuant to a Current Report on Form 8-K filed with the Commission, the Merger Warrant Price shall be reduced by an amount (in dollars) (but in no event less than zero) equal to the difference of (i) the Merger Warrant Price in effect prior to such reduction minus (ii) (A) the Per Share Consideration (as defined below) minus (B) the Black-Scholes Merger Warrant Value (as defined below). The “Black-Scholes Merger Warrant Value” means the value of a Merger Warrant immediately prior to the consummation of the applicable event based on the Black-Scholes Merger Warrant Model for a Capped American Call on Bloomberg Financial Markets (“Bloomberg”). For purposes of calculating such amount, (1) Section 6 of this Agreement shall be taken into account, (2) the price of each share of Common Stock shall be the volume weighted average price of the
7
Common Stock as reported during the ten (10) trading day period ending on the trading day prior to the effective date of the applicable event, (3) the assumed volatility shall be the 90 day volatility obtained from the HVT function on Bloomberg determined as of the trading day immediately prior to the day of the announcement of the applicable event, and (4) the assumed risk-free interest rate shall correspond to the U.S. Treasury rate for a period equal to the remaining term of the Merger Warrant. “Per Share Consideration” means (i) if the consideration paid to holders of the Common Stock consists exclusively of cash, the amount of such cash per share of Common Stock, and (ii) in all other cases, the volume weighted average price of the Common Stock as reported during the ten (10) trading day period ending on the trading day prior to the effective date of the applicable event. If any reclassification or reorganization also results in a change in shares of Common Stock covered by subsection 4.1.1, then such adjustment shall be made pursuant to subsection 4.1.1 or Sections 4.2, 4.3 and this Section 4.4. The provisions of this Section 4.4 shall similarly apply to successive reclassifications, reorganizations, mergers or consolidations, sales or other transfers. In no event will the Merger Warrant Price be reduced to less than the par value per share issuable upon exercise of the Merger Warrant.
4.5 Notices of Changes in Merger Warrant. Upon every adjustment of the Merger Warrant Price or the number of shares of Common Stock issuable upon exercise of a Merger Warrant, the Company shall give written notice thereof to the Merger Warrant Agent, which notice shall state the Merger Warrant Price resulting from such adjustment and the increase or decrease, if any, in the number of shares of Common Stock purchasable at such price upon the exercise of a Merger Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Upon the occurrence of any event specified in Sections 4.1, 4.2, 4.3 or 4.4, the Company shall give written notice of the occurrence of such event to each holder of a Merger Warrant, at the last address set forth for such holder in the Merger Warrant Register, of the record date or the effective date of the event. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such event.
4.6 No Fractional Shares. Notwithstanding any provision contained in this Agreement to the contrary, the Company shall not issue fractional shares of Common Stock upon the exercise of Merger Warrants. If, by reason of any adjustment made pursuant to this Section 4, the holder of any Merger Warrant would be entitled, upon the exercise of such Merger Warrant, to receive a fractional interest in a share, the Company shall, upon such exercise, round down to the nearest whole number the number of shares of Common Stock to be issued to such holder.
4.7 Form of Merger Warrant. The form of Merger Warrant need not be changed because of any adjustment pursuant to this Section 4, and Merger Warrants issued after such adjustment may state the same Merger Warrant Price and the same number of shares of Common Stock as is stated in the Merger Warrants initially issued pursuant to this Agreement; provided, however, that the Company may at any time in its sole discretion make any change in the form of Merger Warrant that the Company may deem appropriate and that does not affect the substance thereof, and any Merger Warrant thereafter issued or countersigned, whether in exchange or substitution for an outstanding Merger Warrant or otherwise, may be in the form as so changed.
4.8 Other Events. In case any event shall occur affecting the Company as to which none of the provisions of the preceding subsections of this Section 4 are strictly applicable, but which would require an adjustment to the terms of the Merger Warrants in order to (i) avoid an adverse impact on the Merger Warrants and (ii) effectuate the intent and purpose of this Section 4, then, in each such case, the Company shall appoint a firm of independent registered public accountants, investment banking or other appraisal firm of recognized national standing, which shall give its opinion as to whether or not any adjustment to the rights represented by the Merger Warrants is necessary to effectuate the intent and purpose of this Section 4 and, if they determine that an adjustment is necessary, the terms of such adjustment. The Company shall adjust the terms of the Merger Warrants in a manner that is consistent with any adjustment recommended in such opinion.
8
| 5. | Transfer and Exchange of Merger Warrants. |
5.1 Registration of Transfer. The Merger Warrant Agent shall register the transfer, from time to time, of any outstanding Merger Warrant upon the Merger Warrant Register, upon surrender of such Merger Warrant for transfer, in the case of certificated Merger Warrants, properly endorsed with signatures properly guaranteed and accompanied by appropriate instructions for transfer. Upon any such transfer, a new Merger Warrant representing an equal aggregate number of Merger Warrants shall be issued and the old Merger Warrant shall be cancelled by the Merger Warrant Agent. In the case of certificated Merger Warrants, the Merger Warrants so cancelled shall be delivered by the Merger Warrant Agent to the Company from time to time upon request.
5.2 Procedure for Surrender of Merger Warrants. Merger Warrants may be surrendered to the Merger Warrant Agent, together with a written request for exchange or transfer, and thereupon the Merger Warrant Agent shall issue in exchange therefor one or more new Merger Warrants as requested by the Registered Holder of the Merger Warrants so surrendered, representing an equal aggregate number of Merger Warrants; provided, however, that except as otherwise provided herein or with respect to any Book-Entry Merger Warrant, each Book-Entry Merger Warrant may be transferred only in whole and only to the Depositary, to another nominee of the Depositary, to a successor depository, or to a nominee of a successor depository; provided further, however that in the event that a Merger Warrant surrendered for transfer bears a restrictive legend (as in the case of the Merger Warrants initially issued to Car Tech Members), the Merger Warrant Agent shall not cancel such Merger Warrant and issue new Merger Warrants in exchange thereof until the Merger Warrant Agent has received an opinion of counsel for the Company stating that such transfer may be made and indicating whether the new Merger Warrants must also bear a restrictive legend.
5.3 Fractional Merger Warrants. The Merger Warrant Agent shall not be required to effect any registration of transfer or exchange which shall result in the issuance of a Definitive Merger Warrant Certificate or book-entry position for a fraction of a Merger Warrant.
5.4 Service Charges. No service charge shall be made for any exchange or registration of transfer of Merger Warrants.
5.5 Merger Warrant Execution and Countersignature. The Merger Warrant Agent is hereby authorized to countersign and to deliver, in accordance with the terms of this Agreement, the Merger Warrants required to be issued pursuant to the provisions of this Section 5, and the Company, whenever required by the Merger Warrant Agent, shall supply the Merger Warrant Agent with Merger Warrants duly executed on behalf of the Company for such purpose.
| 6. | Redemption. |
6.1 Redemption of Merger Warrants When the Price per Share of Common Stock Equals or Exceeds $18.00. Subject to Section 6.4 hereof, not less than all of the outstanding Merger Warrants may be redeemed at the option of the Company at any time during the Exercise Period, at the office of the Merger Warrant Agent, upon notice to the Registered Holders of the Merger Warrants, as described in Section 6.2 below, at a Redemption Price of $0.01 per Merger Warrant, provided that (a) the Reference Value (as defined below) equals or exceeds $18.00 per share (subject to adjustment in compliance with Section 4 hereof) and (b) there is an effective registration statement covering the issuance of the shares of Common Stock issuable upon exercise of the Merger Warrants, and a current prospectus relating thereto, available throughout the 30-day Redemption Period (as defined in Section 6.2 below) or the Company has elected to require the exercise of the Merger Warrants on a “cashless basis” pursuant to subsection 3.3.1. In addition, subject to Section 6.4 hereof, the Merger Warrants shall be redeemed if the Company exercises its option to redeem the Public Warrants pursuant to Article 6 of that certain Warrant Agreement dated as of October 28, 2021, by and between the Company and Continental Stock Transfer & Trust Company as the Warrant Agent thereunder.
9
6.2 Date Fixed for, and Notice of, Redemption; Redemption Price; Reference Value. In the event that the Company elects to redeem the Merger Warrants, pursuant to Section 6.1, the Company shall fix a date for the redemption (the “Redemption Date”). Notice of redemption shall be mailed by first class mail, postage prepaid, by the Company not less than thirty (30) days prior to the Redemption Date (the “30-day Redemption Period”) to the Registered Holders of the Merger Warrants to be redeemed at their last addresses as they shall appear on the registration books. Any notice mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the Registered Holder received such notice. As used in this Agreement, (a) “Redemption Price” shall mean the price per Merger Warrant at which any Merger Warrants are redeemed pursuant to Section 6.1 and (b) “Reference Value” shall mean the last reported sales price of the shares of Common Stock for any twenty (20) trading days within the thirty (30) trading-day period ending on the third trading day prior to the date on which notice of the redemption is given.
6.3 Exercise After Notice of Redemption. The Merger Warrants may be exercised, for cash at any time after notice of redemption shall have been given by the Company pursuant to Section 6.2 hereof and prior to the Redemption Date. On and after the Redemption Date, the record holder of the Merger Warrants shall have no further rights except to receive, upon surrender of the Merger Warrants, the Redemption Price.
6.4 Exclusion of Merger Warrants. The Company agrees that the redemption rights provided in Section 6.1 hereof shall not apply to the Merger Warrants if and to the extent that at the time of the redemption such Merger Warrants continue to be held by the Car Tech Members or their Permitted Transferees. However, once such Merger Warrants are transferred (other than to Permitted Transferees), the Company may redeem the Merger Warrants pursuant to Section 6.1 hereof, provided that the criteria for redemption are met, including the opportunity of the holder of such Merger Warrants to exercise the Merger Warrants prior to redemption pursuant to Section 6.3 hereof.
| 7. | Other Provisions Relating to Rights of Holders of Merger Warrants. |
7.1 No Rights as Stockholder. A Merger Warrant does not entitle the Registered Holder thereof to any of the rights of a stockholder of the Company, including, without limitation, the right to receive dividends, or other distributions, exercise any preemptive rights to vote or to consent or to receive notice as a stockholder in respect of the meetings of stockholders or the election of directors of the Company or any other matter.
7.2 Lost, Stolen, Mutilated, or Destroyed Merger Warrants. If any Merger Warrant is lost, stolen, mutilated, or destroyed, the Company and the Merger Warrant Agent may on such terms as to indemnity or otherwise as they may in their discretion impose (which shall, in the case of a mutilated Merger Warrant, include the surrender thereof), issue a new Merger Warrant of like denomination, tenor, and date as the Merger Warrant so lost, stolen, mutilated, or destroyed. Any such new Merger Warrant shall constitute a substitute contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated, or destroyed Merger Warrant shall be at any time enforceable by anyone.
7.3 Reservation of Common Stock. The Company shall at all times reserve and keep available a number of its authorized but unissued shares of Common Stock that shall be sufficient to permit the exercise in full of all outstanding Merger Warrants issued pursuant to this Agreement.
7.4 Cashless Exercise at Company’s Option. If the Common Stock is at the time of any exercise of a Merger Warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act (or any successor statute), the Company may, at its option, (i) require holders of Merger Warrants who exercise Merger Warrants to exercise such Merger Warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act (or any successor statute) and (ii) in the event the Company so elects, the Company shall (x) not be required to file or maintain in effect a registration statement for the registration, under the Securities Act, of the Common Stock issuable upon exercise of the Merger Warrants, notwithstanding anything in this Agreement to the contrary and (y) use commercially reasonable efforts to register or qualify for sale the Common Stock issuable upon exercise of the Merger Warrant under applicable blue sky laws of the state of residence of the holder to the extent an exemption is not available.
10
| 8. | Concerning the Merger Warrant Agent and Other Matters. |
8.1 Payment of Taxes. The Company shall from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Merger Warrant Agent in respect of the issuance or delivery of shares of Common Stock upon the exercise of the Merger Warrants, but the Company shall not be obligated to pay any transfer taxes in respect of the Merger Warrants or such shares of Common Stock.
8.2 Resignation, Consolidation, or Merger of Merger Warrant Agent.
8.2.1 Appointment of Successor Merger Warrant Agent. The Merger Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the Company. If the office of the Merger Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a successor Merger Warrant Agent in place of the Merger Warrant Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after it has been notified in writing of such resignation or incapacity by the Merger Warrant Agent or by the holder of a Merger Warrant (who shall, with such notice, submit his, her or its Merger Warrant for inspection by the Company), then the holder of any Merger Warrant may apply to the Supreme Court of the State of New York for the County of New York for the appointment of a successor Merger Warrant Agent at the Company’s cost. Any successor Merger Warrant Agent, whether appointed by the Company or by such court, shall be a corporation organized and existing under the laws of the State of New York, in good standing and having its principal office in the Borough of Manhattan, City and State of New York, and authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal or state authority. After appointment, any successor Merger Warrant Agent shall be vested with all the authority, powers, rights, immunities, duties, and obligations of its predecessor Merger Warrant Agent with like effect as if originally named as Merger Warrant Agent hereunder, without any further act or deed; but if for any reason it becomes necessary or appropriate, the predecessor Merger Warrant Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Merger Warrant Agent all the authority, powers, and rights of such predecessor Merger Warrant Agent hereunder; and upon request of any successor Merger Warrant Agent the Company shall make, execute, acknowledge, and deliver any and all instruments in writing for more fully and effectually vesting in and confirming to such successor Merger Warrant Agent all such authority, powers, rights, immunities, duties, and obligations.
8.2.2 Notice of Successor Merger Warrant Agent. In the event a successor Merger Warrant Agent shall be appointed, the Company shall give notice thereof to the predecessor Merger Warrant Agent and the Transfer Agent for the Common Stock not later than the effective date of any such appointment.
8.2.3 Merger or Consolidation of Merger Warrant Agent. Any corporation into which the Merger Warrant Agent may be merged or with which it may be consolidated or any corporation resulting from any merger or consolidation to which the Merger Warrant Agent shall be a party shall be the successor Merger Warrant Agent under this Agreement without any further act.
8.3 Fees and Expenses of Merger Warrant Agent.
8.3.1 Remuneration. The Company agrees to pay the Merger Warrant Agent reasonable remuneration for its services as such Merger Warrant Agent hereunder and shall, pursuant to its obligations under this Agreement, reimburse the Merger Warrant Agent upon demand for all expenditures that the Merger Warrant Agent may reasonably incur in the execution of its duties hereunder.
8.3.2 Further Assurances. The Company agrees to perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged, and delivered all such further and other acts, instruments, and assurances as may reasonably be required by the Merger Warrant Agent for the carrying out or performing of the provisions of this Agreement.
