Terrestrial Energy Inc DEFA14A, filed Mar 26, 2025
Terrestrial Energy Inc. (IMSR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 26, 2025
HCM II Acquisition Corp.
(Exact name of registrant as specified in its charter)
| Cayman Islands | 001-42252 | 98-1785406 | ||
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
100 First Stamford Place, Suite 330
Stamford, CT 06902
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (203) 930-2200
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☒ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☒ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
| Units, each consisting of one share of Class A ordinary share and one-half of one Redeemable Warrant | HONDU | The Nasdaq Stock Market LLC | ||
| Class A ordinary shares, par value $0.0001 per share | HOND | The Nasdaq Stock Market LLC | ||
| Redeemable Warrants, each whole warrant exercisable for one Class A ordinary share at a price of $11.50 per share | HONDW | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement.
Business Combination Agreement
On March 26, 2025 (the “Signing Date”), HCM II Acquisition Corp, a Cayman Islands exempted company (which will transfer by way of continuation and domesticate as a Delaware corporation prior to the Closing (as defined below)) (“HCM II”), entered into a Business Combination Agreement (as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “Business Combination Agreement”), by and among HCM II, Terrestrial Energy Inc., a Delaware corporation (the “Company”) and HCM II Merger Sub Inc., a Delaware corporation and a direct wholly owned subsidiary of HCM II (“Merger Sub”), pursuant to which, among other things and subject to the terms and conditions contained therein, Merger Sub will merge with and into the Company (the “Merger”), with the Company continuing as the surviving company (the Company, in its capacity as the surviving corporation of the Merger, is sometimes referred to as the “Surviving Company”). The transactions contemplated by the Business Combination Agreement are referred to herein as the “Business Combination.” HCM II, the Company and Merger Sub are individually referred to herein as a “Party” and, collectively, the “Parties.” The combined company’s business will continue to operate through the Company and its subsidiaries.
The Business Combination Agreement and the Business Combination were approved by the board of directors of HCM II and the board of directors of the Company.
The Business Combination is expected to close in the fourth quarter of 2025, subject to the receipt of the required approvals by HCM II’s shareholders and the fulfilment of other customary closing conditions.
The Domestication
HCM II will, subject to obtaining the required shareholder approvals and at least one (1) day prior to the date of the closing of the Business Combination (the “Closing” and the date of the Closing, the “Closing Date”), change its jurisdiction of incorporation by deregistering as a Cayman Islands exempted company and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication”). HCM II will provide its public shareholders the opportunity to elect, at least two (2) business days prior to the HCM II shareholder’s meeting, to redeem their shares on the terms and conditions set forth in the Business Combination Agreement and HCM II’s governing documents (the “Redemption”). Subject to the receipt of HCM II shareholder approval, and at least one (1) day prior to the Domestication, HCM II will carry out the Redemption.
By virtue of the Domestication and subject to the satisfaction or waiver of the conditions of the Business Combination Agreement, including approval of HCM II’s shareholders: (i) immediately prior to the Domestication, each of the then issued and outstanding Class B ordinary shares of HCM II (each a “Class B Ordinary Share”) will convert automatically, on a one-for-one basis, into one (1) Class A ordinary share, par value of $0.0001 per share, of HCM II (each a “Class A Ordinary Share”) (the “Sponsor Share Conversion”); and (ii) immediately following the Sponsor Share Conversion, in connection with the Domestication, (x) each then issued and outstanding Class A Ordinary Share (other than any Class A Ordinary Share included in the Cayman Purchaser Units (as defined in the Business Combination Agreement)) will convert automatically, on a one-for-one basis, into one (1) share of common stock, par value $0.0001 per share, of HCM II (after the Domestication) (the “Domesticated Common Stock”); (y) each of the then issued and outstanding warrants (other than any Cayman Purchaser Public Warrants (as defined in the Business Combination Agreement) included in the Cayman Purchaser Units) representing the right to purchase one (1) Class A Ordinary Share will convert automatically into a warrant to acquire one (1) share of Domesticated Common Stock (each a “Domesticated Warrant”); and (z) each of the then issued and outstanding Cayman Purchaser Units will be cancelled and each holder thereof will be entitled to one (1) share of Domesticated Common Stock and one-half (1/2) of one (1) Domesticated Warrant.
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The Merger and Consideration
At the Effective Time (as defined in the Business Combination Agreement), by virtue of the Merger, each share of capital stock of Merger Sub issued and outstanding immediately prior to the Effective Time will be automatically cancelled and extinguished and converted into one (1) share of common stock, par value $0.001, of the Surviving Company.
Subject to, and in accordance with the terms and conditions of the Business Combination Agreement, at the Effective Time:
| i. | each share of common stock, par value $0.001, of the Company (the “Company Common Shares”) that is issued and outstanding immediately prior to the Effective Time (other than Excluded Shares (as defined below) and any Dissenting Shares (as defined in the Business Combination Agreement)) will be cancelled and converted into the right to receive the Per Share Base Consideration (as defined below); |
| ii. | each share of preferred stock, par value $0.001, of the Company designated as “Series A Preferred Stock” pursuant to Company’s certificate of incorporation (the “Company Series A Preferred Shares”) that is issued and outstanding immediately prior to the Effective Time (other than Excluded Shares and any Dissenting Shares) will be cancelled and converted into the right to receive a number of shares of Domesticated Common Stock equal to: (A) the number of shares of Company Common Shares into which such Company Series A Preferred Share would be converted in accordance with the Company’s governing documents as of immediately prior to the Effective Time; multiplied by (B) the Per Share Base Consideration; |
| iii. | each Company Common Share and Company Series A Preferred Share that, immediately prior to the Effective Time, is owned by HCM II or Merger Sub (or any other subsidiary of HCM II), or held by the Company (in treasury or otherwise), if any (each, an “Excluded Share”), will be automatically cancelled and retired without any conversion thereof and will cease to exist, and no consideration will be delivered in exchange therefore; |
| iv. | each option to purchase Company Common Shares (“Company Option”) that is outstanding immediately prior to the Effective Time will be automatically assumed by HCM II such that, as of the Effective Time, each share underlying each Company Option will instead be shares of Domesticated Common Stock and the number of such shares will be equal to the Exchange Ratio (as defined below); |
| v. | each warrant to purchase shares or other equity interests of the Company (“Company Warrant”) that is outstanding and unexercised immediately prior to the Effective Time will automatically become exercisable, in accordance with the terms and conditions of such Company Warrant, for the Per Share Base Consideration. HCM II will assume the obligation to issue the Domesticated Common Stock upon the exercise of Company Warrants following the Effective Time pursuant to the terms of the Warrant Assignment and Assumption Agreement (as defined in the Business Combination Agreement); |
| vi. | each 8% Convertible Note due 2026 issued by the Company (collectively, the “Company Convertible Notes”) that is outstanding immediately prior to the Effective Time will be cancelled and converted pursuant to its terms, and the holder thereof will be entitled to receive, without interest, assuming the delivery of the lock-up agreement contemplated by such Company Convertible Note: (i) a number of shares of Domesticated Common Stock equal to (A) the outstanding amount of such Company Convertible Note, including any accrued and unpaid interest, divided by (B) seventy-five percent (75%) of the price at which each share of Domesticated Common Stock may be redeemed pursuant to the Redemption (the “Redemption Price”); and (ii) a contingent value right to receive additional shares of Domesticated Common Stock in the event that the volume weighed average price of the Domesticated Common Stock for the twenty (20) trading days beginning on the trading day immediately following expiration of the lock-up period contemplated by the applicable Company Convertible Note is less than seventy-five percent (75%) of the Redemption Price; |
| vii. | if the ExchangeCo Recapitalization (as defined below) has been completed prior to or concurrently with the Closing, each Exchangeable Share (as defined in the Business Combination Agreement) that is issued and outstanding immediately prior to the Effective Time will thereafter be exchangeable for shares of Domesticated Common Stock rather than Company Common Shares in accordance with the terms and conditions of such Exchangeable Share; and |
| viii. | if the ExchangeCo Recapitalization has not been completed prior to or concurrently with the Closing, then immediately prior to the Effective Time, but conditional upon the Closing, the Company shall cause each Exchangeable Share to be exchanged for Company Common Shares or Company Series A Preferred Shares, as applicable, and each such Company Common Share or Company Series A Preferred Share issued pursuant to such exchange will be cancelled and converted into the right to receive the Per Share Base Consideration. |
Pursuant to the Business Combination Agreement, the aggregate consideration to be paid in the Merger in respect of each Company Common Share and each Company Series A Preferred Share that is issued and outstanding immediately prior to the Effective Time, will be a number of shares of Domesticated Common Stock equal to the Exchange Ratio (the “Per Share Base Consideration”). The “Exchange Ratio” is equal to the number of shares of Domesticated Common Stock equal to the quotient of (i)(a) $925,000,000, divided by (b) the Redemption Price divided by (ii) the Company Fully Diluted Capital (as defined in the Business Combination Agreement).
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ExchangeCo Recapitalization
Following the Signing Date, the Company and its subsidiaries will take, or cause to be taken, such actions the Company and its subsidiaries determine (in their sole discretion) to be necessary or advisable to provide the holders of Exchangeable Shares with the ability to continue to hold, following the Closing, such Exchangeable Shares (the “ExchangeCo Recapitalization”), including by causing ExchangeCo (as defined in the Business Combination Agreement) to call a special meeting of its shareholders to vote on a proposal to effectuate the ExchangeCo Recapitalization.
Prior to the Closing, the Company will, and will cause its subsidiaries to, as applicable, (i) give notice of and convene and hold a special meeting of the ExchangeCo Shareholders (as defined in the Business Combination Agreement) (the “ExchangeCo Shareholder Meeting”) in accordance with ExchangeCo’s governing documents and the Business Corporations Act (Ontario), and (ii) solicit proxies from ExchangeCo Shareholders to vote in favor of and approve the adoption of the ExchangeCo Recapitalization (the “ExchangeCo Shareholder Approval”). The Company may cause the ExchangeCo Shareholder Meeting to be adjourned, if necessary, to permit further solicitation of approvals if there are not sufficient votes to obtain the ExchangeCo Shareholder Approval or because of the absence of a quorum. HCM II will, and will cause its representatives to, reasonably cooperate with the Company and its subsidiaries in a timely manner to implement the ExchangeCo Recapitalization in a manner deemed necessary and appropriate by the Company.
PIPE Subscription Agreements
HCM II has entered into subscription agreements (collectively, the “PIPE Subscription Agreements”), each dated as of March 26, 2025, with certain investors (collectively, the “PIPE Investors”), pursuant to which, among other things, HCM II has agreed to issue and sell, in private placements to close immediately prior to or substantially concurrently with the Closing, an aggregate of 5,000,000 shares of Domesticated Common Stock for a purchase price of $10.00 per share (the “PIPE Financing”). The PIPE Investors are permitted, under the PIPE Subscription Agreements, to satisfy their commitments thereunder if they hold shares of Domesticated Common Stock that qualify as Non-Redeemed Shares (as defined in the PIPE Subscription Agreement), subject to certain conditions and restrictions set forth in the PIPE Subscription Agreements. Each of the PIPE Subscription Agreements has been entered into on substantially similar terms and conditions to the form of the PIPE Subscription Agreement, a copy of which is filed as Exhibit 10.1 and is incorporated by reference herein. From time-to-time following execution of the Business Combination Agreement and prior to the Closing, HCM II may enter into additional PIPE subscription agreements on forms mutually acceptable to HCM II and the Company.
The foregoing description of the PIPE Subscription Agreements and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by the terms and conditions of the applicable PIPE Subscription Agreements, each of which has been entered into on substantially similar terms and conditions to the form of the PIPE Subscription Agreement, a copy of which is filed as Exhibit 10.1 hereto and is incorporated by reference herein.
Governance
The Parties have agreed to take all necessary action, including HCM II causing the directors of HCM II to resign, so that effective at the Closing, the board of directors of HCM II (the “Post-Closing HCM II Board”) will consist of no less than five (5) individuals, including one (1) director to be designated by HCM II, one (1) director who is the chief executive officer of HCM II following Closing, and the remaining directors to be designated by the Company, such number of whom will be independent such that a majority of the members of the Post-Closing HCM II Board will be independent under applicable law and the relevant rules and regulations of Nasdaq.
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Representations, Warranties and Covenants
The Business Combination Agreement contains representations, warranties, and covenants, including, among others, covenants with respect to the Parties’ conduct and the conduct of their related group entities prior to the Closing and a covenant providing for HCM II and the Company to jointly prepare, agree upon, and file a registration statement (the “Registration Statement”) with the U.S. Securities and Exchange Commission (the “SEC”) (which will contain a prospectus of the Company and a proxy statement of HCM II). The representations and warranties made in the Business Combination Agreement will not survive the consummation of the Merger. The Business Combination Agreement also contains customary pre-Closing covenants of the parties, including the obligation of HCM II, the Company and their respective subsidiaries to conduct their businesses in the ordinary course and to refrain from taking certain specified actions, subject to certain exceptions, without the prior written consent of certain counterparties to the Business Combination Agreement.
The Company agreed to provide HCM II with its audited financial statements for the twelve (12) month periods ending December 31, 2023 and December 31, 2024, and its interim unaudited financial information that are required by applicable law, which comply in all material respects with the applicable accounting requirements, as soon as reasonable practicable following the Signing Date, and in the case of the interim unaudited financial information, within seventy-five (75) days of each applicable quarter-end (other than with respect to the quarters ended March 31, 2025 and March 31, 2024). At or prior to the Closing, HCM II shall provide each initial director of the Post-Closing HCM II Board with a customary director indemnification agreement, in form and substance reasonably acceptable to such director, HCM II and the Company.
Conditions to the Parties’ Obligations to Consummate the Business Combination
Under the Business Combination Agreement, the obligations of the Parties to consummate the Business Combination are subject to the satisfaction or written waiver (where permissible) of certain conditions, including: (i) obtaining the Purchaser Shareholder Approval (as defined in the Business Combination Agreement) and the Company Stockholder Approval (as defined in the Business Combination Agreement); (ii) no adverse law or order has been entered into that would make the Business Combination Agreement, or the Business Combination, illegal or otherwise prevent or prohibit consummation of the Business Combination; (iii) the Registration Statement has been declared effective by the SEC, and no stop order has been issued with respect to the Registration Statement and no proceedings for that purpose have been initiated or threatened by the SEC and not withdrawn; (iv) receipt of the conditional approval for the listing of Domesticated Common Stock on Nasdaq upon the Closing; (v) the waiting period (and any extensions thereof) under the HSR Act (as defined in the Business Combination Agreement) and any other Antitrust Laws (as defined in the Business Combination Agreement) has expired or has been terminated and any approval required under any other Antitrust Laws has been obtained; and (vi) if applicable, the waiting period (and any extensions thereof) with the United States Nuclear Regulatory Commission (the “NRC”) has expired or has been terminated.
The obligations of the Company to consummate the Business Combination are further subject to the satisfaction or written waiver (where permissible) of additional conditions, including: (i) the truth and accuracy of the representations and warranties of HCM II and Merger Sub, subject to the materiality standards contained in the Business Combination Agreement; (ii) material compliance by HCM II and Merger Sub with their respective agreements and covenants under the Business Combination Agreement; (iii) no Purchaser Material Adverse Effect (as defined in the Business Combination Agreement) having occurred; (iv) the Domestication having been completed and a time-stamped copy of the certificate issued by the Secretary of State of the State of Delaware in relation thereto having been delivered to the Company; (v) HCM II having made the arrangements to have the net proceeds remaining in HCM II’s trust account (after giving effect to all Redemptions) available to HCM II at the Closing; (vi) after giving effect to the transactions contemplated by the Business Combination Agreement (including any PIPE Financing), HCM II will have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) immediately after the Effective Time; (vii) the Available Closing SPAC Cash (as defined in the Business Combination Agreement) will not be less than $150,000,000; (vii) all actions have been taken such that the Post-Closing HCM II Board will be constituted of the directors contemplated by the Business Combination Agreement; (viii) HCM II’s governing documents have been amended and restated in the agreed upon forms of the Post-Closing Charter (as defined in the Business Combination Agreement) and the Post-Closing Bylaws (as defined in the Business Combination Agreement), and such Post-Closing Charter has been filed with the Secretary of State of the State of Delaware and such Post-Closing Bylaws have been adopted; (ix) receipt of a customary officer’s certificate of HCM II, certifying as to the satisfaction of the conditions listed in clauses (i) through (iii) above; (x) receipt of a customary secretary’s certificate of HCM II, certifying as to and attaching (A) copies of HCM II’s and Merger Sub’s governing documents as in effect as of the Closing Date (after giving effect to the Domestication) and (B) the resolutions of HCM II’s and Merger Sub’s board of directors authorizing and approving the Business Combination Agreement, each of the Ancillary Documents (as defined in the Business Combination Agreement) and the consummation of the Business Combination; and (xi) HCM II has delivered, or caused to be delivered, all Ancillary Documents to the Company.
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The obligations of HCM II and Merger Sub to consummate the Business Combination are further subject to the satisfaction or written waiver (where available) of additional conditions, including: (i) the truth and accuracy of the representations and warranties of the Company, subject to the materiality standards contained in the Business Combination Agreement; (ii) material compliance by the Company with its agreements and covenants under the Business Combination Agreement; (iii) no Company Material Adverse Effect (as defined in the Business Combination Agreement) having occurred; (iv) the Company having not received from the NRC any formal written communication that would (A) have a material and adverse impact on the ability of the Company or its subsidiaries, taken as a whole, to consummate the Merger, or (B) prevent the Company or its subsidiaries from continuing their regulatory engagement with the NRC; (v) a customary officer’s certificate of the Company, certifying as to the satisfaction of the conditions listed in clauses (i) through (iii) above; (vi) receipt of a customary secretary’s certificate of the Company, certifying as to and attaching (A) copies of the Company’s governing documents as in effect as of the Closing Date and (B) the resolutions of the Company’s board of directors authorizing and approving the Business Combination Agreement, each of the Ancillary Documents and the consummation of the Business Combination; (vii) the Company has delivered, or caused to be delivered, all Ancillary Documents; and (viii) the Company has delivered (A) a certificate of good standing for the Company and each of its subsidiaries formed or incorporated in the United States and (B) to the extent available, a certificate of good standing or similar certificate for the Company and each of its subsidiaries not formed or incorporated in the United States, dated, in each case, no earlier than thirty (30) days prior to the Closing Date.
Termination Rights
The Business Combination Agreement may be terminated by HCM II or the Company under certain circumstances, including, among others: (i) by mutual written consent of the Company and HCM II; (ii) by the Company if there has been a Modification in Recommendation (as defined in the Business Combination Agreement) or by HCM II if there has been a Company Board Recommendation Change (as defined in the Business Combination Agreement); (iii) by written notice by HCM II or the Company if any of the conditions to the Closing set forth in Article VII of the Business Combination Agreement have not been satisfied or waived by February 28, 2026; (iv) by written notice by either HCM II or the Company if a governmental authority has issued an order prohibiting the transactions contemplated by the Business Combination Agreement; (v) by written notice to HCM II from the Company if there is any breach of any representation, warranty, covenant or agreement on the part of HCM II or Merger Sub set forth in the Business Combination Agreement, such that the conditions specified would not be satisfied at the Closing, subject to certain exceptions; (vi) by written notice to the Company from HCM II if there is any breach of any representation, warranty, covenant or agreement on the part of the Company set forth in the Business Combination Agreement, such that the conditions specified would not be satisfied at the Closing, subject to certain exceptions; (vii) by written notice by either HCM II or the Company, if the Purchaser Shareholders’ Meeting (as defined in the Business Combination Agreement) has been held (including any adjournment or postponement thereof), has concluded, the shareholders of HCM II have duly voted, and the Purchaser Shareholder Approval was not obtained; (viii) by written notice to HCM II or Company if all the conditions to Closing of the other party have been satisfied and the other party fails to consummate the Business Combination on or prior to the date when the Closing is required to occur; and (ix) by HCM II, if the Company does not deliver to HCM II a Transaction Support Agreement (as defined below) duly executed by each Supporting Company Stockholder (as defined below) on or prior to the Transaction Support Agreement Deadline (as defined in the Business Combination Agreement) or hold the Company Stockholder Meeting (as defined in the Business Combination Agreement) in accordance with the Business Combination Agreement, subject to certain exceptions.
The foregoing description of the Business Combination Agreement and the Merger does not purport to be complete and is qualified in its entirety by the terms and conditions of the Business Combination Agreement, a copy of which is attached hereto as Exhibit 2.1, and is incorporated herein by reference. The Business Combination Agreement contains representations, warranties, and covenants that the parties to the Business Combination Agreement made to each other as of the date of the Business Combination Agreement or other specific dates. The assertions embodied in those representations, warranties, and covenants were made for purposes of the contract among the parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating the Business Combination Agreement. The Business Combination Agreement has been attached to provide investors with information regarding its terms and is not intended to provide any other factual information about HCM II, the Company, or any other party to the Business Combination Agreement. In particular, the representations, warranties, covenants, and agreements contained in the Business Combination Agreement, which were made only for purposes of the Business Combination Agreement and as of specific dates, were solely for the benefit of the parties to the Business Combination Agreement, may be subject to limitations agreed upon by the contracting parties, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors and reports and documents filed with the SEC. Investors should not rely on the representations, warranties, covenants, and agreements, or any descriptions thereof, as characterizations of the actual state of facts or condition of any party to the Business Combination Agreement. In addition, the representations, warranties, covenants, and agreements and other terms of the Business Combination Agreement may be subject to subsequent waiver or modification. Moreover, information concerning the subject matter of the representations and warranties, and other terms may change after the date of the Business Combination Agreement, which subsequent information may or may not be fully reflected in HCM II’s or the Company’s public disclosures.
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Sponsor Support Agreement
HCM II, the Company, and HCM Investor Holdings II, LLC, a Cayman Islands limited liability company (the “Sponsor”), concurrently with the execution and delivery of the Business Combination Agreement, have entered into the Sponsor Support Agreement (the “Sponsor Support Agreement”), pursuant to which the Sponsor has agreed, among other things, to vote, or cause to be voted at HCM II shareholder’s meeting, all of its shares of HCM IIs Class B Ordinary Shares (A) in favor of each Transaction Proposal (as defined in the Business Combination Agreement), (B) against any Alternative Transaction (as defined in the Business Combination Agreement) or any proposal relating to an Alternative Transaction, (C) against any merger agreement or merger (other than the Business Combination Agreement and the Business Combination), consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by HCM II, (D) against any change in the business, management or board of directors of HCM II (other than in connection with the Transaction Proposals or pursuant to the Business Combination Agreement or the Ancillary Documents), (E) against any proposal, action or agreement that would (i) impede, interfere, frustrate, prevent or nullify any provision of the Sponsor Support Agreement, the Business Combination Agreement or the Business Combination, (ii) result in a breach in any respect of any covenant, representation, warranty or any other obligation or agreement of HCM II under the Business Combination Agreement, (iii) result in any of the conditions set forth in Article VII (Closing Conditions) of the Business Combination Agreement not being fulfilled, (iv) result in a breach of any covenant, representation or warranty or other obligation or agreement of the Sponsor contained in the Sponsor Support Agreement or HCM II contained in the Business Combination Agreement, or (v) change in any manner the dividend policy or capitalization of, including the voting rights of any class of capital stock of, HCM II, and (F) in favor of any proposal to adjourn a meeting at which there is a proposal for shareholders of the Company to approve and adopt the Transaction Proposals to a later date if there are not sufficient votes to approve and adopt the Transaction Proposals or if there are not sufficient shares present in person or represented by proxy at such meeting to constitute a quorum.
The foregoing description of the Sponsor Support Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by the terms and conditions of the Sponsor Support Agreement, a copy of which is filed as Exhibit 10.2 hereto and is incorporated by reference herein.
Transaction Support Agreement
Within ten (10) business days following the Signing Date, certain stockholders of the Company (the “Supporting Company Stockholders”) must execute and deliver to HCM II a Transaction Support Agreement (the “Transaction Support Agreement”), pursuant to which each such Supporting Company Stockholder will agree to, among other things, support and vote (A) to the extent any approval or adoption is required or sought, to approve and adopt the Business Combination Agreement and the Business Combination and the Ancillary Documents to which the Company is or will be a party, (B) against any Alternative Transaction or any proposal relating to an Alternative Transaction, (C) against any merger agreement or merger (other than the Business Combination Agreement and the transactions contemplated thereby or the ExchangeCo Recapitalization), consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by the Company, (D) against any change in the business or board of directors of the Company (other than as contemplated or permitted to be taken pursuant to the Business Combination Agreement, the Ancillary Documents or the ExchangeCo Recapitalization), (E) against any proposal, action or agreement that would (i) impede, interfere, frustrate, prevent or nullify any provision of the Transaction Support Agreement, the Business Combination Agreement or the Business Combination, in each case, in any material respect, (ii) result in a breach in any respect of any covenant, representation, warranty or any other obligation or agreement of the Company under the Business Combination Agreement that would result in any of the conditions set forth in Article VII (Closing Conditions) of the Business Combination Agreement not being fulfilled, (iii) result in a breach of any covenant, representation or warranty or other obligation or agreement of the Supporting Stockholder contained in the Transaction Support Agreement or the Company contained in the Business Combination Agreement, or (iv) change in any manner the dividend policy or capitalization of, including the voting rights of any class of capital stock of, the Company, and (F) in favor of any proposal to adjourn a meeting at which there is a proposal for stockholders of the Company or any subsidiary of the Company to approve and adopt the Business Combination Agreement and the consummation of the transactions contemplated thereby to a later date if there are not sufficient votes to approve and adopt the Business Combination Agreement if there are not sufficient shares present in person or represented by proxy at such meeting to constitute a quorum.
The foregoing description of the Transaction Support Agreements and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by the terms and conditions of the applicable Transaction Support Agreements, each of which will be entered into on substantially similar terms and conditions to the form of the Transaction Support Agreement, the form of which is attached hereto as Exhibit B to the Business Combination Agreement, filed as Exhibit 2.1 to this Current Report on Form 8-K, and incorporated by reference herein.
Item 3.02. Unregistered Sales of Equity Securities.
The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein. The securities of HCM II and the Company that may be issued in connection with the PIPE Subscription Agreements will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.
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Item 7.01. Regulation FD Disclosure.
On March 26, 2025, HCM II and the Company issued a joint press release announcing the execution of the Business Combination Agreement. The joint press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.
Furnished as Exhibit 99.2 hereto and also incorporated into this Item 7.01 by reference is the investor presentation HCM II and the Company have prepared for use in connection with the Business Combination.
The information in this Item 7.01, including Exhibit 99.1 and 99.2 is furnished and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities under that section, and will not be deemed to be incorporated by reference into the filings of HCM II under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filings. This Current Report on Form 8-K will not be deemed an admission as to the materiality of any information of the information in this Item 7.01, including Exhibit 99.1 and 99.2.
Item 8.01. Other Events.
Sponsor Lock-Up Agreement
At the Closing, the Sponsor will enter into a lock-up agreement (the “Sponsor Lock-Up Agreement”), pursuant to which shares of Domesticated Common Stock the Sponsor received upon conversion of its Class A Ordinary Shares (following the Sponsor Share Conversion) in connection with the Domestication (the “Sponsor Lock-Up Shares”) and Domesticated Warrants received upon conversion of private placement warrants in connection with the Domestication (the “Sponsor Lock-Up Warrants”) will be locked up and may not be transferred, subject to certain customary transfer exceptions, from the Closing until the date that is the earliest of (a) the twelve (12) month anniversary of the date of the Sponsor Lock-Up Agreement, and (b) following the 180th day following the Closing, (i) with respect to 50% of the Sponsor Lock-Up Shares and the Sponsor Lock-Up Warrants, the date on which the VWAP (defined below) equals or exceeds $15.00 per share, and (ii) with respect to 100% of the Sponsor Lock-Up Shares and the Sponsor Lock-Up Warrants, the date on which the VWAP equals or exceeds $20.00 per share (the “Lock-Up Period”). “VWAP” means, for the Domesticated Common Stock for a period of twenty (20) business days ending on any given determination date, the dollar volume-weighted average price for the Domesticated Common Stock on the Nasdaq Capital Market, for such period, as reported by Bloomberg through its “AQR” function (excluding, for the avoidance of doubt, the opening and closing print of each VWAP purchase date), or any successor thereto.
The foregoing description of the Sponsor Lock-Up Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by the terms and conditions of the Sponsor Lock-Up Agreement, the form of which is filed as Exhibit D to the Business Combination Agreement, filed as Exhibit 2.1 to this Current Report on Form 8-K, and incorporated by reference herein.
Key Holder Lock-Up Arrangement
At the Closing, certain key stockholders of Company (the “Key Holders”) will enter into a lock-up agreement (the “Key Holder Lock-Up Agreement”), pursuant to which (a) shares received by the Key Holders as Per Share Base Consideration, and (b) the shares of Domesticated Common Stock underlying all other securities of HCM II held by the Key Holders immediately following the Closing that are convertible into, or exercisable or exchangeable for, Domesticated Common Stock will be locked up and may not be transferred by the Key Holder thereof, subject to certain customary transfer exceptions, until the expiration of the Lock-Up Period.
The foregoing description of the Key Holder Lock-Up Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by the terms and conditions of the Key Holder Lock-Up Agreement, the form of which is attached hereto as Exhibit E to the Business Combination Agreement, filed as Exhibit 2.1 to this Current Report on Form 8-K, and incorporated by reference herein.
Registration Rights Agreement
Concurrently with the Closing, HCM II, Cantor Fitzgerald & Co., a New York general partnership (“Cantor”), the Sponsor and the holder parties thereto will enter into an Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”), amending and restating the registration rights agreement HCM II, Cantor and the Sponsor entered into in connection with HCM II’s initial public offering. Pursuant to the Registration Rights Agreement, among other things, HCM II will use commercially reasonable efforts to submit or file, within thirty (30) calendar days following the Closing Date, a registration statement for a shelf registration with the SEC covering the resale of all Registrable Securities (as defined in the Registration Rights Agreement) (the “Resale Registration Statement”), and shall use its commercially reasonable best efforts to have the Resale Registration Statement declared effective as soon as reasonably practicable after the filing thereof, and in any event within ninety (90) days after the Closing Date (or the one hundred twentieth (120th) calendar day if the SEC notifies HCM II that it will “review” the Resale Registration Statement). The holder parties to the Registration Rights Agreement will be entitled to customary piggyback registration rights and demand registration rights.
The foregoing description of the Registration Rights Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by the terms and conditions of the Registration Rights Agreement, the form of which is attached hereto as Exhibit C to the Business Combination Agreement, filed as Exhibit 2.1 to this Current Report on Form 8-K, and incorporated by reference herein.
7
Additional Information and Where to Find It
In connection with the proposed Merger, HCM II and the Company intend to file with the SEC a Registration Statement, which will include a preliminary proxy statement of HCM II and a prospectus. The definitive proxy statement and other relevant documents will be mailed to shareholders of HCM II as of a record date to be established for voting on the Merger. Shareholders of HCM II and other interested persons are advised to read, when available, the preliminary proxy statement, and the definitive proxy statement, and any supplements or amendments to the preliminary and definitive proxy statements, because these documents will contain important information about HCM II, the Company, and the proposed transactions. Shareholders will also be able to obtain copies of the Registration Statement and the proxy statement/prospectus once they are available, without charge, by directing a request to: HCM II Acquisition Corp, 100 First Stamford Place, Suite 330, Stamford, CT 06902. These documents, once available, and HCM II’s other filings and reports filed with the SEC can also be obtained, without charge, at the SEC’s internet site (http://www.sec.gov).
Participants in the Solicitation
HCM II and the Company, and their respective officers and directors, may be considered participants in the solicitation of proxies with respect to the potential transaction described in this communication under the rules of the SEC. Information about the directors and executive officers of HCM II is set forth in HCM II’s filings with the SEC. Information regarding other persons who may, under the rules of the SEC, be deemed participants in the solicitation of the shareholders in connection with the potential transaction and a description of their direct and indirect interests will be set forth in the Registration Statement (and will be included in the proxy statement/prospectus) and other relevant documents when they are filed with the SEC. These documents can be obtained free of charge from the sources indicated above.
Forward-Looking Statements
This Current Report on Form 8-K includes “forward-looking statements” within the meaning of the federal securities laws, including the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events, including, without limitation, statements regarding the anticipated timing and benefits of the Merger, and HCM II’s or the Company’s future financial or operating performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “potential,” or “continue,” or the negatives of these terms or variations of them or similar terminology. In addition, these forward-looking statements include, without limitation, statements regarding HCM II’s and the Company’s expectations with respect to future performance and anticipated financial impacts of the Merger, the satisfaction of the closing conditions to the Merger, and the timing of the completion of the Merger. Such forward-looking statements are subject to risks, uncertainties (some of which are beyond the control of the Company and/or HCM II), and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by HCM II and its management, and the Company and its management, as the case may be, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, without limitation: (1) the occurrence of any event, change, or other circumstances that could give rise to the termination of the definitive agreements respecting the Merger; (2) the outcome of any legal proceedings that may be instituted against HCM II, the Company or others following the announcement of the Merger; (3) the inability to complete the Merger due to the failure to obtain approval of the shareholders of HCM II or the SEC’s declaration of the effectiveness of the Registration Statement (which will including the proxy statement/prospectus contained therein) to be filed by HCM II and the Company or to satisfy the minimum cash or other conditions to closing; (4) changes to the proposed structure of the Merger that may be required or appropriate as a result of applicable laws or regulations; (5) the ability of HCM II to meet applicable listing standards following the consummation of the Merger; (6) the risk that the Merger disrupts current plans and operations of the Company as a result of the announcement and consummation of the Merger; (7) the ability to recognize the anticipated benefits of the Merger, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably, continue developing its properties, maintain relationships with customers and suppliers, and retain its management and key employees; (8) costs related to the Merger and the Domestication described in the Business Combination Agreement; (9) changes in applicable laws or regulations; (10) the possibility that the Company and/or its related entities may be adversely affected by other economic, business, and/or competitive factors; (11) the amount of redemption requests made by the HCM II public shareholders; and (12) other risks and uncertainties set forth in the section entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in HCM II’s prospectus dated August 15, 2024 and filed with the SEC on August 16, 2024 and HCM II’s other filings with the SEC, as well as any further risks and uncertainties to be contained in the proxy statement/prospectus filed after the date hereof. In addition, there may be additional risks that neither HCM II or the Company presently know, or that HCM II or the Company currently believe are immaterial, that could also cause actual results to differ from those contained in the forward-looking statements. Nothing in this Current Report should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Except as may be required by law, neither HCM II nor the Company undertakes any duty to update these forward-looking statements.
8
No Offer or Solicitation
This Current Report on Form 8-K is not a proxy statement or solicitation of a proxy, consent, or authorization with respect to any securities or in respect of the potential transaction and will not constitute an offer to sell or a solicitation of an offer to buy any securities, nor will there be any sale of any securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits. |
Exhibit Number |
Description | |
| 2.1 † | Business Combination Agreement, dated March 26, 2025, by and among HCM II Acquisition Corp, HCM Merger Sub Inc. and Terrestrial Energy Inc. | |
| 10.1 | Form of the PIPE Subscription Agreement | |
| 10.2 | Sponsor Support Agreement, dated March 26, 2025, by and among HCM Investor Holdings II, LLC, HCM II Acquisition Corp., and Terrestrial Energy Inc. | |
| 99.1* | Press Release, dated March 26, 2025. | |
| 99.2 | Investor Presentation. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| † | Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. |
| * | This exhibit is furnished pursuant to Item 7.01 hereof and should not be deemed to be “filed” under the Securities Exchange Act of 1934, as amended. |
9
SIGNATURES
Pursuant to the requirements 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 hereunto duly authorized.
| HCM ACQUISITION CORP. | ||
| By: | /s/ Shawn Matthews | |
| Name: | Shawn Matthews | |
| Title: | Chief Executive Officer | |
| Date: March 26, 2025 | ||
10
Exhibit 2.1
Dated MARCH MARCH 26, 2025
Business Combination Agreement
by and among
HCM II Acquisition Corp.,
HCM II Merger Sub Inc.
and
Terrestrial Energy Inc.