11
8.4 Liability of Merger Warrant Agent.
8.4.1 Reliance on Company Statement. Whenever in the performance of its duties under this Agreement, the Merger Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a statement signed by the President, the Chief Executive Officer, the Chief Financial Officer, the Secretary or the Chairman of the Board of the Company and delivered to the Merger Warrant Agent. The Merger Warrant Agent may rely upon such statement for any action taken or suffered in good faith by it pursuant to the provisions of this Agreement.
8.4.2 Indemnity. The Merger Warrant Agent shall be liable hereunder only for its own gross negligence, willful misconduct, fraud or bad faith. The Company agrees to indemnify the Merger Warrant Agent and save it harmless against any and all liabilities, including judgments, out-of-pocket costs and reasonable outside counsel fees, for anything done or omitted by the Merger Warrant Agent in the execution of this Agreement, except as a result of the Merger Warrant Agent’s gross negligence, willful misconduct, fraud or bad faith.
8.4.3 Exclusions. The Merger Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution of any Merger Warrant (except its countersignature thereof). The Merger Warrant Agent shall not be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Merger Warrant. The Merger Warrant Agent shall not be responsible to make any adjustments required under the provisions of Section 4 hereof or responsible for the manner, method, or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Agreement or any Merger Warrant or as to whether any shares of Common Stock shall, when issued, be valid and fully paid and non-assessable.
8.5 Acceptance of Agency. The Merger Warrant Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the terms and conditions herein set forth and among other things, shall account promptly to the Company with respect to Merger Warrants exercised and concurrently account for, and pay to the Company, all monies received by the Merger Warrant Agent for the purchase of shares of Common Stock through the exercise of the Merger Warrants.
8.6 Waiver. The Merger Warrant Agent has no right of set-off or any other right, title, interest or claim of any kind (“Claim”) in, or to any distribution of, the Trust Account (as defined in that certain Investment Management Trust Agreement, dated as of the date hereof, by and between the Company and the Merger Warrant Agent as trustee thereunder) and hereby agrees not to seek recourse, reimbursement, payment or satisfaction for any Claim against the Trust Account for any reason whatsoever. The Merger Warrant Agent hereby waives any and all Claims against the Trust Account and any and all rights to seek access to the Trust Account.
| 9. | Miscellaneous Provisions. |
9.1 Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Merger Warrant Agent shall bind and inure to the benefit of their respective successors and assigns.
12
9.2 Notices. Any notice, statement or demand authorized by this Agreement to be given or made by the Merger Warrant Agent or by the holder of any Merger Warrant to or on the Company shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five (5) days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Company with the Merger Warrant Agent), as follows:
Car Tech [*] Inc. (f/k/a AltEnergy Acquisition Corp.}
[*]
Attn: [*]
Email:
Any notice, statement or demand authorized by this Agreement to be given or made by the holder of any Merger Warrant or by the Company to or on the Merger Warrant Agent shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five (5) days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Merger Warrant Agent with the Company), as follows:
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, NY 10004
Attn: Compliance Department
With copies in each case to:
Morrison Cohen LLP
909 Third Avenue
New York, NY 10022
Attn: Jack Levy, Esq.
Email: jlevy@morrisoncohen.com
Attn: Anthony M. Saur, Esq.
Email: amsaur@morrisoncohen.com
Dorsey & Whitney LLP
1400 Wewatta St #400
Denver, CO 80202
Attention: Anthony Epps
Email: epps.anthony@dorsey.com
Attention: Dan Miller
Email: miller.dan@dorsey.com
9.3 Applicable Law and Exclusive Forum. The validity, interpretation, and performance of this Agreement and of the Merger Warrants shall be governed in all respects by the laws of the State of New York. Subject to applicable law, the Company hereby agrees that any action, proceeding or claim against it arising out of or relating in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Notwithstanding the foregoing, the provisions of this paragraph will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum.
13
Any person or entity purchasing or otherwise acquiring any interest in the Merger Warrants shall be deemed to have notice of and to have consented to the forum provisions in this Section 9.3. If any action, the subject matter of which is within the scope the forum provisions above, is filed in a court other than a court located within the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any Merger Warrant holder, such Merger Warrant holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located within the State of New York or the United States District Court for the Southern District of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such Merger Warrant holder in any such enforcement action by service upon such Merger Warrant holder’s counsel in the foreign action as agent for such Merger Warrant holder.
9.4 Persons Having Rights under this Agreement. Nothing in this Agreement shall be construed to confer upon, or give to, any person or corporation other than the parties hereto and the Registered Holders of the Merger Warrants any right, remedy, or claim under or by reason of this Agreement or of any covenant, condition, stipulation, promise, or agreement hereof. All covenants, conditions, stipulations, promises, and agreements contained in this Agreement shall be for the sole and exclusive benefit of the parties hereto and their successors and assigns and of the Registered Holders of the Merger Warrants.
9.5 Examination of the Merger Warrant Agreement. A copy of this Agreement shall be available at all reasonable times at the office of the Merger Warrant Agent in the Borough of Manhattan, City and State of New York, for inspection by the Registered Holder of any Merger Warrant. The Merger Warrant Agent may require any such holder to submit such holder’s Merger Warrant for inspection by the Merger Warrant Agent.
9.6 Counterparts. This Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
9.7 Effect of Headings. The section headings herein are for convenience only and are not part of this Agreement and shall not affect the interpretation thereof.
9.8 Amendments. This Agreement may be amended by the parties hereto without the consent of any Registered Holder (i) for the purpose of curing any ambiguity or to correct any mistake, or curing, correcting or supplementing any defective provision contained herein or adding or changing any other provisions with respect to matters or questions arising under this Agreement as the parties may deem necessary or desirable and that the parties deem shall not adversely affect the interest of the Registered Holders, and (ii) to provide for the delivery of Alternative Issuance pursuant to Section 4.4. All other modifications or amendments, including any amendment to increase the Merger Warrant Price or shorten the Exercise Period and any amendments to the terms of only the Merger Warrants, shall require the vote or written consent of the Registered Holders of 50% of the then outstanding Merger Warrants. Notwithstanding the foregoing, the Company may lower the Merger Warrant Price or extend the duration of the Exercise Period pursuant to Sections 3.1 and 3.2, respectively, without the consent of the Registered Holders.
9.9 Severability. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.
Exhibit A – Form of Definitive Merger Warrant Certificate
Exhibit B – Legend
[Signature Page Follows]
14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.
| CAR TECH [*] INC. (F/K/A ALTENERGY ACQUISITION CORP.) | ||
| By: | ||
| Name: | ||
| Title: | ||
| CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Merger Warrant Agent | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Merger Warrant Agreement]
15
EXHIBIT A
FORM OF MERGER WARRANT CERTIFICATE
[FACE]
Number [●]
MERGER WARRANTS
THIS MERGER WARRANT SHALL BE VOID IF NOT EXERCISED PRIOR TO
THE EXPIRATION OF THE EXERCISE PERIOD PROVIDED FOR
IN THE MERGER WARRANT AGREEMENT DESCRIBED BELOW
CAR TECH [*] INC. (F/K/A ALTENERGY ACQUISITION CORP. )
Incorporated Under the Laws of the State of Delaware
CUSIP [●]
Merger Warrant Certificate
9.9.1 This Merger Warrant Certificate certifies that , or its registered assigns, is the registered holder of Merger Warrant(s) evidenced hereby (the “Merger Warrants” and each, a “Merger Warrant”) to purchase shares of Common Stock, $0.0001 par value per share (“Common Stock”), of Car Tech[*] Inc. (formerly known as AltEnergy Acquisition Corp.), a Delaware corporation (the “Company”). Each Merger Warrant entitles the holder, upon exercise during the period set forth in the Merger Warrant Agreement referred to below, to receive from the Company that number of fully paid and non-assessable shares of Common Stock as set forth below, at the exercise price (the “Exercise Price”) as determined pursuant to the Merger Warrant Agreement, payable in lawful money (or through “cashless exercise” as provided for in the Merger Warrant Agreement) of the United States of America upon surrender of this Merger Warrant Certificate and payment of the Exercise Price at the office or agency of the Merger Warrant Agent referred to below, subject to the conditions set forth herein and in the Merger Warrant Agreement. Defined terms used in this Merger Warrant Certificate but not defined herein shall have the meanings given to them in the Merger Warrant Agreement.
Each whole Merger Warrant is initially exercisable for one fully paid and non-assessable share of Common Stock. No fractional shares will be issued upon exercise of any Merger Warrant. If, upon the exercise of Merger Warrants, a holder would be entitled to receive a fractional interest in a share of Common Stock, the Company will, upon exercise, round down to the nearest whole number the number of shares of Common Stock to be issued to the Merger Warrant holder. The number of shares of Common Stock issuable upon exercise of the Merger Warrants is subject to adjustment upon the occurrence of certain events set forth in the Merger Warrant Agreement.
The initial Exercise Price per share of Common Stock for any Merger Warrant is equal to $11.50 per share. The Exercise Price is subject to adjustment upon the occurrence of certain events set forth in the Merger Warrant Agreement.
Subject to the conditions set forth in the Merger Warrant Agreement, the Merger Warrants may be exercised only during the Exercise Period and to the extent not exercised by the end of such Exercise Period, such Merger Warrants shall become void. The Merger Warrants may be redeemed, subject to certain conditions, as set forth in the Merger Warrant Agreement.
Reference is hereby made to the further provisions of this Merger Warrant Certificate set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though fully set forth at this place.
This Merger Warrant Certificate shall not be valid unless countersigned by the Merger Warrant Agent, as such term is used in the Merger Warrant Agreement.
This Merger Warrant Certificate shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to conflicts of laws principles thereof.
| CAR TECH [*] INC. (f/k/a ALTENERGY ACQUISITION CORP.) | ||
| By: | ||
| Name: | ||
| Title: | ||
| CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Merger Warrant Agent | ||
| By: | ||
| Name: | ||
| Title: | ||
17
EXHIBIT A-1
FORM OF MERGER WARRANT CERTIFICATE
[Reverse]
The Merger Warrants evidenced by this Merger Warrant Certificate are part of a duly authorized issue of Merger Warrants entitling the holder on exercise to receive shares of Common Stock and are issued or to be issued pursuant to a Merger Warrant Agreement dated as of , 2021 (the “Merger Warrant Agreement”), duly executed and delivered by the Company to Continental Stock Transfer & Trust Company, a New York limited purpose trust company, as Merger Warrant agent (the “Merger Warrant Agent”), which Merger Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Merger Warrant Agent, the Company and the holders (the words “holders” or “holder” meaning the Registered Holders or Registered Holder, respectively) of the Merger Warrants. A copy of the Merger Warrant Agreement may be obtained by the holder hereof upon written request to the Company. Defined terms used in this Merger Warrant Certificate but not defined herein shall have the meanings given to them in the Merger Warrant Agreement.
Merger Warrants may be exercised at any time during the Exercise Period set forth in the Merger Warrant Agreement. The holder of Merger Warrants evidenced by this Merger Warrant Certificate may exercise them by surrendering this Merger Warrant Certificate, with the form of election to purchase set forth hereon properly completed and executed, together with payment of the Exercise Price as specified in the Merger Warrant Agreement (or through “cashless exercise” as provided for in the Merger Warrant Agreement) at the principal corporate trust office of the Merger Warrant Agent. In the event that upon any exercise of Merger Warrants evidenced hereby the number of Merger Warrants exercised shall be less than the total number of Merger Warrants evidenced hereby, there shall be issued to the holder hereof or his, her or its assignee, a new Merger Warrant Certificate evidencing the number of Merger Warrants not exercised.
Notwithstanding anything else in this Merger Warrant Certificate or the Merger Warrant Agreement, no Merger Warrant may be exercised unless at the time of exercise (i) a registration statement covering the shares of Common Stock to be issued upon exercise is effective under the Securities Act and (ii) a prospectus thereunder relating to the shares of Common Stock is current, except through “cashless exercise” as provided for in the Merger Warrant Agreement.
The Merger Warrant Agreement provides that upon the occurrence of certain events the number of shares of Common Stock issuable upon exercise of the Merger Warrants set forth on the face hereof may, subject to certain conditions, be adjusted. If, upon exercise of a Merger Warrant, the holder thereof would be entitled to receive a fractional interest in a share of Common Stock, the Company shall, upon exercise, round down to the nearest whole number of shares of Common Stock to be issued to the holder of the Merger Warrant.
Merger Warrant Certificates, when surrendered at the principal corporate trust office of the Merger Warrant Agent by the Registered Holder thereof in person or by legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Merger Warrant Agreement, but without payment of any service charge, for another Merger Warrant Certificate or Merger Warrant Certificates of like tenor evidencing in the aggregate a like number of Merger Warrants.
Upon due presentation for registration of transfer of this Merger Warrant Certificate at the office of the Merger Warrant Agent a new Merger Warrant Certificate or Merger Warrant Certificates of like tenor and evidencing in the aggregate a like number of Merger Warrants shall be issued to the transferee(s) in exchange for this Merger Warrant Certificate, subject to the limitations provided in the Merger Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith.
The Company and the Merger Warrant Agent may deem and treat the Registered Holder(s) hereof as the absolute owner(s) of this Merger Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the holder(s) hereof, and for all other purposes, and neither the Company nor the Merger Warrant Agent shall be affected by any notice to the contrary. Neither the Merger Warrants nor this Merger Warrant Certificate entitles any holder hereof to any rights of a stockholder of the Company.
19
EXHIBIT A-2
Election to Purchase
(To Be Executed Upon Exercise of Merger Warrant)
The undersigned hereby irrevocably elects to exercise the right, represented by this Merger Warrant Certificate, to receive shares of Common Stock and herewith tenders payment for such shares of Common Stock to the order of Car Tech [*] Inc. (f/k/a AltEnergy Acquisition Corp.) (the “Company”) in the amount of $ in accordance with the terms hereof. The undersigned requests that a certificate for such shares of Common Stock be registered in the name of , whose address is and that such shares of Common Stock be delivered to whose address is . If said number of shares of Common Stock is less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new Merger Warrant Certificate representing the remaining balance of such shares of Common Stock be registered in the name of , whose address is and that such Merger Warrant Certificate be delivered to , whose address is .
In the event that the Merger Warrant is to be exercised on a “cashless” basis pursuant to subsection 3.3.1(c) of the Merger Warrant Agreement, the number of shares of Common Stock that this Merger Warrant is exercisable for shall be determined in accordance with subsection 3.3.1(c) of the Merger Warrant Agreement.
In the event that the Merger Warrant is to be exercised on a “cashless” basis pursuant to Section 7.4 of the Merger Warrant Agreement, the number of shares of Common Stock that this Merger Warrant is exercisable for shall be determined in accordance with Section 7.4 of the Merger Warrant Agreement.
In the event that the Merger Warrant may be exercised, to the extent allowed by the Merger Warrant Agreement, through cashless exercise (i) the number of shares of Common Stock that this Merger Warrant is exercisable for would be determined in accordance with the relevant section of the Merger Warrant Agreement which allows for such cashless exercise and (ii) the holder hereof shall complete the following: The undersigned hereby irrevocably elects to exercise the right, represented by this Merger Warrant Certificate, through the cashless exercise provisions of the Merger Warrant Agreement, to receive shares of Common Stock. If said number of shares of Common Stock is less than all of the shares of Common Stock purchasable hereunder (after giving effect to the cashless exercise), the undersigned requests that a new Merger Warrant Certificate representing the remaining balance of such shares of Common Stock be registered in the name of , whose address is and that such Merger Warrant Certificate be delivered to , whose address is .
[Signature Page Follows]
| Date: , 20 | ||
| (Signature) | ||
| (Address) | ||
| (Tax Identification Number) | ||
| Signature Guaranteed: | ||
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15 (OR ANY SUCCESSOR RULE) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED).
21
EXHIBIT B
LEGEND
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. IN ADDITION, SUBJECT TO ANY ADDITIONAL LIMITATIONS ON TRANSFER DESCRIBED IN THE [*] AGREEMENT BY AND AMONG [*] AND THE OTHER PARTIES THERETO, THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD OR TRANSFERRED EXCEPT TO A PERMITTED TRANSFEREE (AS DEFINED IN SECTION 3 OF THE MERGER WARRANT AGREEMENT) WHO AGREES IN WRITING WITH THE COMPANY TO BE SUBJECT TO SUCH TRANSFER PROVISIONS.”
Exhibit 10.13
EXECUTION VERSION
CONTRIBUTION AND EXCHANGE AGREEMENT
This CONTRIBUTION AND EXCHANGE AGREEMENT (this “Agreement”) is entered into as of February 14, 2025, by and among Car Tech, LLC, an Alabama limited liability company (the “Company”), Shinyoung Co., Ltd., a corporation organized in the Republic of Korea (“Shinyoung”), and AltEnergy Acquisition Corp., a Delaware corporation (“Parent,” and together with the Company and Shinyoung, the “Parties”).
WHEREAS, concurrently with the execution of this Agreement, Company, Parent, Car Tech Merger Sub, LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Parent (“Merger Sub I”), and Car Tech Merger Sub II, LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Parent (“Merger Sub II”), are entering into an Amended and Restated Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, among other things (a) Merger Sub I will merge with and into the Company, the separate limited liability company existence of Merger Sub I will cease, and the Company will be the surviving company (the “First Merger Surviving Company”) and a direct wholly-owned subsidiary of Parent (the “First Merger”), and (b) as soon as practicable following the First Merger, the First Merger Surviving Company will merge with and into Merger Sub II, the separate limited liability company existence of the First Merger Surviving Company will cease, and Merger Sub II will be the surviving company and a direct wholly-owned subsidiary of Parent (the “Second Merger” and collectively, the “Mergers”);
WHEREAS, the Company, as borrower, and Shinyoung, as lender, previously entered into (i) that certain Loan Agreement, dated December 27, 2022, in the original principal amount of $1,000,000, (ii) that certain Loan Agreement, dated February 7, 2023, in the original principal amount of $800,000, (iii) that certain Loan Agreement, dated February 23, 2023, in the original principal amount of $1,000,000, (iv) that certain Loan Agreement, dated June 14, 2023, in the original principal amount of $11,000,000, (v) that certain Loan Agreement, dated July 7, 2023, in the original principal amount of $2,000,000, (vi) that certain Loan Agreement, dated July 20, 2023, in the original principal amount of $400,000, (vii) that certain Loan Agreement, dated July 22, 2023, in the original principal amount of $1,400,000, (viii) that certain Loan Agreement, dated August 12, 2023, in the original principal amount of $600,000, (ix) that certain Loan Agreement, dated September 2, 2023, in the original principal amount of $700,000, (x) that certain Loan Agreement, dated November 19, 2023, in the original principal amount of $1,800,000, (xi) that certain Loan Agreement, dated September 4, 2023, in the original principal amount of $900,000, (xii) that certain Loan Agreement, dated December 28, 2023, in the original principal amount of $1,383,000, (xiii) those certain capital expenditure loans extended from January through March, 2024, in the aggregate original principal amount of $5,000,000, (xiv) that certain Loan Agreement, dated February 7, 2024 in the original principal amount of $800,000, (xv) that certain Loan Agreement, dated February 23, 2024, in the original principal amount of $1,000,000, (xvi) that certain Loan Agreement, dated February 26, 2024, in the original principal amount of $1,500,000, (xvii) that certain Loan Agreement, dated March 26, 2024, in the original principal amount of $2,000,000, (xviii) that certain Loan Agreement, dated April 23, 2024, in the original principal amount of $2,000,000, (xviii) that certain Loan Agreement, dated June 15, 2024, in the original principal amount of $11,000,000, (xix) that certain Loan Agreement, dated July 8, 2024, in the original principal amount of $2,000,000, (xx) that certain Loan Agreement, dated July 20, 2024, in the original principal amount of $400,000, (xxi) that certain Loan Agreement, dated July 26, 2024, in the original principal amount of $5,483,000, (xxii) that certain Loan Agreement, dated August 12, 2024, in the original principal amount of $600,000, (xxiii) that certain Loan Agreement, dated August 19, 2024, in the original principal amount of $1,000,000, (xxiv) that certain Loan Agreement, dated September 2, 2024, in the original principal amount of $700,000, (xv) that certain Loan Agreement, dated November 14, 2024, in the original principal amount of $1,000,000, (xxvi) that certain Loan Agreement, dated November 19, 2024, in the original principal amount of $1,000,000 (xxvii) that certain Loan Agreement, dated December 27, 2024, in the original principal amount of $1,000,000, (xxviii) that certain Loan Agreement, dated January 30, 2025, in the
original principal amount of $1,500,000, (xxix) that certain Loan Agreement, dated January 31, 2025, in the original principal amount of $1,000,000, and (xxx) that certain Loan Agreement, dated February 7, 2025, in the original principal amount of $800,000;
WHEREAS, as a condition to Parent’s willingness to enter into the Merger Agreement, the Parties have executed and delivered this Agreement, pursuant to which prior to the effective time of the First Merger, Shinyoung will contribute to the capital of the Company all of the Shinyoung Conversion Indebtedness (after giving effect to the Interest Payment, as defined below) entered into prior to the First Merger Effective Time in exchange for the Company’s issuance of Company Units with a fair market value equal to the aggregate amount the Company is obligated to pay pursuant to the Shinyoung Conversion Indebtedness; and
WHEREAS, capitalized terms used but not otherwise defined herein shall have the meanings given to such terms in the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties, agreements, and conditions set forth in this Agreement, the Parties hereby agree as follows:
Article 1. Contribution and Exchange
1.1 Interest Payment. Within three Business Days prior to the effective time of the Contribution (as defined below), the Company shall cause to be paid to Shinyoung in cash all accrued, outstanding and unpaid interest with respect to the Shinyoung Conversion Indebtedness (the “Interest Payment”).
1.2 Contribution. Prior to the effective time of the First Merger, Shinyoung will contribute to the capital of the Company all of the Shinyoung Conversion Indebtedness (the “Contribution”). Notwithstanding the foregoing, any Shinyoung Conversion Indebtedness outstanding immediately prior to the effective time of the First Merger that is not contributed to the capital of the Company pursuant to the Contribution shall automatically and irrevocably be contributed to the Company without any further action by Shinyoung, unless otherwise consented to in writing by Parent.
1.3 Exchange. Effective upon the Contribution and prior to the conversion of Company Units under Section 3.1 of the Merger Agreement, the Company will accept the Contribution and, in exchange therefore, issue to Shinyoung a number of Company Units such that Shinyoung will receive in respect of such Company Units out of the Merger Consideration, pursuant to the First Merger, a number of shares of Parent Common Stock equal to the quotient of (a) the amount of Shinyoung Conversion Indebtedness contributed to the Company pursuant to the Contribution, divided by $10.00 (rounded down to the nearest whole Company Unit) (such exchange, together with the Contribution, the “Contribution and Exchange”).
1.4 U.S. Federal Income Tax Matters.
(a) For U.S. federal income tax purposes, the Parties intend that, pursuant to Section 108(e)(8) of the Code, the Company be treated as having satisfied the Shinyoung Conversion Indebtedness contributed to the Company pursuant to the Contribution for an amount of cash equal to the fair market value of the Company Units issued to Shinyoung pursuant to the Contribution and Exchange; provided, however, if it is determined that the fair market value of the Company Units issued to Shinyoung pursuant to the Contribution and Exchange is not at least equal to the principal amount owed by the Company pursuant to the Shinyoung Conversion Indebtedness contributed in exchange therefor, such deficit shall be treated as contributed by Shinyoung to the capital of the Company pursuant to Section 108(e)(6) of the Code.
(b) Prior to the Closing Date, Shinyoung shall deliver to the Company a properly completed and executed IRS Form W-8BEN-E, together with all required attachments to such form and such other information reasonably requested by the Company to enable the Company to comply with its tax reporting and withholding obligations with respect to the Interest Payment and any portion of the Contribution that is
2
treated as the payment of interest to Shinyoung for U.S. federal income tax purposes. The Company shall be entitled to deduct and withhold, or cause to be deducted and withheld, from the Interest Payment and the portion (if any) of the Contribution that is treated as the payment of interest to Shinyoung for U.S. federal income tax purposes such Taxes that are required to be deducted and withheld from such amounts under applicable Tax Law; provided that the Company shall be obligated to timely remit such amounts to the appropriate U.S. tax authorities.
1.5 Discharge and Release. Effective upon the Interest Payment and the Contribution and Exchange in accordance with the terms and conditions of this Agreement, and without further action by any Party:
(a) Shinyoung hereby acknowledges that any and all debts, liabilities and obligations of the Company under and in connection with the Shinyoung Conversion Indebtedness, including all principal and accrued and unpaid interest owed by the Company or its Affiliates to Shinyoung or its Affiliates with respect to any Conversion Indebtedness, shall be deemed satisfied in full, and Shinyoung and its Affiliates shall not be owed any additional Indebtedness by the Company or its Affiliates in connection with the Shinyoung Conversion Indebtedness or otherwise, upon consummation of the Contribution and Exchange in accordance with this Agreement; and
(b) Shinyoung hereby absolutely and unconditionally releases and forever discharges the Company from any and all claims arising from or otherwise in connection with the Shinyoung Conversion Indebtedness.
Article 2. Representations and Warranties
2.1 Authority. Each Party represents to the other Parties that (a) such Party has the full legal right, power and authority to execute, deliver and perform this Agreement and consummate the transaction contemplated hereby, and (b) this Agreement has been duly and validly executed and delivered by, and constitutes the valid and binding agreement of, such Party, enforceable against such Party in accordance with its terms.
2.2 No Conflicts. Each Party represents to the other Parties that the execution and delivery of this Agreement by such Party, and the consummation of the transaction contemplated hereby, will not (a) contravene or conflict with, or constitute a violation of any provision of such Party’s Governing Documents, (b) violate or conflict with any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to such Party, (c) conflict with, or result in (with or without notice or lapse of time or both) any violation of, or default under, or give rise to a right of termination, acceleration or modification of any obligation or loss of any benefit under any contract or other instrument to which such Party is a party, or (d) require any filing with, or license, permit, consent or other approval from, any other third party or governmental body.
2.3 Title. Shinyoung represents to the other Parties that (a) Shinyoung is the sole creditor in respect of the Shinyoung Conversion Indebtedness, (b) the Shinyoung Conversion Indebtedness is free and clear of all liens and encumbrances, (c) to the knowledge of Shinyoung, the Shinyoung Conversion Indebtedness is not subject to any legal challenges and (d) the Shinyoung Indebtedness constitutes the only Indebtedness owed by the Company or its Affiliates to Shinyoung or its Affiliates.
2.4 Brokers; Finders. Except as disclosed in the Merger Agreement, no person or entity has acted directly or indirectly as a broker, finder or financial advisor for the Parties in connection with this Agreement, and no person or entity is entitled to any broker’s, finder’s, financial advisory or similar fee or payment in respect thereof based in any way on any agreement, arrangement or understanding made by or authorized on behalf of the Parties.
2.5 Access to Information. Shinyoung has been provided an opportunity to ask questions of, and has received answers thereto satisfactory to Shinyoung from the Company and its officers, managers, employees, agents and other representatives regarding the terms and conditions of the offering and issuance of the Company
3
Units as contemplated hereby, and Shinyoung has obtained all additional information requested by Shinyoung of the Company and its officers, managers, employees, agents and other representatives to verify the accuracy of all information furnished to Shinyoung regarding the offering and issuance of the Company Units as contemplated hereby.
2.6 Evaluation of and Ability to Bear Risks. Shinyoung has such knowledge and experience in financial affairs that it capable of evaluating the merits and risks of purchasing the Company Units, and Shinyoung has not relied in connection with its investment in the Company Units upon any representations, warranties or agreements other than those set forth in this Agreement or in another signed writing between one or more of the Parties. Shinyoung’s financial situation is such that it can afford to bear the economic risk of holding the Company Units for an indefinite period of time, and can afford to suffer the complete loss of its investment in the Company.
Article 3. Miscellaneous
3.1 Guaranty. Subject to the terms and conditions of the Merger Agreement, Shinyoung will execute and deliver the Shinyoung Guaranty in favor of the Transaction Financing Lenders no later than contemporaneously with the closing of the Transaction Financing.
3.2 Further Assurances. Subject to the terms and conditions of this Agreement, each Party shall execute and deliver, or caused to be executed and delivered, such further documents, instruments and filings, and shall use commercially reasonable best efforts to take or cause to be taken such other further action, as the other Parties may reasonably request from time to time in order to consummate the transactions contemplated by this Agreement, including to effectuate the issuance of the Company Units pursuant to the Contribution and Exchange (which may include the delivery by Shinyoung of customary subscription agreements and other documentation in connection with such issuance).
3.3 Governing Law and Jury Waiver. All matters relating to the interpretation, construction, validity and enforcement of this agreement shall be governed by the internal laws of the state of Delaware, without giving effect to any choice of law provisions thereof. Each Party hereby waives trial by jury in any action, suit or proceeding arising out of this Agreement.
3.4 Amendment and Termination. This Agreement may be amended, modified or terminated only pursuant to a written instrument signed by each of the Parties; provided, however, that this Agreement shall automatically terminate upon termination of the Merger Agreement prior to the effective time of the First Merger in accordance with its terms.
3.5 Waiver. No failure or delay by any Party in exercising any right of 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.