Table of Contents
| Page | ||
| Article I THE TRANSACTIONS | 4 | |
| Section 1.01 | The Domestication | 4 |
| Section 1.02 | The Merger | 4 |
| Section 1.03 | Further Assurances | 5 |
| Article II CONSIDERATION | 5 | |
| Section 2.01 | Company Securities | 5 |
| Section 2.02 | Conversion of Securities | 6 |
| Section 2.03 | Surrender and Payment | 7 |
| Section 2.04 | Dissenting Shares | 8 |
| Section 2.05 | Adjustment | 9 |
| Section 2.06 | No Fractional Shares | 9 |
| Section 2.07 | Lost or Destroyed Certificates | 9 |
| Section 2.08 | Withholding | 9 |
| Article III CLOSING | 9 | |
| Section 3.01 | Closing | 9 |
| Section 3.02 | Closing Documents | 10 |
| Section 3.03 | Payment of Expenses | 10 |
| Article IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY | 11 | |
| Section 4.01 | Organization and Standing | 11 |
| Section 4.02 | Authorization; Binding Agreement | 11 |
| Section 4.03 | Capitalization | 12 |
| Section 4.04 | Subsidiaries | 12 |
| Section 4.05 | No Conflict; Governmental Consents and Filings | 13 |
| Section 4.06 | Financial Statements | 13 |
| Section 4.07 | Undisclosed Liabilities | 14 |
| Section 4.08 | Absence of Certain Changes | 14 |
| Section 4.09 | Compliance with Laws | 14 |
| Section 4.10 | Government Contracts | 15 |
| Section 4.11 | Company Permits | 15 |
| Section 4.12 | Litigation | 15 |
| Section 4.13 | Material Contracts | 15 |
| Section 4.14 | Intellectual Property | 17 |
| Section 4.15 | U.S. Nuclear Regulatory Matters | 20 |
| Section 4.16 | Taxes and Returns | 20 |
| Section 4.17 | Real Property | 22 |
| Section 4.18 | Personal Property | 22 |
| Section 4.19 | Employee Matters | 23 |
| Section 4.20 | Benefit Plans | 24 |
| Section 4.21 | Environmental Matters | 25 |
| Section 4.22 | Transactions with Related Persons | 26 |
| Section 4.23 | Insurance | 26 |
| Section 4.24 | Top Customers and Suppliers | 27 |
| Section 4.25 | Certain Business Practices | 27 |
| Section 4.26 | Investment Company Act | 28 |
| Section 4.27 | Finders and Brokers | 28 |
| Section 4.28 | Independent Investigation | 28 |
(i)
| Section 4.29 | Information Supplied | 29 |
| Section 4.30 | No Additional Representations or Warranties | 29 |
| Article V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND MERGER SUB | 29 | |
| Section 5.01 | Organization and Standing | 29 |
| Section 5.02 | Authorization; Binding Agreement | 30 |
| Section 5.03 | Governmental Approvals | 30 |
| Section 5.04 | Non-Contravention | 30 |
| Section 5.05 | Capitalization | 31 |
| Section 5.06 | SEC Filings and Purchaser Financials | 32 |
| Section 5.07 | Absence of Certain Changes | 33 |
| Section 5.08 | Undisclosed Liabilities | 34 |
| Section 5.09 | Compliance with Laws | 34 |
| Section 5.10 | Legal Proceedings; Orders; Permits | 34 |
| Section 5.11 | Taxes and Returns | 34 |
| Section 5.12 | Properties | 35 |
| Section 5.13 | Investment Company Act | 36 |
| Section 5.14 | Contracts | 36 |
| Section 5.15 | Trust Account | 36 |
| Section 5.16 | Finders and Brokers | 36 |
| Section 5.17 | Certain Business Practices | 37 |
| Section 5.18 | Insurance | 38 |
| Section 5.19 | Information Supplied | 38 |
| Section 5.20 | Independent Investigation | 38 |
| Section 5.21 | No Additional Representation or Warranties | 39 |
| Article VI COVENANTS | 39 | |
| Section 6.01 | Access and Information; Cooperation | 39 |
| Section 6.02 | Conduct of Business of the Company | 40 |
| Section 6.03 | Conduct of Business of the Purchaser | 44 |
| Section 6.04 | Annual and Interim Financial Statements | 46 |
| Section 6.05 | Purchaser Public Filings | 46 |
| Section 6.06 | No Solicitation | 47 |
| Section 6.08 | Notification of Certain Matters | 48 |
| Section 6.09 | Efforts | 48 |
| Section 6.10 | Trust Account | 50 |
| Section 6.11 | Tax Matters | 50 |
| Section 6.12 | Further Assurances | 51 |
| Section 6.13 | The Preparation of Proxy Statement/Registration Statement; | 52 |
| Section 6.14 | Employee Matters | 54 |
| Section 6.15 | Public Announcements | 54 |
| Section 6.16 | Confidential Information | 55 |
| Section 6.17 | Documents and Information | 56 |
| Section 6.18 | Post-Closing Board of Directors and Executive Officers | 56 |
| Section 6.19 | Indemnification of Directors and Officers; Tail Insurance | 57 |
| Section 6.20 | PIPE Investment | 58 |
| Section 6.21 | Redemption | 58 |
| Section 6.22 | Domestication | 59 |
| Section 6.23 | Adoption of Proxy Statement/Registration Statement | 59 |
| Section 6.24 | Compliance | 59 |
| Section 6.25 | Employment Agreements | 59 |
(ii)
| Section 6.26 | Transaction Support Agreement; Company Stockholder Approval | 59 |
| Section 6.27 | NRC Communications | 60 |
| Section 6.28 | Post-Closing Organizational Documents; Capital Stock. | 60 |
| Section 6.29 | ExchangeCo Recapitalization | 60 |
| Article VII CLOSING CONDITIONS | 61 | |
| Section 7.01 | Conditions to Each Party’s Obligations | 61 |
| Section 7.02 | Conditions to Obligations of the Company | 61 |
| Section 7.03 | Conditions to Obligations of the Purchaser and Merger Sub | 63 |
| Section 7.04 | Frustration of Conditions | 64 |
| Article VIII TERMINATION AND EXPENSES | 64 | |
| Section 8.01 | Termination | 64 |
| Section 8.02 | Effect of Termination | 66 |
| Article IX MISCELLANEOUS | 66 | |
| Section 9.01 | No Survival | 66 |
| Section 9.02 | Notices | 66 |
| Section 9.03 | Binding Effect; Assignment | 67 |
| Section 9.04 | Third Parties | 67 |
| Section 9.05 | Governing Law | 67 |
| Section 9.06 | Jurisdiction | 67 |
| Section 9.07 | WAIVER OF JURY TRIAL | 67 |
| Section 9.08 | Specific Performance | 68 |
| Section 9.09 | Severability | 68 |
| Section 9.10 | Amendment; Waiver | 68 |
| Section 9.11 | Entire Agreement | 68 |
| Section 9.12 | Interpretation | 69 |
| Section 9.13 | Counterparts | 69 |
| Section 9.14 | Legal Representation | 69 |
| Section 9.15 | Waiver of Claims Against Trust | 70 |
| Section 9.16 | Company and Purchaser Disclosure Letters | 71 |
| Section 9.17 | Transferred Information | 71 |
| Article X DEFINITIONS | 71 | |
| Section 10.01 | Certain Definitions | 71 |
| Exhibits | |
| Exhibit A | Form of Certificate of Merger |
| Exhibit B | Transaction Support Agreements |
| Exhibit C | Form of Registration Rights Agreement |
| Exhibit D | Form of Sponsor Lock-Up Agreement |
| Exhibit E | Form of Key Holders Lock-Up Agreement |
(iii)
BUSINESS COMBINATION AGREEMENT
This Business Combination Agreement (this “Agreement”) is made and entered into as of March 26, 2025, by and among (i) HCM II Acquisition Corp., a Cayman Islands exempted company (which shall transfer by way of continuation and domesticate as a Delaware corporation prior to Closing) (the “Purchaser”), (ii) HCM II Merger Sub Inc., a Delaware corporation and a direct wholly owned subsidiary of the Purchaser (“Merger Sub”) and (iii) Terrestrial Energy Inc., a Delaware corporation (the “Company”). The Purchaser, Merger Sub and the Company are sometimes referred to herein individually as a “Party” and, collectively, as the “Parties.”
RECITALS:
WHEREAS, the Purchaser is a special purpose acquisition company incorporated as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses;
WHEREAS, Merger Sub is a newly incorporated Delaware corporation, wholly owned by the Purchaser, and was formed for the purpose of effectuating the Merger (as defined below);
WHEREAS, at least one (1) day prior to the Closing Date (as defined below) and subject to the satisfaction or waiver of the conditions of this Agreement (other than those conditions that by their nature are to be satisfied at the Closing), the Purchaser shall transfer by way of continuation from the Cayman Islands to the State of Delaware and domesticate as a Delaware corporation in accordance with Section 388 of the General Corporation Law of the State of Delaware, as amended (the “DGCL”), and Part XII of the Companies Act (as revised) of the Cayman Islands (the “Cayman Companies Act,” and such continuation and domestication, the “Domestication”);
WHEREAS, (a) immediately prior to the Domestication, each then issued and outstanding Purchaser Class B Ordinary Share shall convert automatically, on a one-for-one basis, into one (1) Purchaser Class A Ordinary Share (the “Sponsor Share Conversion”) and (b) immediately following the Sponsor Share Conversion, in connection with the Domestication, (i) each then issued and outstanding Purchaser Class A Ordinary Share (other than any Purchaser Class A Ordinary Share included in the Cayman Purchaser Units) shall convert automatically, on a one-for-one basis, into one (1) share of Domesticated Purchaser Common Stock, (ii) each then issued and outstanding warrant of the Purchaser (other than any Cayman Purchaser Public Warrants included in the Cayman Purchaser Units) (each a “Cayman Purchaser Warrant”) shall convert automatically into a warrant to acquire one (1) share of Domesticated Purchaser Common Stock (each a “Domesticated Purchaser Warrant”), pursuant to the Warrant Agreement, and (iii) each then issued and outstanding Cayman Purchaser Unit shall be cancelled and will thereafter entitle the holder thereof to one (1) share of Domesticated Purchaser Common Stock and one-half (1/2) of one (1) Domesticated Purchaser Warrant, in each case without any action on the part of the Purchaser, Merger Sub, the Company or any holder of securities of any of the foregoing;
WHEREAS, in order to effectuate the Domestication, and subject to the satisfaction or waiver of the conditions of this Agreement (other than those conditions that by their nature are to be satisfied at the Closing), the Purchaser shall (a) file all applicable notices, declarations, affidavits, statements of assets and liabilities, stockholder approvals, undertakings and other documents required to be filed, pay all applicable fees required to paid, and cause the satisfaction of all other conditions to deregistration required to be satisfied, in each case, in accordance with Part XII of the Cayman Companies Act and in accordance therewith, (b) file the Post-Closing Charter (as defined in Section 6.28 herein) with the Secretary of State of the State of Delaware and (c) adopt the Post-Closing Bylaws (as defined Section 6.28 herein);
WHEREAS, upon the terms and subject to the conditions of this Agreement, and in accordance with the DGCL and the Cayman Companies Act, as applicable, the Parties intend to enter into a business combination transaction by which the Company and Merger Sub will file with the Secretary of State of the State of Delaware a certificate of merger substantially in the form attached hereto as Exhibit A (the “Certificate of Merger”) in accordance with the applicable provisions of the DGCL and pursuant thereto Merger Sub will merge with and into the Company (the “Merger,” and together with the Domestication and the other transactions contemplated by this Agreement and the Ancillary Documents, the “Transactions”), with the Company being the surviving company of the Merger (the Company, in its capacity as the surviving corporation of the Merger, is sometimes referred to as the “Surviving Company”);
1
WHEREAS, as a condition and inducement to the Company’s willingness to enter into this Agreement, simultaneously with the execution and delivery of this Agreement, the Sponsor has executed and delivered to the Company the Sponsor Support Agreement, dated as of the date hereof (the “Sponsor Support Agreement”), pursuant to which the Sponsor has agreed to, among other things, vote to adopt and approve this Agreement and the other documents contemplated hereby (including the applicable Ancillary Documents) and the transactions contemplated hereby and thereby;
WHEREAS, as promptly as reasonably practicable (and in any event within ten (10) Business Days) following the date of this Agreement, Persons with the right to cast at least fifty percent (50%) of the votes entitled to be cast at a special meeting of the stockholders of the Company if called as of the date of this Agreement to approve the Merger (collectively, the “Supporting Company Stockholders”) will duly execute and deliver to Purchaser a transaction support agreement, substantially in the form attached hereto as Exhibit B (collectively, the “Transaction Support Agreements”), pursuant to which each such Supporting Company Stockholder will agree to, among other things, support and vote in favor of this Agreement, the Ancillary Documents to which the Company is or will be a party and the transactions contemplated hereby and thereby (including the Merger);
WHEREAS, simultaneously with the execution and delivery of this Agreement or from time to time following the date hereof and prior to the Closing, the Purchaser may enter into subscription agreements on forms mutually acceptable to the Company and the Purchaser (the “PIPE Subscription Agreements”) with investors (the “PIPE Investors”) pursuant to which, and on the terms and subject to the conditions of which, the PIPE Investors will agree to make a private investment in the Purchaser, which commitment may be subject to potential offset by certain Purchaser Class A Ordinary Shares owned by the PIPE Investors that the PIPE Investors do not redeem (such investments, the “PIPE Investment”);
WHEREAS, in connection with the consummation of the Transactions, simultaneously with the Closing, the Sponsor, the Purchaser and certain other shareholders of the Company to be mutually agreed by the Company and Purchaser (the “Restricted Company Securityholders”) will enter into a Registration Rights Agreement (the “Registration Rights Agreement”) in substantially the form attached hereto as Exhibit C, with such changes thereto as may be agreed in writing by the Purchaser and the Company;
WHEREAS, in connection with the consummation of the Transactions, simultaneously with the Closing, (a) the Sponsor will enter into a lock-up Agreement (the “Sponsor Lock-Up Agreement”) in substantially the form attached hereto as Exhibit D and (b) the Key Holders will enter into a lock-up Agreement (the “Key Holders Lock-Up Agreement”) in substantially the form attached hereto as Exhibit E, with such changes thereto as may be agreed in writing by the Purchaser and the Company, in each case with such changes to the forms attached hereto as Exhibits D and E as may be agreed in writing by the Purchaser and the Company;
WHEREAS, prior to the consummation of the Merger, the Company and the Purchaser will enter into an assignment and assumption agreement in a form mutually acceptable to the Company and the Purchaser (the “Warrant Assignment and Assumption Agreement”), which will provide for the assignment and assumption by the Purchaser of the Company’s rights and obligations under the Company Warrants, which will be effective as of the Effective Time;
2
WHEREAS, the Parties intend that, for U.S. federal, and applicable state and local, income tax purposes, (a) the Domestication qualifies as a “reorganization” described in Section 368(a)(1)(F) of the Code and the Treasury Regulations promulgated thereunder, (b) the Sponsor Share Conversion is treated as a “reorganization” described in Section 368(a)(1)(E) of the Code and the Treasury Regulations promulgated thereunder, and (c) the Merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code and the Treasury Regulations promulgated thereunder (each an “Intended Tax Treatment,” and collectively, the “Intended Tax Treatments”), and that this Agreement be, and hereby is, adopted as a “plan of reorganization” for the purposes of Section 368 of the Code and Treasury Regulations Section 1.368-2(g) with respect to each of the reorganizations described in the foregoing clauses;
WHEREAS, following the date hereof, the Target Companies shall take or cause to be taken such actions the Target Companies determine in their sole discretion to be necessary or advisable to provide the holders of Exchangeable Shares with the ability to continue to hold, following the Closing, Exchangeable Shares (the “ExchangeCo Recapitalization”), including by causing ExchangeCo to call a special meeting of its shareholders to vote on a proposal to effectuate the ExchangeCo Recapitalization;
WHEREAS, if the ExchangeCo Recapitalization has been completed prior to or concurrently with the Closing, then prior to the consummation of the Merger, the Company, the Purchaser, CallCo, and ExchangeCo will enter into the Amended & Restated Exchange and Support Agreement, pursuant to which, among other things, the Exchange and Support Agreement will be amended and restated in its entirety and the Purchaser will assume certain rights and obligations of the Company with respect to the exchange of exchangeable shares of the Company following the ExchangeCo Recapitalization;
WHEREAS, the board of directors of the Company has unanimously: (a) determined that the Merger in the best interests of the Company and the stockholders of the Company, and declared it advisable; (b) approved, adopted and declared advisable this Agreement, the Ancillary Documents to which the Company is or will be a party and the consummation of the Transactions, including the Merger; and (c) resolved to recommend adoption and approval of this Agreement by the stockholders of the Company;
WHEREAS, the board of directors of the Purchaser has unanimously: (a) determined that (i) the Merger is in the best interests of the Purchaser and the Purchaser Shareholders, as a whole, and declared it advisable for the Purchaser to enter into this Agreement and the Ancillary Documents providing for the Merger and the other Transactions, and (ii) the Transactions constitute a “Business Combination” as such term is defined in the Cayman Purchaser Charter; (b) approved and declared advisable this Agreement, the Ancillary Documents to which the Purchaser is or will be a party and the consummation of the Transactions, including the Merger; (c) adopted a resolution recommending the adoption of the Agreement and the approval of the Merger and the other Transactions by the stockholders of the Purchaser; and (d) directed that this Agreement, the Merger and the other Transactions be submitted to the stockholders of the Purchaser for their adoption and approval;
WHEREAS, the board of directors of Merger Sub has unanimously: (a) determined that the Merger in the best interests of Merger Sub and the sole stockholder of Merger Sub, and declared it advisable; (b) approved, adopted and declared advisable this Agreement, the Ancillary Documents to which Merger Sub is or will be a party and the consummation of the Transactions, including the Merger; and (c) resolved to recommend adoption of this Agreement by the sole stockholder of Merger Sub;
WHEREAS, the Purchaser, as the sole stockholder of Merger Sub, has approved and adopted this Agreement, the Ancillary Documents to which Merger Sub is or will be a party and the consummation of the Transactions, including the Merger; and
WHEREAS, in furtherance of the Merger and in accordance with the terms hereof, the Purchaser shall provide an opportunity to the holders of its public shares to have their public shares redeemed on the terms and conditions set forth in this Agreement and the Purchaser’s Organizational Documents, which redemption shall occur at least one (1) day prior to the Domestication as set forth in this Agreement (the “Redemption”).
3
NOW, THEREFORE, in consideration of the premises set forth above, and the representations, warranties, covenants and agreements contained in this Agreement, and for other consideration, the receipt and sufficiency of which is acknowledged and agreed to by the Parties, and intending to be legally bound hereby, the Parties hereto agree as follows:
Article I
THE TRANSACTIONS
Section 1.01 The Domestication.
(a) Domestication. Upon the terms and subject to the satisfaction or waiver of the conditions of this Agreement (other than those conditions that by their nature are to be satisfied at Closing), and in accordance with the DGCL and the Cayman Companies Act, at least one (1) day after the Redemption and at least one (1) day prior to the Closing, the Purchaser shall, in accordance with applicable Law, any applicable rules and regulations of the SEC, Nasdaq and the Purchaser’s Organizational Documents, as applicable, cause the Domestication to become effective, including by (i) filing with the Delaware Secretary of State a certificate of corporate domestication with respect to the Domestication, in form and substance reasonably acceptable to the Purchaser and the Company, together with the Post-Closing Charter, in each case, in accordance with the provisions thereof and applicable Law, (ii) adopting the Post-Closing Bylaws upon Domestication, (iii) completing and making and procuring all those filings required to be made with the Cayman Registrar in connection with the Domestication, and (iv) filing with the Cayman Registrar all applicable notices, declarations, affidavits, statements of assets and liabilities, stockholder approvals, undertakings and other documents required to be filed, pay all applicable fees required to paid, and cause the satisfaction of all other conditions to deregistration required to be satisfied, in each case, under Part XII of the Cayman Companies Act and obtaining a certificate of de-registration from the Cayman Registrar.
(b) Effect on Purchaser Securities. (i) Immediately prior to the Domestication, pursuant to the Cayman Purchaser Charter, the Sponsor Share Conversion shall occur; and (ii) immediately following the Sponsor Share Conversion, in connection with the Domestication: (A) each then issued and outstanding Purchaser Class A Ordinary Share (other than any Purchaser Class A Ordinary Share included in the Cayman Purchaser Units) shall convert automatically, on a one-for-one basis, into one (1) share of Domesticated Purchaser Common Stock; (B) each then issued and outstanding Cayman Purchaser Warrant (other than any Cayman Purchaser Public Warrants included in the Cayman Purchaser Units) shall convert automatically into one (1) Domesticated Purchaser Warrant, pursuant to the Warrant Agreement; and (C) each then issued and outstanding Cayman Purchaser Units shall be cancelled and will thereafter entitle the holder thereof to one (1) share of Domesticated Purchaser Common Stock and one-half (1/2) of one (1) Domesticated Purchaser Warrant, in each case without any action on the part of the Purchaser, Merger Sub, the Company or any holder of securities of any of the foregoing.
Section 1.02 The Merger.
(a) Effective Time. Upon the terms and subject to the satisfaction or waiver of the conditions of this Agreement (other than those conditions that by their nature are to be satisfied at Closing), on the Closing Date the Company and Merger Sub shall cause the Merger to be consummated by filing the Certificate of Merger with the Secretary of State of the State of Delaware, in accordance with the applicable provisions of the DGCL (the time of such filing, or such later time as may be agreed in writing by the Company, Merger Sub and Purchaser and specified in the Certificate of Merger, being the “Effective Time”).
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(b) Merger. At the Effective Time, upon the terms and subject to the satisfaction or waiver of the conditions of this Agreement (other than those conditions that by their nature are to be satisfied at Closing), Merger Sub and the Company shall consummate the Merger, pursuant to which Merger Sub shall be merged with and into the Company, following which the separate corporate existence of Merger Sub shall cease and the Company shall continue as the Surviving Company after the Merger and as a direct, wholly owned subsidiary of the Purchaser. References to the Company for periods after the Effective Time shall include the Surviving Company.
(c) Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in this Agreement, the Certificate of Merger and the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, agreements, powers and franchises, debts, liabilities, duties and obligations of Merger Sub and the Company shall become the property, rights, privileges, agreements, powers and franchises, debts, liabilities, duties and obligations of the Surviving Company, which shall include the assumption by the Surviving Company of any and all agreements, covenants, duties and obligations of Merger Sub and the Company set forth in this Agreement to be performed after the Effective Time.
(d) Surviving Company Share. At the Effective Time, by virtue of the Merger and without any action on the part of any Party or any other Person, each share of capital stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be automatically cancelled and extinguished and converted into one (1) share of common stock, par value $0.001, of the Surviving Company (each such share, a “Surviving Company Share”).
(e) Organizational Documents. At the Effective Time, the Organizational Documents of the Company shall be amended and restated to be in the forms of certificate of incorporation and bylaws to be mutually agreed upon by the Purchaser and the Company prior to the Closing Date, which shall be the certificate of incorporation and bylaws of the Surviving Company until thereafter duly amended in accordance with the terms thereof and applicable Law.
(f) Directors and Officers of the Surviving Company. Immediately after the Effective Time, the initial board of directors and executive officers of the Surviving Company shall be as determined by the Company and the Purchaser pursuant to Section 6.18 and otherwise in accordance with the terms of this Agreement.
Section 1.03 Further Assurances. From time to time after the Closing Date, upon the reasonable written request of any Party, each Party shall execute, acknowledge and deliver such further instruments and documents, and take such additional reasonable action, to effect, consummate, confirm or evidence the Transactions and carry out the purpose this Agreement.
Article
II
CONSIDERATION
Section 2.01 Company Securities. The consideration to be paid in, or in connection with, the Merger in respect of each Company Common Share and each Company Series A Preferred Share that is issued and outstanding, or deemed to be issued and outstanding (including all Company Common Shares deemed to be issued and outstanding pursuant to Section 2.02(a) and Section 2.02(b)), immediately prior to the Effective Time, shall be a number of shares of Domesticated Purchaser Common Stock equal to the Exchange Ratio (the “Per Share Base Consideration”).
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Section 2.02 Conversion of Securities.
(a) Exchangeable Shares.
(i) If the ExchangeCo Recapitalization has been completed prior to or concurrently with the Closing, then, at the Effective Time, each Exchangeable Share that is issued and outstanding immediately prior to the Effective Time shall thereafter be exchangeable for Domesticated Purchaser Common Stock rather than Company Common Shares in accordance with the terms and conditions of such Exchangeable Shares (including, for the avoidance of doubt, taking into account the Exchange Ratio).
(ii) If the ExchangeCo Recapitalization has not been completed prior to or concurrently with the Closing, then immediately prior to the Effective Time, but conditional upon the Closing, the Company shall cause the following actions to be taken in the sequence set forth below (collectively, the “Exchange”) (provided, that upon their completion such actions shall be deemed to have occurred one (1) Business Day prior to the Closing Date in accordance with the ExchangeCo Articles): (i) CallCo shall exercise its call right to purchase all of the Exchangeable Shares in exchange for the applicable Exchangeable Share Consideration, (ii) CallCo shall issue common shares to the Company in an amount equal to the value of the Exchangeable Share Consideration in exchange for the Company agreeing to issue and deliver the applicable Exchangeable Share Consideration to each holder of Exchangeable Shares, (iii) each Exchangeable Share shall thereupon be transferred to CallCo, and (iv) the Company will issue Company Common Shares and Company Series A Preferred Shares, as applicable, to the holders of the Exchangeable Shares. Upon the Exchange: (A) each Company Series A Preferred Share issued or issuable in the Exchange shall be treated as being issued and outstanding immediately prior to the Effective Time and, pursuant to Section 2.02(b)(ii) (and without duplication), shall be cancelled and converted into such number of Company Common Shares at the then-effective conversion rate as calculated pursuant to the Company Certificate of Incorporation; (B) each Company Common Share issued or issuable upon the Exchange shall be treated as being issued and outstanding immediately prior to the Effective Time and, pursuant to Section 2.02(b)(iii) (and without duplication), shall be cancelled and converted into the right to receive the Per Share Base Consideration; and (C) each Company Special Voting Preferred Share that is issued and outstanding shall be automatically cancelled for no consideration in accordance with the Company Certificate of Incorporation.
(b) Effect on Company Securities. At the Effective Time, by virtue of the Merger and without any action on the part of the Purchaser, Merger Sub, the Company or any holder of securities of any of the foregoing:
(i) each Company Common Share and Company Series A Preferred Share that, immediately prior to the Effective Time, is owned by the Purchaser or Merger Sub (or any other subsidiary of the Purchaser), or held by the Company (in treasury or otherwise), if any (each, an “Excluded Share”), shall be automatically cancelled and retired without any conversion thereof and shall cease to exist, and no consideration shall be delivered in exchange therefore;
(ii) each Company Series A Preferred Share that is issued and outstanding immediately prior to the Effective Time (other than Excluded Shares and any Dissenting Shares) shall be cancelled and converted into the right to receive a number of shares of Domesticated Purchaser Common Stock equal to: (A) the number of shares of Company Common Shares into which such Company Series A Preferred Share would be converted in accordance with the Company’s Organizational Documents as of immediately prior to the Effective Time; multiplied by (B) the Per Share Base Consideration;
(iii) each Company Option that is outstanding immediately prior to the Effective Time shall be automatically assumed by the Purchaser such that, as of the Effective Time, each share underlying each Company Option shall instead be shares of Domesticated Purchaser Common Stock and the number of such shares shall be equal to the Exchange Ratio; provided, that the assumption and adjustment of the unvested Company Options shall be completed in a manner that satisfies the requirements of Section 409A and, with respect to any Company Option intended to be an “incentive stock option,” Section 422 of the Code and the applicable regulations promulgated thereunder;
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(iv) each Company Common Share that is issued and outstanding immediately prior to the Effective Time (other than Excluded Shares and any Dissenting Shares) shall be cancelled and converted into the right to receive the Per Share Base Consideration; and
(v) if the ExchangeCo Recapitalization has been completed prior to or concurrently with the Closing, each Company Special Voting Preferred Share that is issued and outstanding immediately prior to the Effective Time and following the Exchange, if applicable, shall be cancelled and converted into the right to receive one share of Domesticated Purchaser Voting Stock.
(c) Effect on Company Warrants. At the Effective Time, by virtue of the Merger and without any action on the part of the Purchaser, Merger Sub, the Company or any holder of securities of any of the foregoing, each Company Warrant that is outstanding and unexercised immediately prior to the Effective Time shall automatically become exercisable, in accordance with the terms and conditions of such Company Warrant, for the Per Share Base Consideration. The Purchaser hereby agrees to assume the obligation to issue the Domesticated Purchaser Common Stock upon the exercise of Company Warrants following the Effective Time pursuant to the terms of the Warrant Assignment and Assumption Agreement.
(d) Effect on Company Convertible Notes. No Company Convertible Note shall be continued, assumed or substituted for by the Merger Sub or the Company as part of the Merger. Contingent on and effective immediately prior to the Effective Time, each Company Convertible Note that is outstanding immediately prior to the Effective Time shall be cancelled and converted at the Effective Time pursuant to its terms, and the holder thereof shall be entitled to receive, without interest, assuming the delivery of the lock-up agreement contemplated by such Company Convertible Note: (i) a number of shares of Domesticated Purchaser Common Stock equal to (A) the outstanding amount of such Company Convertible Note, including any accrued and unpaid interest, divided by (B) seventy-five percent (75%) of the Redemption Price (the “Company Convertible Note Share Consideration”); and (ii) a contingent value right (the “Company Convertible Note CVR”) to receive additional shares of Domesticated Purchaser Common Stock in the event that the volume weighed average price of the Domesticated Purchaser Common Stock for the twenty (20) Trading Days beginning on the Trading Day immediately following the expiration of the lock-up period contemplated by the applicable Company Convertible Note is less than seventy-five percent (75%) of the Redemption Price.
Section 2.03 Surrender and Payment.
(a) Exchange Fund. Immediately prior to or at the Effective Time, the Purchaser shall deposit, or cause to be deposited, with Continental for the benefit of the Company Stockholders and the Company Noteholders evidence in book-entry form of shares of Domesticated Purchaser Common Stock representing the number of shares of Domesticated Purchaser Common Stock sufficient to deliver the aggregate Per Share Base Consideration (the “Exchange Fund”). The Purchaser shall cause Continental, pursuant to irrevocable instructions, to pay the Per Share Base Consideration out of the Exchange Fund in accordance with the terms of this Agreement.
(b) Stock Exchange Procedures. Within two (2) Business Days following the effectiveness of the Proxy Statement/Registration Statement, the Purchaser shall cause Continental to deliver to each holder of Company Securities and each holder of Exchangeable Shares, a letter of transmittal and instructions for exchanging each such holder’s Company Common Shares or Company Series A Preferred Shares (for the avoidance of doubt, including the Company Common Shares and/or the Company Series A Preferred Shares to be issued to such holder in connection with the Exchange), as applicable, for such holder’s applicable portion of the Per Share Base Consideration from the Exchange Fund, and which shall be in a form determined by the Company (a “Letter of Transmittal”). Promptly following receipt of a properly completed and executed Letter of Transmittal, and in any event within two (2) Business Days following the Closing, Continental shall deliver the applicable portion of the Per Share Base Consideration to each such holder. Effective as of one (1) Business Day prior to the Company Stockholder Meeting, the Company will not record or recognize any transfers of Company Securities on the record books of the Company, other than (i) transfers necessary to effectuate the Exchange and (ii) transfers as to which the Company has been notified of, in writing, prior to the Company Stockholder Meeting.
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(c) Note Exchange Procedures. Promptly following the effectiveness of the Proxy Statement/Registration Statement, Purchaser shall cause Continental to deliver to each holder of Company Convertible Notes a notice and letter of instruction (a “Letter of Instruction”) notifying each such holder of (i) the deemed cancellation and conversion at the Effective Time of any Company Convertible Note outstanding immediately prior to the Effective Time, (ii) the right of the holder of any such Company Convertible Notes to receive such holder’s applicable portion of the Company Convertible Note Share Consideration, subject to the delivery of a properly completed and executed Letter of Instruction and the lock-up agreement contemplated by such Company Convertible Note and (iii) such holder’s contingent right to receive additional Domesticated Purchaser Common Stock pursuant to the Company Convertible Note and the Company Convertible Note CVR. Promptly following receipt of a properly completed and executed Letter of Instruction from a holder of Company Convertible Notes, and in any event within two (2) Business Days, Continental shall deliver the applicable portion of the Company Convertible Note Share Consideration to such holder.
(d) Termination of Exchange Fund. Promptly following the earlier of (i) the date on which the entire Exchange Fund has been disbursed and (ii) the date which is one (1) year after the Effective Time, the Purchaser shall instruct Continental to deliver to the Purchaser any remaining portion of the Exchange Fund and other documents in its possession related to the Transaction, and Continental’s duties shall terminate. Thereafter, each Company Stockholder and Company Noteholder may look only to the Purchaser (subject to applicable abandoned property, escheat or other similar Laws), as general creditors thereof, for satisfaction of such Company Stockholder’s or Company Noteholder’s claim for Per Share Base Consideration that such Company Stockholder or Company Noteholder may have the right to receive pursuant to Section 2.02 without any interest thereon. None of the Company, the Purchaser, the Surviving Company or Continental shall be liable to any Person for any portion of the Per Share Base Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. Notwithstanding any other provision of this Agreement, any portion of the Per Share Base Consideration that remains undistributed to Company Stockholders or Company Noteholders as of immediately prior to the date on which the Per Share Base Consideration would otherwise escheat to or become the property of any Governmental Authority shall, to the extent permitted by applicable Law, become the property of the Purchaser, free and clear of all claims or interest of any Person previously entitled thereto.
Section 2.04 Dissenting Shares. Notwithstanding any provision of this Agreement to the contrary and to the extent available under the DGCL, Company Common Shares and Company Series A Preferred Shares issued and outstanding immediately prior to the Effective Time (other than Company Common Shares and Company Series A Preferred Shares, if any, cancelled in accordance with Section 2.02(b)(i)) that are held by stockholders who have neither voted in favor of the Merger nor consented thereto in writing and who have demanded properly in writing appraisal or dissenters’ rights for such Company Common Shares or Company Series A Preferred Shares in accordance with Section 262 of the DGCL (collectively, the “Dissenting Shares”) and otherwise complied with all of the provisions of the DGCL relevant to the exercise and perfection of appraisal rights, shall not be converted into, and the holders of such Dissenting Shares shall have no right to receive, the applicable portion of the Per Share Base Consideration unless and until such holder fails to perfect or withdraws or otherwise loses his, her or its right to appraisal and payment under the DGCL. Notwithstanding the foregoing, if any such holder fails to perfect or otherwise waives, withdraws or loses the right to dissent under Section 262 of the DGCL, or if a court of competent jurisdiction determines that such holder is not entitled to the relief provided by Section 262 of the DGCL, such Dissenting Shares shall be treated as if they had been converted as of the Effective Time into the right to receive the portion of the Per Share Base Consideration to which such holder is entitled pursuant to the applicable subsections of Section 2.02, without interest thereon, upon surrender of the Certificate or Certificates representing such Dissenting Shares in accordance with Section 2.03.
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Section 2.05 Adjustment. The Per Share Base Consideration and the Exchange Ratio shall be adjusted to reflect appropriately the effect of any stock split, reverse stock split, stock dividend, recapitalization, reclassification, combination, exchange of shares or other like change with respect to Domesticated Purchaser Common Stock occurring prior to the date the shares comprising the Per Share Base Consideration is issued.
Section 2.06 No Fractional Shares. No fractional shares of Domesticated Purchaser Common Stock, or certificates or scrip representing fractional shares of Domesticated Purchaser Common Stock, will be issued upon the conversion of the TEI Securities pursuant to the Merger, and any such fractional shares or interests therein will not entitle the owner thereof to vote or to any rights of a stockholder of Purchaser. Any fractional shares of Domesticated Purchaser Common Stock will be rounded up to the nearest whole share of Domesticated Purchaser Common Stock, as applicable.
Section 2.07 Lost or Destroyed Certificates. Notwithstanding any other provision to this Agreement, if any Certificate shall have been lost, stolen or destroyed, then upon the making of a customary affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed in a form reasonably acceptable to the Company, Continental shall issue, in exchange for such lost, stolen or destroyed Certificate, the portion of the Per Share Base Consideration to be paid in respect of the Company Common Shares or Company Series A Preferred Shares formerly represented by such Certificate(s) as contemplated under this Agreement.