3.6 Assignment. No Party shall assign its rights or obligations under this Agreement without the prior written consent of the other Parties. The terms and conditions of this Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective legal representatives, successors and permitted assigns.
3.7 Notices. All notices and other communications among the Parties shall be in writing and shall be deemed to have been duly given (a) when delivered in person, (b) when delivered after posting in the United States mail having been sent registered or certified mail return receipt requested, postage prepaid, (c) when delivered by FedEx or other nationally recognized overnight delivery service, or (d) when delivered by email (in
4
each case in this clause (d), solely if receipt is confirmed, but excluding any automated reply, such as an out-of-office notification), addressed as follows:
if to Parent, to:
AltEnergy Acquisition Corp.
600 Lexington Avenue, 9th Floor
New York, NY 10022
Attention: Russell Stidolph
Email: rstidolph@altenergyllc.com
with a copy to (which shall not constitute notice):
Morrison Cohen LLP
909 Third Avenue, 27th Floor
New York, NY 10022
Attention: Jack Levy and Walter Rahmey
Email: jlevy@morrisoncohen.com and wrahmey@morrisoncohen.com
if to the Company, to:
Car Tech, LLC
600 Car Tech Dr.
Opelika, AL 26801
Attention: Jonghoon Ha
Email: jhha@shym.co.kr
with a copy to (which shall not constitute notice):
Dorsey & Whitney LLP
1400 Wewatta St #400
Denver, CO 80202
Attention: Anthony Epps and Dan Miller
Email: epps.anthony@dorsey.com and miller.dan@dorsey.com
if to Shinyoung, to:
Shinyoung Co., Ltd.
39, Bonchongongdan-gil,
Yeongcheon-si Gyeongsangbuk-do
Republic of Korea
Attention: Hogap Kang
Email: kanghogap@shym.co.kr
or to such other address or addresses as the Parties may from time to time designate in writing in accordance with this Section 3.7.
3.8 Entire Agreement. This Agreement, together with the Merger Agreement, contains the entire agreement of the Parties with respect to the subject matter hereof. Without limiting the foregoing, this Agreement replaces in its entirety the that certain Contribution and Exchange Agreement, dated February 21, 2024, which is terminated effective upon the full execution and delivery of this Agreement.
3.9 Severability. To the greatest extent possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. Upon such determination that any term or other provision of this Agreement is invalid, illegal or
5
unenforceable under applicable Law, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
3.10 Interpretation. As used herein, the word “including” shall be deemed followed by the words “without limitation,” and the word “or” shall be deemed to mean “and / or.” The paragraph headings used herein are intended for reference purposes only and shall not be considered in the interpretation of the terms and conditions hereof.
3.11 Counterparts; Electronic Signatures. This Agreement may be executed in one or more counterparts, any one of which need not contain the signatures of more than one Party, but all such counterparts taken together will constitute one and the same instrument. Counterpart signature pages delivered by facsimile or email transmission shall be deemed original signatures for all purposes. The words “execution,” “signed,” “signature,” and words of like import in this Agreement or in any other certificate, agreement or document related to this Agreement shall include images of manually executed signatures transmitted by facsimile or other electronic format (including, “pdf,” “tif” or “jpg”) and other electronic signatures (including, DocuSign and AdobeSign). The use of electronic signatures and electronic records (including, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the Delaware Uniform Electronic Transactions Act and any other applicable Law.
[no further text on this page]
6
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.
| CAR TECH, LLC | ||
| By: | /s/ Jonghoon Ha | |
| Name: Jonghoon Ha | ||
| Its: Executive Director | ||
| SHINYOUNG CO., LTD. | ||
| By: | /s/ Ho Gap Kang | |
| Name: Ho Gap Kang | ||
| Its: Chairman | ||
| ALTENERGY ACQUISITION CORP. | ||
| By: | /s/ Russell Stidolph | |
| Name: Russell Stidolph | ||
| Its: Chief Executive Officer | ||
[Contribution and Exchange Agreement]
Exhibit 10.14
FORM OF SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT (this “Agreement”), dated as of February [●], 2025, is entered into by and between Car Tech, LLC, an Alabama limited liability company (the “Company”), AltEnergy Acquisition Corp., a Delaware corporation (“Parent”), and each of the undersigned, each of whom is a member of the Company or stockholder of Parent, as applicable (each, a “Holder” and collectively, the “Holders”).
WHEREAS, concurrently with the execution of this Agreement, Company, Parent, Car Tech Merger Sub, LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Parent, and Car Tech Merger Sub II, LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Parent, are entering into an Amended and Restated Agreement and Plan of Merger (the “Merger Agreement,” and the mergers and other transactions contemplated by the Merger Agreement, the “Transactions”); and
WHEREAS, each Holder has agreed to enter into this Agreement with respect to, and to vote, all Company Units or shares of Parent Common Stock, as applicable, that they own beneficially or of record in connection with certain matters relating to the Transactions, subject to the terms and conditions specified herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. Additional Securities. Each Holder agrees any Company Units or shares of Parent Common Stock, as applicable, that such Holder may hold, purchase or otherwise acquire or with respect to which such Holder otherwise acquires voting power after the execution of this Agreement and prior to the Expiration Time (as defined herein), shall also be subject to the terms and conditions of this Agreement to the same extent as if they constitute Company Units or Parent Common Stock as of the date hereof. For purpose of this Agreement, “Expiration Time” means the earliest to occur of (a) such time that the Merger Agreement (and any amendment thereto, if applicable) and the Transactions have been validly approved by the requisite members of the Company and requisite stockholders of Parent, (b) such time as the Merger Agreement has been validly terminated pursuant to its terms and (c) the termination of this Agreement upon written consent of Parent and the Company.
3. Voting Support. At any meeting of the members of the Company or stockholders of Parent, as may be necessary, however called (including any adjournment or postponement thereof), and in any action by written resolution of the members of the Company or stockholders of Parent, as applicable, each Holder hereby unconditionally and irrevocably agrees to (a) if applicable, appear at each such meeting or otherwise cause all of its Company Units or Parent Common Stock, as applicable, to be counted as present thereat for purposes of calculating a quorum, (b) vote, and in any action by written resolution of the members of the Company or stockholders of Parent, as applicable, provide written consent with respect to, all of its Company Units or Parent Common Stock, as applicable, owned by such Holder in favor of (i) the approval and adoption of the Merger Agreement, (ii) the Transactions, and (iii) any other matter reasonably necessary to the consummation of the Transactions, and (c) vote, or cause to be voted, against or withhold written consent, or cause written consent to be withheld, with respect to, as applicable, any other matter, action or proposal that would reasonably be expected to result in (i) a material breach of any of the Company’s or Parent’s, or their respective Affiliates’ covenants, agreements or obligations under the Merger Agreement, as applicable or (ii) any of the conditions to the Closing of the Company or Parent, or their respective Affiliates, set forth in Sections 9.1, 9.2 or 9.3 of the Merger Agreement, as applicable, not being satisfied.
4. Holder Representations and Warranties. Each Holder, severally and not jointly, hereby represents and warrants as of the date hereof that:
(a) such Holder (i) is the beneficial and record owner of the number of Company Units or shares of Parent Common Stock, as the case may be, set forth opposite such Holder’s name on the signature pages hereto, and (ii) has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby and to perform all of such Holder’s obligations hereunder;
(b) this Agreement has been duly and validly executed and delivered by such Holder and, assuming this Agreement has been duly authorized, executed and delivered by the other parties hereto, this Agreement constitutes, a legal, valid and binding obligation of such Holder enforceable against it in accordance with its terms;
(c) the execution, delivery and performance by such Holder of this Agreement and the consummation of the transactions contemplated hereby will not (i) violate or conflict with any provision of, or result in the breach of or default under the Governing Documents of such Holder, or (ii) violate or conflict with any provision of, or result in the breach of, or default under any Law or Governmental Order applicable to such Holder;
(d) such Holder has received and reviewed a copy of the Merger Agreement and has reviewed the Parent SEC Filings, including, without limitation, Parent’s Annual Report on Form 10-K for the year ended December 31, 2023 and Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2024, June 30, 2024 and September 30, 2024;
(e) such Holder has been given the opportunity to (i) to ask questions and receive answers concerning the terms and conditions of the Transactions and the Merger Agreement and the Ancillary Agreements, and the Company’s business, management and financial affairs following the Transactions, (ii) perform its own independent investigation, and (iii) obtain additional information in order to evaluate the merits and risks of the Transactions and the business of the combined company following the Transactions;
(f) such Holder recognizes that an investment in Parent Common Stock following the Transactions involves certain risks and uncertainties, including, without limitation generally the risks and uncertainties disclosed in the Parent SEC Filings, and specifically the risk that the price at which the Parent Common Stock will trade at any time in the future following the Transactions may be significantly lower than the price attributed to such Parent Common Stock in the Transactions, and accordingly there can be no assurance as to the price at which such Holder may be able to sell its Parent Common Stock; and
(g) such Holder has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of entering in this Agreement, the Ancillary Agreements, and the transactions contemplated hereby and thereby, and is capable of bearing the economic risks of entering into this Agreement and owning shares of Parent Common Stock following the Transactions.
5. Covenant Not to Sue. Each Holder, for itself and each of its Affiliates, officers, directors, managers, employees, members, stockholders, agents, successors and assigns, covenants and agrees to the fullest extent permitted by law, that neither such Holder or any other such Person will, at any time pursue, cause, or knowingly permit the prosecution of any state, federal, or foreign court, or before any local, state, federal, or foreign administrative agency, or any other tribunal, any charge, claim or action of any kind, nature or character whatsoever, in each case to the extent arising up to and including the earlier of the Closing Date and the termination of the Merger Agreement, which such Holder or such other Person may have against the Parent, the Company or any of their respective Affiliates, officers, directors, employees, stockholders, agents, successors and assigns (collectively, the “Covered Persons”); provided, however, that this Section 5 shall not apply (a) with respect to the rights or obligations of any Covered Person under the Merger Agreement or any Ancillary Agreement, or (b) in the event of actual fraud or willful misconduct.
2
6. Appraisal Rights Waiver. Each Holder hereby irrevocably and unconditionally waives, and agrees to cause to be waived, any rights to seek appraisal, rights of dissent or any similar rights in connection with the Merger Agreement and the Transactions that such Holder may have with respect to the Company Units or Parent Common Stock, as applicable, owned beneficially or of record by such Holder.
7. Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersedes all prior understandings, agreements, or representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby; provided, however, that, for the avoidance of doubt, the foregoing shall not affect the rights and obligations of the parties hereto under the Merger Agreement or any Ancillary Agreements. Without limiting the foregoing, this Agreement replaces in its entirety that certain Support Agreement, dated February 21, 2024, which is terminated effective upon the full execution and delivery of this Agreement.
8. Successors and Assigns. No party hereto may assign this Agreement or any of its rights, interests, or obligations hereunder without the prior written consent of the other parties hereto. Any purported assignment in violation of this paragraph shall be void and ineffectual and shall not operate to transfer or assign any interest or title to the purported assignee. This Agreement shall be binding on the Holder, their successors, heirs, and assigns, and permitted transferees, provided that any such permitted transferees execute a joinder to this Agreement in the form reasonably acceptable to the Company.
9. Third-Party Beneficiaries. Nothing in this Agreement shall be construed to confer upon, or give to, any person or corporation other than the parties hereto any right, remedy or claim under or by reason of this Agreement or of any covenant, condition, stipulation, promise or agreement hereof. All covenants, conditions, stipulations, promises, and agreements contained in this Agreement shall be for the sole and exclusive benefit of the parties hereto and their successors, heirs, personal representatives and assigns and permitted transferees, provided, however, that the Covered Parties shall constitute third-party beneficiaries solely for the purposes of Section 5.
10. Counterparts; Electronic Signatures. This Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. The words “execution,” “signed,” “signature,” and words of like import in this Agreement or in any other certificate, agreement or document related to this Agreement shall include images of manually executed signatures transmitted by facsimile or other electronic format (including, “pdf,” “tif” or “jpg”) and other electronic signatures (including, DocuSign and AdobeSign). The use of electronic signatures and electronic records (including, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the Delaware Uniform Electronic Transactions Act and any other applicable Law.
3
11. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given) when delivered in person, when delivered by e-mail (having obtained electronic delivery confirmation thereof), or when sent by registered or certified mail (postage prepaid, return receipt requested) upon receipt thereof, to the other parties hereto as follows:
| If to Parent, to: | With a copy (which will not constitute notice) to: | |
| AltEnergy Acquisition Corp. | Morrison Cohen LLP | |
| 600 Lexington Avenue, 9th Floor | 909 Third Avenue, 27th Floor | |
| New York, NY 10022 | New York, NY 10022 | |
| Attn: Russell Stidolph (email: | Attn: Jack Levy (email: jlevy@morrisoncohen.com) | |
| rstidolph@altenergyllc.com) | Walter Rahmey (email: wrahmey@morrisoncohen.com) | |
| If to the Company, to: | With a copy (which shall not constitute notice) to: | |
| Car Tech, LLC | Dorsey & Whitney LLP | |
| 600 Car Tech Dr. | 1400 Wewatta St #400 | |
| Opelika, AL 26801 | Denver, CO 80202 | |
| Attn: Jonghoon Ha (email: | Attn: Anthony Epps (email: epps.anthony@dorsey.com) | |
| jhha@shym.co.kr) | Dan Miller (email: miller.dan@dorsey.com) | |
If to a Holder, to the address set forth below such Holder’s name on the signature page to this Agreement.
12. Termination. This Agreement shall automatically terminate and have no further force and effect upon the Expiration Time, except the provisions of Section 5 and Sections 7 through 13 shall survive such termination and remain in full force and effect.
13. Specific Performance. The parties hereto agree that irreparable damage may occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which such party is entitled at law or in equity.
14. Amendments and Waivers. This Agreement may be amended or modified only with the written consent of Parent, the Company and the Majority Holders. The observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the party against whom enforcement of such waiver is sought. No failure or delay by a party in exercising any right hereunder shall operate as a waiver thereof. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision. As used herein, “Majority Holders” means, as of any point in time, (i) the holders of a majority of the Company Units held by the Company Members as of the date hereof, (ii) the holders of a majority of the shares of Parent Common Stock held by the Sponsor as of the date hereof, (iii) the Sponsor and (iv) to the extent any amendment or modification would have a disproportionate adverse effect on any Holder relative to the other Holders, such Holder.
15. Severability. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.
16. Governing Law. This Agreement, the rights of the parties hereunder, and all Actions arising in whole or in part under or in connection herewith, shall be governed by and construed in accordance with the internal Laws
4
of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Law of any jurisdiction other than the State of Delaware. The provisions of Section 11.6 (Governing Law) and Section 11.14 (Jurisdiction; Waiver of Jury Trial) of the Merger Agreement are expressly incorporated herein and shall apply to this Agreement mutatis mutandis, with references to the Merger Agreement in such provisions deemed to reference this Agreement and references to the “Parties” in such provisions deemed to reference the parties hereto.