Section 2.08 Withholding. Notwithstanding any other provision to this Agreement, the Purchaser, Merger Sub, the Company, and the Surviving Company (and their respective Representatives) shall be entitled to deduct and withhold from any amount payable to any Person pursuant to this Agreement such Taxes that are required to be deducted or withheld with respect to such amounts under the Code, the Tax Act or under any provision of U.S. state or local or non-U.S. tax law. To the extent that amounts are so deducted and withheld and paid over to the appropriate Governmental Authorities, such amounts shall be treated for all purposes under this Agreement as having been paid to the Person in respect of which such deduction and withholding was made. Notwithstanding the foregoing, the Purchaser, Merger Sub, the Company and the Surviving Company shall use commercially reasonable efforts to provide recipients of any amounts payable that may be subject to withholdings with a reasonable opportunity to provide documentation establishing exemptions from or reductions of such withholdings. In the case of any such payment payable to employees of the Company or its Subsidiaries in connection with the Merger treated as compensation, the Parties shall reasonably cooperate to pay such amounts through the Company’s or the relevant Subsidiary’s payroll to facilitate applicable withholding.
Article
III
CLOSING
Section 3.01 Closing. Subject to the satisfaction or waiver of the conditions set forth in Article VII, the consummation of the Transactions (other than the transactions contemplated by this Agreement that by their nature are to be satisfied prior to the Closing) (the “Closing”) shall take place (a) electronically by the mutual electronic exchange of documents and signatures (including portable document format (.pdf)) at a time and date to be specified in writing by the Parties, which date shall be no later than the third (3rd) Business Day after all the Closing conditions in Article VII have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions), or (b) at such other date, time or place (including remotely) as the Purchaser and the Company may agree. The date on which the Closing occurs is referred to herein as the “Closing Date”.
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Section 3.02 Closing Documents.
(a) Purchaser Closing Certificate. At least one (1) Business Day prior to the Purchaser Shareholders’ Meeting and, in any event, not earlier than the time that the holders of Purchaser Class A Ordinary Shares may no longer elect to redeem their Purchaser Class A Ordinary Shares in connection with the Redemption, the Purchaser shall deliver to the Company a written notice (the “Purchaser Closing Certificate”) setting forth the Purchaser’s good faith calculation of the following: (i) the aggregate amount of cash in the Trust Account (prior to giving effect to the Redemptions); (ii) the aggregate amount of all payments that will be required to be made in connection with the Redemptions; (iii) the aggregate amount of the Purchaser Transaction Costs as of the Closing (including a breakdown by Person of amounts owed by the Purchaser); (iv) the repayment amount (if any) pursuant to the Convertible Promissory Note; and (v) the number of shares of Domesticated Purchaser Common Stock, the number of Domesticated Purchaser Warrants, and the number of shares of Domesticated Purchaser Common Stock that may be issued upon the exercise of all Domesticated Purchaser Warrants, in each case, to be outstanding as of the Closing and after giving effect to the Domestication, the Redemption and the issuance of securities in connection with the consummation of any PIPE Investment and any forfeiture of Domesticated Purchaser Warrants pursuant to the Sponsor Support Agreement (but excluding any shares of Domesticated Purchaser Common Stock to be issued in the Merger).
(b) Company Closing Certificate. At least two (2) Business Days prior to the Closing, the Company shall deliver to the Purchaser a written notice (the “Company Closing Certificate”) setting forth the Company’s good faith calculation of the aggregate amount of the Company Transaction Costs as of the Closing (including a breakdown by Person of amounts owed by the Company and wire instructions and applicable Tax forms for each such Person; provided, that the failure to provide wire instructions or Tax forms shall not affect the effectiveness of the Company’s compliance with this requirement).
(c) Access; Cooperation. From and after the delivery of the Purchaser Closing Certificate or the Company Closing Certificate, as the case may be, until the Closing Date, each of the Purchaser and the Company shall (i) provide the other Parties and their Representatives with reasonable access to information reasonably requested by the Purchaser or the Company or any of their respective Representatives in connection with the review of the Purchaser Closing Certificate or the Company Closing Certificate, as the case may be, (ii) consider in good faith any comments to the Purchaser Closing Certificate or the Company Closing Certificate, as the case may be, and (iii) revise the Purchaser Closing Certificate or the Company Closing Certificate, respectively, to incorporate any changes the Purchaser or the Company, respectively, reasonably determines are necessary or appropriate given such comments.
Section 3.03 Payment of Expenses.
(a) Company Transaction Costs. On the Closing Date, the Purchaser shall pay or cause to be paid by wire transfer of immediately available funds all Company Transaction Costs.
(b) Purchaser Transaction Costs. On the Closing Date, the Purchaser shall pay or cause to be paid by wire transfer of immediately available funds all Purchaser Transaction Costs.
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Article IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter dated as of the date of this Agreement delivered by the Company to the Purchaser (the “Company Disclosure Letter”) prior to or in connection with the execution and delivery of this Agreement or as are disclosed in the Company Financials, the Company hereby represents and warrants to the Purchaser and Merger Sub, as of the date hereof and as of the Closing, as follows:
Section 4.01 Organization and Standing. The Company is a Delaware corporation duly formed, validly existing and in good standing under the DGCL and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except as would not be material to the Target Companies, taken as a whole. Each Subsidiary of the Company is a corporation, limited liability company or other entity duly formed, validly existing and in good standing under the Laws of its jurisdiction of organization and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted, except as would not be material to the Target Companies, taken as a whole. Each Subsidiary of the Company is duly qualified or licensed and in good standing in the jurisdiction in which it is formed or registered and in each other jurisdiction where it does business or operates to the extent that the character of the property owned, or leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified or licensed or in good standing would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. The Company has provided to the Purchaser accurate and complete copies of the Target Companies’ Organizational Documents, each as amended to date and as currently in effect. No Target Company is in violation of any provision of its Organizational Documents in any material respect.
Section 4.02 Authorization; Binding Agreement. The Target Companies have all requisite power and authority to execute and deliver this Agreement and each Ancillary Document to which it is or is required to be a party, to perform the Target Companies’ respective obligations hereunder and thereunder and to consummate the Transactions, subject to obtaining the Company Stockholder Approval. The execution and delivery of this Agreement and each Ancillary Document to which each Target Company is or is required to be a party and the consummation of the transactions contemplated hereby and thereby, (a) have been duly and validly authorized by the applicable Target Company’s board of directors (or other similar governing body) in accordance with such Target Companies’ Organizational Documents, the DGCL, any other applicable Law or any Contract to which such Target Company or any of its stockholders is a party or by which it or its securities are bound and (b) other than the Company Stockholder Approval, no other proceedings on the part of the Target Companies are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the Transactions. This Agreement has been, and each Ancillary Document to which the Target Companies are or are required to be a party shall be when delivered, duly and validly executed and delivered by the Target Companies and assuming the due authorization, execution and delivery of this Agreement and any such Ancillary Document by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the legal, valid and binding obligation of the Target Companies, enforceable against the Target Companies in accordance with its terms, subject to the Enforceability Exceptions. The Company’s board of directors, by resolutions duly adopted, has (i) determined that this Agreement, the Ancillary Documents and the Transactions are advisable, and in the best interests of, the Company and the Company Stockholders and (ii) approved this Agreement and the Ancillary Documents and the Transactions in accordance with the DGCL, the Company’s Organizational Documents and any other applicable Law. The execution and delivery of this Agreement and each Ancillary Document to which the Company is or is required to be a party and the consummation of the Transactions do not require the approval of the Company Stockholders in their capacity as such, or by any class or series of the Company Stockholders, or by holders of any other TEI Securities, pursuant to the Company Certificate of Incorporation, the DGCL and any other applicable Laws.
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Section 4.03 Capitalization.
(a) Set forth on Section 4.03(a) of the Company Disclosure Letter is a true, correct and complete list of each record holder of: (i) Company Securities and the number and type of Company Securities held by each such holder as of the date hereof; (ii) Exchangeable Shares and the number and type of Exchangeable Shares held by each such holder as of the date hereof, subject to the additional information set forth on Section 4.03(a) of the Company Disclosure Letter; and (iii) all outstanding Company Options as of the date hereof.
(b) Prior to giving effect to the Transactions, all of the Company Securities are and will be owned free and clear of any Liens other than those imposed under the Company’s Organizational Documents, applicable securities Laws, or as set forth on Section 4.03(b)(i) of the Company Disclosure Letter, and other than the Company Securities, the Company does not have any other issued or outstanding common stock or any other securities. All of the issued and outstanding Company Securities have been duly authorized and validly issued in accordance with all applicable Laws, including applicable securities Laws, and the Company’s Organizational Documents, are fully paid and nonassessable and are not subject to, nor were they issued in violation of, any preemptive rights, rights of first refusal or similar rights, except where such violation or failure would not reasonably be expected to be, individually or in the aggregate, material to the Target Companies, taken as a whole. Except as set forth on Section 4.03(b)(ii) of the Company Disclosure Letter or in the Company’s Organizational Documents, there are no preemptive rights or rights of first refusal or first offer, nor are there any Contracts, commitments, arrangements or restrictions to which the Company or, to the Knowledge of the Company, any of its security holders is a party or bound relating to any Company Securities, whether or not outstanding. Except as set forth on Section 4.03(b)(iii) of the Company Disclosure Letter or as provided for in this Agreement, there are no (1) outstanding or authorized equity appreciation, phantom equity or similar rights with respect to the Company or (2) voting trusts, proxies, stockholder agreements or any other agreements or understandings with respect to the voting of the TEI Securities. Except as set forth in any Target Company’s Organizational Documents and the Exchange and Support Agreement, there are no outstanding contractual obligations of the Target Companies to repurchase, redeem or otherwise acquire any equity interests or securities of such Target Company, nor has any Target Company granted any registration rights to any Person with respect to such Target Companies’ securities. Except as disclosed in the Company Financials, since December 31, 2022, the Company has not declared or paid any distribution in respect of its equity interests and has not repurchased, redeemed or otherwise acquired any equity interests of the Company, and the board of directors of the Company has not authorized any of the foregoing.
(c) Except as provided for in this Agreement or as contemplated by the ExchangeCo Recapitalization, no units, warrants, options or other securities of the Target Companies are issuable as a result of the consummation of the Transactions.
Section 4.04 Subsidiaries. Section 4.04 of the Company Disclosure Letter sets forth the names of the Company’s direct and indirect Subsidiaries, and with respect to each Subsidiary (a) their jurisdiction of incorporation or organization, (b) all names other than its legal name under which any Subsidiary does business, as applicable, (c) its authorized shares or other equity interests (if applicable) and (d) the number of issued and outstanding shares or other equity interests and the record holders and beneficial owners thereof as of the date hereof. All of the outstanding equity securities of each Subsidiary of the Company are duly authorized and validly issued, fully paid and non-assessable (if applicable), were offered, sold and delivered in compliance with all applicable securities Laws, and, except with respect to ExchangeCo (which, in addition to the common shares of ExchangeCo issued to CallCo, also has issued and outstanding equity interests held by the stockholders specified in Section 4.03(a) of the Company Disclosure Letter), are owned by one or more of the Company or its Subsidiaries free and clear of all Liens (other than, if any, those imposed by such Subsidiary’s Organizational Documents, applicable securities Laws, Permitted Liens or immaterial Liens).
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Section 4.05 No Conflict; Governmental Consents and Filings.
(a) Except as otherwise described in Section 4.02, subject to the receipt of consents, approvals, authorizations and other requirements set forth in Section 4.02 of the Company Disclosure Letter, the execution, delivery and performance of this Agreement (including the consummation by the Target Companies of the Transactions) and the other Ancillary Documents to which the Target Companies are a party by the Target Companies, do not and will not: (i) violate any provision of, or result in the breach of, any applicable Law to which any Target Company is subject or by which any property or asset of any Target Company is bound; (ii) conflict with or violate the Organizational Documents of any Target Company; (iii) violate any provision of or result in a breach, default or acceleration of, require a consent under, or create any right to payment under any Company Material Contract, material Company Real Property Lease (as defined in Section 4.17(b) herein) or Material Current Government Contract, or terminate or result in the termination of any Company Material Contract, material Company Real Property Lease or Material Current Government Contract, or result in the creation of any Lien (other than a Permitted Lien) under any Company Material Contract, material Company Real Property Lease or Material Current Government Contract upon any of the properties or assets of any Target Company, or constitute an event which, after notice or lapse of time or both, would result in any such violation, breach, default, acceleration, termination or creation of a Lien (other than a Permitted Lien); or (iv) result in a violation or revocation of any required Consents, except to the extent that the occurrence of any of the foregoing items set forth in clauses (i), (iii) or (iv) would not, individually or in the aggregate, reasonably be expected to prevent, materially delay or materially impair the ability of the Company to consummate the Transactions or to have a Company Material Adverse Effect.
(b) Assuming the truth and completeness of the representations and warranties of the Purchaser and Merger Sub contained in this Agreement, no consent, notice, approval or authorization of, or designation, declaration or filing with, any Governmental Authority is required on the part of the Target Companies with respect to the Target Companies’ execution, delivery or performance of this Agreement, any of the other Ancillary Documents to which it is a party or the consummation by the Target Companies of the Transactions, except for: (i) any consents, notices, approvals, authorizations, designations, declarations or filings, the absence of which would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect; (ii) material compliance with any applicable requirements of the securities Laws and state takeover laws, the HSR Act and any other Antitrust Laws, and filing and recordation of appropriate merger documents as required by the DGCL; (iii) any declarations or filings with any Governmental Authority required in connection with the ExchangeCo Recapitalization, if applicable; and (iv) as otherwise disclosed on Section 4.05(b) of the Company Disclosure Letter.
Section 4.06 Financial Statements.
(a) The Company has provided to the Purchaser: (i) complete copies of the unaudited consolidated financial statements of the Target Companies as of and for the years ended December 31, 2024 and December 31, 2023, each consisting of the consolidated balance sheets of the Target Companies as of such dates and the related consolidated income statements and statements of cash flows for the periods then ended (the “Draft Company Financials”) and (ii) true, correct and complete copies of the audited consolidated financial statements of the Target Companies (including, in each case, any related notes thereto) as of and for the year ended December 31, 2022, consisting of the consolidated audited balance sheet of the Target Companies as of such date and the related consolidated audited income statement, changes in stockholder equity and statement of cash flows for the fiscal year then ended, audited in accordance with GAAP and PCAOB (the “Audited Company Financials”, together with the Draft Company Financials, the “Company Financials”). Except as set forth on Section 4.06(a) of the Company Disclosure Letter, (y) the Company Financials were derived in all material respects from the books and records of the Target Companies, which books and records are, in all material respects, true, correct and complete and have been maintained in all material respects in accordance with commercially reasonable business practices and (z) the Company Financials, when delivered, present fairly in all material respects, the consolidated financial position, results of operations, income (loss), changes in stockholder equity (in the case of the Audited Company Financials) and cash flows of the Target Companies as of the dates and for the periods indicated in such Company Financials in the case of the Audited Company Financials, in conformity with GAAP, and were derived from and accurately reflect in all material respects, the books and records of each of the Target Companies. No Target Company has ever been subject to the reporting requirements of Sections 13(a) and 15(d) of the Exchange Act.
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(b) The Target Companies have established and maintain a system of internal controls. Such internal controls are designed to provide reasonable assurance that (i) transactions are executed in all material respects in accordance with management’s authorization and (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for each Target Company’s assets.
(c) The Company has not identified and has not received written notice from an independent auditor of (i) any significant deficiency or material weakness in the system of internal controls utilized by the Company (other than a significant deficiency or material weakness that has been previously disclosed in writing to Purchaser and is set forth on Section 4.06(c) of the Company Disclosure Letter), (ii) any material fraud that involves the Company’s management or other employees who have a significant role in the preparation of financial statements or the internal controls over financial reporting utilized by the Company or (iii) any claim or allegation regarding any of the foregoing.
(d) There are no outstanding loans or other extensions of credit made by any Target Company to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of any Target Company.
Section 4.07 Undisclosed Liabilities. There is no liability, debt or obligation (absolute, accrued, contingent or otherwise) of any Target Company of a type required to be reflected or reserved for on a balance sheet prepared in accordance with GAAP, except for liabilities, debts and obligations: (a) provided for in, or otherwise reflected or reserved for on the Company Financials or disclosed in the notes thereto; (b) incurred in the ordinary course of the operation of business of the Company since the date of the most recent balance sheet included in the Company Financials; (c) incurred in connection with the Transactions;(d) set forth on Section 4.06(a) of the Company Disclosure Letter; or (e) which would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 4.08 Absence of Certain Changes. Except as set forth on Section 4.08 of the Company Disclosure Letter or in connection with the Redomiciliation or Internal Reorganization, and for activities conducted in connection with this Agreement and the transactions contemplated hereby, since April 5, 2024 through the date of this Agreement (a) each Target Company has conducted its business in the ordinary course of business consistent with past practice, (b) there has not been any Company Material Adverse Effect, and (c) no Target Company has taken any action or committed or agreed to take any action that would be prohibited by Section 6.02(b) (without giving effect to Section 6.02(b) of the Company Disclosure Letter) if such action were taken on or prior to the Closing without the consent of the Purchaser.
Section 4.09 Compliance with Laws. Provided that this Section 4.09 shall not apply with respect to the matters covered by Section 4.25, each Target Company has, during the past five (5) years, materially complied with, and is not currently in violation of, any applicable Law with respect to the conduct of its business, or the ownership or operation of its business, except for failures to comply or violations which, individually or in the aggregate, have not been and would not reasonably expected to be, material to the Target Companies, taken as a whole. Except as disclosed on Section 4.09 of the Company Disclosure Letter, no written, or to the Knowledge of the Company, oral notice of non-compliance with any applicable Law has been received that, individually or in the aggregate, would reasonably be expected to be material to the Target Companies, taken as a whole.
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Section 4.10 Government Contracts. Section 4.10 of the Company Disclosure Letter sets forth a list of each Contract with a Governmental Authority in existence as of the date hereof that involves aggregate payments to the Target Companies that are reasonably expected to be in excess of $300,000 (each, a “Material Current Government Contract”). Each Material Current Government Contract was legally awarded to the Target Companies, as applicable. Except for any Material Current Government Contract that is terminated or expires following the date hereof in accordance with its terms, all Material Current Government Contracts are: (i) a legal, valid binding obligation of the Target Companies, as applicable; and (ii) in full force and effect and enforceable against the Target Companies, as applicable, in accordance with its terms, in each case subject to the Enforceability Exceptions.
Section 4.11 Company Permits. Each Target Company holds all Permits required to own, lease and operate its assets and properties as presently owned, leased or operated (collectively, the “Company Permits”) except where the failure to have such Permits, individually or in the aggregate, has not been and would not reasonably expected to be, material to the Target Companies, taken as a whole. The Company has made available to the Purchaser true, correct and complete copies of all the Company Permits. To the Knowledge of the Company, each Company Permit is in full force and effect and will, upon its termination or expiration, be timely renewed or reissued upon terms and conditions substantially similar to its existing terms and conditions, except where the failure to be renewed or reissued, individually or in the aggregate, would not reasonably expected to be material to the Target Companies, taken as a whole. There are no Legal Proceedings pending or, to the Knowledge of the Company, threatened, that seek the revocation, cancellation, limitation, suspension, restriction, adverse modification or termination of any Company Permit. Each Target Company has at all times operated in material compliance with all Company Permits applicable to such Target Company.
Section 4.12 Litigation. Except as described on Section 4.12 of the Company Disclosure Letter, there is no (a) Legal Proceeding of any nature currently pending or, to the Knowledge of the Company, threatened, against any Target Company or any of its properties or assets, or, to the Knowledge of the Company, any of the directors or officers of any Target Company with regard to their actions as such; (b) to the Knowledge of the Company, there are no pending or threatened, audits, examinations or investigations by any Governmental Authority against any Target Company with regard to their actions as such; (c) pending or threatened in writing Legal Proceedings by any Target Company against any third party; (d) settlements or similar agreements that impose any material ongoing obligations or restrictions on any Target Company; and (e) Orders imposed or, to the Knowledge of the Company, threatened to be imposed upon any Target Company or any of their respective properties or assets, or, to the Company’s Knowledge, any of the directors or officers of any Target Company with regard to their actions as such.
Section 4.13 Material Contracts.
(a) Section 4.13(a) of the Company Disclosure Letter sets forth a true, correct and complete list of all Contracts described in clauses (i) through (xiii) below, to which, as of the date of this Agreement, any Target Company is a party or by which any Target Company, or any of its properties or assets are bound or affected (each Contract required to be set forth on Section 4.13(a) of the Company Disclosure Letter, a “Company Material Contract”). True, correct, complete copies of the Company Material Contracts, including amendments thereto, have been delivered or made available to the Purchaser. The Company Material Contracts include:
(i) Each Contract that contains covenants that limit the ability of any Target Company to compete in any material respect in any line of business or with any Person or in any geographic area or to sell, or provide any material service or material product, including any non-competition covenants, exclusivity restrictions, rights of first refusal or most-favored pricing clauses;
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(ii) Each joint venture Contract, profit-sharing agreement, partnership, limited liability company agreement with a third party or other similar agreement or arrangement relating to the formation, creation, operation, management or control of any partnership or joint venture;
(iii) Each Contract that involves any exchange traded, over the counter or other swap, cap, floor, collar, futures contract, forward contract, option or other derivative financial instrument or Contract, based on any commodity, security, instrument, asset, rate or index of any kind or nature whatsoever, whether tangible or intangible, including currencies, interest rates, foreign currency and indices;
(iv) Each Contract for the acquisition of any Person or any business division thereof or the disposition of any material assets of any Target Company (other than in the ordinary course of business), in each case, whether by merger, purchase or sale of stock or assets or otherwise (other than Contracts for the purchase or sale of inventory or supplies entered into in the ordinary course of business) occurring in the last five (5) years and/or relating to pending or future acquisitions or dispositions;
(v) Each obligation to make payments in excess of $250,000, contingent or otherwise, arising out of the prior acquisition of the business, assets or stock of other Persons;
(vi) Each lease, rental agreement, installment and conditional sale agreement, or other Contract that, in each case, provides for the ownership of, leasing of, title to, use of, or any leasehold or other interest in any real or personal property and involves aggregate annual payments in excess of $100,000;
(vii) Each Contract with any Top Customer or Top Supplier (other than purchase orders, invoices, statements of work and non-disclosure or similar agreements entered into in the ordinary course of business consistent with past practice);
(viii) Each collective bargaining (or similar) agreement or Contract between the Target Company on one hand, and any labor union or other body representing employees of the Target Company on the other hand;
(ix) Each Contract that obligates the Target Companies to provide continuing indemnification or a guarantee of obligations of a third party after the date hereof in excess of $500,000;
(x) Each Contract that obligates the Target Companies to make any capital commitment or expenditure in excess of $150,000 (including pursuant to any joint venture);
(xi) Each Contract that relates to a material settlement entered into within three (3) years prior to the date of this Agreement or under which any Target Company has outstanding obligations (other than customary confidentiality obligations) in excess of $1,000,000;
(xii) Any Contract that provides another Person (other than another Target Company or any manager, director or officer of any Target Company) with a power of attorney to act on behalf of any Target Company or to act on behalf of any manager, director or officer of any Target Company with respect to any Target Company; and
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(xiii) Each Contract which (A) contains any assignment or any covenant not to assert or enforce, any Intellectual Property material to the business of any Target Company; (B) pursuant to which any Intellectual Property material to the business of any Target Company is or was developed by, with or for any Target Company; or (C) pursuant to which any of the Target Companies either (1) grants to a third Person (I) a license, immunity, or other right in or to any Intellectual Property material to the business of any Target Company or (II) an exclusive license, immunity, or other right in or to any Owned Intellectual Property, or (2) is granted by a third Person a license, immunity, or other right in or to any Intellectual Property or IT Assets material to the business of any Target Company, in the case of both (1) and (2) excluding (unless they otherwise qualify as Company Material Contracts under a different subsection of this Section 4.13): (w) non-exclusive licenses of Owned Intellectual Property granted to suppliers, customers or end users in the ordinary course of business; (x) licenses of Open Source Software; (y) Off-the-Shelf Software; and (z) invention assignment and confidentiality agreements with employees and contractors on standard forms made available to Purchaser and without any material deviations or exceptions.
(b) Except as disclosed in Section 4.13(b) of the Company Disclosure Letter, or with respect to any Company Material Contract that is terminated or expires following the date hereof in accordance with its terms: (i) such Company Material Contract is valid and binding and enforceable in all material respects against the Target Company party thereto and, to the Knowledge of the Company, each other party thereto, and is in full force and effect (except, in each case, as such enforcement may be limited by the Enforceability Exceptions); (ii) no Target Company is in breach of or default under, in any material respect, and, to the Knowledge of the Company, no event has occurred that with the passage of time or giving of notice or both would constitute a material breach of or default under by any Target Company, or permit termination or acceleration by the other party thereto, under such Company Material Contract; (iii) to the Knowledge of the Company, no other party to such Company Material Contract is in breach of or default in any material respect, and, to the Knowledge of the Company no event has occurred that with the passage of time or giving of notice or both would constitute such a material breach or default by such other party, or permit termination or acceleration by any Target Company, under such Company Material Contract; (iv) no Target Company has received written or, to the Knowledge of the Company, oral notice of an intention by any party to any such Company Material Contract that provides for a continuing obligation by any party thereto to terminate such Company Material Contract or amend the terms thereof, other than modifications in the ordinary course of business that do not adversely affect any Target Company in any material respect; and (v) no Target Company has waived any material rights under any such Company Material Contract.
Section 4.14 Intellectual Property.
(a) Section 4.14(a)(i) of the Company Disclosure Letter sets forth a true, accurate, and complete list of: all U.S. and foreign registered or issued Intellectual Property and applications owned by a Target Company (“Company Registered IP”), specifying as to each item, as applicable: (A) the nature of the item, including the title, (B) the owner of the item, (C) the jurisdictions in which the item is issued or registered or in which an application for issuance or registration has been filed and (D) the issuance, registration or application numbers and dates. Each item of Company Registered IP is subsisting, and to the Knowledge of the Company, valid and enforceable. Each Target Company owns, free and clear of all material Liens (other than Permitted Liens or any Liens set out on Section 4.14(a)(ii) of the Company Disclosure Letter) such Target Company’s Owned Intellectual Property and has valid and enforceable rights in, and has the right to use, sell, license, transfer or assign, in the manner such activities are currently conducted (and if and to the extent such activities are currently conducted) by such Target Company, all other Intellectual Property currently used, licensed or held for use by such Target Company. No item of Company Registered IP that is a pending Patent application fails to identify all inventors of the inventions as currently claimed in such Patent application, and for each Patent and Patent application in the Company Registered IP, the Target Companies have obtained valid present assignments of the applicable inventions from each inventor. Except as set forth on Section 4.14(a)(iii) of the Company Disclosure Letter, all Company Registered IP is owned exclusively by the applicable Target Company without obligation to pay royalties, licensing fees or other fees to any third party with respect to such Company Registered IP, and such Target Company is the record owner of all Company Registered IP.
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(b) Each Target Company has a valid and enforceable written license or other valid right to use all other Company IP that it uses, including Intellectual Property that is the subject of the inbound Company IP Licenses applicable to such Target Company. The inbound Company IP Licenses include all of the licenses, sublicenses and other agreements or permissions necessary to enable use of the Intellectual Property licensed under such Company IP Licenses in the manner used in the operation of business of the Target Companies as presently conducted. Each Target Company has performed all material obligations imposed on it in the Company IP Licenses, has made all payments required to date, and such Target Company is not, nor, to the Knowledge of the Company, is any other party thereto, in breach or default thereunder in any material respect, nor has any event occurred that with notice or lapse of time or both would constitute a default thereunder. The use by the Target Companies of the Intellectual Property that is the subject of any Company IP License in the manner that it is currently being used is permitted under the terms of the applicable Company IP License. No Target Company is party to any Contract that requires a Target Company to assign to any Person any or all of its material rights in any Intellectual Property developed by a Target Company under such Contract.
(c) No Legal Proceeding has been made in the last six (6) years or is pending or, to the Company’s Knowledge, threatened against a Target Company that challenges the validity, enforceability, ownership, or right to use, sell, license or sublicense, or that otherwise relates to, any Owned Intellectual Property, nor, to the Knowledge of the Company, is there any reasonable basis for any such Legal Proceeding. During the last six (6) years, no Target Company has received any written or, to the Knowledge of the Company, oral notice or claim asserting that any infringement, misappropriation, violation, dilution or unauthorized use of the Intellectual Property of any other Person is or may be occurring or has or may have occurred, as a consequence of the business activities of any Target Company, nor to the Knowledge of the Company is there a reasonable basis therefor. There are no Orders to which any Target Company is a party or is otherwise bound that (i) restrict the rights of a Target Company to use, transfer, license or enforce any Intellectual Property owned by a Target Company, (ii) restrict the conduct of the business of a Target Company in order to accommodate a third Person’s Intellectual Property, or (iii) other than the outbound Company IP Licenses, grant any third Person any right with respect to any Intellectual Property owned by a Target Company. To the Company’s Knowledge, no Target Company is currently infringing, or has, in the past six (6) years, infringed, misappropriated or violated any Intellectual Property of any other Person in any material respect in connection with the ownership, use or license of any Owned Intellectual Property or otherwise in connection with the conduct of the respective businesses of the Target Companies. To the Company’s Knowledge, no third party is currently infringing, or in the past six (6) years has infringed upon, misappropriated or otherwise violated any Owned Intellectual Property.
(d) No current or former officers, employees, independent contractors, or other third parties employed or engaged by a Target Company has any ownership interest in any Owned Intellectual Property and no Person has claimed or asserted in writing any ownership interest or other rights in or to any Owned Intellectual Property. To the Company’s Knowledge, there has been no material violation of a Target Company’s policies or practices related to protection of Company IP or any confidentiality or nondisclosure Contract relating to the Intellectual Property owned by a Target Company. To the Company’s Knowledge, none of the employees of any Target Company is obligated under any Contract, or subject to any Order, that would materially interfere with the use of such employee’s reasonable efforts to perform such employee’s employment obligations for the Target Companies, or that would conflict with the business of any Target Company as presently conducted. Each Target Company has taken commercially reasonable efforts and security measures in order to maintain, preserve and protect all material Owned Intellectual Property, including to protect the secrecy, confidentiality and value of the material Company IP. All Persons who have participated in or contributed to the creation or development of any material Owned Intellectual Property have executed written agreements pursuant to which all of such Person’s right, title and interest in and to any such Owned Intellectual Property has been irrevocably assigned (by a present tense assignment) to one or more of the Target Companies (or all such right, title, and interest vested in one or more of the Target Companies by operation of Law).
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(e) Each Target Company is in all material respects in compliance with all licenses by which such Target Company is bound governing any Open Source Software that such Target Company has incorporated into, used, intermingled, or bundled with any material Company Software. No Open Source Software is or has been included, incorporated or embedded in, linked to, combined, made available or distributed with, or used in the development, maintenance, operation, delivery or provision of any material Company Software by a Target Company in a manner that requires any Target Company to: (i) disclose, contribute, distribute, license or otherwise make available to any Person (including the open source community) any source code to such Company Software; (ii) license any such Company Software or other material Owned Intellectual Property for making modifications or derivative works; (iii) disclose, contribute, distribute, license or otherwise make available to any Person any such Company Software or other material Owned Intellectual Property for no or nominal charge; or (iv) grant a license to, or refrain from asserting or enforcing any of, its Patents (“Copyleft Terms”).
(f) Other than pursuant to the Contracts listed on Section 4.14(f) of the Company Disclosure Letter, no government funding, resources or assistance, nor any facilities of a university, college, other educational institution, or similar institution or research center in their respective research and development activities were used by any Target Company in the development of any material Owned Intellectual Property. No Governmental Authority has any (i) ownership interest or exclusive license in or to any Owned Intellectual Property, (ii) “unlimited rights” (as defined in 48 C.F.R. §52.227-14 and in 48 C.F.R. §252.227-7013(a)) in or to any of the Company Software, or (iii) “march in rights” (pursuant to 35 U.S.C. §203) in or to any Patents constituting material Owned Intellectual Property. No Target Company is a member of or party to, or has participated in any patent pool, industry standards body, trade association or other organization pursuant to the rules of which any Target Company is obligated to license or offer to license any existing or future Owned Intellectual Property to any Person.
(g) To the Knowledge of the Company, no Person has obtained unauthorized access to any material information, data (including personally identifiable information), IT Assets or Software in the possession of a Target Company or in their custody or control and there has not been any loss, damage, improper disclosure or use, breach of security, or other compromise of the security, confidentiality or integrity of any such IT Assets, Software, information, or data in any material respect. To the Knowledge of the Company, no Target Company has experienced any material information security incident that has compromised the integrity or availability of the material IT Assets of the Target Companies or the information and data thereon. Except as would not reasonably be expected to have a Company Material Adverse Effect, (i) no material written or oral complaint, or notice of any claims or investigations, relating to an improper use or disclosure of, or a breach in the security of, any such information or data or relating to any information security-related incident has been received by a Target Company and (ii) no Target Company has notified in writing, or been required by applicable Laws or Contract to notify in writing, any person or entity of any personal data or information security-related incident.
(h) The consummation of any of the Transactions will not result in (i) any material violation of any data privacy or cybersecurity laws by a Target Company; or (ii) the material breach of, material modification, cancellation, termination, or suspension of, acceleration of any material payments with respect to, or release of material source code under (a) any Contract that a Target Company is party to providing for the license or other use of material Intellectual Property owned by a Target Company; or (b) any Company IP License.
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Section 4.15 U.S. Nuclear Regulatory Matters. Except as would not constitute a Company Material Adverse Effect:
(a) Neither the Company nor its Subsidiaries currently holds or requires any license for the possession or use of nuclear materials in order to conduct its current business activities (whether “source material”, “special nuclear material” or “byproduct material”, as these terms are defined by applicable Nuclear Laws) or possesses a license from the NRC for the construction, operation or decommissioning of any facility which would require a license or other prior consent from the NRC.
(b) Neither the Company nor its Subsidiaries has operated or currently operates any “utilization facility” or “production facility,” as those terms are defined by applicable Nuclear Laws and the regulations of the NRC, whether or not owned, in whole or part, by the Company or one of its Subsidiaries.
(c) The Company and each of its Subsidiaries is in compliance with all applicable Laws relating to the design, licensing, construction and operation of a “utilization facility” and a “production facility,” as those terms are defined by applicable Nuclear Laws and the regulations of the NRC. Neither the Company nor its Subsidiaries is subject to any Law that prevents or materially inhibits the Company’s or any of its Subsidiaries’ ability to design, license or fabricate systems, structures or components for, or construct, any such facilities, subject to the necessary approvals from an applicable Governmental Authority. Neither the Company nor any of its Subsidiaries requires prior approval from the NRC to execute, deliver or perform this Agreement, and the consummation by it of the Transactions, shall not cause the Company or its Subsidiaries to become subject to any Law that prevents or materially inhibits the Company’s or any of its Subsidiaries’ ability to design, license or fabricate systems, structures or components for, or construct, any such facilities subject to the necessary approvals from an applicable Governmental Authority.
Section 4.16 Taxes and Returns. Except in each case as set forth on Section 4.16 of the Company Disclosure Letter:
(a) Each Target Company (i) has filed, or caused to be filed, all income and other material Tax Returns required to be filed by it (taking into account all valid extensions of time to file) and (ii) has paid, collected, withheld or remitted, or caused to be paid, collected, withheld or remitted, all income and other material Taxes required to be paid, collected, withheld or remitted by it, whether or not such Taxes are shown as due and payable on any Tax Return. Each Target Company has complied in all material respects with all applicable Laws relating to Tax.
(b) There is no Legal Proceeding currently pending or, to the Knowledge of the Company, threatened against a Target Company by a Governmental Authority in a jurisdiction where the Target Company does not file any Tax Returns or a particular type of Tax Return or pays any Tax or a particular type of Tax that it is or may be subject to such Tax or required to file such Tax Return in that jurisdiction.
(c) There is no claim, assessment, audit, examination, investigation or other Legal Proceeding that is pending, or to the Knowledge of the Company, threatened against a Target Company in respect of any Tax, and no Target Company has been notified in writing of any proposed Tax claim, deficiency or assessment against it. No Target Company is currently contesting any material Tax liability before any Governmental Authority.
(d) There are no Liens with respect to any Taxes upon any Target Company’s assets, other than Permitted Liens.
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(e) No Target Company has requested or consented to any waivers or extensions of any applicable statute of limitations for the collection or assessment of any Taxes, which waiver or extension (or request thereof) is outstanding or pending, other than as the result of automatic extensions of time to file Tax Returns requested in the ordinary course of business.
(f) No Target Company will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion thereof) beginning after the Closing Date, as a result of: (i) an installment sale or open transaction disposition that occurred on or prior to the Closing Date; (ii) any change in method of accounting on or prior to the Closing Date, including by reason of the application of Section 481 of the Code (or any analogous provision of state, local or foreign Law) or the use of an improper method of accounting on or prior to the Closing Date; (iii) any prepaid amounts received or deferred revenue realized or received on or prior to the Closing Date; (iv) any intercompany transaction described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign Law); or (v) any “closing agreement” pursuant to Section 7121 of the Code or any other agreement or arrangement with a Governmental Authority relating to Taxes.
(g) No Target Company has participated in or been a party to, or sold, distributed or otherwise promoted, any “reportable transaction,” as defined in Treasury Regulations Section 1.6011-4 (or any similar or corresponding provision of state, local or foreign Law, including, for greater certainty, sections 237.3 to 237.5 of the Tax Act).
(h) No Target Company has been a member of an affiliated, combined, consolidated, unitary or other group for Tax purposes other than a group of which a Target Company is the common parent. No Target Company has any Liability or potential Liability for the Taxes of another Person (other than another Target Company) (i) pursuant to Treasury Regulations Section 1.1502-6 (or any similar or corresponding provision of U.S. state or local Tax Law) or under any other applicable Tax Law, (ii) as a transferee or successor, or (iii) by Contract, indemnity or otherwise (excluding customary commercial Contracts entered into in the ordinary course of business the primary purpose of which is not the sharing of Taxes). No Target Company is a party to or bound by any Tax indemnity agreement, Tax sharing agreement or Tax allocation agreement or similar agreement, arrangement or practice (excluding customary commercial Contracts entered into in the ordinary course of business the primary purpose of which is not the sharing of Taxes) with respect to Taxes.
(i) No Target Company has requested or is it the subject of or bound by any private letter ruling, technical advice memorandum, closing agreement or similar ruling, memorandum or agreement with any Governmental Authority with respect to any Taxes, nor is any such request pending or outstanding.
(j) The Company is, and has at all times since its inception been, classified as a C corporation for U.S. federal (and applicable state and local) income tax purposes. The Company is, and has at all times since its formation been, classified as a domestic corporation for U.S. federal income tax purposes. The U.S. federal income tax classification of each of the Company’s Subsidiaries is as set forth on Section 4.16(j) of the Company Disclosure Letter.
(k) No Target Company has ever had a permanent establishment, office, branch, fixed place of business or other taxable presence in any country other than the country of its organization.
(l) No Target Company has claimed any employee retention credit pursuant to Section 2301 of the CARES Act (or any corresponding or similar provision of state or local Law).
(m) No Target Company has been a party to any transaction that was purported or intended to be treated as a distribution of stock qualifying, in whole or in part, for tax-free treatment under Section 355 of the Code (or any corresponding or similar provision of U.S. state or local Tax Law) within the past three (3) years.
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(n) No Target Company has knowingly taken any action, nor is aware of any fact or circumstance, that would reasonably be expected to prevent the Merger from qualifying for its Intended Tax Treatments.
Section 4.17 Real Property.
(a) Section 4.17(a) of the Company Disclosure Letter sets forth a true, correct and complete listing of all real property owned by the Target Companies (the “Company Owned Properties”), including the street address and owner thereof. The Company has made available to the Purchaser true, correct, and complete copies of the deeds and other instruments in its possession by which the applicable Target Company acquired such Company Owned Properties, together with any title insurance policies, the most recent title reports and surveys with respect to such Company Owned Property to the extent such items are in its possession. The applicable Target Company has good and indefeasible fee simple title to each such Company Owned Property free and clear of all Liens (other than Permitted Liens). Other than the Company Owned Properties, the Target Companies do not own any real property. There are no parties in possession, as tenants, licensees or, to the Knowledge of the Company, otherwise, or parties having any option, right of first offer or first negotiation or right of first refusal or other similar rights granted to third parties to purchase or lease the Company Owned Properties or any portion thereof or interest therein. There is no condemnation or eminent domain proceedings pending or, to the Knowledge of the Company, threatened with respect to any of the Company Owned Properties or any portion thereof.
(b) Section 4.17(b) of the Company Disclosure Letter contains a true, correct and complete list of all premises currently leased or subleased or otherwise used or occupied (but not owned) by a Target Company for the operation of the business of a Target Company (the “Company Leased Real Properties”), and of all current leases, lease guarantees, agreements and documents related thereto, including all amendments, terminations and modifications thereof, waivers thereto or guarantees thereof (collectively, the “Company Real Property Leases”), including the street address thereof (if applicable) and parties to such Company Real Property Leases. The Company has provided to the Purchaser a true and complete copy of each of the Company Real Property Leases. Each Company Real Property Lease is valid and binding and enforceable in all respects against the Target Company party thereto and, to the Knowledge of the Company, each other party thereto, and is in full force and effect (except, in each case, as such enforcement may be limited by the Enforceability Exceptions). With respect to each Company Real Property Lease, (i) no Target Company is in breach of or default, in any material respect, under any Company Real Property Lease, (ii) no event has occurred and no circumstance exists which, if not remedied, and whether with or without notice or the passage of time or both, would result in such a material breach or default by a Target Company, and (iii) to the Knowledge of the Company, no other party to such Company Real Property Lease is in breach or default, in any material respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a material breach or default by such other party, or permit termination or acceleration by any Target Company, under such Company Real Property Lease. No Target Company has leased, licensed or otherwise granted use or occupancy rights with respect to any Company Leased Real Property or any portion thereof to any third party. No party to any Company Real Property Lease has exercised any termination rights with respect thereto. To the Knowledge of the Company there is no condemnation or eminent domain proceedings pending or threatened with respect to any of the Company Leased Real Properties or any portion thereof.
Section 4.18 Personal Property(i). Each Target Company has good title to, or a valid leasehold interest in or right to use, its respective material tangible and intangible assets that are necessary to conduct the business of the Target Company as presently conducted, free and clear of all Liens other than Permitted Liens, and such tangible and intangible assets are in good working order and condition, except for ordinary wear and tear, except in each case and as would not, individually or in the aggregate, reasonably be expected to be material to the Target Companies, taken as a whole.
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Section 4.19 Employee Matters.
(a) The Target Companies are not and have never been a party to any collective bargaining agreement or other Contract covering any group of employees with any labor organization or other representative of any of the employees of such Target Company, and to the Knowledge of the Company, there are not, and have not been, in the past three (3) years, any activities or proceedings of any labor union to organize or represent such employees. There has not occurred or, to the Knowledge of the Company, been threatened, in writing, any strike, slow-down, picketing, work-stoppage, or other similar labor activity with respect to any such employees. Except as set forth on Section 4.19(a) of the Company Disclosure Letter, no current senior officer of a Target Company, as of the date of this Agreement, has provided such Target Company notice, in writing, of his or her intention to terminate his or her employment.
(b) Except as set forth on Section 4.19(b) of the Company Disclosure Letter, the Target Companies are, and in the past three (3) years have been in compliance with all applicable Laws respecting employment and employment practices, terms and conditions of employment, health and safety and wages and hours, and other Laws relating to discrimination, disability, labor relations, hours of work, payment of wages and overtime wages, pay equity, immigration, workers compensation and employee terminations, except for failures to comply which, individually or in the aggregate, have not been and would not reasonably expected to be, material to the Target Companies, taken as a whole. No Target Company has received written notice that there is any pending Legal Proceeding involving unfair labor practices against any Target Company. There are no Legal Proceedings pending or, to the Knowledge of the Company, threatened, in writing, against any Target Company brought by or on behalf of any applicant for employment, any current or former employee or any Governmental Authority, relating to any such Law or wrongful termination of employment, or alleging any other discriminatory conduct in connection with the employment relationship.
(c) Except as set forth on Section 4.19(c) of the Company Disclosure Letter, each employee located in the United States is employed “at will”, and no Target Company has any obligation or Liability (whether or not contingent) with respect to severance payments to any employees under the terms of any written agreement other than: (i) such as results by Law from the employment of an employee in Canada without an agreement as to notice or severance; or (ii) a contractual entitlement to, in addition to the minimum statutory notice (or pay in lieu thereof) and statutory severance pay required under applicable employment standards legislation, three (3) months or less of notice or pay in lieu thereof.
(d) In the past three (3) years, the Target Companies have not received (i) written notice of any unfair labor practice charge or material complaint pending or, to the Knowledge of the Company, threatened before the National Labor Relations Board against them, and (ii) written notice of any grievances or arbitrations arising out of any collective bargaining agreement to which any Target Company is a party.
(e) In the past three (3) years, the Target Companies have not engaged in layoffs, furloughs or employment terminations in the United States sufficient to trigger application of the Worker Adjustment and Retraining Notification Act or any similar state or local law.
(f) In the past three (3) years, (i) no allegations of sexual harassment or sexual misconduct have been made in writing, or, to the Knowledge of the Company, threatened to be made against or involving any current or former officer, director or other employee at the level of Vice President or above by any current or former officer, employee or individual service provider of any Target Company, and (ii) the Target Companies have not entered into any settlement agreements resolving, in whole or in part, allegations of sexual harassment or sexual misconduct by any current or former officer, director or other employee at the level of Vice President or above.
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Section 4.20 Benefit Plans.
(a) Set forth on Section 4.20(a) of the Company Disclosure Letter is a true and complete list of each material Company Benefit Plan. The Target Companies are not required to provide employee benefits pursuant to a collective bargaining agreement or other Contract covering any group of employees, labor organization or other representative of any of the employees.
(b) Except as set forth on Section 4.20(b) of the Company Disclosure Letter, each Company Benefit Plan is and has been operated, administered, maintained, and funded in compliance with its terms and all applicable Laws, including ERISA and the Code, except as would not be material to the Target Companies, taken as a whole. Each Company Benefit Plan which is intended to be “qualified” within the meaning of Section 401(a) of the Code (i) has received a favorable determination letter from the IRS to be so qualified (or is based on a prototype plan which has received a favorable opinion letter upon which the Target Companies are entitled to rely) or (ii) the Target Companies have requested an initial favorable IRS determination of qualification and/or exemption within the period permitted by applicable Law. To the Knowledge of the Company, no event has occurred or circumstance exists which could reasonably be expected to adversely affect the qualified status of such Company Benefit Plans or the exempt status of such trusts.
(c) With respect to each Company Benefit Plan, the Company has provided to Purchaser accurate and complete copies, if applicable, of: (i) all Company Benefit Plan documents and related trust agreements or annuity Contracts (including any amendments, modifications or supplements thereto); (ii) the most recent summary plan descriptions and material modifications thereto; (iii) the most recent annual and periodic accounting of plan assets; (iv) the three (3) most recent nondiscrimination testing reports; (v) the most recent determination letter (or opinion letter) received from the IRS; and (vi) all material communications with any Governmental Authority within the last three (3) years.
(d) With respect to each Company Benefit Plan: (i) no Legal Proceeding is pending, or to the Knowledge of the Company, threatened (other than routine claims for benefits arising in the ordinary course of administration and administrative appeals of denied claims); (ii) no prohibited transaction, as defined in Section 406 of ERISA or Section 4975 of the Code, has occurred, excluding transactions effected pursuant to a statutory or administration exemption; and (iii) all contributions and premiums that are due have been made in all material respects as required under ERISA or have been fully accrued in all material respects on the Company Financials in accordance with GAAP.
(e) None of the Target Companies nor any ERISA Affiliate currently maintains, or within the preceding six (6) years has maintained or contributed to, (i) a Company Benefit Plan which is a “defined benefit plan” (as defined in Section 414(j) of the Code), a “multiemployer plan” (as defined in Section 3(37) of ERISA) or a “multiple employer plan” (as described in Section 413(c) of the Code) a multiple employer welfare arrangement or voluntary employees’ beneficiary association as defined in Section 501(c)(9) of the Code or (ii) a “funded welfare plan” within the meaning of Section 419 of the Code.
(f) Except as set forth on Section 4.20(f) of the Company Disclosure Letter, the consummation of the Transactions will not, either alone or in combination with another event: (i) entitle any current or former employee, officer or other service provider of the Target Companies to any severance pay or increase in severance pay or any other compensation payable by the Target Companies; (ii) accelerate the time of payment, funding or vesting, or increase the amount of compensation due to any such employee, officer or other individual service provider by the Target Companies; (iii) directly or indirectly cause the Target Companies to transfer or set aside any assets to fund any material benefits under any Company Benefit Plan; (iv) otherwise give rise to any material liability under any Company Benefit Plan; or (v) limit or restrict the right to merge, materially amend, terminate or transfer the assets of any Company Benefit Plan on or following the Closing. The consummation of the transactions contemplated hereby will not, either alone or in combination with another event, result in any “excess parachute payment” under Section 280G of the Code. Except as set forth on Section 4.20(f) of the Company Disclosure Letter, no Company Benefit Plan provides for a Tax gross-up, make whole or similar payment, including with respect to the Taxes imposed under Sections 409A or 4999 of the Code.
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(g) Except to the extent required by Section 4980B of the Code or similar state Law, the Target Companies do not provide health or welfare benefits to any former or retired employee and are not obligated to provide such benefits to any active employee following such employee’s retirement or other termination of employment or service.
(h) Each Company Benefit Plan can be terminated at any time without resulting in any material Liability to the Target Companies, the Purchaser, Merger Sub or their respective Affiliates for any additional contributions, penalties, premiums, fees, fines, excise taxes or any other charges or liabilities, other than Liabilities with respect to participant accrued benefits through the effective date of such termination in accordance with the terms of such plan and ordinary administration costs typically incurred in a termination event.
(i) Each Company Benefit Plan that is subject to Section 409A of the Code has been administered and maintained in compliance with the applicable provisions of Section 409A of the Code, the regulations thereunder and other official guidance issued thereunder, except as would not be material to the Target Companies, taken as a whole.
Section 4.21 Environmental Matters. Except as set forth in Section 4.21 of the Company Disclosure Letter:
(a) Each Target Company and its respective properties and facilities are and have, during the time that the applicable Target Company has owned, operated or leased such property or facility, been in compliance in all material respects with all material Environmental Laws, including obtaining, maintaining in good standing, and complying with all material Permits required for their business and operations under any Environmental Laws (“Environmental Permits”).
(b) No Legal Proceeding is pending or, to the Knowledge of the Company, threatened against any Target Company or their respective assets or properties alleging a material violation of any Environmental Law or Environmental Permit, including with respect to the revocation, modification or termination of any Environmental Permits, and, to the Knowledge of the Company, no facts, circumstances, or conditions currently exist that could materially and adversely affect compliance with Environmental Laws and Environmental Permits or require capital expenditures to achieve or maintain continued compliance with Environmental Laws and Environmental Permits.
(c) No Target Company or any of its respective properties, facilities or operations, is the subject of any outstanding Order or Contract with any Governmental Authority or other Person in respect of any (i) Environmental Law, (ii) Remedial Legal Proceeding, or (iii) Release or threatened Release of a Hazardous Material. No Target Company has assumed, contractually or by operation of Law, any Environmental Liabilities.
(d) No Target Company has manufactured, treated, stored, disposed of, arranged for or permitted the disposal of, generated, handled or Released any Hazardous Material, or owned or operated any property or facility, in a manner that has given or would reasonably be expected to have a Company Material Adverse Effect. To the Knowledge of the Company, no fact, circumstance, or condition exists in respect of any Target Company or any property currently or formerly owned, operated, or leased by any Target Company, or any other property that would reasonably be expected to have a Company Material Adverse Effect.
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(e) No Target Company has received written notification of any investigation of the business, operations, or currently or formerly owned, operated, or leased property of a Target Company that could lead to the imposition of any Liens or Environmental Liabilities and, to the Knowledge of the Company, no such investigations are pending or threatened in writing.
(f) To the Knowledge of the Company, no Person has Released any Hazardous Material at, on, or under any facility currently or formerly owned or operated by any Target Company or any third-party site, in each case in a manner that would be reasonably likely to give rise to a material Environmental Liability of the Target Companies, including for Remedial Legal Proceeding costs, investigation costs, cleanup costs, response costs, corrective action costs, personal injury, property damage, natural resources damages, and attorney fees.
(g) There are no (i) underground storage tanks, (ii) asbestos-containing materials, or (iii) equipment containing polychlorinated biphenyls located at any of the properties of a Target Company.
(h) The Company has provided to the Purchaser all material written environmental reports, audits, assessments, liability analyses, memoranda and studies in the possession of, or conducted by, the Target Companies and concerning the environmental condition of any properties of the Target Company, Environmental Liabilities or compliance with Environmental Laws.
Section 4.22 Transactions with Related Persons. Except as set forth on Section 4.22 of the Company Disclosure Letter, and except for in the case of any employee, officer or director, of any employment Contract or Company Benefit Plans made in the ordinary course of business consistent with past practice or except as set forth in the Company Financials, no Target Company is a party to any material transaction or Contract with any (a) present or former executive officer or director of any of the Target Companies, (b) beneficial owner (within the meaning of Section 13(d) of the Exchange Act) of 5% or more of the capital stock or equity interests of any of the Target Companies or (c) any Affiliate, “associate” or any member of the “immediate family” (as such terms are respectively defined in Rules 12b-2 and 16a-1 of the Exchange Act) of any of the foregoing; provided that, in each case of the foregoing, excluding any transaction or Contract between or among the Company’s Subsidiaries or between or among the Company and any of its Subsidiaries. Except as set forth in the Company Financials or as set forth on Section 4.22 of the Company Disclosure Letter: (i) to the Knowledge of the Company, no Related Person or any Affiliate of a Related Person has, directly or indirectly, a material economic interest in any Contract with any of the Target Companies (other than such Contracts that relate to any such Person’s ownership of the Company Common Shares or other equity interests of any Target Company as set forth on Section 4.03(a) of the Company Disclosure Letter or such Person’s employment or consulting arrangements with the Target Companies); and (ii) the assets of the Target Companies do not include any receivable or other obligation from a Related Person, and the liabilities of the Target Companies do not include any payable or other obligation or commitment to any Related Person.
Section 4.23 Insurance.
(a) Section 4.23(a) of the Company Disclosure Letter contains a list of, as of the date hereof, all material policies or binders of property, fire and casualty, product liability, workers’ compensation, and other forms of insurance held by, or for the benefit of, the business of any Target Company (the “Insurance Policies”) (by policy number, insurer, policy period, policy limits and type of policy). As of the date hereof, all premiums due and payable under all such Insurance Policies have been timely paid and the Target Companies are otherwise in material compliance with the terms of the Insurance Policies. Each Insurance Policy is legal, valid, binding, enforceable and in full force and effect, subject, in each case to the Enforceability Exceptions. No Target Company has any self-insurance or co-insurance programs. In the past three (3) years, no Target Company has received any written notice from, or on behalf of, any insurance carrier relating to or involving any adverse material change, notice of cancellation, termination or any material change other than in the ordinary course of business, in the conditions of insurance, any refusal to issue an insurance policy or non-renewal of a policy.
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(b) Section 4.23(b) of the Company Disclosure Letter identifies each individual insurance claim in excess of $100,000 made by a Target Company in the past five (5) years. To the Knowledge of the Company, no event has occurred, and no condition or circumstance exists, that would reasonably be expected to (with or without notice or lapse of time) give rise to or serve as a basis for the denial of any such insurance claim. No Target Company has claim pending under an insurance policy as to which the insurer has denied coverage.
Section 4.24 Top Customers and Suppliers.
(a) As of the date hereof the Company currently has no material customers, including any off-takers. Section 4.24(a) of the Company Disclosure Letter lists as of the date of this Agreement, all prospective consumers or off-takers for the twelve (12) months ended December 31, 2024 and the twelve (12) months ended December 31, 2023 to which the Company has submitted written bids or responded to requests for proposals, with expected revenue (assuming any such bid or response were accepted) in excess of $5,000,000 (the “Top Customers”). To the Knowledge of the Company as of the date hereof, no such Top Customer has provided notice to the Target Companies (i) of its intention to reject, cancel or otherwise terminate, or materially reduce, its relationship with the Target Companies, taken as a whole, or (ii) that any Target Company is in material breach of the terms of any existing Company Material Contract with any such Top Customer.
(b) Section 4.24(b) of the Company Disclosure Letter lists as of the date of this Agreement, all suppliers or manufacturers of goods or services for the twelve (12) months ended December 31, 2024 and the twelve (12) months ended December 31, 2023 to which the Company made payments or accrued obligations in excess of $250,000 (the “Top Suppliers”). To the Knowledge of the Company as of the date hereof, no such Top Supplier has provided notice to the Target Companies (i) of its intention to reject, cancel or otherwise terminate, or materially reduce, its relationship with the Target Companies, taken as a whole, or (ii) that any Target Company is in material breach of the terms of any Company Material Contract with any such Top Supplier.
(c) Except as set forth on Section 4.24(c) of the Company Disclosure Letter, none of the Top Customers or Top Suppliers has, as of the date of this Agreement, notified any Target Companies in writing that it is in a material dispute with the Target Companies or their respective businesses.
Section 4.25 Certain Business Practices.
(a) No Target Company, nor any of their respective officers or directors, nor, to the Knowledge of the Company, any of their respective Representatives acting on their behalf has unlawfully offered, given, paid, promised to give or pay, or authorized the giving or payment of anything of value to (i) an official or employee of a foreign or domestic Governmental Authority; (ii) a foreign or domestic political party or an official of a foreign or domestic political party; (iii) a candidate for foreign or domestic political office; or (iv) any Person, in any such case under circumstances where such Target Company or Representative thereof knew, or would have reasonably known after due and proper inquiry, that all or a portion of such thing of value would be offered, given, paid, or promised to an official or employee of a foreign or domestic Governmental Authority, a foreign or domestic political party, an official of a foreign or domestic political party, or a candidate for foreign or domestic political office for the purpose of influencing any act or decision of such official, employee, or candidate to obtain or retain business or direct business to any person (in each case in violation of any Anti-Bribery Laws). No Target Company, nor any of their respective officers and directors, nor, to the Knowledge of the Company, any of their respective Representatives acting on their behalf has directly or indirectly and in violation of applicable Law offered, given, paid, promised to give or pay, or authorized the giving or payment of anything of value to any customer, supplier, or other Person who is or may be in a position to assist or hinder any Target Company in connection with any actual or proposed transaction for the purpose of influencing any act or decision of such customer, supplier, or other Person to obtain or retain business or direct business to any person. No Target Company, nor any of their respective officers and directors, nor, to the Knowledge of the Company, any of their respective Representatives acting on their behalf has conducted or initiated any internal investigation or made a voluntary, directed, or involuntary disclosure to any Governmental Authority with respect to any alleged act or omission relating to any noncompliance with any Anti-Bribery Laws. No Target Company, nor any of their respective officers and directors, nor, to the Knowledge of the Company, any Representatives acting on their behalf has received any written notice, request, or citation from any Governmental Authority for any actual or potential noncompliance with any Anti-Bribery Laws.
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(b) The operations of each Target Company are and have been conducted at all times in the previous five (5) years in material compliance with any International Trade Laws and Sanctions Laws of any jurisdiction in which any Target Company operates that are applicable to such Target Company, and no Legal Proceeding between the Target Company and any Governmental Authority with respect to any of the foregoing is pending or, to the Knowledge of the Company, threatened in writing.
(c) No Target Company nor any of their respective directors or officers, or, to the Knowledge of the Company, any other Representative acting on behalf of a Target Company is or has been: (i) identified on any applicable sanctions-related list of designated or blocked persons (including without limitation the Specially Designated Nationals and Blocked Persons List (“SDN List”) maintained by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”)); (ii) located, organized, or resident in any country, region or territory that is the subject of comprehensive territorial sanctions administered by the United States and any other jurisdiction in which any Target Company operates (as of the date of this Agreement, Cuba, Iran, North Korea, Syria, and the Crimea, so-called Donetsk People’s Republic, and so-called Luhansk People’s Republic regions of Ukraine) (each a “Sanctioned Jurisdiction”); or (iii) owned, directly or indirectly, individually or in the aggregate, fifty percent (50%) or more by any of the foregoing.
(d) No Target Company has, since April 24, 2019, directly or indirectly, used any funds, or loaned, contributed or otherwise made available such funds to any Subsidiary, joint venture partner or other Person, in connection with any sales or operations in a Sanctioned Jurisdiction or for the purpose of financing the activities (i) of any Person currently identified on any applicable sanctions-related list of designated or blocked persons maintained by OFAC, or (ii) in any other manner that would constitute a violation of any applicable U.S. sanctions administered by the U.S. government.
Section 4.26 Investment Company Act. No Target Company is an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company” or required to register as an “investment company”, in each case within the meaning of the Investment Company Act of 1940, as amended.
Section 4.27 Finders and Brokers. Except as reflected on Section 4.27 of the Company Disclosure Letter, no broker, finder, investment banker or other Person is entitled to, nor will be entitled to, either directly or indirectly, any brokerage fee, finders’ fee or other similar commission, for which any Target Company would be liable in connection with the Transactions based upon arrangements made by any Target Company or any of their Affiliates.
Section 4.28 Independent Investigation. The Target Companies have conducted their own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Purchaser and Merger Sub and acknowledge that they have been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of the Purchaser and Merger Sub for such purpose. The Company acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, it has relied solely upon its own investigation and the express representations and warranties of the Purchaser and Merger Sub set forth in Agreement (including the related portions of the Purchaser Disclosure Letter) and in any certificate delivered to the Company pursuant hereto; and (b) none of the Purchaser, Merger Sub or any of their respective Representatives have made any representation or warranty as to the Purchaser or Merger Sub or this Agreement, except as expressly set forth in this Agreement (including the related portions of the Purchaser Disclosure Letter) or in any certificate delivered to the Company pursuant hereto.
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Section 4.29 Information Supplied. None of the information relating to the Company or its Subsidiaries supplied or to be supplied by the Company, or by any other Person acting on behalf of the Company, in writing specifically for inclusion in the Proxy Statement/Registration Statement will, as of the date the Proxy Statement/Registration Statement (or any amendment or supplement thereto) is first mailed to the Purchaser Shareholders, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, the Target Companies make no representation, warranty or covenant with respect to any information supplied by or on behalf of the Purchaser, Merger Sub or their respective Affiliates.
Section 4.30 No Additional Representations or Warranties. Except as provided in this Article IV, none of the Target Companies nor any of their respective Affiliates, nor any of their respective directors, managers, officers, employees, equityholders, partners, members or representatives has made, or is making, any representation or warranty whatsoever to Purchaser, Merger Sub or their respective Affiliates or any other Person and no such party shall be liable in respect of the accuracy or completeness of any information provided to the Purchaser, Merger Sub or their respective Affiliates or any other Person.
Article
V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND MERGER SUB
Except as set forth in (i) in any Purchaser SEC Reports filed or submitted on or prior to the date hereof, or (ii) in the disclosure letter delivered by the Purchaser to the Company (the “Purchaser Disclosure Letter”) on the date of this Agreement, the Purchaser and Merger Sub represent and warrant to the Company, as of the date hereof and as of the Closing, as follows:
Section 5.01 Organization and Standing.
(a) As of the date hereof, the Purchaser is an exempted company duly incorporated, validly existing and in good standing under the Laws of the Cayman Islands. As of the Closing, the Purchaser will be a Delaware corporation duly domesticated, validly existing and in good standing under the DGCL. The Purchaser has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Purchaser is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified or licensed or in good standing can be cured without material cost or expense. The Purchaser has heretofore made available to the Company accurate and complete copies of its Organizational Documents as currently in effect. The Purchaser is, and at all times has been, in compliance in all material respects with the provisions of its Organizational Documents.
(b) Merger Sub is a corporation duly formed, validly existing and in good standing under the Laws of Delaware. Merger Sub has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Merger Sub is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified or licensed or in good standing can be cured without material cost or expense. Merger Sub has heretofore made available to the Company accurate and complete copies of its Organizational Documents as currently in effect. Merger Sub is, and at all times has been, in compliance in all material respects with the provisions of its Organizational Documents.
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Section 5.02 Authorization; Binding Agreement. Each of the Purchaser and Merger Sub has all requisite power and authority to execute and deliver this Agreement and each Ancillary Document to which it is a party, to perform its respective obligations hereunder and thereunder and to consummate the Transactions, subject to obtaining the Purchaser Shareholder Approval. The execution, delivery and performance of this Agreement and each Ancillary Document to which it is a party and the consummation of the Transactions (a) have been duly, validly and unanimously authorized and approved by the boards of directors of the Purchaser and Merger Sub, and (b) other than the Purchaser Shareholder Approval, no other corporate proceedings on the part of the Purchaser or Merger Sub are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the Transactions. This Agreement has been, and each Ancillary Document to which the Purchaser or Merger Sub are a party shall be when delivered, duly and validly executed and delivered by the Purchaser or Merger Sub, as applicable, and, assuming the due authorization, execution and delivery of this Agreement and such Ancillary Documents by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the valid and binding obligation of the Purchaser or Merger Sub, as applicable, enforceable against the Purchaser or Merger Sub, as applicable, in accordance with its terms, except to the extent that enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization and moratorium laws and other laws of general application affecting the enforcement of creditors’ rights generally or by any applicable statute of limitation or by any valid defense of set-off or counterclaim, and the fact that equitable remedies or relief (including the remedy of specific performance) are subject to the discretion of the court from which such relief may be sought (collectively, the “Enforceability Exceptions”).
Section 5.03 Governmental Approvals. No Consent of or with any Governmental Authority, on the part of the Purchaser or Merger Sub is required to be obtained or made in connection with the execution, delivery or performance by the Purchaser or Merger Sub of this Agreement and each Ancillary Document to which it is a party or the consummation by the Purchaser or Merger Sub of the Transactions, other than (a) pursuant to the HSR Act or any other Antitrust Laws, (b) filing of the Certificate of Merger in accordance with the DGCL, (c) any filings required with Nasdaq or the SEC with respect to the Transactions, (d) applicable requirements, if any, of the Securities Act, the Exchange Act, and/ or any state “blue sky” securities Laws, and the rules and regulations thereunder, and (e) where the failure to obtain or make such Consents or to make such filings or notifications, would not reasonably be expected to be, individually or in the aggregate, material to Purchaser or Merger Sub.
Section 5.04 Non-Contravention. The execution and delivery by each of the Purchaser and Merger Sub of this Agreement and each Ancillary Document to which it is a party, the consummation by the Purchaser and Merger Sub of the transactions contemplated hereby and thereby, and compliance by the Purchaser and Merger Sub with any of the provisions hereof and thereof, do not and will not (a) conflict with or violate any provision of their respective Organizational Documents, (b) subject to obtaining the Consents from Governmental Authorities referred to in Section 5.03 hereof, and the waiting periods referred to therein having expired, and any condition precedent to such Consent or waiver having been satisfied, conflict with or violate any Law, Order or Consent applicable to the Purchaser or Merger Sub or any of its properties or assets, (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by the Purchaser or Merger Sub under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) give rise to any obligation to obtain any third party Consent or provide any notice to any Person or (viii) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of, material Contract, or (d) result in the creation of any Lien upon any of the properties or assets (other than any Permitted Liens) or capital stock or other equity interests of the Purchaser or Merger Sub, except for any deviations from any of the foregoing clauses (b) or (c) that would not reasonably be expected to be, individually or in the aggregate, material to Purchaser or Merger Sub.
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Section 5.05 Capitalization.
(a) As of the date of this Agreement, the authorized share capital of Purchaser is $22,100 divided into (i) 200,000,000 shares of Purchaser Class A Ordinary Shares, of which 23,000,000 are issued and outstanding, (ii) 20,000,000 shares of Purchaser Class B Ordinary Shares, par value $0.0001 per share, of which 5,750,000 shares are issued and outstanding, and (iii) 1,000,000 preference shares, par value $0.0001 per share, of which no shares are issued and outstanding. All of the issued and outstanding Purchaser Ordinary Shares are duly authorized, validly issued, fully paid and non-assessable and are not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Cayman Companies Act, Purchaser’s Organizational Documents or any Contract to which the Purchaser is a party. None of the issued and outstanding Purchaser Ordinary Shares have been issued in violation of any applicable securities Laws.
(b) Subject to the terms of conditions of the Warrant Agreement, in connection with the Domestication, the Cayman Purchaser Warrants will be converted into Domesticated Purchaser Warrants, which will be exercisable after giving effect to the Transactions for one (1) share of Domesticated Purchaser Common Stock at an exercise price of $11.50 per share. As of the date of this Agreement, 18,350,000 Cayman Purchaser Warrants, consisting of 11,500,000 Cayman Purchaser Public Warrants and 6,850,000 Cayman Purchaser Private Placement Warrants are issued and outstanding. All outstanding Cayman Purchaser Warrants are duly authorized, validly issued, fully paid and non-assessable and are not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Cayman Companies Act, Purchaser’s Organizational Documents or any Contract to which the Purchaser is a party. None of the outstanding Cayman Purchaser Warrants have been issued in violation of any applicable securities Laws.
(c) As of the date hereof, other than (i) the Cayman Purchaser Warrants and (ii) the Purchaser Class B Ordinary Shares, there are (A) no subscriptions, calls, options, warrants, rights (including preemptive rights), puts or other securities convertible into or exchangeable or exercisable for Purchaser Ordinary Shares or any other capital stock or equity interests of Purchaser, or any other Contracts to which the Purchaser is a party or by which the Purchaser is bound obligating the Purchaser to issue or sell any shares of capital stock of, or other equity interests in or debt securities of, the Purchaser, and (B) no equity equivalents, stock appreciation rights, phantom stock ownership interests or similar rights in the Purchaser.
(d) Other than the Redemption or as expressly set forth in this Agreement, there are no outstanding obligations of Purchaser to repurchase, redeem or otherwise acquire any shares of Purchaser or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any Person. Except as set forth in Section 5.05(c) of the Purchaser Disclosure Letter, there are no stockholders agreements, voting trusts or other agreements or understandings to which the Purchaser is a party with respect to the voting of any shares of Purchaser.
(e) All Indebtedness of Purchaser as of the date of this Agreement is disclosed on Section 5.05(e) of the Purchaser Disclosure Letter. No Indebtedness of the Purchaser contains any restriction upon (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness by the Purchaser or (iii) the ability of the Purchaser to grant any Lien on its properties or assets.
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(f) Since the date of formation of the Purchaser, and except as contemplated by this Agreement, the Purchaser has not declared or paid any distribution or dividend in respect of its shares and has not repurchased, redeemed or otherwise acquired any of its shares, and the Purchaser’s board of directors has not authorized any of the foregoing.
(g) Purchaser owns all of the equity interests in Merger Sub. No other equity interests or other voting securities of Merger Sub are issued, reserved for issuance or outstanding. All issued and outstanding equity interests of Merger Sub are duly authorized, validly issued, fully paid and nonassessable and are not subject to, and were not issued in violation of, any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL, Merger Sub’s Organizational Documents or any Contract to which Merger Sub is a party or by which Merger Sub is bound. There are no outstanding contractual obligations of Merger Sub to repurchase, redeem or otherwise acquire any of its equity interests or any equity capital of Merger Sub. There are (i) no subscriptions, calls, options, warrants, rights (including preemptive rights), puts or other securities convertible into or exchangeable or exercisable for equity interests of Merger Sub, or any other Contracts to which Merger Sub is a party or by which Merger Sub is bound obligating Merger Sub to issue or sell any shares of capital stock of, or other equity interests in or debt securities of, Merger Sub, and (ii) no equity equivalents, stock appreciation rights, phantom stock ownership interests or similar rights in the Purchaser. There are no outstanding contractual obligations of Merger Sub to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person.
Section 5.06 SEC Filings and Purchaser Financials.
(a) The Purchaser has, since the IPO, filed all prospectuses, forms, reports, schedules, statements and other documents required to be filed or furnished by the Purchaser with the SEC under the Securities Act and/or the Exchange Act, together with any amendments, restatements or supplements thereto (all of the foregoing filed prior to the date of this Agreement, the “Purchaser SEC Reports”) and will have filed all such forms, reports, schedules, statements and other documents (except for the Proxy Statement/Registration Statement and any other forms reports, schedules, statements and other documents filed or furnished with respect to the Transactions) required to be filed on or subsequent to the date of this Agreement through the Closing Date (the “Additional Purchaser SEC Reports”). All of the Purchaser SEC Reports, Additional Purchaser SEC Reports, any correspondence from or to the SEC or the Nasdaq Stock Market (“Nasdaq”) (other than such correspondence in connection with the IPO of the Purchaser) and all certifications and statements required by: (i) Rule 13a-14 or 15d-14 under the Exchange Act; or (ii) 18 U.S.C. §1350 (Section 906) of the Sarbanes-Oxley Act with respect to any of the foregoing (collectively, the “Public Certifications”) are available on the SEC’s Electronic Data-Gathering, Analysis and Retrieval system (EDGAR) in full without redaction.