[no further text on this page]
5
IN WITNESS WHEREOF, each of the parties hereto has caused this Support Agreement to be duly executed as of the date first above written.
| PARENT: | ||
| AltEnergy Acquisition Corp. | ||
| By: | /s/ Russell Stidolph | |
| Name: | Russell Stidolph | |
| Title: | Chief Executive Officer | |
| THE COMPANY: | ||
| Car Tech, LLC | ||
| By: | /s/ Jonghoon Ha | |
| Name: | Jonghoon Ha | |
| Title: | Executive Director | |
[Signature Page to Support Agreement]
IN WITNESS WHEREOF, each of the parties hereto has caused this Support Agreement to be duly executed as of the date first above written.
| HOLDER: |
| Name of Holder: |
| By: |
| Name: |
| Title: |
| Number and Type of Securities: |
| Company Units: |
| Parent Common Stock: |
| Address: |
|
|
|
|
|
|
| Telephone: |
|
|
| Email: |
|
|
[Signature Page to Support Agreement]
Exhibit 10.15
Execution Version
FORM OF LOCK-UP AGREEMENT
THIS LOCK-UP AGREEMENT (this “Agreement”) is made and entered into as of February [●], 2025, by and between AltEnergy Acquisition Corp., a Delaware corporation (“Parent”), Car Tech, LLC, an Alabama limited liability company (the “Company”), and the undersigned (“Holder”).
WHEREAS, as of the date hereof, Holder is a holder of Company Units, shares of Parent Common Stock or Parent Private Warrants, as applicable, in such amounts as set forth underneath Holder’s name on the signature page hereto;
WHEREAS, concurrently with the execution of this Agreement, Company, Parent, Car Tech Merger Sub, LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Parent (“Merger Sub I”) and Car Tech Merger Sub II, LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Parent (“Merger Sub II”), are entering into an Amended and Restated Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, among other things (a) Merger Sub I will merge with and into the Company, the separate limited liability company existence of Merger Sub I will cease, and the Company will be the surviving company (the “First Merger Surviving Company”) and a direct wholly-owned subsidiary of Parent (the “First Merger”), and (b) as soon as practicable following the First Merger, the First Merger Surviving Company will merge with and into Merger Sub II, the separate limited liability company existence of the First Merger Surviving Company will cease, and Merger Sub II will be the surviving company and a direct wholly-owned subsidiary of Parent;
WHEREAS, contemporaneously with the effective time of the First Merger, all Company Units will be converted into the right to receive shares of Parent Common Stock and warrants to purchase shares of Parent Common Stock (such warrants, the “Merger Warrants”); and
WHEREAS, pursuant to the Merger Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto desire to enter into this Agreement, pursuant to which:
a. (i) all shares of Parent Common Stock currently held by AltEnergy Acquisition Sponsor, LLC, a Delaware limited liability company and the sponsor of Parent (the “Sponsor”), or B. Riley Principal Investments, LLC, a Delaware limited liability company (“B. Riley”), or to be held by the Sponsor or B. Riley immediately following the Closing, and (ii) all shares of Parent Common Stock to be held by the Company Members immediately following the Closing (clauses (i) and (ii) collectively, the “Restricted Securities”), shall be or shall become, as applicable, subject to the restrictions set forth in Section 2 hereof; provided however, that the Restricted Securities shall exclude (A) 500,000 shares of Parent Common Stock currently held by Sponsor (the “Unrestricted Sponsor Shares”), which Unrestricted Sponsor Shares shall not be subject to the restrictions set forth in Section 2 hereof so long as (I) such shares are not held by Sponsor or its Affiliates as of the Closing or immediately thereafter, and (II) Sponsor notifies Parent in writing prior to the Closing of the names of the holders of such Unrestricted Sponsor Shares and the allocation of such Unrestricted Sponsor Shares to such holders; and (B) 500,000 shares of Parent Common Stock to be acquired by Company Members (“Unrestricted Company Member Shares”), which Unrestricted Company Member Shares shall not be subject to the restrictions set forth in Section 2 hereof so long as (I) such shares are not held by Shinyoung or its Affiliates as of the Closing or immediately thereafter, and (II) the Company notifies Parent in writing prior to the Closing of the names of the holders of such Unrestricted Company Member Shares and the allocation of such Unrestricted Company Member Shares to such holders;
b. (i) 4,000,000 of the shares of Parent Common Stock constituting Restricted Securities to be held by the Sponsor immediately following the Closing (the “Sponsor Earnout Shares”) and (ii) 4,000,000 of the Restricted Securities designated as “Earnout Shares” under the Merger Agreement to be held by the Company Members immediately following the Closing (the “Company Member Earnout Shares”; and together with the Sponsor Earnout Shares, the “Earnout Shares”) shall become subject to the special restrictions set forth in Section 3 hereof upon the Closing; and
c. (i) the Sponsor Earnout Shares and (ii) 500,000 shares of Parent Common Stock of the remaining Restricted Securities held by Sponsor (collectively, the “Special Restricted Securities”) shall become subject to the special restrictions set forth in Section 4 hereof upon the Closing.
NOW, THEREFORE, in consideration of the premises set forth above, which are incorporated in this Agreement as if fully set forth below, and intending to be legally bound hereby, the parties hereto agree as follows:
1. Definitions. Capitalized terms used but not otherwise defined herein shall have the meanings given to such terms in the Merger Agreement
2. Lock-Up.
a. Except as expressly provided otherwise herein, Holder hereby agrees not to Transfer (as defined below) any Restricted Securities until the expiration of the Lock-Up Period (as defined below) (such restrictions, the “Lock-Up”).
b. The Lock-Up shall not apply to any Transfer of Restricted Securities that constitutes a Permitted Transfer (as defined below); provided, however, that any such Transfer shall be conditioned upon the transferee executing and delivering to Parent an agreement, in substantially the same form as this Agreement, acknowledging that the transferee is receiving and holding the Restricted Securities subject to the provisions of this Agreement (as if the transferee were Holder hereunder), and there shall be no further Transfer of such Restricted Securities except in accordance with this Agreement.
As used herein, “Transfer” means (i) the 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 Securities Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder with respect to, any security, (ii) the 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 (iii) the public announcement of any intention to effect any transaction, including the filing of a registration statement, provided for in clauses (i) or (ii). For the avoidance of doubt, the exercise or conversion of a derivative security shall not constitute a “Transfer” under this Agreement; provided, however, that any shares of Parent Common Stock received upon such exercise or conversion of a derivative security shall constitute Restricted Securities hereunder.
As used in this Agreement, the term “Permitted Transfer” means a Transfer made: (A) in the case of a Holder that is an individual, (1) by gift to one of such Holder’s Family Members, (2) to an estate planning vehicle or trust, in either case the beneficiary of which is one or more of such Holder’s Family Members, (3) to a charitable organization, (4) by virtue of Laws of descent and distribution upon the death of such Holder or (5) pursuant to a qualified domestic relations order; (B) in the case of a Holder that is an entity, (1) by distributions from such Holder to its members, partners or stockholders, (2) by virtue of applicable Law or such Holder’s organizational documents upon liquidation or dissolution of such Holder or (3) to any employees, officers, directors or members of such Holder or any of its Affiliates or (C) to any Affiliate of Holder.
2
c. The Restricted Securities will automatically be released from the Lock-Up, without any action by any Person, as follows (the “Lock-Up Period”):
i. 50% of the Restricted Securities shall be released from the Lock-Up on the twelve-month anniversary of the Closing Date;
ii. 25% of the Restricted Securities shall be released from the Lock-Up on the eighteen-month anniversary of the Closing Date; and
iii. the final 25% of the Restricted Securities shall be released from the Lock-Up on the twenty-four-month anniversary of the Closing Date.
In addition to the foregoing, to the extent not previously released from the Lock-Up in accordance with the above schedule, all of the Restricted Securities will be released from the Lock-Up on the date on which, following the Closing, Parent completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of Parent’s stockholders having the right to exchange their equity holdings in Parent for cash, securities or other property.
d. For the avoidance of any doubt, Holder shall retain all of its rights as a stockholder of Parent during the Lock-Up Period, the Earnout Period and, with respect to the Sponsor, the Shinyoung Guaranty Period (as defined below), including the right to vote and receive dividends with respect to the Restricted Securities (including those Restricted Securities that constitute Earnout Shares).
e. For the avoidance of doubt, notwithstanding the expiration of the Lock-Up Period as provided for in this Section 2, (i) any Earnout Shares for which the applicable Triggering Event (as defined below) has not yet occurred shall remain subject to the special restrictions as provided for in Section 3 hereof, and (ii) the Special Restricted Securities shall remain subject to the special restrictions as provided for in Section 4 hereof.
3. Earnout Shares.
a. No Holder shall Transfer all or any portion of a block of fifty percent (50%) of the Earnout Shares held by such Holder (i.e. for avoidance of doubt, 2,000,000 Sponsor Earnout Shares and 2,000,000 Company Member Earnout Shares held in the aggregate by all Company Members) (the “Block A Earnout Shares;” of which (i) ninety-two and one-half percent (92.5%) (i.e. for avoidance of doubt, 1,850,000 Sponsor Earnout Shares and 1,850,000 Company Member Earnout Shares held in the aggregate by all Company Members) shall be designated “Block A-1 Earnout Shares” and (ii) seven and one-half percent (7.5%) (i.e., for avoidance of doubt, 150,000 Sponsor Earnout Shares and 150,000 Company Member Earnout Shares held in the aggregate by all Company Members) shall be designated “Block A-2 Earnout Shares”), unless and until either (i) the closing price of shares of Parent Common Stock on the principal securities exchange or securities market on which the Parent Common Stock is then traded equals or exceeds $14.00 per share for any 20 trading days within any consecutive 30-trading day period during the Earnout Period (as defined below) or (ii) immediately prior to the consummation of a Block A Change of Control (as defined below) during the Earnout Period (each of clauses (i) and (ii), a “Block A Triggering Event”). If a Block A Triggering Event does not occur or a Block A Forfeiting Change of Control (as defined below) is consummated during the Earnout Period, the Block A Earnout Shares shall be automatically forfeited and cancelled for no consideration at the end of the Earnout Period or immediately prior to the consummation of such Block A Forfeiting Change of Control, as applicable.
b. No Holder shall Transfer all or any portion of the remaining Earnout Shares held by such Holder (the “Block B Earnout Shares”) unless and until either (i) the closing share price of shares of Parent Common Stock on the principal securities exchange or securities market on which the Parent Common Stock is then traded equals or exceeds $18.00 per share for any 20 trading days within any consecutive 30-trading day period during the Earnout Period or (ii) immediately prior to the consummation of a Block B Change of Control (as defined below) during the Earnout Period (each of clauses (i) and (ii), a “Block B Triggering Event”, and together with a Block A Triggering Event, a “Triggering Event”). If a Block B Triggering
3
Event does not occur or a Block B Forfeiting Change of Control (as defined below) is consummated during the Earnout Period, the Block B Earnout Shares shall be automatically forfeited and cancelled for no consideration at the end of the Earnout Period or immediately prior to the consummation of such Block B Forfeiting Change of Control, as applicable.
c. In the event of a Non-Triggering Change of Control, Parent and its Affiliates shall cause the purchaser or surviving entity in such transaction (to the extent not otherwise the Company) to assume the restrictions and conditions with respect to the Earnout Shares or other equity securities issued in exchange for the Earnout Shares set forth in Section 3(a) and 3(b), with appropriate adjustments as contemplated by Section 3(e) or as otherwise deemed necessary by the Board of Directors of Parent to maintain substantially equivalent terms of the Earnout Shares before and after the Non-Triggering Change of Control.
d. The restrictions set forth in Section 3(a) and 3(b) shall not apply to any Transfer of Earnout Shares that constitutes a Permitted Transfer; provided, however, that any such Transfer shall be conditioned upon the transferee executing and delivering to Parent an agreement, in substantially the same form as this Agreement, acknowledging that the transferee is receiving and holding the Earnout Shares subject to the provisions of this Agreement (as if the transferee were Holder hereunder), and there shall be no further Transfer of such Earnout Shares except in accordance with this Agreement.
e. Notwithstanding the foregoing or anything else herein to the contrary, if Parent shall, at any time or from time to time, after the date of the Merger Agreement effect a stock split, reverse stock split, stock dividend, reorganization, merger, recapitalization, reclassification, combination, exchange of shares or other similar change or transaction affecting the outstanding shares of Parent Common Stock, the numbers of Block A Earnout Shares and Block B Earnout Shares subject to the restrictions set forth in, and the stock price targets set forth in, Section 3(a) and Section 3(b) (included as embedded in the definitions of Block A Change of Control and Block B Change of Control) shall be equitably adjusted for such stock split, reverse stock split, stock dividend, reorganization, merger, recapitalization, reclassification, combination, exchange of shares or other similar change or transaction. Any adjustment under this Section 3 shall become effective at the close of business on the date the stock split, reverse stock split, stock dividend, reorganization, merger, recapitalization, reclassification, combination, exchange of shares or other similar change or transaction becomes effective.
f. As used herein:
i. “Block A Change of Control” means a Cashout Change of Control (as defined below) which implies a value per share of Parent Common Stock that equals or exceeds $14.00 per share, as determined by the Board of Directors of Parent in good faith after including all of the Block A Earnout Shares in such determination.
ii. “Block A Forfeiting Change of Control” means a Cashout Change of Control which implies a value per share of Parent Common Stock that is less than $14.00 per share, as determined by the Board of Directors of Parent in good faith after including all of the Block A Earnout Shares in such determination.
iii. “Block B Change of Control” means a Cashout Change of Control which implies a value per share of Parent Common Stock that equals or exceeds $18.00 per share, as determined by the Board of Directors of Parent in good faith after including all of the Block B Earnout Shares and Block A Earnout Shares (to the extent outstanding) in such determination.
iv. “Block B Forfeiting Change of Control” means a Cashout Change of Control which implies a value per share of Parent Common Stock that is less than $18.00 per share, as determined by the Board of Directors of Parent in good faith after including all of the Block B Earnout Shares and Block A Earnout Shares (to the extent outstanding) in such determination.
v. “Cashout Change of Control” means a Change of Control where all of the Parent Common Stock and other equity securities of Parent outstanding immediately prior to such Change of Control is
4
sold, transferred, exchanged or redeemed exclusively for cash, and not for other securities or non-cash consideration (other than non-cash consideration that is immaterial in the context of the overall transaction, as determined by the Board of Directors in good faith).
vi. “Change of Control” means, other than the transactions contemplated by the Merger Agreement, (A) any transaction or series of related transactions that results in any Person or “group” (within the meaning of Section 13(d)(3) of the Exchange Act) acquiring equity securities that represent more than 50% of the total voting power of Parent (for the avoidance of doubt, excluding Shinyoung, the Sponsor or their Affiliates), or (B) a sale or disposition of all or substantially all of the assets of Parent and its Subsidiaries on a consolidated basis, in each case that results in shares of Parent Common Stock being converted into cash or other consideration (including equity securities of another Person) (other than a transaction or series of related transactions where shares of Parent Common Stock are converted into equity securities of another Person who has substantially similar equity ownership to Parent immediately prior to such transaction or series of related transactions).
vii. “Earnout Period” means (A) with respect to the Block A-1 Earnout Shares, the period from (and excluding) the Closing Date to (and including) the day that is the fifth (5th) anniversary of the Closing Date, and (B) with respect to the Block A-2 Earnout Shares and the Block B Earnout Shares, the period from (and excluding) the Closing Date to (and including) the day that is the tenth (10th) anniversary of the Closing Date.
viii. “Non-Triggering Change of Control” means a Change of Control that does not constitute a Cashout Change of Control.
g. For the avoidance of doubt, notwithstanding the occurrence of a Triggering Event as provided for in this Section 3, (i) any Restricted Securities for which the applicable Lock-Up Period release date has not yet occurred shall remain subject to the Lock-Up as provided for in Section 2 hereof, and (ii) the Special Restricted Securities shall remain subject to the special restrictions as provided for in Section 4 hereof.