(b) The Purchaser SEC Reports were, and the Additional Purchaser SEC Reports will be, prepared in accordance with the requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act, as the case may be, and the rules and regulations thereunder. The Purchaser SEC Reports did not, and the Additional Purchaser SEC Reports will not, at the time they were or are filed (or if amended or superseded by a filing prior to the date of this Agreement or the Closing Date, then on the date of such filing), as the case may be, with the SEC contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. Each director and executive officer of Purchaser has filed with the SEC on a timely basis all statements required with respect to Purchaser by Section 16(a) of the Exchange Act and the rules and regulations thereunder. Each of the Public Certifications are, or will be, true and correct as of their respective dates of filing. As used in this Section 5.06(b), the term “file” shall be broadly construed to include any manner in which a document or information is furnished, supplied or otherwise made available to the SEC or Nasdaq.
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(c) The financial statements and notes contained or incorporated by reference in the Purchaser SEC Reports fairly present, and the financial statements and notes to be contained in or to be incorporated by reference in the Additional Purchaser SEC Reports will fairly present, the financial condition and the results of operations, changes in stockholders’ equity and cash flows of the Purchaser as of the respective dates, and for the periods referred to, in such financial statements, all in accordance with: (i) GAAP; and (ii) Regulation S-X or Regulation S-K, as applicable, subject, in the case of interim financial statements, to normal recurring year-end adjustments and the omission of notes to the extent permitted by Regulation S-X or Regulation S-K, as applicable.
(d) The Purchaser has no off-balance sheet arrangements that are not disclosed in the Purchaser SEC Reports. No financial statements other than those of the Purchaser and Merger Sub are required by GAAP to be included in the consolidated financial statements of the Purchaser.
(e) The issued and outstanding Cayman Purchaser Units are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on Nasdaq under the symbol “HONDU.” The issued and outstanding Purchaser Class A Ordinary Shares are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on Nasdaq under the symbol “HOND.” The issued and outstanding Cayman Purchaser Public Warrants are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on Nasdaq under the symbol “HONDW.” The Purchaser is a listed company in good standing with Nasdaq. There is no action or proceeding pending or, to the Knowledge of the Purchaser, threatened against the Purchaser by Nasdaq or the SEC with respect to any intention by such entity to deregister the Cayman Purchaser Units, the Purchaser Class A Ordinary Shares or the Cayman Purchaser Public Warrants or terminate the listing of the Purchaser on Nasdaq. Except in connection with the Transactions, none of the Purchaser or any of its Affiliates has taken any action in an attempt to terminate the registration of the Cayman Purchaser Units, the Purchaser Class A Ordinary Shares or Cayman Purchaser Public Warrants under the Exchange Act.
(f) Except as not required in reliance on exemptions from various reporting requirements by virtue of the Purchaser’s status as an “emerging growth company” within the meaning of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), the Purchaser has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act). Such disclosure controls and procedures are designed to ensure that material information relating to the Purchaser is made known to the Purchaser’s principal executive officer and its principal financial officer by others within the entity, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared. Such disclosure controls and procedures are effective in to perform the functions for which they were established, including timely alerting the Purchaser’s principal executive officer and principal financial officer to material information required to be included in the Purchaser’s periodic reports required under the Exchange Act. Since the consummation of the IPO, the Purchaser has established and maintained a system of internal controls over financial reporting (as defined in Rule 13a-15 under the Exchange Act) sufficient to provide reasonable assurance regarding the reliability of the Purchaser’s financial reporting and the preparation of the financial statements included in the Purchaser SEC Reports for external purposes in accordance with GAAP.
Section 5.07 Absence of Certain Changes. As of the date of this Agreement, the Purchaser has, since the date of its formation (a) conducted no business other than its formation, the public offering of its securities (and the related private offerings), public reporting and its search for an initial Business Combination as described in the IPO Prospectus (including the investigation of the Target Companies and the negotiation and execution of this Agreement) and related activities that are administrative and immaterial in nature, (b) not been subject to a Purchaser Material Adverse Effect, and (c) neither Purchaser nor Merger Sub has taken any action that would require the consent of the Company if taken after the date of this Agreement and prior to the Closing pursuant to Section 6.03. Merger Sub was formed solely for the purpose of effecting the Transactions and has not engaged in any business activities or conducted any operations other than in connection with the Transactions.
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Section 5.08 Undisclosed Liabilities. There is no liability, debt or obligation of or claim or judgment against Purchaser (whether direct or indirect, absolute or contingent, accrued or unaccrued, known or unknown, liquidated or unliquidated, or due or to become due), except for liabilities and obligations (a) reflected or reserved for in the most recent balance sheet included in the Purchaser SEC Reports or disclosed in the notes thereto, (b) that have arisen since the date of the most recent balance sheet included in the Purchaser SEC Reports in the ordinary course of business of Purchaser (none of which is a Liability for breach of contract, breach of warranty, tort, infringement or violation of Law), (c) incurred in connection with the Transactions, (d) that constitute Purchaser Transaction Costs or (e) which would not be, or would not reasonably be expected to be, individually or in the aggregate, material to the Purchaser. Merger Sub has no, and at all times prior to the Effective Time except as contemplated by this Agreement or the Ancillary Documents to this Agreement, will have no, assets, liabilities or obligations of any kind or nature whatsoever other than those incident to its formation.
Section 5.09 Compliance with Laws. Each of the Purchaser and Merger Sub is, and has since its formation been, in material compliance with all Laws applicable to it and the conduct of its business. Since the date of the formation of the Purchaser, neither the Purchaser nor Merger Sub has received written notice alleging any violation of applicable Law, Orders or Permits in any material respect by the Purchaser or Merger Sub, and to the Knowledge of the Purchaser, no charge, claim, assertion or Legal Proceeding of any material violation of any Law, Orders or Permit by the Purchaser or Merger Sub is currently threatened.
Section 5.10 Legal Proceedings; Orders; Permits. There is no pending or, to the Knowledge of the Purchaser, threatened Legal Proceeding to which the Purchaser or Merger Sub is subject which would reasonably be expected to have a Purchaser Material Adverse Effect or that would have a material adverse effect on the ability of the Purchaser to enter into and perform its obligations under this Agreement and consummate the Transactions. There is no Legal Proceeding that the Purchaser or Merger Sub has pending against any other Person. Neither the Purchaser, nor Merger Sub, is subject to any Orders of any Governmental Authority, nor are any such Orders pending. Each of the Purchaser and Merger Sub holds all material Permits necessary to lawfully conduct its business as presently conducted, and to own, lease and operate its assets and properties, all of which are in full force and effect, except where the failure to hold such Consent or for such Consent to be in full force and effect would not reasonably be expected to have a Purchaser Material Adverse Effect.
Section 5.11 Taxes and Returns.
(a) The Purchaser (i) has filed, or caused to be filed, all income and other material Tax Returns required to be filed by it (taking into account all valid extensions of time to file), and (ii) has paid, collected, withheld or remitted, or caused to be paid, collected, withheld or remitted, all income and other material Taxes required to be paid, collected, withheld or remitted by it, whether or not such Taxes are shown as due and payable on any Tax Return. The Purchaser has complied in all material respects with all applicable Laws relating to Tax.
(b) There is no Legal Proceeding currently pending or, to the Knowledge of the Purchaser, threatened against the Purchaser by a Governmental Authority in a jurisdiction where Purchaser does not file any Tax Returns or a particular type of Tax Return or pays any Tax or a particular type of Tax that it is or may be subject to such Tax or required to file such Tax Return in that jurisdiction.
(c) There is no claim, assessment, audit, examination, investigation or other Legal Proceeding that is pending, or to the Knowledge of the Purchaser, threatened against the Purchaser in respect of any Tax, and the Purchaser has not been notified in writing of any proposed Tax claim, deficiency or assessment against the Purchaser. Purchaser is not currently contesting any material Tax liability before any Governmental Authority.
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(d) There are no Liens with respect to any Taxes upon any of the Purchaser’s assets, other than Permitted Liens.
(e) The Purchaser has not requested or consented to any waivers or extensions of any applicable statute of limitations for the collection or assessment of any Taxes, which waiver or extension (or request thereof) is outstanding or pending, other than as the result of automatic extensions of time to file Tax Returns requested in the ordinary course of business.
(f) The Purchaser will not be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion thereof) beginning after the Closing Date, as a result of: (i) an installment sale or open transaction disposition that occurred on or prior to the Closing Date; (ii) any change in method of accounting on or prior to the Closing Date, including by reason of the application of Section 481 of the Code (or any analogous provision of state, local or foreign Law) or the use of an improper method of accounting on or prior to the Closing Date; (iii) any prepaid amounts received or deferred revenue realized or received on or prior to the Closing Date; (iv) any intercompany transaction described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign Law); or (v) any “closing agreement” pursuant to Section 7121 of the Code or any other agreement or arrangement with a Governmental Authority relating to Taxes.
(g) The Purchaser has not participated in or been a party to, or sold, distributed or otherwise promoted, any “reportable transaction,” as defined in Treasury Regulations Section 1.6011-4 (or any similar or corresponding provision of state, local or foreign Law, including, for greater certainty, sections 237.3 to 237.5 of the Tax Act).
(h) The Purchaser has not been a member of an affiliated, combined, consolidated, unitary or other group for Tax purposes. The Purchaser does not have any Liability or potential Liability for the Taxes of another Person (i) pursuant to Treasury Regulations Section 1.1502-6 (or any similar or corresponding provision of U.S. state or local Tax Law) or under any other applicable Tax Law, (ii) as a transferee or successor, or (iii) by Contract, indemnity or otherwise (excluding customary commercial Contracts entered into in the ordinary course of business the primary purpose of which is not the sharing of Taxes). The Purchaser is not a party to or bound by any Tax indemnity agreement, Tax sharing agreement or Tax allocation agreements or similar agreement, arrangement or practice (excluding customary commercial Contracts entered into in the ordinary course of business the primary purpose of which is not the sharing of Taxes) with respect to Taxes.
(i) The Purchaser has not requested, and is not the subject of or bound by, any private letter ruling, technical advice memorandum, closing agreement or similar ruling, memorandum or agreement with any Governmental Authority with respect to any Taxes, nor is any such request pending or outstanding.
(j) The Purchaser has not knowingly taken any action, nor is it aware of any fact or circumstance, that would reasonably be expected to prevent the relevant portions of the Transactions from qualifying for their respective Intended Tax Treatments.
Section 5.12 Properties. Neither the Purchaser, nor Merger Sub, owns, licenses or otherwise has any right, title or interest in any material Intellectual Property. Neither the Purchaser, nor Merger Sub own or lease any real property or material Personal Property.
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Section 5.13 Investment Company Act. The Purchaser is not an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company”, or required to register as an “investment company”, in each case within the meaning of the Investment Company Act of 1940, as amended.
Section 5.14 Contracts. Except as set forth in Purchaser’s or Merger Sub’s Organizational Documents or publicly filed with the SEC, neither Purchaser nor Merger Sub is subject to any agreement, commitment, exclusive license, judgment, injunction, order or decree that prohibits or materially impairs, or could reasonably be expected to prohibit or materially impair, their business practices, acquisitions of property or conduct of business.
Section 5.15 Trust Account. As of the date of this Agreement, Purchaser has at least $232,000,000 in the Trust Account, such monies held in cash or invested in United States government securities or money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act pursuant to the Investment Management Trust Agreement (the “Trust Agreement”), dated as of August 15, 2024, between Purchaser and Continental, as trustee (the “Trustee”). There are no separate Contracts, side letters or other arrangements or understandings (whether written or unwritten, express or implied) that would cause the description of the Trust Agreement in the Purchaser SEC Reports to be inaccurate or that would entitle any Person (other than Purchaser Shareholders who shall have properly elected to redeem their Purchaser Class A Ordinary Shares pursuant to Purchaser’s Organizational Documents and the underwriters of the IPO with respect to deferred underwriting commissions) to any portion of the proceeds in the Trust Account. Since August 14, 2024, the Purchaser has not released any money from the Trust Account, and prior to the Closing, none of the funds held in the Trust Account may be released other than to pay Taxes and payments with respect to the Redemption of Purchaser Class A Ordinary Shares properly submitted in connection with a stockholder vote to amend the Purchaser’s Organizational Documents to (A) modify the substance or timing of its obligation to allow redemption in connection with its initial business combination or to redeem 100% of its Purchaser Class A Ordinary Shares if it has not consummated an initial business combination within the prescribed window or (B) with respect to any other material provisions related to stockholders’ rights or pre-initial business combination activity. The Trust Agreement has not been amended or modified and is a valid and binding obligation of Purchaser and is in full force and effect and is enforceable in accordance with its terms, subject to the Enforceability Exceptions. There are no claims or proceedings pending or, to the Knowledge of Purchaser, threatened with respect to the Trust Account. Purchaser has performed all material obligations required to be performed by it to date under, and is not in default, breach or delinquent in performance or any other respect (claimed or actual) in connection with, the Trust Agreement, and no event has occurred which, with due notice or lapse of time or both, would constitute such a default or breach thereunder. As of the Closing, the obligations of Purchaser to dissolve or liquidate pursuant to Purchaser’s Organizational Documents shall terminate, and as of the Closing, Purchaser shall have no obligation whatsoever pursuant to Purchaser’s Organizational Documents to dissolve and liquidate the assets of Purchaser by reason of the consummation of the Transactions. To the Knowledge of Purchaser, as of the date hereof, following the Closing, no Purchaser Shareholder shall be entitled to receive any amount from the Trust Account except to the extent such Purchaser Shareholder is exercising their option to redeem Purchaser Class A Ordinary Shares in connection with the Redemption. As of the date hereof, assuming the accuracy of the representations and warranties of the Company contained herein and the compliance by the Company with its obligations hereunder, Purchaser does not have any reason to believe that any of the conditions to the use of funds in the Trust Account will not be satisfied or funds available in the Trust Account will not be available to Purchaser on the Closing Date.
Section 5.16 Finders and Brokers. Except as reflected on Section 5.16 of the Purchaser Disclosure Letter, no broker, finder, investment banker or other Person is entitled to, nor will be entitled to, either directly or indirectly, any brokerage fee, finders’ fee or other similar commission, including any deferred underwriting commissions, in connection with the Transactions based upon arrangements made by the Purchaser, Merger Sub or any of their Affiliates.
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Section 5.17 Certain Business Practices.
(a) None of the Purchaser, Merger Sub or to the Knowledge of Purchaser or Merger Sub any of their Representatives acting on behalf of the Purchaser or Merger Sub, has unlawfully offered, given, paid, promised to give or pay, or authorized the giving or payment of anything of value to (i) an official or employee of a foreign or domestic Governmental Authority; (ii) a foreign or domestic political party or an official of a foreign or domestic political party; (iii) a candidate for foreign or domestic political office; or (iv) any Person, in any such case under circumstances the Purchaser, Merger Sub or the Representative thereof knew, or reasonably would have known after due and proper inquiry, that all or a portion of such thing of value would be offered, given, paid, or promised to an official of employee of a foreign or domestic Governmental Authority, a foreign or domestic political party, an official of a foreign or domestic political party, or a candidate for foreign or domestic political office, in each case in violation of any Anti-Bribery Laws. None of Purchaser, Merger Sub or, to the Knowledge of Purchaser or Merger Sub, any of their respective Representatives acting on their behalf has directly or indirectly and in violation of applicable Law offered, given, paid, promised to give or pay, or authorized the giving or payment of anything of value to any customer, supplier, or other Person who is or may be in a position to assist or hinder Purchaser or Merger Sub in connection with any actual or proposed transaction for the purpose of influencing any act or decision of such customer, supplier, or other Person to obtain or retain business or direct business to any person. To the Knowledge of the Purchaser, none of the Purchaser, Merger Sub or any Representative thereof has conducted or initiated any internal investigation or made a voluntary, directed, or involuntary disclosure to any Governmental Authority with respect to any alleged act or omission relating to any noncompliance with any Anti-Bribery Laws. To the Knowledge of the Purchaser, none of the Purchaser, Merger Sub or any Representative thereof has received any written notice, request, or citation from any Governmental Authority for any actual or potential noncompliance with any Anti-Bribery Laws. The Purchaser has instituted and maintains policies and procedures reasonably designed to ensure compliance in all material respects with the Anti-Bribery Laws.
(b) The operations of the Purchaser and Merger Sub are and have been conducted at all times since April 24, 2019, in material compliance with Sanctions Laws and at all times in the previous five (5) years in material compliance with, International Trade Laws, and money laundering statutes in all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority, and no Legal Proceeding involving the Purchaser or Merger Sub with respect to any of the foregoing is pending or, to the Knowledge of the Purchaser, threatened.
(c) None of the Purchaser, Merger Sub, or any of their respective directors or officers nor, to the Knowledge of the Purchaser, any other Representative acting on behalf of the Purchaser or Merger Sub is or has been: (i) identified on any applicable sanctions-related list of designated or blocked persons (including without limitation the SDN List maintained by OFAC), (ii) otherwise the subject or target of any U.S. sanctions administered by OFAC, (iii) located, organized or resident in any Sanctioned Jurisdiction, or (iv) owned, directly or indirectly, individually or in the aggregate, 50% or more by any of the foregoing.
(d) The Purchaser and Merger Sub have maintained in place and implemented controls and systems designed to ensure compliance with economic sanctions administered and maintained by the U.S. government.
(e) Neither the Purchaser nor Merger Sub has directly or indirectly, used any funds, or loaned, contributed or otherwise made available such funds to any Subsidiary, joint venture partner or other Person, in connection with any sales or operations in a Sanctioned Jurisdiction or for the purpose of financing the activities (x) of any Person currently the subject or target of U.S. sanctions administered by the U.S. government, or (y) in any other manner that would constitute a violation of, any U.S. sanctions administered by U.S. government.
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Section 5.18 Insurance. Section 5.18 of the Purchaser Disclosure Letter lists all insurance policies (by policy number, insurer, coverage period, coverage amount, annual premium and type of policy) held by the Purchaser or Merger Sub or relating to the Purchaser or Merger Sub or their business, properties, assets, directors, officers and employees, copies of which have been provided to the Company. All premiums due and payable under all such insurance policies have been timely paid and the Purchaser and Merger Sub are otherwise in material compliance with the terms of such insurance policies. All such insurance policies are in full force and effect, and to the Knowledge of the Purchaser, there is no threatened termination of, or material premium increase with respect to, any of such insurance policies. There have been no insurance claims made by the Purchaser or Merger Sub. Each of the Purchaser and Merger Sub has reported to its insurers all claims and pending circumstances that would reasonably be expected to result in a claim, except where such failure to report such a claim would not be reasonably likely to have a Purchaser Material Adverse Effect.
Section 5.19 Information Supplied. None of the information supplied or to be supplied by, or on behalf of, Purchaser or Merger Sub expressly for inclusion or incorporation by reference in (i) any current report on Form 8-K, and any exhibits thereto or any other report, form, registration or other filing made with any Governmental Authority or stock exchange with respect to the Transactions or in the Proxy Statement/Registration Statement or (ii) any of the Signing Press Release, the Signing Filing, the Closing Press Release, the Closing Filing and any other press releases or prospectuses filed under Rule 425 of the Securities Act in connection to the Transactions shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading at (a) the time such information is filed with or furnished to the SEC (provided, that, if such information is revised by any subsequently filed amendment or supplement, this clause (a) shall solely refer to the time of such subsequent revision); (b) the time the Proxy Statement/Registration Statement is declared effective by the SEC; (c) the time the Proxy Statement/Registration Statement (or any amendment thereof or supplement thereto) is first mailed to the Purchaser Shareholders; or (d) the time of the Purchaser Shareholders’ Meeting. Notwithstanding the foregoing, the Purchaser and Merger Sub make no representations, warranties or covenants with respect to any information supplied by or on behalf of the Target Companies or their respective Affiliates.
Section 5.20 Independent Investigation. The Purchaser and Merger Sub have conducted their own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Target Companies, and acknowledges that they have been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of the Target Companies for such purpose. The Purchaser and Merger Sub acknowledge and agree that: (a) in making their decision to enter into this Agreement and to consummate the Transactions, they have relied solely upon their own investigation and the express representations and warranties of the Company expressly set forth in Article IV of this Agreement (including the related portions of the Company Disclosure Letter) and in any certificate delivered to Purchaser or Merger Sub pursuant hereto, and the information provided by or on behalf of the Target Companies for the Proxy Statement/Registration Statement; and (b) neither the Company, nor its Representatives have made any representation or warranty as to Target Companies, or this Agreement, including with respect to the accuracy or completeness of any information provided to Purchaser in the electronic data room, in any projections, or otherwise, except as expressly set forth in Article IV (including the related portions of the Company Disclosure Letter) or in any certificate delivered to Purchaser or Merger Sub pursuant hereto. Without limiting the foregoing, the Purchaser and Merger Sub acknowledge that the Purchaser and Merger Sub or their advisors, have made their own investigation of the Target Companies and, except as expressly provided in Article IV, are not relying on any (a) representation or warranty whatsoever as to the condition, merchantability, suitability or fitness for a particular purpose or trade as to any of the assets of the Target Companies, the prospects (financial or otherwise) or the viability or likelihood of success of the business of the Target Companies as conducted after the Closing, or (b) representation or warranty as contained in any materials provided by the Target Companies or any of their respective Affiliates or any of their respective directors, officers, employees, stockholders, partners, members or representatives or otherwise.
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Section 5.21 No Additional Representation or Warranties. Except as provided in this Article V, none of the Purchaser, Merger Sub, any their respective Affiliates, or any of their respective directors, managers, officers, employees, stockholders, partners, members or representatives has made, or is making, any representation or warranty whatsoever to the Target Companies or their Affiliates and no such party shall be liable in respect of the accuracy or completeness of any information provided to the Target Companies or their Affiliates.
Article
VI
COVENANTS
Section 6.01 Access and Information; Cooperation.
(a) During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement in accordance with Section 8.01 or the Closing (the “Interim Period”), subject to Section 6.16, the Company shall give, and shall cause the Target Companies and its and their respective Representatives to give, the Purchaser and its Representatives, at reasonable times during normal business hours, upon reasonable intervals and notice, reasonable access to all offices and other facilities and to all officers, managers, properties, Contracts, agreements, commitments and books and records of the Target Companies, and shall use its and their commercially reasonable efforts to furnish Purchaser and its Representatives with all financial and operating data and other information concerning the affairs of the Target Companies that are in the possession of the Target Companies, in each case as the Purchaser or its Representatives may reasonably request; provided, however, that the Purchaser and its Representatives shall conduct any such activities in such a manner as not to unreasonably interfere with the business or operations of the Target Companies. Notwithstanding the foregoing, the Company shall not be required to provide, or cause to be provided, to Purchaser or any of its Representatives any information (i) if and to the extent doing so would (A) violate any Law to which the Company is subject, (B) result in the disclosure of any trade secrets of third parties in breach of any Contract with such third party, (C) violate any legally-binding obligation of the Company with respect to confidentiality, non-disclosure or privacy or (D) jeopardize protections afforded to the Company under the attorney-client privilege or the attorney work product doctrine (provided that, in the case of each of clauses (A) through (C), the Company shall use commercially reasonable efforts to (x) provide such access as can be provided (or otherwise convey such information regarding the applicable matter as can be conveyed) without violating such Contract, obligation or Law and (y) provide such information in a manner without violating such Contract, obligation or Law), (ii) if the Company, on the one hand, and Purchaser or any of its Representatives, on the other hand, are adverse parties in a litigation and such information is reasonably pertinent thereto, or (iii) if such information relates to interactions with prospective buyers of the Company or the negotiation of this Agreement or the Transactions, including with respect to the consideration or valuation of the Merger or any financial or strategic alternatives thereto. For the avoidance of doubt, the Purchaser or any of its Representatives shall not be permitted to perform any environmental sampling at the properties of any of the Target Companies, including any invasive, intrusive or subsurface sampling or testing of any media.
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(b) During the Interim Period, subject to Section 6.16, the Purchaser shall give, and shall cause its Representatives to give, the Company and its Representatives, at reasonable times during normal business hours and upon reasonable intervals and notice, reasonable access to all offices and other facilities and to all officers, directors, properties, Contracts, agreements, commitments and books and records, of the Purchaser or its Subsidiaries, and shall use its and their commercially reasonable efforts to furnish the Company and its Representatives with all financial and operating data and other information concerning the affairs of the Purchaser and its Subsidiaries that are in the possession of the Purchaser or its Subsidiaries, in each case as the Company or its Representatives may reasonably request; provided, however, that the Company and its Representatives shall conduct any such activities in such a manner as not to unreasonably interfere with the business or operations of the Purchaser or any of its Subsidiaries. Notwithstanding the foregoing, the Purchaser shall not be required to provide, or cause to be provided, to the Company or any of its Representatives any information (i) if and to the extent doing so would (A) violate any Law to which the Purchaser is subject, (B) violate any legally-binding obligation of the Purchaser with respect to confidentiality, non-disclosure or privacy or (C) jeopardize protections afforded to the Purchaser under the attorney-client privilege or the attorney work product doctrine (provided that, in the case of each of clauses (A) through (B), the Purchaser shall use commercially reasonable efforts to (x) provide such access as can be provided (or otherwise convey such information regarding the applicable matter as can be conveyed) without violating such Contract, obligation or Law and (y) provide such information in a manner without violating such Contract, obligation or Law), or (ii) if the Purchaser, on the one hand, and the Company or any of its Representatives, on the other hand, are adverse parties in a litigation and such information is reasonably pertinent thereto.
(c) During the Interim Period, each of the Company and the Purchaser shall, and shall cause their respective Representatives to, reasonably cooperate in a timely manner in connection with any financing arrangement the Parties mutually agree to seek in connection with the transactions contemplated by this Agreement (including, in connection with any PIPE Investment), including, (i) by providing such information and assistance as the other Party may reasonably request, (ii) granting such access to the other Party and its Representatives as may be reasonably necessary for their due diligence, and (iii) participating in a reasonable number of meetings, presentations, road shows, drafting sessions, due diligence sessions with respect to such financing efforts (including direct contact between senior management and other Representatives of the Company at reasonable times and locations). All such cooperation, assistance and access shall be granted during normal business hours and shall be granted under conditions that shall not unreasonably interfere with the business and operations of the Company, the Purchaser, or their respective Representatives.
Section 6.02 Conduct of Business of the Company.
(a) During the Interim Period, except as expressly contemplated by this Agreement or the Ancillary Documents, as required by applicable Law (including COVID-19 Measures) or any Governmental Authority, as set forth on Section 6.02(b) of the Company Disclosure Letter or as consented to in writing by the Purchaser (such consent not to be unreasonably withheld, conditioned or delayed), the Company shall use commercially reasonable efforts to, and shall use commercially reasonable efforts to cause its Subsidiaries to (i) conduct its and their respective businesses, in all material respects, in the ordinary course of business, (ii) maintain the existing relations and goodwill of the Target Companies with the Target Companies’ customers, suppliers, distributors and creditors, as well as with the NRC, and (iii) take commercially reasonable measures necessary or appropriate to preserve intact, in all material respects, their respective businesses.
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(b) Without limiting the generality of Section 6.02(a) and except as contemplated by the terms of this Agreement or the Ancillary Documents, as required by applicable Law (including COVID-19 Measures) or any Governmental Authority, or as set forth on Section 6.02(b) of the Company Disclosure Letter, during the Interim Period, without the prior written consent of the Purchaser (such consent not to be unreasonably withheld, conditioned or delayed), the Company shall not, and shall cause its Subsidiaries not to:
(i) amend, waive or otherwise change, in any material respect, its Organizational Documents;
(ii) other than (A) the cancellation of Company Special Voting Preferred Shares and issuance of Company Common Shares and/or Company Series A Preferred Shares prior to the Closing Date in connection with the exchange of Exchangeable Shares outstanding as of the day hereof, (B) in connection with the Interim Financing, or (C) subject to Section 6.02(b)(v)(E), the grant of up to 20,000 Company Options to any current or prospective employee or service provider (the “Interim Period Option Issuance”), authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any of its equity securities or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its equity securities, or other securities, including any securities convertible into or exchangeable for any of its units or other equity securities or securities of any class and any other equity-based awards, or engage in any hedging transaction with a third Person with respect to such securities, except in compliance with existing Company Benefits Plans or any Contract (including any warrant, option, or profits interest award) outstanding as of the date hereof or amended in compliance with this Section 6.02(b);
(iii) split, combine, recapitalize or reclassify any of its shares or other equity interests or issue any other securities in respect thereof or pay or set aside any dividend or other distribution (whether in cash, equity or property or any combination thereof) in respect of its equity interests, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its securities, except as may be required (A) pursuant to the Company Certificate of Incorporation or the Organizational Documents of any Target Company, (B) pursuant to the terms of any warrant, option or profits interest award outstanding as of the date hereof, (C) in connection with the Interim Period Option Issuance, or (D) pursuant to the terms of any Company Securities issued in connection with the Interim Financing;
(iv) except in connection with the Interim Financing, incur, create, assume or otherwise become liable for any additional Indebtedness (directly, contingently or otherwise) for borrowed money in excess of $1,000,000;
(v) except as otherwise required by Company Benefit Plans or award agreements thereunder, (A) grant any severance, retention, change in control or termination or similar pay, other than offer letters or employment Contracts to employees in the ordinary course of business, (B) terminate, adopt, enter into or materially amend or grant any new awards under any Company Benefit Plan other than the Company Incentive Plan in connection with the Interim Period Option Issuance or any plan, policy, practice, program, agreement or other arrangement other than the Company Incentive Plan that would be deemed a Company Benefit Plan as of the date hereof, (C) increase the cash compensation or bonus opportunity of any employee, officer, director or other individual service provider, except for such increases to any such individuals made in the ordinary course of business consistent with past practice, (D) take any action to materially amend or waive any performance or vesting criteria or to accelerate the time of payment or vesting of any compensation or benefit payable by the Company or any of the Company’s Subsidiaries other than as provided under this Agreement, (E) hire or engage any new employee or individual independent contractor if such new employee or individual independent contractor will receive annual base cash compensation in excess of $350,000, other than in the ordinary course of business consistent with past practice, (F) terminate the employment or engagement, other than for cause, death or disability, of any employee or individual independent contractor with an annual base cash compensation in excess of $350,000 or (G) enter into any written waiver of any restrictive covenants applying to any current or former employee or individual independent contractor;
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(vi) enter into or amend or extend any collective bargaining agreement or similar labor agreement, or recognize or certify any labor union, labor organization, or group of employees of any Target Company as the bargaining representative for any employees of any Target Company;
(vii) (A) make, change or rescind any material election relating to Taxes, (B) settle any claim, suit, litigation, proceeding, arbitration, investigation, audit, controversy or other Legal Proceeding relating to material Taxes, (C) file any amended income Tax or other material Tax Return, (D) surrender or allow to expire any right to claim a refund of material Taxes, (E) change (or request to change) any method of accounting for Tax purposes, (F) waive or extend any statute of limitations in respect of a period within which an assessment or reassessment of income Taxes or other material Taxes may be issued or in respect of any income Taxes or other material Tax attribute that would give rise to any claim or assessment of Taxes of or with respect to the Target Companies, (G) enter into any “closing agreement” as described in Section 7121 of the Code or any other agreement or arrangement with any Governmental Authority, or (H) enter into any Tax indemnity agreement, Tax sharing agreement or Tax allocation agreement or similar agreement, arrangement or practice (excluding customary commercial Contracts entered into in the ordinary course of business the primary purpose of which is not the sharing of Taxes) with respect to Taxes;
(viii) knowingly take any action, or knowingly fail to take any action, where such action or failure to act would reasonably be expected to prevent the Transactions from qualifying for its Intended Tax Treatments;
(ix) transfer, sell, assign, license, sublicense, covenant not to assert, subject to a Lien (other than a Permitted Lien), abandon, allow to lapse, transfer or otherwise dispose of, any right, title or interest of any Target Company in or to any Owned Intellectual Property material to any of the businesses of the Target Companies (other than non-exclusive licenses of Owned Intellectual Property granted in the ordinary course of business or abandoning, allowing to lapse or otherwise disposing of Owned Intellectual Property registrations or applications that the Target Companies, in the exercise of their good faith business judgment, have determined to abandon, allow to lapse or otherwise dispose of), or otherwise materially amend or modify, permit to lapse or fail to preserve any material Company Registered IP (excluding non-exclusive licenses of Company IP to Target Company customers in the ordinary course of business consistent with past practice), or disclose, divulge, furnish to or make accessible to any Person who has not entered into a confidentiality agreement sufficiently protecting the confidentiality thereof any material Trade Secrets constituting Owned Intellectual Property;
(x) terminate or assign any Company Material Contract or any material Company Real Property Lease or enter into any Contract that would be a Company Material Contract or material Company Real Property Lease, in any case outside of the ordinary course of business consistent with past practice;
(xi) enter into any new line of business or establish any Subsidiary in connection therewith;
(xii) fail to use commercially reasonable efforts to keep in force insurance policies or replacement or revised policies providing insurance coverage with respect to its assets, operations and activities in such amount and scope of coverage substantially similar to that which is currently in effect, or terminate without replacement or amend in a manner materially detrimental to the Target Companies, taken as a whole, any material insurance policy insuring any of the Target Companies;
(xiii) make any material change in accounting methods, principles or practices, except to the extent required to comply with GAAP or changes that are made in accordance with PCAOB standards;
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(xiv) waive, release, assign, settle or compromise any claim, action or proceeding (including any suit, action, claim, proceeding or investigation relating to this Agreement or the transactions contemplated hereby), other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages (and not the imposition of equitable relief on, or the admission of wrongdoing by, a Target Company or its Affiliates) not in excess of $500,000 (individually or in the aggregate);
(xv) effect any mass layoff or plant closing at any of its facilities that triggers the notice obligations under the Worker Adjustment and Retraining Notification Act of 1988, except as would not be material to the Target Companies or any terminations for cause;
(xvi) acquire, including by merger, consolidation, acquisition of equity interests or assets, or any other form of business combination, any corporation, partnership, limited liability company, other business organization or any division thereof, or any material amount of assets, in each case, outside the ordinary course of business consistent with past practice, except pursuant to any Contract in existence as of the date hereof which has been disclosed in writing or in the data room to the Purchaser;
(xvii) except as required pursuant to Contract in effect on the date hereof, make capital expenditures outside of the ordinary course of business consistent with past practice in excess of $250,000 (individually for any project) or $1,000,000 (in the aggregate);
(xviii) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring or other reorganization;
(xix) sell, lease, license, transfer, exchange or swap, mortgage or otherwise pledge or encumber (including securitizations), or otherwise dispose of any material portion of its tangible properties, assets or rights;
(xx) enter into any written agreement, understanding or arrangement with respect to the voting of equity securities of the Company;
(xxi) enter into, amend, waive or terminate (other than terminations in accordance with their terms) any transaction with any Related Person (other than compensation and benefits and advancement of expenses, in each case, provided in the ordinary course of business consistent with past practice, and other than in connection with the Interim Period Option Issuance);
(xxii) (A) limit the right of any Target Company to engage in any line of business or in any geographic area, to develop, market or sell products or services, or to compete with any Person or (B) grant any exclusive or similar rights to any Person, in each case of clause (A) and (B), except where such limitation or grant does not, and would not be reasonably likely to, individually or in the aggregate, materially and adversely affect, or materially disrupt, the ordinary course operation of the business of the Target Companies;
(xxiii) voluntarily terminate any design certification, pre-application, application or standard design approval activities the Target Companies are currently undertaking with the NRC; or
(xxiv) authorize or agree to do any of the foregoing actions.
Notwithstanding the foregoing, nothing contained in this Agreement will give the Purchaser, directly or indirectly, rights to control or direct the business or operations of the Company prior to the Closing. Prior to the Closing, the Company shall exercise, consistent with the terms and conditions of this Agreement and subject to the Purchaser’s rights set forth herein, complete control and supervision over its business, assets and operations.
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Section 6.03 Conduct of Business of the Purchaser.
(a) During the Interim Period, except as expressly contemplated by this Agreement or the Ancillary Documents, as required by applicable Law (including COVID-19 Measures) or any Governmental Authority, as set forth on Section 6.03(b) of the Purchaser Disclosure Letter or as consented to in writing by the Company (such consent not to be unreasonably withheld, conditioned or delayed), the Purchaser shall, and shall cause Merger Sub to, (i) conduct its business, in all material respects, in the ordinary course of business, and (ii) take commercially reasonable measures necessary or appropriate to preserve intact, in all material respects, its business. Notwithstanding anything to the contrary in this Section 6.03, nothing in this Agreement shall prohibit or restrict the Purchaser from extending, in accordance with the Purchaser’s Organizational Documents and the IPO Prospectus, the deadline by which it must complete its Business Combination (an “Extension”), and no consent of any other Party shall be required in connection therewith.