4. Special Restrictions Applicable to the Sponsor.
a. The Sponsor hereby agrees not to Transfer any Special Restricted Securities until the Shinyoung Guaranty has been terminated and neither Shinyoung nor any of its Affiliates guaranties any portion of the indebtedness that is incurred pursuant to the Transaction Financing (the “Shinyoung Guaranty Period”).
b. The restrictions set forth in Section 4(a) shall not apply to any Transfer of Special Restricted Securities that constitutes a Permitted Transfer; provided, however, that any such Transfer shall be conditioned upon the transferee executing and delivering to Parent an agreement, in substantially the same form as this Agreement, acknowledging that the transferee is receiving and holding the Special Restricted Securities subject to the provisions of this Agreement (as if the transferee were the Sponsor hereunder), and there shall be no further Transfer of such Special Restricted Securities except in accordance with this Agreement.
c. For the avoidance of doubt, notwithstanding the expiration of the Shinyoung Guaranty Period as provided for in this Section 4, (i) any Restricted Securities for which the applicable Lock-Up Period release date has not yet occurred shall remain subject to the Lock-Up as provided for in Section 2 hereof, and (ii) any Earnout Shares for which the applicable Triggering Event has not yet occurred shall remain subject to the special restrictions as provided for in Section 3 hereof.
d. Notwithstanding the foregoing or anything to the contrary contained in this Agreement, this Section 4 shall not apply if the Shinyoung Guaranty is never entered into.
5. Miscellaneous.
a. Open Market Purchases. Notwithstanding any provision of this Agreement to the contrary, the Restricted Securities shall exclude, and the restrictions set forth in Section 2, Section 3 and Section 4 shall not apply to, any shares of Parent Common Stock acquired by Holder in open market transactions after the Closing Date.
5
b. Transfers.
i. If any Transfer is made or attempted contrary to the provisions of this Agreement, such purported Transfer shall be null and void ab initio, and Parent shall refuse to recognize any such purported transferee of the Restricted Securities as one of its equity holders for any purpose.
ii. Until the end of the Lock-Up Period, the Earnout Period, and, solely with respect to the Sponsor, the Shinyoung Guaranty Period, stop transfer orders shall be placed against the Restricted Securities and each certificate or book entry position statement evidencing any Restricted Securities shall be stamped or otherwise imprinted with a legend in substantially the following form, in addition to any other applicable legends:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH IN A LOCK-UP AGREEMENT, DATED AS OF FEBRUARY [●], 2025, BY AND AMONG THE ISSUER OF SUCH SECURITIES (THE “ISSUER”), THE ISSUER’S SECURITY HOLDER NAMED THEREIN AND CERTAIN OTHER PARTIES NAMED THEREIN, AS AMENDED. A COPY OF SUCH LOCK-UP AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
c. Termination of the Merger Agreement. Notwithstanding any provision of this Agreement to the contrary, in the event that the Merger Agreement is terminated in accordance with its terms prior to the Closing, this Agreement and all rights and obligations of the parties hereunder shall automatically terminate and be of no further force or effect.
d. Sponsor Operating Agreement. For purposes of clarification, as it relates to the Sponsor Earnout Shares, each of the Earnout Period and the Shinyoung Guaranty Period shall constitute a “Lockup Period” under that certain Amended and Restated Limited Liability Company Agreement of the Sponsor, dated as July 6, 2021, as it may be amended from time to time.
e. Binding Effect; Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. This Agreement and all obligations of Holder are personal to Holder and may not be transferred or delegated by Holder at any time without the prior written consent of Parent and the Company.
f. Third Parties. Nothing contained in this Agreement shall create any rights in, or be deemed to have been executed for the benefit of, any Person that is not a party hereto or a successor or permitted assign of a party hereto.
g. Governing Law. This Agreement, the rights of the parties hereunder, and all Actions arising in whole or in part under or in connection herewith, shall be governed by and construed in accordance with the internal Laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Law of any jurisdiction other than the State of Delaware. The provisions of Section 11.6 (Governing Law) and Section 11.14 (Jurisdiction; Waiver of Jury Trial) of the Merger Agreement are expressly incorporated herein and shall apply to this Agreement mutatis mutandis, with references to the Merger Agreement in such provisions deemed to reference this Agreement and references to the “Parties” in such provisions deemed to reference the parties hereto.
h. Severability. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable Law, but if any term or other provision of this Agreement is held to be invalid, illegal or unenforceable under applicable Law, all other provisions of this Agreement shall remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party hereto. Upon such determination that any term or other provision of this Agreement is invalid, illegal or unenforceable under applicable Law, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
6
i. Construction; Interpretation. The headings set forth in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. No party hereto, nor its respective counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions hereof, and all provisions of this Agreement shall be construed according to their fair meaning and not strictly for or against any such party.
j. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given) when delivered in person, when delivered by e-mail (having obtained electronic delivery confirmation thereof), or when sent by registered or certified mail (postage prepaid, return receipt requested) upon receipt thereof, to the other parties hereto as follows:
| If to Parent, to: | With a copy (which will not constitute notice) to: | |
| AltEnergy Acquisition | Morrison Cohen LLP | |
| 600 Lexington Avenue, 9th Floor | 909 Third Avenue, 27th Floor | |
| New York, NY 10022 | New York, NY 10022 | |
| Attn: Russell Stidolph | Attn: Jack Levy (email: jlevy@morrisoncohen.com) | |
| (email: rstidolph@altenergyllc.com) | Walter Rahmey (email: wrahmey@morrisoncohen.com) | |
| If to the Company, to: | With a copy (which shall not constitute notice) to: | |
| Car Tech, LLC | Dorsey & Whitney LLP | |
| 600 Car Tech 1400 | Wewatta St #400 | |
| Opelika, AL 26801 | Denver, CO 80202 | |
| Attn: Jonghoon Ha | Attn: Anthony Epps (email: epps.anthony@dorsey.com) | |
| (email: jhha@shym.co.kr) | Dan Miller (email: miller.dan@dorsey.com) | |
If to a Holder, to the address set forth below such Holder’s name on the signature page to this Agreement.
k. Amendments and Waivers. This Agreement may be amended or modified only with the written consent of Parent, the Company and the Majority Holders. The observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the party against whom enforcement of such waiver is sought. No failure or delay by a party in exercising any right hereunder shall operate as a waiver thereof. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision. As used herein, “Majority Holders” means (i) the holders of a majority of the Restricted Securities held by the Company Members immediately following the Closing (measured on a fully-diluted basis), (ii) the holders of a majority of the Restricted Securities held by the Sponsor and B. Riley immediately following the Closing (measured on a fully-diluted basis), (iii) the Sponsor and (iv) to the extent any amendment or modification would have a disproportionate adverse effect on any Holder relative to the other Holders, such Holder. For the avoidance of doubt, any changes to the terms of the Earnout Shares made pursuant to Section 3(c) shall not require approval pursuant to this Section 5(k).
l. Specific Performance. Holder acknowledges that its obligations under this Agreement are unique, recognizes and affirms that in the event of a breach of this Agreement by Holder, money damages will be inadequate and Parent, and the Company will have no adequate remedy at law, and agrees that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by Holder in accordance with their specific terms or were otherwise breached. Accordingly, each of Parent and the Company shall be entitled to seek an injunction or restraining order to prevent breaches of this Agreement by Holder and to enforce specifically the terms and provisions hereof, without the requirement to post any bond or other security or to prove that money damages would be inadequate, this being in addition to any other right or remedy to which such party may be entitled under this Agreement, at law or in equity.
7
m. Entire Agreement. This Agreement constitutes the full and entire understanding and agreement among the parties hereto with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled; provided, however, that, for the avoidance of doubt, the foregoing shall not affect the rights and obligations of the parties under the Merger Agreement or any Ancillary Agreements. Notwithstanding the foregoing, nothing in this Agreement shall limit any of the rights or remedies of Parent and the Company, and or any of the obligations of Holder under any other agreement between Holder and Parent or the Company, or any certificate or instrument executed by Holder in favor of Parent or the Company, and nothing in any other agreement, certificate or instrument shall limit any of the rights or remedies of Parent or the Company or any of the obligations of Holder under this Agreement. Without limiting the foregoing, this Agreement replaces in its entirety the that certain Lock-Up Agreement, dated February 21, 2024, which is terminated effective upon the full execution and delivery of this Agreement.
n. Further Assurances. From time to time, at another party’s written request and without further consideration (but at the requesting party’s reasonable cost and expense), each party hereto shall execute and deliver such additional documents and take all such further action as may be reasonably necessary to consummate the transactions contemplated by this Agreement.
o. Counterparts; Electronic Signatures. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. The words “execution,” “signed,” “signature,” and words of like import in this Agreement or in any other certificate, agreement or document related to this Agreement shall include images of manually executed signatures transmitted by facsimile or other electronic format (including, “pdf,” “tif” or “jpg”) and other electronic signatures (including, DocuSign and AdobeSign). The use of electronic signatures and electronic records (including, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the Delaware Uniform Electronic Transactions Act and any other applicable Law.
p. Sponsor Transfer. The Sponsor hereby represents to the Company Members that, as of the date hereof, the Sponsor is the record holder of (i) 5,500,000 shares of Parent Class A Common Stock, and (ii) Parent Private Warrants to acquire 7,600,000 shares of Parent Class A Common Stock (as well as 250,000 shares of Parent Class B Common Stock, which will be surrendered and forfeited to Parent pursuant to the Non-Redemption Agreements). In the event of a breach of the foregoing representation such that, as of the date hereof, the Sponsor is the record holder of a different number of shares of Parent Class A Common Stock or a different number of Parent Private Warrants, the Sponsor shall transfer to the Company Members a number of shares of Parent Class A Common Stock or Parent Private Warrants, as applicable, equal to the difference, with each Company Member receiving its pro rata portion of the Warrant Consideration in accordance with the number of Company Units held by the Company Members as of immediately prior to the Effective Time. Any such transfer shall occur promptly following written notice of such breach provided by the Company Members, provided, however, that no such transfer shall occur until after the Closing Date.
q. Termination of Warrant Transfer and Option Agreement. The parties hereto hereby terminate in its entirety the Warrant Transfer and Option Agreement, dated February 21, 2024, executed and delivered in connection with the that certain Agreement and Plan of Merger, dated February 21, 2024 which shall have no further force or effect.
[no further text on this page]
8
IN WITNESS WHEREOF, each of the parties hereto has caused this Lock-Up Agreement to be duly executed as of the date first above written.
| PARENT: | ||
| AltEnergy Acquisition Corp. | ||
| By: | /s/ Russell Stidolph | |
| Name: | Russell Stidolph | |
| Title: | Chief Executive Officer | |
| THE COMPANY: | ||
| Car Tech, LLC | ||
| By: | /s/ Jonghoon Ha | |
| Name: | Jonghoon Ha | |
| Title: | Executive Director | |
[Signature Page to Lock-up Agreement]
IN WITNESS WHEREOF, each of the parties hereto has caused this Lock-Up Agreement to be duly executed as of the date first above written.
| HOLDER: |
| Name of Holder: |
| By: |
| Name: |
| Title: |
| Number and Type of Securities: |
| Company Units: |
| Parent Common Stock: |
| Parent Private Warrants: |
| Address: |
|
|
|
|
|
|
| Telephone: |
|
|
| Email: |
|
|
[Signature Page to Lock-up Agreement]
Exhibit 19
ALTENERGY ACQUISITION CORP.
INSIDER TRADING POLICY
TRADING IN COMPANY SECURITIES WHILE IN POSSESSION OF MATERIAL NONPUBLIC INFORMATION IS PROHIBITED
The purchase or sale of securities by any person who possesses material nonpublic information is a violation of federal and state securities laws. Furthermore, it is important that the appearance, as well as the fact, of trading on the basis of material nonpublic information be avoided. Therefore, it is the policy of AltEnergy Acquisition Corp. (the “Company”), in accordance with applicable law, that any director, officer, employee or consultant of the Company (a “Covered Person”) who is aware of material nonpublic information relating to the Company may not, directly or through family members or other persons or entities:
| • | buy or sell securities of the Company, other than pursuant to a trading plan that complies with Rule 10b5-1 promulgated by the Securities and Exchange Commission (the “SEC”); |
| • | engage in any other action to take personal advantage of that information; or |
| • | pass that information on to others outside the Company, including friends and family (a practice referred to as “tipping”). |
In addition, it is the policy of the Company that no Covered Person who, in the course of working for the Company, learns of material nonpublic information of another company with which the Company does business, such as a customer or supplier, may trade in that company’s securities until that information becomes public or is no longer material.
ALL COVERED PERSONS AND THEIR FAMILY MEMBERS AND AFFILIATES ARE SUBJECT TO THIS POLICY
This Insider Trading Policy (the “Policy”) applies to all Covered Persons. This Policy applies to family members who reside with Covered Persons (including a spouse, a child, a child away at college, stepchildren, grandchildren, parents, stepparents, grandparents, siblings and in-laws), anyone else who lives in such persons’ household and any family members who do not live in their household but whose transactions in the Company’s securities are directed by Covered Persons or are subject to the control or influence by such persons, such as parents or children who consult with such persons before they trade in the Company’s securities (collectively referred to as “Family Members”). Each person subject to this Policy is responsible for the transactions of Family Members and therefore should make them aware of this Policy. All transactions of a Family Member, for the purposes of this Policy and applicable securities laws, is treated as if such transactions were for the account of the applicable Covered Person. This Policy does not, however, apply to personal securities transactions of Family Members where the purchase or sale decision is made by a third party not controlled by, influenced by or related to a Covered Person or such person’s Family Members. This Policy also applies to any entities (such as trusts, limited partnerships and corporations) over which Covered Persons have or share voting or investment control, unless such Covered Persons have instituted appropriate walls with respect to trades by such entities in the Company’s securities (collectively referred to as “Controlled Entities”), and transactions by Controlled Entities should be treated for the purposes of this Policy and applicable securities laws as if they were for the account of the applicable Covered Person.
EVERY INDIVIDUAL IS RESPONSIBLE
Every Covered Person has an individual responsibility to comply with this Policy against illegal insider trading. A Covered Person may, from time to time, have to forego a proposed transaction in the Company’s securities even if he or she planned to make the transaction before learning of the material nonpublic information and even though the Covered Person believes that he or she may suffer an economic loss or forego anticipated profit by waiting.
EXECUTIVE OFFICERS, DIRECTORS AND CERTAIN NAMED EMPLOYEES ARE SUBJECT TO ADDITIONAL RESTRICTIONS
1. Section 16 Insiders. The Company has designated certain persons who are subject to the reporting provisions and trading restrictions of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the underlying rules and regulations promulgated by the SEC. Each such person is referred to herein as a “Section 16 Insider.” The Company will maintain a list of Section 16 Insiders and amend such list from time to time as necessary to reflect the addition and the resignation or departure of Section 16 Insiders.
2. Access Persons. The Company will maintain a list of other employees who have frequent access to material nonpublic information concerning the Company (“Access Persons”). The Company will amend such list from time to time as necessary to reflect the addition and departure of Access Persons.
3. Additional Restrictions. Because Section 16 Insiders and Access Persons are more likely than other employees to possess material nonpublic information about the Company, and in light of the reporting requirements to which Section 16 Insiders are subject under Section 16 of the Exchange Act, Section 16 Insiders and Access Persons are subject to the additional restrictions set forth in Appendix I hereto. For purposes of this Policy, Section 16 Insiders and Access Persons are each referred to as “Insiders.”
INSIDER TRADING COMPLIANCE OFFICER
The Company has initially designated its Chief Financial Officer as its Insider Trading Compliance Officer (the “Compliance Officer”). Upon the employment of a Company General Counsel, such General Counsel or another member of the internal legal counsel of the Company shall become the Compliance Officer. The duties of the Compliance Officer will include the following:
| • | Administering this Policy and monitoring and enforcing compliance with all Policy provisions and procedures. |
| • | Responding to all inquiries relating to this Policy and its procedures. |
| • | Designating and announcing special trading blackout periods during which no Insiders may trade in Company securities. |
2
| • | Providing copies of this Policy and other appropriate materials to all current and new Covered Persons, and such other persons as the Compliance Officer determines have access to material nonpublic information concerning the Company. |
| • | Administering, monitoring and enforcing compliance with federal and state insider trading laws and regulations; and assisting in the preparation and filing of all required SEC reports relating to trading in Company securities, including without limitation Forms 3, 4, 5 and 144 and Schedules 13D and 13G. |
| • | Approving designated brokers through which Insiders are authorized to trade Company securities. |
| • | Revising the Policy as necessary to reflect changes in federal or state insider trading laws and regulations. |
| • | Maintaining as Company records originals or copies of all documents required by the provisions of this Policy or the procedures set forth herein, and copies of all required SEC reports relating to insider trading, including without limitation Forms 3, 4, 5 and 144 and Schedules 13D and 13G. |
| • | Maintaining the accuracy of the list of Section 16 Insiders and the list of Access Persons, and updating such lists periodically as necessary to reflect additions or deletions |
The Compliance Officer may designate one or more individuals who may perform the Compliance Officer’s duties in the event that the Compliance Officer is unable or unavailable to perform such duties. In fulfilling his or her duties under this Policy, the Compliance Officer shall be authorized to consult with the Company’s outside counsel.
APPLICABILITY OF THIS POLICY TO TRANSACTIONS IN COMPANY SECURITIES
1. General Rule. This Policy applies to all transactions in the Company’s securities, including common stock, options to purchase common stock and any other securities the Company may issue from time to time, such as preferred stock, warrants and convertible debentures, as well as derivative securities relating to the Company’s stock, whether or not issued by the Company, such as exchange-traded options or swaps. For purposes of this Policy, the term “trade” includes any transaction in the Company’s securities, including gifts and pledges.
2. Employee Benefit Plans
Equity Incentive Plans. The trading prohibitions and restrictions set forth in this Policy do not apply to the exercise of stock options or other equity awards for cash, but do apply to all sales of securities acquired through the exercise of stock options or other equity awards. Thus, this Policy does apply to the “same-day sale” or cashless exercise of Company stock options.
Employee Stock Purchase Plans. The trading prohibitions and restrictions set forth in this Policy do not apply to periodic contributions by the Company or employees to employee stock purchase plans or employee benefit plans (e.g., a pension or 401(k) plan) which are used to purchase Company securities pursuant to the employee’s advance instructions. However, no officers or employees may alter their instructions regarding the level of withholding or the purchase of Company securities in such plans while in the possession of material nonpublic information. Any sale of Company securities acquired under such plans is subject to the prohibitions and restrictions of this Policy.
3
Tax Withholding Rights. The trading prohibitions and restrictions set forth in this Policy do not apply to the exercise of tax withholding rights pursuant to which an officer or other employee elects to have the Company withhold shares to satisfy any tax withholding requirements.
DEFINITION OF “MATERIAL NONPUBLIC INFORMATION”
1. “Material”. Information about the Company is “material” if it would be expected to affect the investment or voting decisions of a reasonable shareholder or investor, or if the disclosure of the information would be expected to significantly alter the total mix of the information in the marketplace about the Company. In simple terms, material information is any type of information which could reasonably be expected to affect the market price of the Company’s securities. Both positive and negative information may be material. While it is not possible to identify all information that would be deemed material, the following types of information ordinarily would be considered material:
| • | Financial performance, especially quarterly and year-end operating results, and significant changes in financial performance or liquidity. |
| • | Company projections and strategic plans. |
| • | Potential mergers or acquisitions, the sale of Company assets or major partnering agreements outside of the ordinary course of business. |
| • | New major contracts, orders, suppliers, customers or finance sources or the loss thereof. |
| • | Major discoveries or significant changes or developments in products or product lines, research or technologies. |
| • | Significant changes or developments in supplies or inventory, including significant vendor problems, product defects, recalls or product returns. |
| • | Significant pricing changes. |
| • | Stock splits, public or private securities/debt offerings, or changes in Company dividend policies or amounts. |
| • | Significant changes in senior management or membership of the Board of Directors. |
| • | Significant labor disputes or negotiations. |
| • | Actual or threatened major litigation, or the resolution of such litigation. |
| • | Receipt or denial of regulatory approval for products. |
2. “Nonpublic”. Material information is “nonpublic” if it has not been widely disseminated to the general public through a report filed with the SEC or through major newswire services, national news services or financial news services. For the purpose of this Policy, information will be considered public after the close of trading on the second full trading days following the Company’s widespread public release of the information.
3. Consult the Compliance Officer When In Doubt. Any Covered Persons who are unsure whether the information that they possess is material or nonpublic must consult the Compliance Officer for guidance before trading in any Company securities.
COVERED PERSONS MAY NOT DISCLOSE MATERIAL NONPUBLIC INFORMATION TO OTHERS OR MAKE RECOMMENDATIONS REGARDING TRADING IN COMPANY SECURITIES
4
No Covered Person may disclose material nonpublic information concerning the Company to any other person (including Family Members) where such information may be used by such person to his or her advantage in the trading of the securities of companies to which such information relates, a practice commonly known as “tipping.” No Covered Person or Family Member may make recommendations or express opinions as to trading in the Company’s securities while in possession of material nonpublic information, except such person may advise others not to trade in the Company’s securities if doing so might violate the law or this Policy.
COVERED PERSONS MAY NOT PARTICIPATE IN CHAT ROOMS
Covered Persons are prohibited from participating in chat room discussions or other Internet forums regarding the Company’s securities or business.
ONLY DESIGNATED COMPANY SPOKESPERSONS ARE AUTHORIZED TO DISCLOSE MATERIAL NONPUBLIC INFORMATION
The Company is required under the federal securities laws to avoid the selective disclosure of material nonpublic information. The Company has established procedures for releasing material information in a manner that is designed to achieve broad dissemination of the information immediately upon its release. Covered Persons may not, therefore, disclose material information to anyone outside the Company, including Family Members and friends, other than in accordance with those established procedures. Any inquiries from outsiders regarding information about the Company should be forwarded to the Compliance Officer, the Chief Executive Officer or the Chief Financial Officer.
CERTAIN TYPES OF TRANSACTIONS ARE PROHIBITED
1. Short Sales. Short sales of the Company’s securities evidence an expectation on the part of the seller that the securities will decline in value, and therefore signal to the market that the seller has no confidence in the Company or its short-term prospects. In addition, short sales may reduce the seller’s incentive to improve the Company’s performance. For these reasons, short sales of the Company’s securities are prohibited by this Policy. In addition, Section 16(c) of the Exchange Act expressly prohibits executive officers and directors from engaging in short sales.
2. Publicly Traded Options. A transaction in options is, in effect, a bet on the short-term movement of the Company’s stock and therefore creates the appearance that the Covered Person is trading based on inside information. Transactions in options also may focus the Covered Person’s attention on short-term performance at the expense of the Company’s long-term objectives. Accordingly, transactions in puts, calls or other derivative securities involving the Company’s stock, on an exchange or in any other organized market, are prohibited by this Policy. (Option positions arising from certain types of hedging transactions are governed by the section below captioned “Hedging Transactions.”)
5
3. Hedging Transactions. Certain forms of hedging or monetization transactions, such as zero-cost collars and forward sale contracts, allow a Covered Person to lock in much of the value of his or her stock holdings, often in exchange for all or part of the potential for upside appreciation in the stock. These transactions allow the Covered Person to continue to own the covered securities, but without the full risks and rewards of ownership. When that occurs, the Covered Person may no longer have the same objectives as the Company’s other shareholders. Therefore, such transactions involving the Company’s securities are prohibited by this Policy.
4. Margin Accounts and Pledges. Securities held in a margin account may be sold by the broker without the customer’s consent if the customer fails to meet a margin call. Similarly, securities pledged (or hypothecated) as collateral for a loan may be sold in foreclosure if the borrower defaults on the loan. Because a margin sale or foreclosure sale may occur at a time when the pledgor is aware of material nonpublic information or otherwise is not permitted to trade in Company securities, Covered Persons are prohibited from holding Company securities in a margin account or pledging Company securities as collateral for a loan.
THE COMPANY MAY SUSPEND ALL TRADING ACTIVITIES BY COVERED PERSONS
In order to avoid any questions and to protect both Covered Persons and the Company from any potential liability, from time to time the Company may impose a “blackout” period during which some or all of the Covered Persons may not buy or sell the Company’s securities. The Compliance Officer will impose such a blackout period if, in his judgment, there exists nonpublic information that would make trades by the Covered Persons (or certain of the Covered Persons) inappropriate in light of the risk that such trades could be viewed as violating applicable securities laws.
VIOLATIONS OF INSIDER TRADING LAWS OR THIS POLICY CAN RESULT IN SEVERE CONSEQUENCES
1. Civil and Criminal Penalties. Penalties for trading on or communicating material nonpublic information can be severe, both for individuals involved in the unlawful conduct and their employers and supervisors, and may include a substantial jail term and payment of a criminal penalty of several times the amount of profits gained or losses avoided. In addition, a person who tips others may also be liable for transactions by the tippees to whom he or she has disclosed material nonpublic information. Tippers can be subject to the same penalties and sanctions as the tippees, and the SEC has imposed large penalties even when the tipper did not profit from the transaction. The SEC can also seek substantial civil penalties from any person who, at the time of an insider trading violation, “directly or indirectly controlled the person who committed the violation,” which would apply to the Company and/or management and supervisory personnel. These control persons may be held liable for up to the greater of $1 million or three times the amount of the profits gained or losses avoided. Even for violations that result in a small or no profit, the SEC can seek penalties from a company and/or its management and supervisory personnel as control persons.
2. Company Discipline. Violation of this Policy or federal or state insider trading laws by any director, officer or employee may subject the director to removal proceedings and the officer or employee to disciplinary action by the Company, including termination for cause.
3. Reporting Violations. Any person who violates this Policy or any federal or state laws governing insider trading, or knows of any such violation by any other person, must report the violation immediately to the Compliance Officer. Upon learning of any such violation, the Compliance Officer, in consultation with the Company’s legal counsel, will determine whether the Company should release any material nonpublic information or whether the Company should report the violation to the SEC or other appropriate governmental authority.
6
THIS POLICY CONTINUES TO APPLY FOLLOWING TERMINATION OF SERVICE
This Policy continues to apply to transactions in the Company’s securities even after termination of employment. If a Covered Person is in possession of material nonpublic information when his or her employment or service terminates, he or she may not trade in the Company’s securities until that information has become public or is no longer material.
THE COMPLIANCE OFFICER IS AVAILABLE TO ANSWER QUESTIONS ABOUT THIS POLICY
Please direct all inquiries regarding any of the provisions or procedures of this Policy to the Compliance Officer, the Chief Executive Officer or Chief Financial Officer.
THIS POLICY IS SUBJECT TO REVISION
The Company may change the terms of this Policy from time to time to respond to developments in law and practice. The Company will take steps to inform all affected persons of any material change to this Policy.
COMPLIANCE PROCEDURES
This Policy will be made available on the Company’s intranet and provided to new Covered Persons at the start of their employment or relationship with the Company. Covered Persons must periodically sign a form indicating their acknowledgement of understanding of the Policy and confirming their agreement to abide by the guidelines it sets forth.
The Company reserves the right to impose disciplinary actions for violation of this Policy and to issue any necessary stop-transfer orders to the Company’s transfer agent to enforce compliance with this Policy.
7
Appendix I
Special Restrictions on Transactions in Company Securities by Executive Officers, Directors and Access Persons
OVERVIEW
To minimize the risk of apparent or actual violations of the rules governing insider trading, we have adopted these special restrictions relating to transactions in Company securities by Insiders. As with the other provisions of this Policy, Insiders are responsible for ensuring compliance with this Appendix I, including restrictions on all trading during certain periods, by Family Members and by Controlled Entities. Insiders should provide each of these persons or entities with a copy of this Policy.