(b)
Without limiting the generality of Section 6.03(a) and except as contemplated by the terms
of this Agreement or the Ancillary Documents (including the Domestication or as contemplated by any PIPE Investment), as required by applicable
Law (including COVID-19 Measures) or any Governmental Authority or as set forth on Section 6.03(b) of the Purchaser Disclosure
Letter, during the Interim Period, without the prior written consent of the Company (such consent not to be unreasonably withheld, conditioned
or delayed), the Purchaser shall not, and shall cause Merger Sub not to:
(i) amend, waive or otherwise change, in any material respect, its Organizational Documents;
(ii) authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any of its equity securities or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its equity securities, or other securities, including any securities convertible into or exchangeable for any of its units or other equity securities or securities of any class and any other equity-based awards, or engage in any hedging transaction with a third Person with respect to such securities;
(iii) split, combine, recapitalize or reclassify any of its shares or other equity interests or issue any other securities in respect thereof or pay or set aside any dividend or other distribution (whether in cash, equity or property or any combination thereof) in respect of its shares or other equity interests, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its securities;
(iv) incur, create, assume, prepay or otherwise become liable for any Indebtedness (directly, contingently or otherwise), other than Indebtedness under the Convertible Promissory Note solely for the purpose of paying Purchaser Transaction Costs;
(v) (A) make, change or rescind any material election relating to Taxes, (B) settle any claim, suit, litigation, proceeding, arbitration, investigation, audit, controversy or other Legal Proceeding relating to material Taxes, (C) file any amended income Tax or other material Tax Return, (D) surrender or allow to expire any right to claim a refund of material Taxes, (E) change (or request to change) any method of accounting for Tax purposes, (F) waive or extend any statute of limitations in respect of a period within which an assessment or reassessment of income Taxes or other material Taxes may be issued or in respect of any income Taxes or other material Tax attribute that would give rise to any claim or assessment of Taxes of or with respect to Purchaser, (G) enter into any “closing agreement” as described in Section 7121 of the Code or any other agreement or arrangement with any Governmental Authority, or (H) enter into any Tax indemnity agreement, Tax sharing agreement or Tax allocation agreement or similar agreement, arrangement or practice (excluding customary commercial Contracts entered into in the ordinary course of business the primary purpose of which is not the sharing of Taxes) with respect to Taxes;
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(vi) knowingly take any action, or knowingly fail to take any action, where such action or failure to act could reasonably be expected to prevent the relevant portions of the Merger from qualifying for their respective Intended Tax Treatments;
(vii) amend, waive or otherwise change the Trust Agreement;
(viii) terminate, waive or assign any material right under any material Contract of Purchaser or any Contract with any broker, finder, financial advisor or investment banker, or make any discretionary payments under any such Contract;
(ix) enter into, amend, waive or terminate (other than terminations in accordance with their terms) any transaction with any Related Person (other than with respect to the Convertible Promissory Note);
(x) establish any Subsidiary;
(xi) engage in any activities or business, other than activities or business (A) currently conducted by the Purchaser or Merger Sub as of the date of this Agreement, (B) in connection with or incident to Purchaser’s or Merger Sub’s organization, incorporation, or continuing corporate existence, or (C) that are administrative and immaterial in nature;
(xii) fail to use commercially reasonable efforts to keep in force insurance policies or replacement or revised policies providing insurance coverage with respect to its assets, operations and activities in such amount and scope of coverage substantially similar to that which is currently in effect;
(xiii) make any material change in accounting methods, principles or practices, except to the extent required to comply with GAAP or PCAOB standards;
(xiv) waive, release, assign, settle or compromise any claim, action or proceeding (including any suit, action, claim, proceeding or investigation relating to this Agreement or the Transactions), other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages (and not the imposition of equitable relief on, or the admission of wrongdoing by, the Purchaser or its Subsidiary) not in excess of $500,000 (individually or in the aggregate);
(xv) acquire, including by merger, consolidation, acquisition of equity interests or assets, or any other form of business combination, any corporation, partnership, limited liability company, other business organization or any division thereof, or any material amount of assets;
(xvi) make capital expenditures (excluding for the avoidance of doubt, incurring any ordinary course administrative costs and expenses);
(xvii) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization (other than with respect to the Transactions);
(xviii) voluntarily incur any Liability or obligation (whether absolute, accrued, contingent or otherwise) in excess of $500,000 individually or $1,000,000 in the aggregate (excluding the incurrence of any ordinary course administrative costs and expenses incurred in connection with the consummation of Transactions, including legal or accounting (including any PIPE Investment)) other than pursuant to the terms of a Contract in existence as of the date of this Agreement or entered into in the ordinary course of business or in accordance with the terms of this Section 6.03 during the Interim Period;
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(xix) sell, lease, license, transfer, exchange or swap, mortgage or otherwise pledge or encumber (including securitizations), or otherwise dispose of any material portion of its tangible properties, assets or rights;
(xx) grant or establish any form of compensation or benefits to any current or former employee, officer, director, individual independent contractor or other individual service provider of Purchaser; or
(xxi) authorize or agree to do any of the foregoing actions.
Notwithstanding the foregoing, nothing contained in this Agreement will give the Company, directly or indirectly, rights to control or direct the business or operations of the Purchaser prior to the Closing. Prior to the Closing, the Purchaser shall exercise, consistent with the terms and conditions of this Agreement and subject to the Company’s rights set forth herein, complete control and supervision over its business, assets and operations.
Section 6.04 Annual and Interim Financial Statements.
(a) As soon as reasonably practicable following the date of this Agreement, but in no event later than June 30, 2025, the Company shall deliver to the Purchaser audited consolidated balance sheets and statements of operations, comprehensive loss, stockholders’ equity and cash flows of the Target Companies as of and for the years ended December 31, 2023 and December 31, 2024, together with the auditor’s reports thereon, which comply in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act applicable to a registrant and which are have been audited in accordance with GAAP and PCAOB standards (collectively, the “PCAOB Financial Statements”); provided, that upon delivery of such PCAOB Financial Statements, such financial statements shall be deemed “Audited Financial Statements” for the purposes of this Agreement and the representation and warranties set forth in Section 4.06 shall be deemed to apply to such Audited Financial Statements with the same force and effect as if made as of the date of this Agreement.
(b) As soon as reasonably practicable following the date of this Agreement, and in each case, within seventy-five (75) days of each applicable quarter-end (other than with respect to the quarters ended March 31, 2025 and March 31, 2024), the Company shall deliver to the Purchaser unaudited consolidated balance sheets and statements of operations, comprehensive loss, stockholders’ equity and cash flows of the Target Companies that are required by applicable law to be included in the Proxy Statement/Registration Statement, which comply in all material respects with the applicable accounting requirements (the “Interim Financial Statements”); provided, that upon delivery of such Interim Financial Statements, the representation and warranties set forth in Section 4.06 shall be deemed to apply to the Interim Financial Statements, mutatis mutandis, with the same force and effect as if made as of the date of this Agreement.
Section 6.05 Purchaser Public Filings. During the Interim Period, the Purchaser will keep current all of its public filings with the SEC (after giving effect to all applicable extension periods) and otherwise comply in all material respects with applicable securities Laws and shall use its reasonable best efforts prior to the Closing to maintain the listing of the Purchaser Class A Ordinary Shares and the Cayman Purchaser Public Warrants on Nasdaq; provided, that the Parties acknowledge and agree that (i) if Purchaser fails to timely file any public filing with the SEC, such failure shall not be a breach of this Section 6.05 provided such public filing is made before the effectiveness of the Registration Statement or the earlier termination of this Agreement pursuant to Section 8.01(d) (even though such filing is late) and such late filing does not have a material adverse impact on the consummation of the Transactions and (ii) from and after the Closing, the Parties intend to list on Nasdaq only the Domesticated Purchaser Common Stock and the Domesticated Purchaser Warrants.
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Section 6.06 No Solicitation.
(a) For purposes of this Agreement, (i) an “Acquisition Proposal” means any inquiry, proposal or offer, or any indication of interest in making an offer or proposal (whether written or oral), from any Person or group at any time relating to an Alternative Transaction, and (ii) an “Alternative Transaction” means (A) with respect to the Company and its Subsidiaries, a transaction or a series of transactions (other than the Transactions) concerning the sale (whether directly or indirectly) of (x) five percent (5%) or more of the business or assets of the Target Companies, or (y) five percent (5%) or more of any class of shares or other equity interests or profits of any of the Target Companies, in any case, whether such transaction takes the form of a sale of shares or other equity interests, assets, merger, consolidation, issuance of debt securities, management Contract, joint venture or partnership, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution or other similar transaction (other than with respect to the ExchangeCo Recapitalization, the Interim Financing or any purchases of equity securities by the Company from employees of the Company or its Subsidiaries), and (B) with respect to the Purchaser and its Affiliates, a transaction (other than the Transactions) concerning a business combination.
(b) During the Interim Period, in order to induce the other Parties to continue to commit to expend management time and financial resources in furtherance of the transactions contemplated hereby, each Party shall not, and shall cause its Representatives to not, without the prior written consent of the Company and the Purchaser, directly or indirectly, (i) solicit, assist, initiate, engage or facilitate the making, submission or announcement of, or intentionally encourage, any Acquisition Proposal, (ii) furnish any non-public information regarding such Party or its Affiliates or their respective businesses, operations, assets, Liabilities, financial condition, prospects or employees to any Person or group (other than a Party to this Agreement or their respective Representatives) in connection with or in response to an Acquisition Proposal, (iii) engage or participate in discussions or negotiations with any Person or group with respect to, or that could reasonably be expected to lead to, an Acquisition Proposal, (iv) approve, endorse or recommend, or publicly propose to approve, endorse or recommend, any Acquisition Proposal, or (v) negotiate or enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement related to any Acquisition Proposal.
(c) Each Party shall notify the other Parties as promptly as practicable (and in any event within two (2) Business Days) in writing of the receipt by such Party or any of its Representatives of any bona fide inquiries, proposals or offers, requests for information or requests for discussions or negotiations regarding or constituting any Acquisition Proposal or any bona fide inquiries, proposals or offers, requests for information or requests for discussions or negotiations that could be expected to result in an Acquisition Proposal, specifying in each case, the material terms and conditions thereof (including a copy thereof if in writing or a written summary thereof if oral) and the identity of the party making such inquiry, proposal, offer or request for information. Each Party shall keep the others promptly informed of the status of any such inquiries, proposals, offers or requests for information. During the Interim Period, each Party shall, and shall cause its Representatives to, immediately cease and cause to be terminated any solicitations, discussions or negotiations with any Person with respect to any Acquisition Proposal and shall, and shall direct its Representatives to, cease and terminate any such solicitations, discussions or negotiations.
Section 6.07 No Trading. The Company acknowledges and agrees that it is aware, and that the Company’s Affiliates are aware (and each of their respective Representatives is aware or, upon receipt of any material nonpublic information of the Purchaser, will be advised) of the restrictions imposed by U.S. federal securities laws and the rules and regulations of the SEC and Nasdaq promulgated thereunder or otherwise (the “Federal Securities Laws”) and other applicable foreign and domestic Laws on a Person possessing material nonpublic information about a publicly traded company. The Company hereby agrees that, while it is in possession of such material nonpublic information, it shall not, it shall cause its Subsidiaries not to, and it shall instruct its other Affiliates and Representatives not to, purchase or sell any securities of the Purchaser (unless otherwise explicitly contemplated in this Agreement), communicate such information to any third party (other than (x) to Persons for the purpose of seeking consents related to the Transactions or (y) Persons subject to confidentiality restrictions in favor of the Company), take any other action with respect to the Purchaser in violation of such Laws, or cause or encourage any third party to do any of the foregoing.
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Section 6.08 Notification of Certain Matters.
(a) During the Interim Period, each Party shall give prompt notice to the other Parties if such Party or its Affiliates: (a) receives any notice or other communication in writing from any third party (including any Governmental Authority) alleging: (i) that the Consent of such third party is or may be required in connection with the Transactions or (ii) any non-compliance with any Law by such Party or its Affiliates; (b) receives any notice or other communication from any Governmental Authority in connection with the Transactions; or (c) becomes aware of the commencement or threat, in writing, of any Legal Proceeding against such Party or any of its Affiliates, or any of their respective properties or assets, or, to the Knowledge of such Party, any officer, director, partner, member or manager, in his, her or its capacity as such, of such Party or of its Affiliates, in each case, with respect to the consummation of the Transactions. No such notice shall constitute an acknowledgement or admission by the Party providing the notice regarding whether or not any of the conditions to the Closing have been satisfied or in determining whether or not any of the representations, warranties or covenants contained in this Agreement have been breached. In the event that any litigation related to this Agreement, any Ancillary Documents or the Transactions is brought, or, to the Knowledge of the Parties, respectively, threatened, against such Party, or the board of directors (or similar governing body) of such Party or its Subsidiaries, respectively, by a third party prior to the Closing, such Party shall promptly notify the other Party of any such litigation and keep the other Party reasonably informed with respect to the status thereof. Each Party shall provide the other Party the opportunity to participate in (subject to a customary joint defense agreement), but not control, the defense of any such litigation, shall give due consideration to the other Party’s advice with respect to such litigation and shall not settle or agree to settle any such litigation without the prior written consent of the other Party, such consent not to be unreasonably withheld, conditioned or delayed.
(b) The Company may, from time to time, deliver to Purchaser no later than the end of the second (2nd) Business Day prior to the Closing Date a true and complete schedule of changes (an “Update Schedule”) to any of the information contained in the Company Disclosure Letter (including changes to any other representations or warranties in Article IV hereof as to which no section of the Company Disclosure Letter has been created as of the date hereof but as to which a section of the Company Disclosure Letter would have been required if such changes had existed on the date hereof), which changes pertain to events or circumstances occurring, or of which Company Knowledge is first obtained subsequent to the date hereof which would render any representation or warranty inaccurate or incomplete. Any Update Schedule so delivered shall be deemed to amend the Company Disclosure Letter with respect to the matters contained therein. Upon delivery of an Update Schedule to the Purchaser that would cause the conditions in Section 7.03(a) to not be satisfied, the Purchaser shall have ten (10) Business Days to exercise its rights under this Agreement under Article VIII. If the Purchaser does not exercise its rights to terminate this Agreement within ten (10) Business Days, the Purchaser shall be deemed to have waived all such rights to terminate this Agreement in connection with the matters described in such Update Schedule.
Section 6.09 Efforts.
(a) Subject to the terms and conditions of this Agreement, each Party shall use its reasonable best efforts, and shall cooperate fully with the other Parties, to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable Laws and regulations to consummate the Transactions (including the receipt of all applicable Consents of Governmental Authorities) and to comply as promptly as practicable with all requirements of Governmental Authorities applicable to the Transactions.
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(b) In furtherance and not in limitation of Section 6.09(a), to the extent required under the HSR Act any other Laws that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition (collectively, “Antitrust Laws”), each Party hereto agrees to make any required filing or application under Antitrust Laws, as applicable, at such Party’s sole cost and expense (except that any fees or other amounts charged by any Governmental Authorities relating to such filings or applications will be split equally between the Purchaser, on the one hand, and the Company, on the other hand, which fees and expenses shall be considered Purchaser Transaction Costs and Company Transaction Costs, respectively), with respect to the Transactions as promptly as practicable (but in any event within twenty (20) Business Days after the date hereof), to supply as promptly as reasonably practicable any additional information and documentary material that may be requested pursuant to Antitrust Laws and to take all other actions reasonably necessary, proper or advisable to cause the expiration or termination of the applicable waiting periods under Antitrust Laws as soon as practicable, including by requesting early termination of the waiting period provided for under the HSR Act or any other Antitrust Laws and obtaining any approval required under any other Antitrust Laws; provided, that neither Party shall extend any waiting period under the HSR Act or comparable period under any other Antitrust Laws or enter into any agreement with any Governmental Authority to so extend such waiting period or comparable period without the prior written consent of the other Parties. Each Party shall, in connection with its efforts to obtain all requisite approvals and authorizations for the Transactions under any Antitrust Law, use its reasonable best efforts to: (i) cooperate in all respects with each other Party or its Affiliates in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private Person; (ii) keep the other Parties reasonably informed of any material communication received by such Party or its Representatives from, or given by such Party or its Representatives to, any Governmental Authority and of any communication received or given in connection with any proceeding by a private Person, in each case regarding any of the Transactions; (iii) permit a Representative of the other Parties and their respective outside counsel to review any material communication given by it to, and consult with each other in advance of any meeting or conference with, any Governmental Authority or, in connection with any proceeding by a private Person, with any other Person, and to the extent permitted by such Governmental Authority or other Person, give a Representative or Representatives of the other Parties the opportunity to attend and participate in such meetings and conferences; (iv) in the event a Party’s Representative is prohibited from participating in or attending any meetings or conferences, the other Parties shall keep such Party promptly and reasonably apprised with respect thereto; and (v) use reasonable best efforts to cooperate in the filing of any memoranda, white papers, filings, correspondence or other written communications explaining or defending the Transactions, articulating any regulatory or competitive argument, and/or responding to requests or objections made by any Governmental Authority. The Parties agree that any written materials of such Party (including without limitation any notification and report forms filed under the HSR Act concerning the transactions contemplated by this Agreement) may be redacted as necessary to comply with contractual arrangements and as necessary to address reasonable privilege or confidentiality concerns, in each event prior to sharing such materials with another Party.
(c) As soon as reasonably practicable following the date of this Agreement, the Parties shall reasonably cooperate with each other and use (and shall cause their respective Affiliates to use) their respective reasonable best efforts to prepare and file with Governmental Authorities any notices or requests for approval, to the extent required, of the Transactions and shall use their reasonable best efforts to have such Governmental Authorities approve the Transactions, as applicable. Each Party shall give prompt written notice to the other Parties if such Party or any of its Representatives receives any notice from such Governmental Authorities in connection with the Transactions and shall promptly furnish the other Parties with a copy of such Governmental Authority notice. If any Governmental Authority requires that a hearing or meeting be held in connection with its approval of the Transactions, whether prior to the Closing or after the Closing, each Party shall arrange for Representatives of such Party to be present for such hearing or meeting. If any objections are asserted with respect to the Transactions under any applicable Law or if any Legal Proceeding is instituted (or threatened to be instituted) by any applicable Governmental Authority or any private Person challenging any of the Transactions or any Ancillary Document as violative of any applicable Law or which would otherwise prevent, materially impede or materially delay the consummation of the Transactions, the Parties shall use their reasonable best efforts to resolve any such objections or Legal Proceedings so as to timely permit consummation of the Transactions, including in order to resolve such objections or Legal Proceedings which, in any case if not resolved, could reasonably be expected to prevent, materially impede or materially delay the consummation of the Transactions. In the event any Legal Proceeding is instituted (or threatened to be instituted) by a Governmental Authority or private Person challenging the Transactions, Purchaser shall, and shall cause its Representatives to, at Purchaser’s sole cost and expense, use its reasonable best efforts to contest and resist any such Legal Proceeding and to have vacated, lifted, reversed or overturned any Order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the Transactions, provided that the Company shall, and shall cause its Representatives to, reasonably cooperate with Purchaser with respect to such efforts of Purchaser.
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(d) Prior to the Closing, each Party shall use its reasonable best efforts to obtain any Consents of Governmental Authorities or other third Persons as may be necessary for the consummation by such Party or its Affiliates of the Transactions or required as a result of the execution or performance of, or consummation of the Transactions by such Party or its Affiliates, and the other Parties shall provide reasonable cooperation in connection with such efforts.
Section 6.10 Trust Account. Upon satisfaction or waiver of the conditions set forth in Article VII and provision of notice thereof to the Trustee (which notice Purchaser shall provide to the Trustee in accordance with the terms of the Trust Agreement), (i) in accordance with and pursuant to the Trust Agreement, Purchaser (a) shall cause any documents, opinions and notices required to be delivered to the Trustee pursuant to the Trust Agreement to be so delivered and (b) shall use its reasonable best efforts to cause the Trustee to, and the Trustee shall thereupon be obligated to (1) pay as and when due all amounts payable to the Purchaser Shareholders pursuant to the Redemption, (2) pay the amounts due to the underwriters of Purchaser’s initial public offering for their deferred underwriting commissions as set forth in the Trust Agreement, (3) pay the amounts due to the Sponsor, directors and officers of the Purchaser as repayment of unpaid Purchaser liabilities, (4) pay the Purchaser Transaction Costs and the Company Transaction Costs, (5) pay all income tax or other tax obligations of Purchaser prior to the Closing, and (6) pay all remaining amounts then available in the Trust Account to Purchaser for immediate use, subject to this Agreement and the Trust Agreement, and (ii) thereafter, the Trust Account shall terminate, except as expressly provided in the Trust Agreement.
Section 6.11 Tax Matters.
(a) The Parties hereby agree and acknowledge that, for U.S. federal, and applicable state and local, income Tax purposes, it is intended that the relevant portions of the Transactions qualify for their respective Intended Tax Treatments, and that this Agreement constitutes, and hereby is adopted as, a “plan of reorganization” within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3(a) for purposes of Sections 354, 361 and 368 of the Code and the Treasury Regulations promulgated thereunder. No Party shall knowingly take or knowingly cause to be taken, or knowingly fail to take or knowingly cause to be failed to be taken, any action, if such action or failure to act, as the case may be, would reasonably be expected to prevent or impede the relevant portions of the Transactions from qualifying for their respective Intended Tax Treatments. The Parties hereby agree to file all Tax Returns on a basis consistent with the Intended Tax Treatments unless otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code or a change in applicable Law. Each Party agrees to use reasonable best efforts to promptly notify all other Parties of any challenge to the qualification of any relevant portion of the Transactions for its Intended Tax Treatment by any Governmental Authority.
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(b) Notwithstanding anything to the contrary herein, if the SEC requires that a Tax opinion be prepared and submitted in connection with the Proxy Statement/Registration Statement and any other filings to be made with the SEC in connection with the Transactions, whether as an exhibit to the Proxy Statement/Registration Statement or otherwise, and if such a Tax opinion is being provided by a Tax counsel, the Parties hereto shall, and shall cause their Affiliates to, (i) reasonably cooperate in order to facilitate the issuance of any such Tax opinion and (ii) deliver to such counsel, to the extent requested by such counsel, a duly executed certificate reasonably satisfactory to such Party and such counsel dated as of the date requested by such counsel, containing such customary representations, warranties and covenants as shall be reasonably necessary or appropriate to enable such counsel to render any such opinion; provided, that, notwithstanding anything herein to the contrary, nothing in this Agreement shall require (x) any counsel to the Company or its advisors to provide an opinion with respect to any Tax matters relating to or affecting Purchaser or the Purchaser Shareholder, including that the relevant portions of the Transactions qualify for their respective Intended Tax Treatments and (y) any counsel to Purchaser or its advisors to provide an opinion with respect to any Tax matters relating to or affecting the Company or the holders or beneficial owners of Company Securities, including that the relevant portions of the Transactions qualify for their respective Intended Tax Treatments; provided, further, that neither this provision nor any other provision in this Agreement shall require the provision of a Tax opinion by any Party’s counsel or advisors to be an express condition precedent to the Closing.
(c) All transfer, documentary, sales, use, stamp, registration, excise, recording, registration, value added and other such similar Taxes and fees (including any penalties and interest) that become payable in connection with or by reason of the Merger (“Transfer Taxes”) shall be borne and paid by the relevant Target Companies. The Target Companies shall, at their own expense, timely file all necessary Tax Returns or other documentation with respect to such Transfer Taxes and, if required by applicable Law, the other Parties shall join in the execution of any such Tax Returns or other documentation. Notwithstanding anything to the contrary contained herein, Purchaser shall pay all Transfer Taxes required to be paid in connection with the Domestication, Sponsor Share Conversion, and Redemption (including, for the avoidance of doubt, any Taxes pursuant to Section 4501 of the Code in connection with the Redemptions).
(d) The Company shall provide a certificate signed by an officer of the Company, prepared in a manner consistent and in accordance with the requirements of Treasury Regulations Sections 1.897-2(g), (h) and 1.1445-2(c)(3), certifying that the Company is not, and has not been during the relevant period specified in Section 897(c)(1)(A)(ii) of the Code, a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code, and a form of notice to the IRS prepared in accordance with the provisions of Treasury Regulations Section 1.897-2(h)(2), in each case in form and substance reasonably satisfactory to the Purchaser, provided that the only remedy of the Purchaser for the failure to provide such certificate and form will be to withhold pursuant Section 1445 of the Code.
Section 6.12 Further Assurances. The Parties hereto shall further cooperate with each other and use their respective commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on their part under this Agreement and applicable Laws to consummate the Transactions as soon as reasonably practicable, including preparing and filing as soon as practicable all documentation to effect all necessary notices, reports and other filings and to otherwise effect, consummate, confirm or evidence the Transactions and carry out the purposes of this Agreement.
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Section 6.13 The Preparation of Proxy Statement/Registration Statement; Stockholders’ Meeting and Approvals.
(a) Registration Statement and Prospectus.
(i) As promptly as practicable after the execution of this Agreement and receipt by the Purchaser of the PCAOB Financial Statements, the Interim Financial Statements and any other audited or unaudited financial statements of the Target Companies that are required by applicable Law to be included in the Proxy Statement/Registration Statement, (x) the Purchaser and the Company shall jointly prepare and the Purchaser shall file with the SEC, mutually acceptable materials (such agreement not to be unreasonably withheld, conditioned or delayed by the Purchaser or the Company) that shall include the proxy statement to be filed with the SEC as part of the Registration Statement and sent to the Purchaser Shareholders relating to the Purchaser Shareholders’ Meeting (such proxy statement, together with any amendments or supplements thereto, the “Proxy Statement”), and (y) the Purchaser shall prepare (with the Target Companies’ and their respective Representatives reasonable cooperation) and file with the SEC the Registration Statement, in which the Proxy Statement will be included as a prospectus (the “Proxy Statement/Registration Statement”), in connection with the registration under the Securities Act of the Company Common Shares issuable in connection with the Merger (collectively, the “Registration Statement Securities”). The filing fees payable to the SEC in connection with the Proxy Statement/Registration Statement will be paid by the Purchaser as a Purchaser Transaction Cost. Each of the Purchaser and the Company shall use its reasonable best efforts to cause the Proxy Statement/Registration Statement to comply with the rules and regulations promulgated by the SEC, to have the Registration Statement declared effective under the Securities Act as promptly as practicable after such filing and to keep the Registration Statement effective as long as is necessary to consummate the Transactions. The Purchaser also agrees to use its reasonable best efforts to obtain all necessary state securities law or “blue sky” permits and approvals required to carry out the transactions contemplated hereby, and the Company shall furnish all information concerning the Target Companies and any of their respective members or stockholders as may be reasonably requested in connection with any such action. Each of the Purchaser and the Company agrees to furnish to the other party all information concerning itself, its Subsidiaries, officers, directors, managers, stockholders, and other equityholders and information regarding such other matters as may be reasonably necessary or advisable or as may be reasonably requested in connection with the Proxy Statement/Registration Statement, a current report on Form 8-K pursuant to the Exchange Act in connection with the Transactions, or any other statement, filing, notice or application made by or on behalf of the Purchaser or the Target Companies to any regulatory authority (including Nasdaq) in connection with the Transactions (the “Offer Documents”).
(ii) To the extent not prohibited by Law, the Purchaser will advise the Company, reasonably promptly after the Purchaser receives notice thereof, of the time when the Proxy Statement/Registration Statement has become effective or any supplement or amendment has been filed, of the issuance of any stop order or the suspension of the qualification of the Domesticated Purchaser Common Stock for offering or sale in any jurisdiction, of the initiation or written threat of any proceeding for any such purpose, or of any request by the SEC for the amendment or supplement of the Proxy Statement/Registration Statement or for additional information. To the extent not prohibited by Law, the Company and their counsel shall be given a reasonable opportunity to review and comment on the Proxy Statement/Registration Statement and any Offer Document each time before any such document is filed with the SEC, and the Purchaser shall give reasonable and good faith consideration to any comments made by the Company and its counsel. To the extent not prohibited by Law, the Purchaser shall provide the Company and their counsel with (i) any comments or other communications, whether written or oral, that the Purchaser or its counsel may receive from time to time from the SEC or its staff with respect to the Proxy Statement/Registration Statement or Offer Documents promptly after receipt of those comments or other communications and (ii) a reasonable opportunity to participate in the response of the Purchaser to those comments and to provide comments on that response (to which reasonable and good faith consideration shall be given), including by participating with the Company or its counsel in any discussions or meetings with the SEC.
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(iii) Each of the Purchaser and the Company shall use reasonable best efforts to ensure that none of the information supplied by or on its behalf for inclusion or incorporation by reference in (A) the Proxy Statement/Registration Statement will, at the time the Proxy Statement/Registration Statement is filed with the SEC, at each time at which it is amended and at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, not misleading or (B) the Proxy Statement will, at the date it is first mailed to the Purchaser Shareholders and at the time of the Purchaser Shareholders’ Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.
(iv) If at any time prior to the Closing any information relating to the Company, the Purchaser or any of their respective Subsidiaries, Affiliates, directors or officers is discovered by the Company or the Purchaser, which is required to be set forth in an amendment or supplement to the Proxy Statement or the Proxy Statement/Registration Statement, so that neither of such documents would include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, with respect to the Proxy Statement, in light of the circumstances under which they were made, not misleading, the party which discovers such information shall promptly notify the other parties and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by Law, disseminated to the Purchaser Shareholders.
(b) Purchaser Shareholder Approval. The Purchaser shall (a) as promptly as practicable after the Proxy Statement/Registration Statement is declared effective under the Securities Act, (i) cause the Proxy Statement to be disseminated to Purchaser Shareholders in compliance with applicable Law, (ii) solely with respect to the following clause (1), duly (1) give notice of and (2) convene and hold an extraordinary general meeting of Purchaser Shareholders (the “Purchaser Shareholders’ Meeting”) in accordance with the Purchaser’s Organizational Documents and applicable Law, for a date no later than thirty (30) Business Days following the date the Registration Statement is declared effective, and (iii) solicit proxies from the holders of Purchaser Ordinary Shares to vote in favor of each of the Transaction Proposals, and (b) provide its public stockholders with the opportunity to elect to effect a Redemption. The Purchaser shall, through its board of directors, recommend to the Purchaser Shareholders the (A) adoption and approval of this Agreement in accordance with applicable Law and exchange rules and regulations, (B) approval of the Domestication, (C) adoption of the Purchaser Charter upon Domestication and the Purchaser Bylaws upon Domestication, including any separate or unbundled advisory proposals as are required to implement the foregoing, (D) approval of the issuance of shares of Domesticated Purchaser Common Stock as required by Nasdaq Listing Rule 5635, (E) approval of the adoption by the Purchaser of the Equity Incentive Plan, (F) appointment of the director nominees in accordance with Section 6.18 of this Agreement, (G) adoption and approval of any other proposals as the SEC (or staff member thereof) may indicate are necessary in its comments to the Registration Statement or correspondence related thereto, (H) adoption and approval of any other proposals as reasonably agreed by the Purchaser and the Company to be necessary or appropriate in connection with the Transactions; and (I) adjournment of the Purchaser Shareholders’ Meeting to a later date or dates, if necessary or convenient, (x) to permit further solicitation and vote of proxies in the event that there are insufficient votes for any of the foregoing, (y) if the Purchaser determines that one or more of the conditions to Closing is not or will not be satisfied or waived or (z) to facilitate the Domestication, the Merger or any other Transaction (such proposals in (A) through (H), together, the “Transaction Proposals”), and include such recommendation in the Proxy Statement. The board of directors of Purchaser shall not, except as required by applicable Law, withdraw, amend, qualify or modify its recommendation to the Purchaser Shareholders that they vote in favor of the Transaction Proposals (together with any withdrawal, amendment, qualification or modification of its recommendation to the Purchaser Shareholders described in the Recitals hereto, a “Modification in Recommendation”). To the fullest extent permitted by applicable Law, (x) the Purchaser’s obligations to establish a record date for, duly call, give notice of, convene and hold the Purchaser Shareholders’ Meeting shall not be affected by any Modification in Recommendation, (y) the Purchaser agrees to establish a record date for, duly call, give notice of, convene and hold the Purchaser Shareholders’ Meeting and submit for approval the Transaction Proposals and (z) the Purchaser agrees that if the Purchaser Shareholder Approval shall not have been obtained at any such Purchaser Shareholders’ Meeting, then the Purchaser shall promptly continue to take all such necessary actions, including the actions required by this Section 6.13(b), and hold additional Purchaser Shareholders’ Meetings in order to obtain the Purchaser Shareholder Approval provided that, without the consent of the Company, the Purchaser Shareholders’ Meeting may not be adjourned to a date that is more than fifteen (15) days after the date for which the Purchaser Shareholders’ Meeting was originally scheduled (excluding any adjournments required by applicable Law).
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Section 6.14 Employee Matters.
(a) The Purchaser and the Company shall use their commercially reasonable efforts to agree to a form of equity incentive plan that provides for grants of equity-based incentive of awards to eligible service providers of the Company (the “Equity Incentive Plan”), such agreement by either Party not to be unreasonably withheld, conditioned or delayed. If such Equity Incentive Plan is in agreed form prior to the effective date of the Registration Statement, the Purchaser shall, prior to the Closing Date, adopt such Equity Incentive Plan and submit it for approval of the Purchaser’s Shareholders at the Purchaser Shareholders’ Meeting. The Equity Incentive Plan shall have an initial share reserve equal to or greater than ten percent (10%) of the Purchaser’s fully diluted outstanding shares immediately following the Effective Time, as mutually agreed between the Purchaser and the Company based upon benchmarking against peer public companies and in consultation with an independent outside compensation advisor, such consent not to be unreasonably withheld, conditioned or delayed. The Purchaser and the Company shall determine the initial award grants that shall be granted to eligible service providers identified by the Company and agreed to by the Purchaser as soon as reasonably practicable following the Effective Time and in a form of award agreement, in each case, as mutually agreed between the Purchaser and the Company based upon benchmarking against peer public companies (taking into account employee hiring needs and the development stage nature of the Company) and in consultation with an independent outside compensation advisor, such agreement by either Party not to be unreasonably withheld, conditioned or delayed.
(b) Notwithstanding anything herein to the contrary, each of the parties to this Agreement acknowledges and agrees that all provisions contained in this Section 6.14 are included for the sole benefit of Purchaser and the Company, and that nothing in this Agreement, whether express or implied, (i) shall be construed to establish, amend, or modify any employee benefit plan, program, agreement or arrangement, (ii) shall limit the right of Purchaser, the Company or their respective Affiliates to amend, terminate or otherwise modify any Company Benefit Plan or other employee benefit plan, agreement or other arrangement following the Closing Date, or (iii) shall confer upon any Person who is not a party to this Agreement (including any equityholder, any current or former director, manager, officer, employee or independent contractor of the Company, or any participant in any Company Benefit Plan or other employee benefit plan, agreement or other arrangement (or any dependent or beneficiary thereof)), any right to continued or resumed employment or recall, any right to compensation or benefits, or any third-party beneficiary or other right of any kind or nature whatsoever.
Section 6.15 Public Announcements.
(a) The Parties agree that during the Interim Period no public release, filing or announcement concerning this Agreement or the Ancillary Documents or the transactions contemplated hereby or thereby shall be issued by any Party or any of their Affiliates without the prior written consent of the Purchaser and the Company (which consent shall not be unreasonably withheld, conditioned or delayed), except as such release or announcement may be required by applicable Law, or the rules or regulations of any securities exchange, in which case the applicable Party shall use commercially reasonable efforts to allow the other Parties reasonable time to comment on, and arrange for any required filing with respect to, such release or announcement in advance of such issuance.
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(b) The Parties shall mutually agree upon and, as promptly as practicable after the execution of this Agreement, issue a press release announcing the execution of this Agreement (the “Signing Press Release”). Promptly after the issuance of the Signing Press Release (but in any event within four (4) Business Days after the execution of this Agreement), the Purchaser shall file a current report on Form 8-K (the “Signing Filing”) with the Signing Press Release and a description of this Agreement as required by Federal Securities Laws, which the Company shall review, comment upon and approve (which approval shall not be unreasonably withheld, conditioned or delayed) prior to filing. The Parties shall mutually agree upon and, as promptly as practicable after the Closing, issue a press release announcing the consummation of the transactions contemplated by this Agreement (the “Closing Press Release”). Promptly after the issuance of the Closing Press Release (but in any event within four (4) Business Days after the Closing), the Purchaser shall file a current report on Form 8-K (the “Closing Filing”) with the Closing Press Release and a description of the Closing as required by Federal Securities Laws which the Purchaser shall review, comment upon and approve (which approval shall not be unreasonably withheld, conditioned or delayed) prior to filing. In connection with the preparation of the Signing Press Release, the Signing Filing, the Closing Filing, the Closing Press Release, or any other report, statement, filing notice or application made by or on behalf of a Party to any Governmental Authority or other third party in connection with the transactions contemplated hereby, each Party shall, upon request by any other Party, furnish the Parties with all information concerning themselves, their respective directors, officers and equityholders, and such other matters as may be reasonably necessary or advisable in connection with the transactions contemplated hereby, or any other report, statement, filing, notice or application made by or on behalf of a Party to any third party or any Governmental Authority in connection with the transactions contemplated hereby.