TRADING WINDOW
In addition to the restrictions that are applicable to all employees, any trade by an Insider that is subject to the Insider Trading Policy will be permitted only during an open “trading window.” The trading window generally opens following the close of trading on the second full trading day following the public issuance of the Company’s earnings release for the most recent fiscal quarter and closes at the close of trading on the last day of the month preceding the last month of the fiscal quarter in which the earnings were released. In addition to the times when the trading window is scheduled to be closed, the Company may impose a special blackout period at its discretion due to the existence of material nonpublic information that is likely to be widely known among Insiders. Following termination of employment or other service, Insiders will be subject to the trading window, as well as any special blackout period in effect at the time of termination, for one full fiscal quarter thereafter. Even when the trading window is open, Insiders and other Company personnel are prohibited from trading in the Company’s securities while in possession of material nonpublic information. The Company’s Compliance Officer will advise Insiders when the trading window opens and closes.
HARDSHIP EXEMPTION
The Compliance Officer may, on a case by case basis, authorize a transaction in the Company’s securities outside of the trading window (but in no event during a special blackout period) due to extreme financial or other hardship. Any request for a hardship exemption must be in writing and must describe the amount and nature of the proposed transaction and the circumstances of the hardship. (The request may be made as part of a pre-clearance request, so long as it is in writing.) The Insider requesting the hardship exemption must also certify to the Compliance Officer within two business days prior to the date of the proposed trade that he or she is not in possession of material nonpublic information concerning the Company.
The existence of the foregoing procedure does not in any way obligate the Compliance Officer to approve any hardship exemption requested by an Insider.
PRE-CLEARANCE OF TRADES
As part of the Company’s Insider Trading Policy, all purchases and sales of equity securities of the Company by Insiders, other than transactions that are not subject to the Policy or transactions pursuant to a Rule 10b5-1 trading plan approved in accordance with this Policy, must be pre-cleared by the Compliance Officer. The intent of this requirement is to prevent inadvertent violations of the Policy, avoid trades involving the appearance of improper insider trading, facilitate timely Form 4 reporting and avoid transactions that are subject to disgorgement under Section 16(b) of the Exchange Act.
Written requests for pre-clearance must be submitted to the Compliance Officer at least two business days in advance of each proposed transaction. Written requests should be followed by personal contact with the Compliance Officer to effectively facilitate the receipt of a request for pre-clearance in a timely manner. If the Insider leaves a voicemail message or submits the request by email and does not receive a response from the Compliance Officer within 24 hours, the Insider will be responsible for following up to ensure that the message was received.
A request for pre-clearance should provide the following information:
| • | The nature of the proposed transaction and the expected date of the transaction. |
| • | The number of shares involved. |
| • | If the transaction involves a stock option exercise, the specific option to be exercised and the manner of exercise (e.g., “same-day sale” or “cashless exercise”). |
| • | Contact information for the broker who will execute the transaction. |
Once the proposed transaction is pre-cleared, the Insider may proceed with it on the approved terms, provided that he or she complies with all other securities law requirements, such as Rule 144 and prohibitions regarding trading on the basis of inside information, and with any special trading blackout imposed by the Company prior to the completion of the trade. The Section 16 Insider and his or her broker will be responsible for immediately reporting the results of the transaction as further described below.
In addition, pre-clearance is required for the establishment of a Rule 10b5-1 trading plan. However, pre-clearance will not be required for individual transactions effected pursuant to a pre-cleared Rule 10b5-1 trading plan that specifies or establishes a formula for determining the dates, prices and amounts of planned trades. Of course, the results of transactions effected under a trading plan must be reported immediately to the Company since they will be reportable on Form 4 within two business days following the execution of the trade, subject to an extension of not more than two additional business days where the Section 16 Insider is not immediately aware of the execution of the trade.
Notwithstanding the foregoing, any transactions by the Compliance Officer shall be subject to pre-clearance by the Chief Financial Officer or, in the event of his unavailability, the Chief Executive Officer.
DESIGNATED BROKERS
Each market transaction in the Company’s stock by a Section 16 Insider, or any person whose trades must be reported by that Insider on Form 4 (such as a member of the Insider’s immediate family who lives in the Insider’s household), must be executed by a broker designated by the Company unless the Insider has received authorization from the Compliance Officer to use a different broker.
I-2
A Section 16 Insider and any broker that handles the Section 16 Insider’s transactions in the Company’s stock will be required to enter into an agreement whereby:
| • | The Insider authorizes the broker to immediately report directly to the Company the details of all transactions in Company equity securities executed by the broker in the Insider’s account and the accounts of all others designated by the Insider whose transactions may be attributed to the Insider. |
| • | The broker agrees not to execute any transaction for the Insider or any of the foregoing designated persons (other than under a pre-approved Rule 10b5-1 trading plan) until the broker has verified with the Company that the transaction has been pre-cleared. |
| • | The broker agrees to immediately report the transaction details (including transactions under Rule 10b5-1 trading plans) directly to the Company and to the Insider by telephone and in writing (by fax or email). |
If a Section 16 Insider wishes to use a broker other than one of the Company’s designated brokers, the Section 16 Insider should submit a request to use that broker to the Compliance Officer.
REPORTING OF TRANSACTIONS
To facilitate timely reporting under Section 16 of the Exchange Act of Insider transactions in Company securities, Section 16 Insiders are required to (a) report the details of each transaction immediately after it is executed and (b) arrange with persons whose trades must be reported by the Insider under Section 16 (such as Family Members) to immediately report directly to the Company and to the Insider the details of any transactions they have in the Company’s stock.
Transaction details to be reported include:
| • | Transaction date (trade date). |
| • | Number of shares or other securities involved. |
| • | Price per share/security at which the transaction was executed (before addition or deduction of brokerage commissions and other transaction fees). |
| • | If the transaction was a stock option exercise, the specific option exercised. |
| • | Contact information for the broker who executed the transaction. |
The transaction details must be reported to the Compliance Officer, with copies to the Company personnel who will assist the Section 16 Insider in preparing his or her Form 4.
MODIFICATIONS TO POLICY
The Board of Directors or a designated committee of the Board of Directors will be responsible for monitoring and recommending any necessary or advisable modifications to the Insider Trading Policy.
I-3
PERSONS SUBJECT TO SECTION 16
Most purchases and sales of Company securities by directors, executive officers and greater-than-10% stockholders are subject to Section 16 of the Exchange Act. The Board of Directors or its designated committee will review, at least annually, those individuals who are deemed to be executive officers for purposes of Section 16. An executive officer is generally defined as the president, principal financial officer, principal accounting officer or controller, any vice president in charge of a principal business unit, division or function or any other officer or person who performs a policy making function.
FORM 4 REPORTING
Under Section 16, most trades by Section 16 Insiders are subject to reporting on Form 4 within two business days following the trade date (which in the case of an open market trade is the date when the broker places the buy or sell order, not the date when the trade is settled). To facilitate timely reporting, all transactions that are subject to Section 16 must be reported to the Company on the same day as the trade date, or, with respect to transactions effected pursuant to a Rule 10b5-1 plan, on the day the Insider is advised of the terms of the transaction.
NAMED EMPLOYEES CONSIDERED INSIDERS
The Board of Directors or its designated committee will review, at least annually, those individuals deemed to be “Insiders” for purposes of this Appendix I. Insiders shall include persons subject to Section 16 and such other persons as the Board of Directors or its designated committee deems to be Insiders. Generally, Insiders shall be any person who by virtue of his or her position is regularly in possession of material nonpublic information or performs an operational role, such as head of a division or business unit that is material to the Company as a whole.
SPECIAL GUIDELINES FOR 10b5-1 TRADING PLANS
Notwithstanding the foregoing, an Insider will not be deemed to have violated the Insider Trading Policy if he or she effects a transaction that meets all of the enumerated criteria below.
1. The transaction must be made pursuant to a non-discretionary plan (the “Plan”) entered into in good faith that complies with all provisions of Rule 10b5-1 (the “Rule”), including, without limitation:
a. Each Plan must be in the form of a written, binding contract that specifies either:
i. the amount of securities to be purchased or sold and the price at which and the date on which the securities are to be purchased or sold, or
ii. a written formula or algorithm, or computer program, for determining the amount of securities to be purchased or sold and the price at which and the date on which the securities are to be purchased or sold.
b. The Plan must prohibit the Insider and any other person who possesses material nonpublic information from exercising any subsequent influence over how, when, or whether to effect purchases or sales and must state that any person executing Plan transactions may not deviate from Plan instructions.
2. Each Plan must be approved prior to the effective time of any transactions under such Plan by the Company’s Rule 10b5-1 Plan Review Committee, which shall be composed of persons selected by and serving at the discretion of the Board of Directors (the “10b5-1 Committee”). The Company reserves the right to withhold approval of any Plan that the 10b5-1 Committee determines, in its sole discretion:
I-4
a. fails to comply with the Rule;
b. exposes the Company or the Insider to liability under any other applicable state or federal rule, regulation or law;
c. creates any appearance of impropriety;
d. fails to meet the guidelines established by the Company; or
e. otherwise fails to satisfy review by the 10b5-1 Committee for any reason, such failure to be determined in the sole discretion of the 10b5-1 Committee.
3. Any modifications to the Plan, deviations from the Plan or termination of the Plan without prior approval of the 10b5-1 Committee will result in a failure to comply with the Insider Trading Policy. Any such modification, deviation or termination is subject to the approval of the 10b5-1 Committee in accordance with Section 2 above. No Plan may be modified more than once in any 12-month period. Each Plan must include representations that:
a. the Insider will only modify the Plan while not aware of any material nonpublic information about the Company or the securities covered by the Plan and at a time when the Company’s trading window is open with respect to the Insider, and will require that the first transaction following modification of the Plan will be effected no sooner than thirty (30) days after the date of such modification; and
b. any termination of the Plan prior to its fixed termination date or sale of all securities will be made only when the Insider is not aware of material nonpublic information about the Company or the securities covered by the Plan.
Following the termination of a Plan, the Insider will not be permitted to establish a new Plan sooner than the first open trading window occurring at least three (3) months after the date of termination.
4. Each Plan must be established:
a. at a time when the Insider is not aware of material nonpublic information about the Company or the securities covered by the Plan; and
b. at a time when the trading window is open with respect to the Insider; and
c. in good faith and not as part of a plan or scheme to evade the insider trading rules; and
d. to provide that the first transaction under the Plan will occur no sooner than the opening of the trading window following the Company’s next earnings release.
5. Each Plan must either:
a. have a fixed termination date that is at least twelve (12) months after the date the first transaction is effectuated under the Plan; or
b. continue for an indefinite period and until no more securities covered by the Plan remain available.
6. Each Plan must restrict the size of the transactions which are to be effected under the Plan on any trading day to an amount that does not exceed 10% of the average daily trading volume over the period of four calendar weeks preceding the date of the transaction.
I-5
7. Each Plan must provide appropriate mechanisms to ensure that the Insider complies with all rules and regulations, including Rule 144, Rule 701 and Section 16(b), applicable to securities transactions under the Plan by the Insider.
8. Each Plan must provide for automatic suspension or termination of the Plan in the sole discretion of the Company:
a. to comply with a lock-up agreement required in connection with a securities issuance transaction in which the Company is a participant;
b. upon the occurrence of an event that would violate the law; or
c. upon the occurrence of other similar events.
Further, each Plan must provide for the suspension of all transactions under such Plan in the event that the Company, in its sole discretion, deems such suspension necessary and advisable.
9. Each Plan should include the following representations, warranties and covenants of the Insider:
a. As of the date the Plan is established, the Insider is not aware of any material nonpublic information concerning the Company or the securities covered by the Plan.
b. The Insider is entering into the Plan in good faith and not as part of a plan or scheme to evade compliance with federal or state securities laws.
c. While the Plan is in effect, the Insider agrees not to enter into or alter any corresponding or hedging transaction or position with respect to the securities covered by the Plan.
d. The Insider agrees not to alter or deviate from the terms of the Plan.
e. The Insider agrees that he or she shall not, directly or indirectly, communicate any information relating to the securities or the Company to any broker, dealer, financial advisor, trustee or any other third party who is involved, directly or indirectly, in executing the Plan at any time while the Plan is in effect.
f. The Insider agrees not to take, and agrees to cause any person or entity with which the Insider would be required to aggregate sales of securities pursuant to paragraph (a)(2) or (e) of Rule 144 not to take, any action that would cause the sales made under the Plan not to meet all applicable requirements of Rule 144.
g. The Insider agrees to timely make all filings required under the Securities Act of 1933, as amended, and the Exchange Act.
h. The Insider acknowledges and agrees that the Insider does not have, and shall not attempt to exercise, any influence over how, when or whether to effect purchases or sales of securities pursuant to the Plan.
i. The Insider agrees that any modifications to the Plan must be made in good faith at a time when the Insider is not aware of any material non-public information concerning the Company or the securities covered by the Plan.
j. The Insider agrees that termination of the Plan prior to its expiration pursuant to the terms of the Plan will be made in good faith.
k. The Insider agrees that the Company may, in its sole discretion, make public announcements regarding the Plan in any press release or filings with the SEC such as the Company’s proxy statement, a Form 8-K or other SEC filings, including, among other things, information as to existence or adoption of the Plan and, to the extent required or advisable under applicable law, information as to the timing of the transactions and the amount and price of the securities to be sold.
I-6
l. The Insider agrees to return any securities not sold pursuant to the Plan to the Company for re-legending.
10. None of the Company, the Board of Directors, the 10b5-1 Committee nor any of the Company’s officers, employees or other representatives shall be deemed, solely by their approval of an Insider’s Plan, to have represented that any Plan complies with the Rule or to have assumed any liability or responsibility to the Insider or any other party if such Plan fails to comply with the Rule.
I-7
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Russell Stidolph, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of AltEnergy Acquisition Corp.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
March 28, 2025
| /s/ Russell Stidolph |
| Russell Stidolph |
| Chief Executive Officer and Chairman |
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jonathan Darnell, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of AltEnergy Acquisition Corp.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
March 28, 2025
| /s/ Jonathan Darnell |
| Jonathan Darnell |
| Chief Financial Officer |
| (Principal Financial and Accounting Officer) |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of AltEnergy Acquisition Corp. (the “Company”) for the year ended December 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Russell Stidolph, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
March 28, 2025
| /s/ RUSSELL STIDOLPH |
| Russell Stidolph |
| Chief Executive Officer and Chairman |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of AltEnergy Acquisition Corp. (the “Company”) for the year ended December 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jonathan Darnell, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
March 28, 2025
| /s/ JONATHAN DARNELL |
| Jonathan Darnell |
| Chief Financial Officer |