Section 6.16 Confidential Information. (a) The Company hereby agrees that during the Interim Period and, in the event that this Agreement is terminated in accordance with Article VIII, for a period of two (2) years after such termination, it shall, and shall cause its Affiliates and its and their respective Representatives to, except to the extent otherwise consented to by Purchaser (i) treat and hold in strict confidence any Purchaser Confidential Information, and will not use for any purpose (except in connection with the consummation of the Transactions, performing their obligations hereunder or thereunder, enforcing their rights hereunder or thereunder, or in furtherance of their authorized duties on behalf of the Purchaser), nor directly or indirectly disclose, distribute, publish, disseminate or otherwise make available to any third party any of the Purchaser Confidential Information without the Purchaser’s prior written consent, and (ii) in the event that the Company or any of its Affiliates or its or their respective Representatives, during the Interim Period or, in the event that this Agreement is terminated in accordance with Article VIII, for a period of two (2) years after such termination, becomes legally obligated to disclose any Purchaser Confidential Information, (A) provide the Purchaser, to the extent legally permitted, with prompt written notice of such requirement so that the Purchaser or an Affiliate thereof may seek, at the Purchaser’s sole cost and expense, a protective Order or other remedy or waive compliance with this Section 6.16(a) and (B) in the event that such protective Order or other remedy is not obtained, or the Purchaser waives compliance with this Section 6.16(a) furnish only that portion of such Purchaser Confidential Information; provided, that, with respect to Purchaser Confidential Information constituting trade secrets under applicable Law and has been identified as such to the Company in writing prior to or promptly after its disclosure to the Company or its Representatives, such covenants shall apply for as long as such Purchaser Confidential Information constitutes a trade secret under applicable Law and continues to constitute Purchaser Confidential Information under this Agreement. In the event that this Agreement is terminated and the transactions contemplated hereby are not consummated, the Company shall, and shall cause its Representatives to, promptly deliver to the Purchaser or destroy (at the Purchaser’s election) any and all copies (in whatever form or medium) of Purchaser Confidential Information and destroy all notes, memoranda, summaries, analyses, compilations and other writings related thereto or based thereon; provided, however, that the Company, its Affiliates and its and their respective Representatives shall be entitled to keep any records required by (w) applicable Law, (x) legal, fiduciary or professional obligation, (y) in accordance with written document retention policies and procedures and/or (z) contained in any electronic file created pursuant to bona fide backup storage or archival processes in the ordinary course of business; and provided, further, that any Purchaser Confidential Information that is not returned or destroyed shall remain subject to the confidentiality obligations set forth in this Agreement.
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(b) The Purchaser and Merger Sub hereby agree that during the Interim Period and, in the event that this Agreement is terminated in accordance with Article VIII, for a period of two (2) years after such termination, they shall, and shall cause their respective Affiliates and their Representatives to, except to the extent otherwise consented to by the Company: (i) treat and hold in strict confidence any Company Confidential Information, and will not use for any purpose (except in connection with the consummation of the Transactions, performing its obligations hereunder or thereunder or enforcing its rights hereunder or thereunder), nor directly or indirectly disclose, distribute, publish, disseminate or otherwise make available to any third party any of the Company Confidential Information without the Company’s prior written consent; and (ii) in the event that the Purchaser, Merger Sub or any of its Representatives, during the Interim Period or, in the event that this Agreement is terminated in accordance with Article VIII, for a period of two (2) years after such termination, becomes legally obligated to disclose any Company Confidential Information, (A) provide the Company to the extent legally permitted with prompt written notice of such requirement so that the Company may seek, at the Company’s sole cost and expense, a protective Order or other remedy or waive compliance with this Section 6.16(b) and (B) in the event that such protective Order or other remedy is not obtained, or the Company waives compliance with this Section 6.16(b), furnish only that portion of such Company Confidential Information which is legally required to be provided as advised in writing by outside counsel and to exercise its commercially reasonable efforts to obtain assurances that confidential treatment will be accorded such Company Confidential Information; provided that, with respect to Company Confidential Information constituting trade secrets under applicable Law and that has been identified as such to the Purchaser in writing prior to or promptly after its disclosure to the Purchaser or its Representatives, such covenants shall apply for as long as such Company Confidential Information constitutes a trade secret under applicable Law and continues to constitute Company Confidential Information under this Agreement. In the event that this Agreement is terminated and the transactions contemplated hereby are not consummated, the Purchaser shall, and shall cause its Representatives to, promptly deliver to the Company or destroy (at the Purchaser’s election) any and all copies (in whatever form or medium) of Company Confidential Information and destroy all notes, memoranda, summaries, analyses, compilations and other writings related thereto or based thereon; provided, however, that the Purchaser, Merger Sub and their respective Affiliates and Representatives shall be entitled to keep any records required by applicable Law or legal, fiduciary or professional obligation, in accordance with written document retention policies and procedures and/or contained in any electronic file created pursuant to bona fide backup storage or archival processes in the ordinary course of business; and provided, further, that any Company Confidential Information that is not returned or destroyed shall remain subject to the confidentiality obligations set forth in this Agreement. Notwithstanding the foregoing, (y) the Purchaser, Merger Sub and their respective Representatives shall be permitted to disclose any and all Company Confidential Information to the extent required by the Federal Securities Laws, and (z) no notice or further action shall be required in respect of disclosure of the Company Confidential Information (or provision of access thereto) to regulatory authorities or self-regulatory organizations having authority over the Purchaser, Merger Sub or their respective Representatives in connection with routine regulatory examinations or pursuant to statutory requirements that are not targeted at the Target Companies, the Transactions or the Company Confidential Information.
Section 6.17 Documents and Information. After the Closing Date, the Purchaser and the Company shall, and shall cause their respective Subsidiaries to, until the seventh (7th) anniversary of the Closing Date, retain all books, records and other documents pertaining to the business of the Target Companies in existence on the Closing Date and make the same available for inspection and copying by the Purchaser during normal business hours of the Company and its Subsidiaries, as applicable, upon reasonable request and upon reasonable notice. No such books, records or documents shall be destroyed after the seventh (7th) anniversary of the Closing Date by the Purchaser or its Subsidiaries (including any Target Company) without first advising a representative of the Sponsor (or its successors or assigns) in writing and giving such representative a reasonable opportunity to obtain possession thereof.
Section 6.18 Post-Closing Board of Directors and Executive Officers.
(a) The Parties shall take all necessary action, including the Purchaser causing the directors of the Purchaser to resign, so that effective as of the Closing, the Purchaser’s board of directors (the “Post-Closing Purchaser Board”) will consist of no less than five (5) individuals (appointed in accordance and such that, as of the Closing, the Post-Closing Purchaser Board shall comply with Nasdaq rules) to be determined by the Company. Immediately after the Closing, the Parties shall take all necessary action to designate and appoint to the Post-Closing Purchaser Board (i) the one (1) Person that is designated by the Purchaser prior to the Closing, which Person shall be subject to the Company’s consent (such consent not to be unreasonably withheld, delayed or conditioned), (ii) the chief executive officer of the Purchaser after the Closing and (iii) the remaining Persons, all of whom will be designated by the Company prior to the Closing and such number of whom will be independent under applicable Law and the relevant rules and regulations of Nasdaq such that a majority of the members of the Post-Closing Purchaser Board will be independent under applicable Law and the relevant rules and regulations of Nasdaq. At or prior to the Closing, the Company, if requested, and the Purchaser shall provide each initial director with a customary director indemnification agreement, in form and substance reasonably acceptable to such director, the Company and the Purchaser.
(b) The Parties shall take all action necessary, including the Purchaser causing the executive officers of Purchaser to resign, so that the individuals serving as the executive officers of the Purchaser immediately after the Closing will be individuals the Company desires to appoint to such roles.
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Section 6.19 Indemnification of Directors and Officers; Tail Insurance.
(a) The Parties agree that for a period of six (6) years from the Closing Date, the Parties shall, and shall cause the Purchaser, Merger Sub and the Target Companies to, maintain in effect the exculpation, indemnification and advancement of expenses provisions in favor of any individual who, at or prior to the Closing, was a director, officer, employee or agent of the Purchaser, Merger Sub and the Target Companies, as the case may be, or who, at the request of the Parties, as the case may be, served as a director, officer, member, manager, trustee, employee, agent or fiduciary of another corporation, partnership, joint venture, limited liability company, trust, pension or other employee benefit plan, or other enterprise (collectively, with such individual’s heirs, executors or administrators, (each, together with such Person’s heirs, executors or administrators, a “D&O Indemnified Party”)), of the Purchaser’s, Merger Sub’s and the Target Companies’ respective Organizational Documents as in effect immediately prior to the Closing Date or in any indemnification agreements of the Purchaser, Merger Sub or any of the Target Companies, on the one hand, with any D&O Indemnified Party, on the other hand, as in effect immediately prior to the Closing Date, and the Parties shall, and shall cause the Purchaser, Merger Sub and the Target Companies to, not amend, repeal or otherwise modify any such provisions in any manner that would adversely affect the rights thereunder of any D&O Indemnified Party; provided, however, that all rights to indemnification or advancement of expenses in respect of any Legal Proceedings pending or asserted or any claim made within such period shall continue until the disposition of such Legal Proceeding or resolution of such claim. From and after the Closing Date, the Purchaser shall cause the Target Companies to honor, in accordance with their respective terms, each of the covenants contained in this Section 6.19 without limit as to time.
(b) At or prior to the Closing, the Purchaser shall purchase a fully pre-paid, non-rescindable “tail” management liability insurance policy (inclusive of the directors’ and officers’, employment practices and fiduciary liability coverage parts) (the “D&O Tail”) in respect of acts or omissions occurring prior to the Closing covering each such Person that is a director, officer or employee of the Purchaser or a Target Company currently covered by a management liability insurance policy of the Purchaser or one or more Target Companies, respectively, on terms with respect to coverage, deductibles and amounts no less favorable than those of such applicable policy in effect on the date of this Agreement for the six (6) year period following the Closing. The Purchaser shall maintain the D&O Tail in full force and effect for its full term and cause all obligations thereunder to be honored by the Target Companies, as applicable, and no other party shall have any further obligation to purchase or pay for such insurance pursuant to this Section 6.19(b). No claims made under or in respect of the D&O Tail related to any fiduciary or employee of any Target Company shall be settled without the prior written consent of the Purchaser, such consent not to be unreasonably withheld, delayed or conditioned.
(c) The rights of each D&O Indemnified Party hereunder shall be in addition to, and not in limitation of, any other rights such Person may have under the Organizational Documents of the Purchaser or any Target Company, any other indemnification arrangement, any Law or otherwise. No right or remedy herein conferred by this Section 6.19 is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at Law or in equity, under contract or otherwise. The assertion of any right or remedy under this Section 6.19, or otherwise, shall not prevent the concurrent or subsequent assertion of any other right or remedy. Purchaser acknowledges that the D&O Indemnified Parties have or may, in the future, have certain rights to indemnification, advancement of expenses and/or insurance provided by other Persons (collectively, “Other Indemnitors”). Purchaser agrees that, with respect to any advancement or indemnification obligation owed, at any time, to a D&O Indemnified Party by Purchaser, any Target Company or any Other Indemnitor, whether pursuant to any Organizational Document or other document or agreement and/or pursuant to this Section 6.19 (any of the foregoing, an “Indemnification Obligation”), and, after the Closing, Purchaser shall, and shall cause the Target Companies to, in all cases subject to the terms and limitations of the relevant Indemnification Obligation, (i) be the indemnitors of first resort (i.e., Purchaser’s and each Target Company’s obligations to a D&O Indemnified Party shall be primary and any obligation of the Other Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by any D&O Indemnified Party shall be secondary) and (ii) advance, all reasonable expenses to the extent legally permitted and as required by the terms of the relevant Indemnification Obligations, without regard to any rights that a D&O Indemnified Party may have against the Other Indemnitors. Furthermore, Purchaser and the Target Companies irrevocably waive, relinquish and release the Other Indemnitors from any and all claims (x) against the Other Indemnitors for contribution, subrogation, indemnification or any other recovery of any kind in respect thereof and (y) that the D&O Indemnified Parties must seek expense advancement, reimbursement or indemnification from any Other Indemnitor before any Target Company or Purchaser must perform its expense advancement, reimbursement and Indemnification Obligations under this Agreement. Purchaser hereby further agrees that no advancement, indemnification or other payment by the Other Indemnitors on behalf of a D&O Indemnified Party with respect to any claim for which a D&O Indemnified Party has sought indemnification from Purchaser or any Target Company shall affect the foregoing, and the Other Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement, indemnification or other payment to all of the rights of recovery of such D&O Indemnified Party against Purchaser or any Target Company, and Purchaser and the Target Companies shall jointly and severally indemnify and hold harmless against such amounts actually paid by the Other Indemnitors to or on behalf of such D&O Indemnified Party to the extent such amounts would have otherwise been payable by Purchaser or any Target Company under any Indemnification Obligation.
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(d) The obligations of the Purchaser and the Target Companies under this Section 6.19(c) shall not be terminated or modified after the Closing in such a manner as to adversely affect any D&O Indemnified Party without the consent of such D&O Indemnified Party. The provisions of this Section 6.19 shall survive the Closing and expressly are intended to benefit, and are enforceable by, each of the D&O Indemnified Parties, each of whom is an intended third-party beneficiary of this Section 6.19.
(e) If the Purchaser or, after the Closing, any Target Company, or any of their respective successors or assigns: (i) consolidates with or merges into any other Person and shall not be the continuing or surviving entity of such consolidation or merger; or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then, in each such case, proper provision shall be made so that the successors and assigns of the Purchaser or such Target Company, as applicable, assume the obligations set forth in this Section 6.19.
Section 6.20 PIPE Investment. The Purchaser shall use its reasonable best efforts to satisfy or cause to be satisfied the conditions of the closing obligations contained in any PIPE Subscription Agreements and consummate the transactions contemplated thereby, including using its reasonable best efforts to enforce its rights, as applicable, under such PIPE Subscription Agreements to cause the other parties to such PIPE Subscription Agreement, as applicable, to pay to (or as directed by) the Purchaser the applicable purchase price under such PIPE Subscription Agreement in accordance with its terms. Unless otherwise approved in writing by each of the Purchaser and the Company, neither the Purchaser nor the Company shall, following execution of any PIPE Subscription Agreement, amend, modify, supplement, waive or terminate, or agree or provide consent to amend, modify, supplement, waive or terminate (the approval from the Purchaser or the Company, not to be unreasonably withheld, conditioned or delayed), any provision or remedy under, or any replacement of, such PIPE Subscription Agreement, other than, in each case, any assignment or transfer contemplated in such PIPE Subscription Agreement or expressly permitted by such PIPE Subscription Agreement (without any further amendment, modification or waiver to such assignment or transfer provision). Each of the Purchaser and the Company, as applicable, shall give the other party prompt written notice: (a) of the receipt of any request from any other party to any PIPE Subscription Agreement for an amendment to, modification of, supplement to, waiver under or termination of such PIPE Subscription Agreement; (b) of any breach or default to the Knowledge of such Party that (or any event or circumstance that, to the Knowledge of such party, with or without notice, lapse of time or both) would give rise to any breach or default, by any party to any PIPE Subscription Agreement; (c) of the receipt by such Party of any written notice or other written communication with respect to any actual or potential threatened or claimed expiration, lapse, withdrawal, breach, default, termination or repudiation of any PIPE Subscription Agreement by another party to such PIPE Subscription Agreement; and (d) if such Party does not expect to receive all or any portion of the applicable purchase price under any PIPE Subscription Agreement in accordance with its terms.
Section 6.21 Redemption. In connection with the Purchaser Shareholders’ Meeting, the Purchaser agrees that it shall provide the holders of shares of Purchaser Class A Ordinary Shares the opportunity to elect at least two (2) Business Days prior to the Purchaser Shareholders’ Meeting to have their shares of Purchaser Class A Ordinary Shares redeemed for cash, as required by the Purchaser’s Organizational Documents, in the Redemption. Subject to receipt of the Purchaser Shareholder Approval, and at least one (1) day prior to the Domestication, the Purchaser shall carry out the Redemption and use the proceeds held in the Trust Account to redeem the Purchaser Class A Ordinary Shares of holders who properly exercise their right to redemption in accordance with the Purchaser’s Organizational Documents.
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Section 6.22 Domestication. Subject to receipt of the Purchaser Shareholder Approval, at least one (1) Business Day prior to the Closing, the Purchaser shall, in accordance with applicable Law, any applicable rules and regulations of the SEC, the Nasdaq and the Purchaser’s Organizational Documents, as applicable, cause the Domestication to become effective, including by (a) filing with the Delaware Secretary of State a certificate of corporate domestication with respect to the Domestication, in form and substance reasonably acceptable to the Purchaser and the Company, together with the Purchaser Charter upon Domestication, in each case, in accordance with the provisions thereof and applicable Law, and (b) completing and making and procuring all those filings required to be made with the Cayman Registrar in connection with the Domestication.
Section 6.23 Adoption of Proxy Statement/Registration Statement. Within one (1) Business Day after the Closing Date, the post-Domestication Purchaser, as the successor to the pre-Domestication Purchaser, shall file a post-effective amendment to the Proxy Statement/Registration Statement pursuant to Rule 414(d) of the Securities Act.
Section 6.24 Compliance. Within one hundred and twenty (120) days following the Closing, the Purchaser will implement a compliance program, including the adoption and implementation of adequate risk-based policies and procedures reasonably designed in accordance with industry best practices and applicable published U.S. governmental guidance, including U.S. Department of Justice guidance on corporate compliance programs, to ensure compliance with (a) applicable Anti-Bribery Laws, including the internal-controls provisions imposed on issuers by the U.S. Foreign Corrupt Practices Act of 1977, as amended, (b) the False Claims Act, (c) applicable federal and state Anti-Kickback laws, including the Anti-Kickback Statute and (d) Sanctions Laws and International Trade Laws.
Section 6.25 Employment Agreements. The Company and the Purchaser shall use commercially reasonable efforts to cause each of the individuals listed on Section 6.25 of the Company Disclosure Letter to enter into an employment agreement between each such individual and the Purchaser (or a Subsidiary thereof), in each case, to become effective as of the Closing, and upon terms to be agreed to by the Company, the Purchaser and such individual prior to the effectiveness of the Proxy Statement/Registration Statement.
Section 6.26 Transaction Support Agreement; Company Stockholder Approval.
(a) As promptly as reasonably practicable (and in any event within ten (10) Business Days) following the date of this Agreement (the “Transaction Support Agreement Deadline”), the Company shall deliver, or cause to be delivered, to Purchaser the Transaction Support Agreements duly executed by each Supporting Company Stockholder.
(b) As promptly as reasonably practicable after the Proxy Statement/Registration Statement is declared effective under the Securities Act, the board of directors of the Company shall (i) give notice of and convene and hold special meeting of the Company Stockholders (the “Company Stockholder Meeting”) in accordance with the Company’s Organizational Documents and the DGCL, and (ii) solicit proxies from the holders of Company Common Shares and the holders of Company Series A Preferred Shares to vote in favor of the adoption and approval of this Agreement (the “Company Stockholder Approval”). The Company shall, through its board of directors, recommend to the Company Stockholders the adoption and approval of this Agreement in accordance with the Company’s Organizational Documents and the DGCL (the “Company Board Recommendation”). The board of directors of the Company shall not change, withdraw, withhold, qualify or modify or publicly propose to change, withdraw, withhold, qualify or modify, the Company Board Recommendation (in each case, a “Company Board Recommendation Change”) for any reason, unless the board of directors of the Company determines in good faith by a majority vote, after considering advice from outside legal counsel to the Company, that the failure to take such action would be inconsistent with its fiduciary duties under applicable Law. The Company may adjourn the Company Stockholder Meeting, if necessary, to permit further solicitation of approvals if there are not sufficient votes to obtain the Company Stockholder Approval or because of the absence of a quorum.
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Section 6.27 NRC Communications. During the Interim Period, the Company agrees to keep Purchaser reasonably apprised of the status of matters relating to the NRC’s review of the Company’s activities by furnishing Purchaser with material filed copies of notes, inspections, audit requests and other material communications received by the Company from the NRC upon reasonable request by Purchaser. Further, upon reasonable request by Purchaser, the Company shall provide summaries of material meetings (including via teleconference or videoconference) between the Company and the NRC. Any such disclosures or provisions of information by the Company pursuant to this Section 6.27 may be redacted, withheld or made on an outside-counsel-only basis to the extent required under applicable Law or as appropriate to protect attorney-client or other privileged information or confidential business information.
Section 6.28 Post-Closing Organizational Documents; Capital Stock.
(a) During the Interim Period and in order to effectuate the Domestication, (a) the Purchaser and the Company shall use their commercially reasonable efforts to agree to a form of (i) a certificate of corporate domestication and a certificate of incorporation (the “Post-Closing Charter”) and (ii) bylaws (the “Post-Closing Bylaws”) and (b) the Purchaser shall (i) file the Post-Closing Charter with the Secretary of State of the State of Delaware and (ii) adopt the Post-Closing Bylaws.
(b) Prior to the Closing, the Purchaser shall take all actions necessary to authorize the issuance of the Domesticated Purchaser Common Stock issuable upon (i) the exercise of each Company Warrant that is outstanding and unexercised immediately prior to the Effective Time and (ii) the settlement of each Company Convertible Note CVR, in each case in accordance with the terms of the applicable Company Warrant and Company Convertible Note, respectively, and shall reserve for issuance a sufficient number of shares of Domesticated Purchaser Common Stock for the foregoing.
(c) If the ExchangeCo Shareholder Approval is obtained, prior to Closing, the Purchaser shall take all actions necessary to authorize the issuance of (i) the Domesticated Purchaser Common Stock issuable upon the exchange of each Exchangeable Share that is issued and outstanding immediately prior to the Effective Time and (ii) the Domesticated Purchaser Voting Stock pursuant to Section 2.02(b)(v).
Section 6.29 ExchangeCo Recapitalization. Prior to the Closing, the Company shall, and shall cause the Target Companies to, as applicable, (i) give notice of and convene and hold special meeting of the ExchangeCo Shareholders (the “ExchangeCo Shareholder Meeting”) in accordance with ExchangeCo’s Organizational Documents and the Business Corporations Act (Ontario), and (ii) solicit proxies from ExchangeCo Shareholders to vote in favor of the adoption and approval of the ExchangeCo Recapitalization (the “ExchangeCo Shareholder Approval”). The Company may cause the ExchangeCo Shareholder Meeting to be adjourned, if necessary, to permit further solicitation of approvals if there are not sufficient votes to obtain the ExchangeCo Shareholder Approval or because of the absence of a quorum. the Purchaser shall, and shall cause its Representatives to, reasonably cooperate with the Target Companies in a timely manner to implement the ExchangeCo Recapitalization in a manner deemed necessary and appropriate by the Company.
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Article VII
CLOSING CONDITIONS
Section 7.01 Conditions to Each Party’s Obligations. The obligations of each Party to consummate the Transactions shall be subject to the satisfaction or written waiver (where permissible) by the Company and the Purchaser of the following conditions:
(a) Required Purchaser Shareholder Approval. The Purchaser Shareholder Approval and the Company Stockholder Approval shall have been obtained.
(b) No Adverse Law or Order. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law (whether temporary, preliminary or permanent) or Order that is then in effect and which has the effect of making the Transactions or agreements contemplated by this Agreement illegal or which otherwise prevents or prohibits consummation of the Transactions.
(c) Registration Statement. The Registration Statement shall have been declared effective under the Securities Act by the SEC and shall remain effective as of the Closing, and no stop order or similar order suspending the effectiveness of the Registration Statement shall have been issued and be in effect with respect to the Registration Statement and no proceedings for that purpose shall have been initiated or threatened by the SEC and not withdrawn.
(d) Nasdaq Listing. The shares of Domesticated Purchaser Common Stock to be issued in connection with the Transactions shall be conditionally approved for listing upon the Closing on Nasdaq subject to any requirement to have a sufficient number of round lot holders of the Domesticated Purchaser Common Stock (provided that such condition shall not apply to the extent the shares of Domesticated Purchaser Common Stock have not been conditionally approved for listing due to a failure to meet any “market value of publicly held securities” or similarly titled requirement as a result of the Company not permitting a sufficient number of shares of Domesticated Purchaser Common Stock to be issued to non-Affiliates pursuant to Section 2.02 to be excluded from lock-up or other contractual restriction).
(e) HSR Act and other Antitrust laws Approvals. The applicable waiting period (and any extensions thereof) under the HSR Act and any other Antitrust Laws shall have expired or have been terminated and any approval required under any other Antitrust Laws shall have been obtained.
(f) Nuclear Regulatory Approvals. If applicable, the waiting period (and any extensions thereof) with the Nuclear Regulatory Commission will have expired or have been terminated.
Section 7.02 Conditions to Obligations of the Company. In addition to the conditions specified in Section 7.01, the obligations of the Company to consummate the Transactions shall be subject to the satisfaction or written waiver (where permissible) by the Company of the following conditions:
(a) Representations and Warranties. All of the representations and warranties of the Purchaser and Merger Sub set forth in this Agreement and in any certificate delivered by or on behalf of the Purchaser pursuant hereto shall be true and correct on and as of the date of this Agreement and on and as of the Closing Date as if made on the Closing Date, except for (i) those representations and warranties that address matters only as of a particular date (which representations and warranties shall have been accurate as of such date), and (ii) any failures to be true and correct that (without giving effect to any qualifications or limitations as to materiality or Purchaser Material Adverse Effect), individually or in the aggregate, have not had and would not reasonably be expected to have a Purchaser Material Adverse Effect.
(b) Agreements and Covenants. The Purchaser and Merger Sub shall have performed in all material respects all of their respective obligations and complied in all material respects with all of their respective agreements and covenants under this Agreement to be performed or complied with by them on or prior to the Closing Date.
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(c) No Purchaser Material Adverse Effect. No Purchaser Material Adverse Effect shall have occurred since the date of this Agreement that is continuing.
(d) Domestication. The Domestication shall have been completed as provided in Section 6.22 and a time-stamped copy of the certificate issued by the Secretary of State of the State of Delaware in relation thereto shall have been delivered to the Company.
(e) Trust Account. The Purchaser shall have made appropriate arrangements to have the net proceeds remaining in the Trust Account (after giving effect to all Redemptions) available to Purchaser at the Closing.
(f) Net Tangible Assets. After giving effect to the transactions contemplated hereby (including any PIPE Investment) the Purchaser shall have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) immediately after the Effective Time.
(g) Minimum Cash. As of the Closing, the Available Closing SPAC Cash shall not be less than $150,000,000.
(h) Board Appointments. All action shall have been taken such that the board of directors of the Purchaser as of immediately following the Closing shall be constituted of the directors contemplated by Section 6.18.
(i) Purchaser Organizational Documents. The Purchaser’s applicable Organizational Documents shall have been amended and restated in the agreed upon forms of the Post-Closing Charter and the Post-Closing Bylaws.
(j) Closing Deliveries.
(i) Officer Certificate. The Purchaser shall have delivered to the Company a certificate, dated the Closing Date, signed by an executive officer of the Purchaser in such capacity, certifying as to the satisfaction of the conditions specified in Sections 7.02(a), 7.02(b) and 7.02(c).
(ii) Secretary Certificate. The Purchaser shall have delivered to the Company a certificate from its secretary or other executive officer certifying as to, and attaching, (A) copies of the Purchaser’s and Merger Sub’s Organizational Documents as in effect as of the Closing Date (after giving effect to the Domestication) and (B) the resolutions of the Purchaser’s and Merger Sub’s board of directors authorizing and approving the execution, delivery and performance of this Agreement and each of the Ancillary Documents to which it is a party or by which it is bound, and the consummation of the Transactions.
(iii) Post-Closing Organization Documents. Purchaser shall file the Post-Closing Charter with the Secretary of State of the State of Delaware and adopt the Post-Closing Bylaws.
(iv) Ancillary Documents. The Purchaser shall have delivered, or caused to be delivered, to the Company:
(A) a copy of the Registration Rights Agreement, duly executed by the Purchaser and the Sponsor;
(B) a copy of the Sponsor Lock-up Agreement, duly executed by the Purchaser and the Sponsor;
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(C) a copy of the Warrant Assignment and Assumption Agreement, duly executed by the Purchaser; and
(D) if the ExchangeCo Recapitalization has been completed prior to or concurrently with the Closing, a copy of the Amended & Restated Exchange and Support Agreement, duly executed by the Purchaser.
Section 7.03 Conditions to Obligations of the Purchaser and Merger Sub. In addition to the conditions specified in Section 7.01, the obligations of the Purchaser and Merger Sub to consummate the Merger are subject to the satisfaction or written waiver (where available) of the following conditions:
(a) Representations and Warranties. All of the representations and warranties of the Company set forth in this Agreement and in any certificate delivered by or on behalf of the Company pursuant hereto shall be true and correct on and as of the date of this Agreement and on and as of the Closing Date as if made on the Closing Date, except for (i) those representations and warranties that address matters only as of a particular date (which representations and warranties shall have been accurate as of such date), and (ii) any failures to be true and correct that (without giving effect to any qualifications or limitations as to materiality or Company Material Adverse Effect), individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect.
(b) Agreements and Covenants. The Company shall have performed in all material respects all of its obligations and complied in all material respects with all of the agreements and covenants (except for the requirement to provide the PCAOB Financial Statements and the Interim Financial Statements by the deadlines specified in Section 6.04) under this Agreement to be performed or complied with by it on or prior to the Closing Date.
(c) No Company Material Adverse Effect. No Company Material Adverse Effect shall have occurred with respect to the Target Companies, taken as a whole, since the date of this Agreement that is continuing.
(d) Nuclear Regulatory Commission. The Company shall have not received from the NRC any formal written communication that would (i) have a material and adverse impact on the ability of the Target Companies, taken as a whole, to consummate the Merger, or (ii) prevent the Target Companies from continuing their regulatory engagement with the NRC.
(e) Closing Deliveries.
(i) Officer Certificate. The Purchaser shall have received a certificate from the Company, dated as the Closing Date, signed by an executive officer of the Company in such capacity, certifying as to the satisfaction of the conditions specified in Section 7.03(a), 7.03(b) and 7.03(c).
(ii) Secretary Certificate. The Company shall have delivered to the Purchaser a certificate executed by the Company’s secretary certifying as to the validity and effectiveness of, and attaching, (A) copies of the Company’s Organizational Documents as in effect as of the Closing Date (immediately prior to the Closing) and (B) the requisite resolutions of the Company’s board of directors authorizing and approving the execution, delivery and performance of this Agreement and each Ancillary Document to which the Company is or is required to be a party or bound, and the consummation of the Transactions.
(iii) The Company shall have delivered, or caused to be delivered, to the Purchaser:
(A) a copy of the Registration Rights Agreement, duly executed by the Restricted Company Securityholders;
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(B) a copy of the Warrant Assignment and Assumption Agreement, duly executed by the Company;
(C) if the ExchangeCo Recapitalization has been completed prior to or concurrently with the Closing, a copy of the Amended & Restated Exchange and Support Agreement, duly executed by the Company and any Target Company contemplated to be a party thereto (as applicable);
(D) a properly completed and duly executed IRS Form W-9 or IRS Form W-8 of the applicable series from each Company Stockholder; provided, that failure to deliver the requisite tax forms shall not affect satisfaction of the conditions to closing, rather only the timing of the issuance of the Per Share Base Consideration to Company Stockholders who have failed to return the requisite tax forms;
(E) a copy of the Key Holders Lock-Up Agreement, duly executed by each of the Key Holders; and
(F) (1) a certificate of good standing for each Target Company formed or incorporated in the United States and (2) to the extent available, a certificate of good standing or similar certificate for each Target Company not formed or incorporated in the United States, dated, in each case, no earlier than thirty (30) days prior to the Closing Date.
Section 7.04 Frustration of Conditions. Notwithstanding anything contained herein to the contrary, no Party may rely on the failure of any condition set forth in this Article VII to be satisfied if such failure was caused by the failure of such Party or its Affiliates failure to comply with or perform any of its covenants or obligations set forth in this Agreement.
Article VIII
TERMINATION AND EXPENSES
Section 8.01 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing as follows:
(a) by mutual written consent of the Purchaser and the Company;
(b) by the Company if there has been a Modification in Recommendation or by the Purchaser if there has been a Company Board Recommendation Change;
(c) by written notice by the Purchaser or the Company if any of the conditions to the Closing set forth in Article VII have not been satisfied or waived by February 28, 2026 (the “Outside Date”); provided, however, the right to terminate this Agreement under this Section 8.01(c) shall not be available to a Party if the breach or violation by such Party or its Affiliates of any representation, warranty, covenant or obligation under this Agreement was the cause of, or resulted in, the failure of the Closing to occur on or before the Outside Date.
(d) by written notice by either the Purchaser or the Company if a Governmental Authority of competent jurisdiction shall have issued an Order or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such Order or other action has become final and non-appealable; provided, however, that the right to terminate this Agreement pursuant to this Section 8.01(d) shall not be available to a Party if the failure by such Party or its Affiliates to comply with any provision of this Agreement has been a substantial cause of, or substantially resulted in, such action by such Governmental Authority;
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(e) by written notice by the Company to Purchaser, if (i) there has been a breach by the Purchaser or Merger Sub of any of its representations, warranties, covenants or agreements contained in this Agreement, or if any representation or warranty of the Purchaser or Merger Sub shall have become untrue or inaccurate, in any case, which would result in a failure of a condition set forth in Section 7.02(a) or Section 7.02(b) to be satisfied (treating the Closing Date for such purposes as the date of this Agreement or, if later, the date of such breach), and (ii) the breach or inaccuracy is incapable of being cured or is not cured within the earlier of (A) 20 days after written notice of such breach or inaccuracy is provided to the Purchaser or (B) the Outside Date; provided, that the Company shall not have the right to terminate this Agreement pursuant to this Section 8.01(e) if at such time the Company is in material uncured breach of this Agreement;
(f) by written notice by the Purchaser to the Company, if (i) there has been a breach by the Company of any of its representations, warranties, covenants or agreements contained in this Agreement, or if any representation or warranty of such Parties shall have become untrue or inaccurate, in any case, which would result in a failure of a condition set forth in Section 7.03(a) or Section 7.03(b) to be satisfied (treating the Closing Date for such purposes as the date of this Agreement or, if later, the date of such breach), and (ii) the breach or inaccuracy is incapable of being cured or is not cured within the earlier of (A) 20 days after written notice of such breach or inaccuracy is provided to the Company or (B) the Outside Date; provided, that the Purchaser shall not have the right to terminate this Agreement pursuant to this Section 8.01(f) if at such time the Purchaser is in material uncured breach of this Agreement;
(g) by written notice by either the Purchaser or the Company, if the Purchaser Shareholders’ Meeting has been held (including any adjournment or postponement thereof), has concluded, the Purchaser Shareholders have duly voted, and the Purchaser Shareholder Approval was not obtained; or
(h) by written notice by the Purchaser to the Company, if (i) all the conditions set forth in Section 7.01 and Section 7.02 have been, and continue to be, satisfied or waived (other than those conditions that by their nature are to be satisfied at the Closing, each of which shall be capable of being satisfied if the Closing Date were the date of such termination), (ii) the Company fails to consummate the Transactions on or prior to the day when the Closing is required to occur pursuant to Section 3.01, (iii) the Purchaser shall have irrevocably confirmed in writing to the Company that it is ready, willing and able to consummate the Closing and (iv) the Company fails to effect the Closing within ten (10) Business Days following delivery of such confirmation;
(i) by written notice by the Company to the Purchaser, if (i) all the conditions set forth in Section 7.01 and Section 7.03 have been, and continue to be, satisfied or waived (other than those conditions that by their nature are to be satisfied at the Closing, each of which shall be capable of being satisfied if the Closing Date were the date of such termination), (ii) the Purchaser fails to consummate the Transactions on or prior to the day when the Closing is required to occur pursuant to Section 3.01, (iii) the Company shall have irrevocably confirmed in writing to the Purchaser that it is ready, willing and able to consummate the Closing and (iv) the Purchaser fails to effect the Closing within ten (10) Business Days following delivery of such confirmation; or
(j) by the Purchaser, if the Company does not (i) deliver to Purchaser a Transaction Support Agreement duly executed by each Supporting Company Stockholder in accordance with Section 6.26(a) on or prior to the Transaction Support Agreement Deadline or (ii) hold the Company Stockholder Meeting in accordance with Section 6.26(b); provided that the right to terminate this Agreement on account of a failure to perform the actions or to deliver the deliverables required by clauses (i) or (ii) shall not be available if the Company performs the actions or delivers to Purchaser the deliverables required by clauses (i) and (ii) within five (5) Business Days of the Purchaser providing notice of its intent to terminate this Agreement on account of this Section 8.01(j).
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Section 8.02 Effect of Termination. This Agreement may only be terminated in the circumstances described in Section 8.01 and pursuant to a written notice delivered by the applicable Party to the other applicable Parties, which sets forth the basis for such termination, including the provision of Section 8.01 under which such termination is made. In the event of the valid termination of this Agreement pursuant to Section 8.01, this Agreement shall forthwith become void, and there shall be no Liability on the part of any Party or any of their respective Representatives, and all rights and obligations of each Party shall cease, except: (i) Section 6.15, Section 6.16, Article IX, and this Section 8.02 shall survive the termination of this Agreement, and (ii) nothing herein shall relieve any Party from Liability for any willful breach of any representation, warranty, covenant (other than the requirement to provide the PCAOB Financial Statements by the deadlines specified in Section 6.04) or obligation under this Agreement or any Fraud Claim against such Party, in either case, prior to termination of this Agreement (in each case of clauses (i) and (ii) above, subject to Section 9.15).
Article IX
MISCELLANEOUS
Section 9.01 No Survival. Except in the case of a Fraud Claim against a Person, none of the representations, warranties, covenants, obligations or other agreements in this Agreement or in any certificate, statement or instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such representations, warranties, covenants, obligations, agreements and other provisions, shall survive the Closing (and there shall be no liability after the Closing in respect thereof), except for those covenants and agreements contained herein that by their terms expressly apply in whole or in part at or after the Closing, and then only with respect to any breaches occurring at or after the Closing.
Section 9.02 Notices. All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) when delivered by DocuSign or other electronic means (including email), unless the sender receives an automated undeliverable notice from the Purchaser or Company recipient notice Party, (iii) one (1) Business Day after being sent, if sent by reputable, nationally recognized overnight courier service or (iv) three (3) Business Days after being mailed, if sent by registered or certified mail, pre-paid and return receipt requested, in each case to the applicable Party at the following addresses (or at such other address for a Party as shall be specified by like notice). Actual notice is effective notice for all purposes hereunder.
| If to the Purchaser: | with a copy (which will not constitute notice) to: |
HCM II Acquisition Corp. sbischoff@hondiuscapital.com |
King & Spalding LLP New York, New York 10046 tfitzsimons@kslaw.com |
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| If to the Company, to: | with a copy (which will not constitute notice) to: |
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Terrestrial Energy Inc. 9319 Robert D. Snyder Road, Portal 316 Charlotte, NC 28223 Attn: Simon Irish Email: sirish@terrestrialenergy.com |
Bryan Cave Leighton Paisner LLP 1201 W Peachtree Street NW, 14th Floor Atlanta, GA 30309 Attn: Amy T. Wilson; Jonathan S. Nesher Email: amy.wilson@bclplaw.com;
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Section 9.03 Binding Effect; Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. This Agreement shall not be assigned by operation of Law or otherwise without the prior written consent of the Parties, and any assignment without such consent shall be null and void; provided that no such assignment shall relieve the assigning Party of its obligations hereunder.
Section 9.04 Third Parties. Except for the Persons granted the rights set forth in Section 6.19, which the Parties acknowledge and agree are express third party beneficiaries of this Agreement, nothing contained in this Agreement or in any instrument or document executed by any party in connection with the Transactions 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 thereto or a successor or permitted assign of such a Party.
Section 9.05 Governing Law. This Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to principles or rules of conflict of Laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction, provided that, for the avoidance of doubt, the laws of the Cayman Islands shall also apply to and, as applicable, govern the Domestication.
Section 9.06 Jurisdiction. Any proceeding or Legal Proceeding based upon, arising out of or related to this Agreement or the transactions contemplated hereby must be brought in the Court of Chancery of the State of Delaware (or, to the extent such court does not have jurisdiction, in the United States District Court for the District of Delaware and to the extent such court does not have subject matter jurisdiction, the Superior Court of the State of Delaware), and each of the parties irrevocably (i) submits to the exclusive jurisdiction of each such court in any such proceeding or Legal Proceeding, (ii) waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, (iii) agrees that all claims in respect of the proceeding or Legal Proceeding shall be heard and determined only in any such court, and (iv) agrees not to bring any proceeding or Legal Proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by Law or to commence Legal Proceedings or otherwise proceed against any other party in any other jurisdiction, in each case, to enforce judgments obtained in any Legal Proceeding, suit or proceeding brought pursuant to this Section 9.06.
Section 9.07 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY, UNCONDITIONALLY AND VOLUNTARILY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
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Section 9.08 Specific Performance. Each Party acknowledges that the rights of each Party to consummate the transactions contemplated hereby are unique, recognizes and affirms that in the event of a breach of this Agreement by any Party, money damages may be inadequate and the non-breaching Parties may have not adequate remedy at law, and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by an applicable Party in accordance with their specific terms or were otherwise breached. Accordingly, each Party shall be entitled to seek an injunction or restraining order to prevent breaches of this Agreement and to seek 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.
Section 9.09 Severability. In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a jurisdiction, such provision shall be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity, legality or enforceability of such provision be affected thereby in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties will substitute for any invalid, illegal or unenforceable provision a suitable and equitable provision that carries out, so far as may be valid, legal and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.
Section 9.10 Amendment; Waiver. This Agreement may be amended, supplemented or modified only by execution of a written instrument signed by the Purchaser and the Company. Any party to this Agreement may, at any time prior to the Closing, by action taken by its board of directors or managers or other equivalent body or other officers or Persons thereunto duly authorized, (a) extend the time for the performance of the obligations or acts of the other parties hereto, (b) waive any inaccuracies in the representations and warranties (of another party hereto) that are contained in this Agreement or (c) waive compliance by the other parties hereto with any of the agreements or conditions contained in this Agreement, but such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party granting such extension or waiver. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement. The failure of any party to assert any of its rights hereunder shall not constitute a waiver of such rights.
Section 9.11 Entire Agreement. This Agreement and the documents or instruments referred to herein, including any exhibits and schedules attached hereto, which exhibits and schedules are incorporated herein by reference, together with the Ancillary Documents, embody the entire agreement and understanding of the Parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or the documents or instruments referred to herein, which collectively supersede all prior agreements and the understandings among the Parties with respect to the subject matter contained herein.
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Section 9.12 Interpretation. The table of contents and the Article and Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties and shall not in any way affect the meaning or interpretation of this Agreement. In this Agreement, unless the context otherwise requires: (a) any pronoun used shall include the corresponding masculine, feminine or neuter forms, and words in the singular, including any defined terms, include the plural and vice versa; (b) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity; (c) any accounting term used and not otherwise defined in this Agreement or any Ancillary Document has the meaning assigned to such term in accordance with GAAP; (d) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding or succeeding such term and shall be deemed in each case to be followed by the words “without limitation”; (e) the words “herein,” “hereto,” and “hereby” and other words of similar import shall be deemed in each case to refer to this Agreement as a whole and not to any particular Section or other subdivision of this Agreement; (f) the word “if” and other words of similar import when used herein shall be deemed in each case to be followed by the phrase “and only if”; (g) the term “or” means “and/or”; (h) any reference to the term “ordinary course” or “ordinary course of business” shall be deemed in each case to be followed by the words “consistent with past practice”; (i) any agreement, instrument, insurance policy, Law or Order defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument, insurance policy, Law or Order as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes, regulations, rules or orders) by succession of comparable successor statutes, regulations, rules or orders and references to all attachments thereto and instruments incorporated therein; (j) except as otherwise indicated, all references in this Agreement to the words “Section,” “Article”, “Schedule” and “Exhibit” are intended to refer to Sections, Articles, Schedules and Exhibits to this Agreement; and (k) the term “Dollars” or “$” means United States dollars. Any reference in this Agreement to a Person’s directors shall include any member of such Person’s governing body and any reference in this Agreement to a Person’s officers shall include any Person filling a substantially similar position for such Person. Any reference in this Agreement or any Ancillary Document to a Person’s shareholders or stockholders shall include any applicable owners of the equity interests of such Person, in whatever form, including with respect to the Purchaser, its shareholders under the Cayman Companies Act or DGCL, as then applicable, or its Organizational Documents. The Parties have participated jointly in the negotiation and drafting of this Agreement. Consequently, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement. To the extent that any Contract or document is represented and warranted to by the Company to be given, delivered, provided or made available by the Company, in order for such Contract or document to have been deemed to have been given, delivered, provided and made available to the Purchaser or its Representatives, such Contract or document shall have been posted to the electronic data site maintained on behalf of the Company for the benefit of the Purchaser and its Representatives and the Purchaser and its Representatives have been given access to the electronic folders containing such information.
Section 9.13 Counterparts. This Agreement and each Ancillary Document may be executed and delivered (including by DocuSign or other electronic transmission) in counterparts, and by the different Parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
Section 9.14 Legal Representation.
(a) Conflicts and Privilege.
(i) The Purchaser and the Company, on behalf of their respective successors and assigns (including, after the Closing), hereby agree that, in the event a dispute with respect to this Agreement or the transactions contemplated hereby arises after the Closing between or among (A) the Sponsor, the stockholders, shareholders or holders of other equity interests of the Purchaser or the Sponsor and/or any of their respective directors, members, partners, officers, employees or Affiliates (collectively, the “HCM Group”), on the one hand, and (B) the Purchaser following the Closing, the Company and/or any member of the TE Group, on the other hand, any legal counsel, including King & Spalding LLP (“K&S”), that represented the Purchaser and/or the Sponsor prior to the Closing may represent the Sponsor and/or any other member of the HCM Group, in such dispute even though the interests of such Persons may be directly adverse to the Purchaser and its Affiliates (following the Closing), and even though such counsel may have represented the Purchaser in a matter substantially related to such dispute, or may be handling ongoing matters for the Purchaser and/or the Sponsor. The Purchaser and the Company, on behalf of their respective successors and assigns (including, after the Closing), further agree that, as to all legally privileged communications prior to the Closing (made in connection with the negotiation, preparation, execution, delivery and performance under, or any dispute or Legal Proceeding arising out of or relating to, this Agreement, any Ancillary Document or the transactions contemplated hereby or thereby) between or among the Purchaser, the Sponsor and/or any other member of the HCM Group, on the one hand, and K&S, on the other hand, the attorney/client privilege and the expectation of client confidence shall survive the Transactions and belong to the HCM Group after the Closing, and shall not pass to or be claimed or controlled by the Purchaser and its Affiliates (following the Closing). Notwithstanding the foregoing, any privileged communications or information shared by the Company prior to the Closing with the Purchaser or the Sponsor under a common interest agreement shall remain the privileged communications or information of the Purchaser or the Company.
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(ii) The Purchaser and the Company, on behalf of their respective successors and assigns (including, after the Closing), hereby agree that, in the event a dispute with respect to this Agreement or the transactions contemplated hereby arises after the Closing between or among (A) the stockholders, shareholders or holders of other equity interests of the Company and/or any of their respective directors, members, partners, officers, employees or Affiliates (collectively, the “TE Group”), on the one hand, and (B) the Company (following the Closing) and/or any member of the HCM Group, on the other hand, any legal counsel, including Bryan Cave Leighton Paisner LLP (“BCLP”) that represented the Company prior to the Closing may represent any member of the TE Group in such dispute even though the interests of such Persons may be directly adverse to the Company (following the Closing), and even though such counsel may have represented the Purchaser and/or the Company in a matter substantially related to such dispute, or may be handling ongoing matters for the Company (following the Closing). The Purchaser and the Company, on behalf of their respective successors and assigns (including, after the Closing), further agree that, as to all legally privileged communications prior to the Closing (made in connection with the negotiation, preparation, execution, delivery and performance under, or any dispute or Legal Proceeding arising out of or relating to, this Agreement, any Ancillary Document or the Transactions) between or among the Company and/or any member of the TE Group, on the one hand, and BCLP, on the other hand, the attorney/client privilege and the expectation of client confidence shall survive the Transactions. Notwithstanding the foregoing, any privileged communications or information shared by the Purchaser prior to the Closing with the Company under a common interest agreement shall remain the privileged communications or information of the Company (following the Closing).
(iii) BCLP has represented the TE Group and the Target Companies with respect to the Transactions. All Parties recognize the commonality of interest that exists and will continue to exist until the Closing, and the Parties agree that such commonality of interest should continue to be recognized after the Closing. Specifically, the HCM Group and, following the Closing, the Company, agree that they shall not, and shall cause their Affiliates not to, seek to have BCLP be disqualified from representing (a) any member of the TE Group in connection with any dispute that may arise between such parties and the HCM Group or the Target Companies or (b) the Purchaser or any of the Target Companies in connection with any dispute that may arise between such parties and the members of the TE Group.
Section 9.15 Waiver of Claims Against Trust. The Company acknowledges that the Purchaser is a special purpose company with the powers and privileges to effect a Business Combination. The Company further acknowledges that, as described in the IPO Prospectus available at www.sec.gov, substantially all of the Purchaser assets consist of the cash proceeds of the Purchaser’s initial public offering and private placements of its securities and substantially all of those proceeds have been deposited in the Trust Account for the benefit of the Purchaser, its public stockholders and the underwriters of the Purchaser’s initial public offering. The Company acknowledges that it has been advised by the Purchaser that, except with respect to interest earned on the funds held in the Trust Account that may be released to the Purchaser to pay its franchise Tax, income Tax and similar obligations, the Trust Agreement provides that cash in the Trust Account may be disbursed only: (a) if the Purchaser completes the transactions which constitute a Business Combination, then to those Persons and in such amounts as described in the IPO Prospectus; (b) if the Purchaser fails to complete a Business Combination within the allotted time period and liquidates, subject to the terms of the Trust Agreement, to the Purchaser in limited amounts to permit the Purchaser to pay the costs and expenses of its liquidation and dissolution, and then to the Purchaser Shareholders; and (c) if the Purchaser holds a stockholder vote to amend the Purchaser’s Organizational Documents to modify the substance or timing of the obligation to redeem 100% of the Purchaser Class A Ordinary Shares if the Purchaser fails to complete a Business Combination within the allotted time period or to otherwise modify any other material provision of the Purchaser’s Organizational Documents relating to its stockholders’ rights or its pre-initial Business Combination activity, then for the redemption of any Purchaser Ordinary Shares properly tendered in connection with such vote. For and in consideration of the Purchaser entering into this Agreement, the receipt and sufficiency of which are hereby acknowledged, the Company, on behalf of itself, its Affiliates and its and their respective Representatives, hereby irrevocably waives any right, title, interest or claim of any kind they have or may have in the future in or to any monies in the Trust Account and agrees not to seek recourse against the Trust Account or any funds distributed therefrom to the Purchaser’s public stockholders for any reason whatsoever; provided, that (i) nothing herein shall serve to limit or prohibit the Company’s right to pursue a claim against the Purchaser for legal relief against monies or other assets held outside the Trust Account, for specific performance or other equitable relief in connection with the consummation of the transactions (including a claim for the Purchaser to specifically perform its obligations under this Agreement and cause the disbursement of the balance of the cash remaining in the Trust Account (after giving effect to the Redemptions) to the Company in accordance with the terms of this Agreement and the Trust Agreement) so long as such claim would not affect the Purchaser’s ability to fulfill its obligation to effectuate the redemptions and (ii) nothing herein shall serve to limit or prohibit any claims that the Company may have in the future against the Purchaser’s assets or funds that are not held in the Trust Account (including any funds that have been released from the Trust Account other than to the Purchaser’s public stockholders and any assets that have been purchased or acquired with any such funds).
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Section 9.16 Company and Purchaser Disclosure Letters. The Company Disclosure Letter and the Purchaser Disclosure Letter (including, in each case, any section thereof) referenced herein are a part of this Agreement as if fully set forth herein. All references herein to the Company Disclosure Letter and/or the Purchaser Disclosure Letter (including, in each case, any section thereof) shall be deemed references to such parts of this Agreement, unless the context shall otherwise require. Any disclosure made by a party in the applicable Disclosure Letter, or any section thereof, with reference to any section of this Agreement or section of the applicable Disclosure Letter shall be deemed to be a disclosure with respect to such other applicable sections of this Agreement or sections of applicable Disclosure Letter if it is reasonably apparent on the face of such disclosure that such disclosure is responsive to such other section of this Agreement or section of the applicable Disclosure Letter. Certain information set forth in the Disclosure Letters is included solely for informational purposes and may not be required to be disclosed pursuant to this Agreement. The disclosure of any information shall not be deemed to constitute an acknowledgment that such information is required to be disclosed in connection with the representations and warranties made in this Agreement, nor shall such information be deemed to establish a standard of materiality.
Section 9.17 Transferred Information.
(a) Each Party acknowledges and confirms that the personal information disclosed or conveyed from one party to the other (the “Transferred Information”) is necessary for the purposes of determining if the parties hereto will proceed with the transactions contemplated in this Agreement, and that the disclosure of Transferred Information relates solely to the completion of the transactions contemplated by this Agreement.
(b) In addition to its other obligations hereunder, the recipient of personal information covenants and agrees to:
(i) prior to the completion of the transactions contemplated in this Agreement, collect, use and disclose the Transferred Information solely for the purpose of reviewing and completing the transactions contemplated in this Agreement, including for the purpose of determining to complete the transactions contemplated by this Agreement;
(ii) after the completion of the transactions contemplated by this Agreement, collect, use and disclose the Transferred Information only for those purposes for which the Transferred Information was initially collected from or in respect of the individual to which such Transferred Information relates or for the completion of the transactions contemplated by this Agreement unless (i) the recipient of the personal information has first notified such individual of such additional purpose, and where required by applicable Law, obtained the consent of such individual to such additional purpose, or (ii) such use or disclosure is permitted or authorized by applicable Law, without notice to, or consent from, such individual; and
(iii) where required by applicable Law, promptly notify the individuals to whom the Transferred Information relates that the transactions contemplated by this Agreement has taken place and that the Transferred Information has been disclosed to the recipient of the personal information.
Article X
DEFINITIONS
Section 10.01 Certain Definitions. For purpose of this Agreement, the following capitalized terms have the following meanings:
“Acquisition Proposal” has the meaning specified in Section 6.06(a).
“Additional Purchaser SEC Reports” has the meaning specified in Section 5.06(a).
“Affiliate” means, with respect to any specified Person, any Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person, whether through one or more intermediaries or otherwise. The term “control” (including the terms “controlling”, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by Contract or otherwise.
“Aggregate Base Consideration” means the number of shares of Domesticated Purchaser Common Stock equal to the quotient of: (a) the Base Purchase Price, divided by (b) the Redemption Price.
“Agreement” has the meaning specified in the Preamble.
“Alternative Transaction” has the meaning specified in Section 6.06(a).
“Amended & Restated Exchange and Support Agreement” means the agreement among the Purchaser, the Company, ExchangeCo and CallCo to be entered into effective as of the Closing in a form mutually acceptable to the Purchaser and the Company.
“Ancillary Documents” means each of the agreements and instruments contemplated by this Agreement or otherwise related to the transactions contemplated in this Agreement, in each case to be executed and delivered on the date hereof or on or prior to the Closing Date, including this Agreement (together with the Company Disclosure Letter and the Purchaser Disclosure Letter).
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“Anti-Bribery Law” means the U.S. Foreign Corrupt Practices Act of 1977, as amended; the UK Bribery Act 2010, and any rules or regulations promulgated thereunder; the Organisation for Economic Co-operation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and related implementing legislation; and any other applicable Laws relating to bribery or corruption in any governing jurisdiction.
“Antitrust Laws” has the meaning specified in Section 6.09(b).
“Audited Company Financials” has the meaning specified in Section 4.06(a).
“Available Closing SPAC Cash” means an amount in Cash equal to (a) all amounts in the Trust Account (after reduction for the aggregate amount of payments required to be made in connection with the Redemption and any excise tax payable by SPAC pursuant to Section 6.10, but prior to giving effect to payment of Company Transaction Costs and Purchaser Transaction Costs), plus (b) the net proceeds of any PIPE Investment.
“Base Purchase Price” means $925,000,000.
“BCLP” has the meaning specified in Section 9.14(a)(ii).
“Business Combination” has the meaning specified in Article 1.1 of the Purchaser’s Organizational Documents as in effect on the date hereof.
“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York or, for so long as the Purchaser remains domiciled in Cayman Islands, Governmental Authorities in the Cayman Islands that are authorized or required by Law to close.
“CallCo” means Terrestrial Energy Canada (Call) Inc.
“CARES Act” means the Coronavirus, Aid, Relief and Economic Security Act, Pub. L. 116–136 (116th Cong.) (Mar. 27, 2020), and any amendment thereof, successor law, or executive order, executive memo, administrative or other guidance or legislation published with respect thereto by any Governmental Authority.
“Cash” means cash and cash equivalents, including checks, money orders, marketable securities, short-term instruments, negotiable instruments, funds in time and demand deposits or similar accounts on hand, in lock boxes, in financial institutions or elsewhere, together with all accrued but unpaid interest thereon, and all bank, brokerage or other similar accounts, excluding, amounts subject to outstanding checks or wires and any amounts held in escrow, in each case calculated in accordance with GAAP.
“Cayman Companies Act” has the meaning specified in the Recitals.
“Cayman Purchaser Charter” means the Charter of the Purchaser, as then currently in effect.
“Cayman Purchaser Private Placement Warrants” means the warrants to purchase Purchaser Class A Ordinary Shares, at an initial exercise price of $11.50 per share, purchased by the Sponsor concurrently with the Purchaser’s IPO.
“Cayman Purchaser Public Warrants” means the warrants to purchase Purchaser Class A Ordinary Shares, at an initial exercise price of $11.50 per share, included in the Cayman Purchaser Units sold in the Purchaser’s IPO.
“Cayman Purchaser Units” means the units of the Purchaser sold in the IPO, consisting of one (1) Purchaser Class A Ordinary Share and one-half (1/2) of one (1) warrant to purchase a Purchaser Class A Ordinary Share at an initial exercise price of $11.50 per share.
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“Cayman Purchaser Warrant” has the meaning specified in the Recitals.
“Cayman Registrar” means the Cayman Islands Registrar of Companies.
“Certificate” means a certificate representing shares of Company Common Shares or Company Series A Preferred Shares.
“Certificate of Merger” has the meaning specified in the Recitals.
“Closing” has the meaning specified in Section 3.01.
“Closing Date” has the meaning specified in Section 3.01.
“Closing Filing” has the meaning specified in Section 6.15(b).
“Closing Press Release” has the meaning specified in Section 6.15(b).
“Code” means the U.S. Internal Revenue Code of 1986, as amended, and any successor statute thereto, as amended.
“Company” has the meaning specified in the Preamble.
“Company Benefit Plan” means any and all deferred compensation, executive compensation, incentive compensation, equity purchase or other equity-based compensation plan, severance or termination, holiday, vacation or other bonus plan or practice, hospitalization or other medical, life or other insurance, supplemental unemployment benefits, profit sharing, pension, or retirement plan, program, agreement, commitment or arrangement, including each “employee benefit plan” as such term is defined under Section 3(3) of ERISA, maintained or contributed to or required to be contributed to by any Target Company for the benefit of any employee or terminated employee of any Target Company.
“Company Board Recommendation” has the meaning specified in Section 6.26(b).
“Company Board Recommendation Change” has the meaning specified in Section 6.26(b).
“Company Call Options” means the agreements listed on Section 10.01 of the Company Disclosure Letter.
“Company Certificate of Incorporation” means the Certificate of Incorporation of the Company, as then currently in effect.
“Company Closing Certificate” has the meaning specified in Section 3.02(b).
“Company Common Shares” means shares of common stock, par value $0.001 per share, of the Company.
“Company Confidential Information” means all confidential or proprietary documents and information concerning the Target Companies or any of their respective Representatives, furnished in connection with this Agreement or the transactions contemplated hereby; provided, however, that Company Confidential Information shall not include any information which, (a) at the time of disclosure by the Purchaser or its Representatives, is generally available publicly and was not disclosed in breach of this Agreement or (b) at the time of the disclosure by the Company or its Representatives to the Purchaser or its Representatives was previously known by such receiving party without violation of Law or any confidentiality obligation by the Person receiving such Company Confidential Information.
“Company Convertible Note CVR” has the meaning specified in Section 2.02(d).
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“Company Convertible Note Share Consideration” has the meaning specified in Section 2.02(d)
“Company Convertible Notes” means, collectively, the 8% Convertible Notes due 2026 issued by the Company.
“Company Disclosure Letter” has the meaning specified in the Preamble to Article IV.
“Company Financials” has the meaning specified in Section 4.06(a).
“Company Fully Diluted Capital” means the sum (without duplication) of the aggregate number of (a) Company Common Shares that are issued and outstanding immediately prior to the Effective Time assuming and after giving effect to the exercise in full of the Company Call Options with the consideration for such exercise paid in Company Common Shares, (b) all Company Common Shares issuable upon full exercise of all issued and outstanding Company Warrants outstanding as of immediately prior to the Effective Time (calculated using the treasury method of accounting on a cashless exercise basis), (c) all Company Common Shares issuable upon full conversion of all Company Series A Preferred Shares issued and outstanding as of immediately prior to the Effective Time (calculated using the treasury method of accounting on a cashless exercise basis), (d) Company Common Shares issuable upon exchange of all Exchangeable Shares issued and outstanding as of immediately prior to the Effective Time (including all Company Common Shares issuable upon exchange of all such Exchangeable Shares that are exchangeable for Company Series A Preferred Shares, and the subsequent conversion of all such Company Series A Preferred Shares into Company Common Shares) (calculated using the treasury method of accounting on a cashless exercise basis), and (e) all Company Common Shares issuable upon full exercise of all Company Options outstanding as of immediately prior to the Effective Time (calculated using the treasury method of accounting on a cashless exercise basis).
“Company Incentive Plan” means the Terrestrial Energy Inc. Second Amended and Restated 2024 Stock Option Plan, approved by the board of directors of the Company.
“Company IP” means any and all Intellectual Property that is owned or purported to be owned (in whole or in part), licensed, used or held for use by the Target Companies.
“Company IP Licenses” means any Intellectual Property licenses, sublicenses and other agreements or permissions that a Target Company is party to or is otherwise authorized to use or practice any Intellectual Property under, excluding Off-the-Shelf Software and non-exclusive licenses of Intellectual Property granted in agreements with suppliers, customers or end users in the ordinary course of business where the license is not the primary purpose of the agreement.
“Company Leased Real Properties” has the meaning specified in Section 4.17(b).
“Company Material Adverse Effect” means any change, event or circumstance (collectively, “Events”), that (i) has had, individually or in the aggregate, a material adverse effect on the business, assets, results of operations or financial condition of the Target Companies, taken as a whole or (ii) does or would reasonably be expected to, individually or in the aggregate, prevent the ability of the Target Companies to consummate the Transactions; provided, however, that in no event would any of the following, alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or will be, a “Company Material Adverse Effect”: (a) any change in applicable Laws or GAAP or any interpretation thereof following the date of this Agreement, (b) any change in interest rates or economic, political, business, banking, financial or securities markets conditions generally, including any disruption thereof and any decline in the price of any security or any market index, (c) the taking of any action required by this Agreement or any Ancillary Document, (d) any natural disaster (including hurricanes, storms, tornados, flooding, earthquakes, volcanic eruptions or similar occurrences), pandemic (including any COVID-19 Measures) or change in climate, (e) any acts of terrorism or war, the outbreak or escalation of hostilities, geopolitical conditions, local, national or international political conditions, (f) any failure of the Target Companies to meet any projections or forecasts (provided that clause (f) shall not prevent a determination that any Event not otherwise excluded from this definition of Company Material Adverse Effect underlying such failure to meet projections or forecasts has resulted in a Company Material Adverse Effect), (g) any Events generally applicable to the industries or markets in which the Company and its Subsidiaries operate (including increases in the cost of products, supplies, materials or other goods purchased from third party suppliers), (h) the announcement of this Agreement and consummation of the transactions contemplated hereby, including any termination of, reduction in or similar adverse impact (but in each case only to the extent attributable to such announcement or consummation) on relationships, contractual or otherwise, with any landlords, customers, suppliers, distributors, partners or employees of the Target Companies, (i) any matter set forth on the Company Disclosure Letter, or (j) any action taken by, or at the request of, the Purchaser; provided, further, that any Event referred to in clauses (a), (b), (d), (e) or (g) above may be taken into account in determining if a Company Material Adverse Effect has occurred to the extent it has a disproportionate and adverse effect on the business, assets, results of operations or condition (financial or otherwise) of the Target Companies, taken as a whole, relative to similarly situated companies in the industry in which the Target Companies conduct their respective operations, but only to the extent of the incremental disproportionate effect on the Target Companies, taken as a whole, relative to similarly situated companies in the industry in which the Target Companies conduct their respective operations.
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“Company Material Contract” has the meaning specified in Section 4.13(a).
“Company Noteholders” means the holders of the Company Convertible Notes.
“Company Options” means the options to purchase Company Common Shares, including options granted pursuant to the Company Incentive Plan.
“Company Owned Properties” has the meaning specified in Section 4.17(a).
“Company Permits” has the meaning specified in Section 4.11.
“Company Real Property Leases” has the meaning specified in Section 4.17(b).
“Company Registered IP” has the meaning specified in Section 4.14(a).
“Company Securities” means, collectively, the Company Common Shares, the Company Series A Preferred Shares, the Company Special Voting Preferred Shares, the Company Warrants, the Company Convertible Notes and all other shares, warrants and other securities of the Company, including for the avoidance of doubt, any shares, warrants or other securities issued in connection with the Interim Financing.
“Company Series A Preferred Shares” means preferred stock, par value $0.001 per share, of the Company designated as “Series A Preferred Stock” pursuant to the Company Certificate of Incorporation.
“Company Software” means any and all Software which any of the Target Companies owns or purports to own, in whole or in part.
“Company Special Voting Preferred Shares” means preferred stock, par value $0.001 per share, of the Company designated as “Special Voting Preferred Stock” pursuant to the Company Certificate of Incorporation or any other voting securities of the Company issued to holders of Exchangeable Shares in the ExchangeCo Recapitalization.
“Company Stockholder Approval” has the meaning specified in Section 6.26.
“Company Stockholder Meeting” has the meaning specified in Section 6.26(b).
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“Company Stockholders” means, collectively, the holders of Company Common Shares or Company Series A Preferred Shares as of any determination time prior to the Effective Time.
“Company Transaction Costs” means all fees, costs and expenses of the Target Companies, in each case, incurred prior to and through the Closing Date in connection with the negotiation, preparation and execution of this Agreement, the other Ancillary Documents and the consummation of the Transactions, including: (a) all change of control bonus payments, retention or similar payments payable solely as a result of the consummation of the Transactions pursuant to arrangements (whether written or oral) entered into prior to the Closing Date whether payable before (to the extent unpaid), or on the Closing Date (excluding any “double-trigger” payments), and the employer portion of payroll Taxes payable as a result of the foregoing amounts; (b) all severance payments, retirement payments or similar payments or success fees payable pursuant to arrangements (whether written or oral) entered into prior to the Closing Date and which are either payable solely as a result of the consummation of the Transactions or other action that has occurred prior to the Closing, or payable before (to the extent unpaid), or on the Closing Date (excluding any “double-trigger payments”), and the employer portion of payroll Taxes payable as a result of the foregoing amounts; (c) all professional or transaction, deal, brokerage, legal, accounting, financial advisory or any similar fees payable in connection with the consummation of the Transactions; and (d) all costs, fees and expenses related to the D&O Tail; but excluding any amounts paid or payable by the Purchaser hereunder.
“Company Warrants” means the warrants outstanding as of the date of this Agreement to purchase Company Common Shares and all other warrants to purchase any shares or other equity interests of the Company.
“Consent” means any consent, approval, waiver, authorization or Permit of, or notice to or declaration or filing with any Governmental Authority or any other Person.
“Continental” means the Continental Stock Transfer & Trust Company.
“Contracts” means all legally binding contracts, contracts, agreements, binding arrangements, bonds, notes, indentures, mortgages, debt instruments, purchase order, licenses (and all Company IP Licenses and other contracts, agreements or binding arrangements concerning Intellectual Property), franchises, leases and other instruments or obligations of any kind, written or oral (including any amendments and other modifications thereto).
“Convertible Promissory Note” means a convertible promissory note, issued by the Purchaser to the Sponsor or an Affiliate of the Sponsor, pursuant to which the Purchaser may borrow up to $2,500,000 from the Sponsor, related to ongoing expenses reasonably related to the business of the Purchaser and the consummation of a business combination.
“Copyleft Terms” has the meaning specified in Section 4.14(e).
“Copyrights” has the meaning set for in the definition of “Intellectual Property”.
“COVID-19” means SARS-CoV-2 or COVID-19, and any evolutions or mutations thereof or related or associated epidemics, pandemic or disease outbreaks.
“COVID-19 Measures” means any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester, safety or other Law, directive, guidelines or recommendations promulgated by any industry group or any Governmental Authority, including the Centers for Disease Control and Prevention and the World Health Organization, in each case, in connection with or in response to COVID- 19, including the CARES Act, Families First Act, the Payroll Tax Executive Order and IRS Notices 2020-22, 2020-65 and 2021-11.
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“D&O Indemnified Party” has the meaning specified in Section 6.19(a).
“D&O Tail” has the meaning specified in Section 6.19(b).
“DGCL” has the meaning specified in the Recitals.
“Disclosure Letters” means, collectively, the Company Disclosure Letter and the Purchaser Disclosure Letter.
“Dissenting Shares” has the meaning specified in Section 2.04.
“Domesticated Purchaser Common Stock” means, following the Domestication, common stock of the Purchaser, par value $0.0001 per share.
“Domesticated Purchaser Voting Stock” means any capital stock or other voting security of Purchaser that entitles the holder thereof to cast, at all meetings of the stockholders of Purchaser to which the holders of Domesticated Purchaser Common Stock are entitled to vote and, if applicable, with respect to any written consents sought by Purchaser from the holders of Domesticated Purchaser Common Stock, a number of votes calculated by aggregating the number of shares of Domesticated Purchaser Common Stock each Exchangeable Share held by such holder is exchangeable for as of the record date determining stockholders entitled to vote.
“Domesticated Purchaser Warrant” has the meaning specified in the Recitals.
“Domestication” has the meaning specified in the Recitals.
“Draft Company Financials” has the meaning specified in Section 4.06(a).
“Effective Time” has the meaning specified in Section 1.02(a).
“Enforceability Exceptions” has the meaning as specified in Section 5.02.
“Environmental Law” means any Law in any way relating to (a) the protection of human health and safety, (b) the environment, (c) natural resources (including air, water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), (d) pollution, or (e) Hazardous Materials, including the Comprehensive Environmental Response, Compensation and Liability Act, 42 USC §9601 et seq., the Resource Conservation and Recovery Act, 42 USC §6901 et seq., the Toxic Substances Control Act, 15 USC §2601 et seq., the Federal Water Pollution Control Act, 33 USC §1251 et seq., the Clean Air Act, 42 USC §7401 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 USC §136 et seq., the Occupational Safety and Health Act, 29 USC §651 et seq. (to the extent it relates to exposure to Hazardous Materials), the Asbestos Hazard Emergency Response Act, 15 USC §2641 et seq., the Safe Drinking Water Act, 42 USC §300f et seq., the Oil Pollution Act of 1990, 33 USC §2701 et seq., and analogous state acts.
“Environmental Liabilities” means, in respect of any Person, all Liabilities, obligations, responsibilities, Remedial Legal Proceedings, losses, damages, costs, and expenses (including all reasonable fees, disbursements, and expenses of counsel, experts, and consultants and costs of investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a result of any claim or demand by any other Person or in response to any violation of Environmental Law, whether known or unknown, accrued or contingent, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, to the extent based upon, related to, or arising under or pursuant to any Environmental Law, Environmental Permit, Order, or Contract with any Governmental Authority or other Person, that relates to any environmental, health or safety condition, violation of Environmental Law, or a Release or threatened Release of Hazardous Materials.
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“Environmental Permits” has the meaning specified in Section 4.21(a).
“Equity Incentive Plan” has the meaning specified in Section 6.14(a).
“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means each “person” (as defined in Section 3(9) of ERISA) which together with a Target Company would be deemed to be a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of the Code.
“Exchange” has the meaning specified in Section 2.02(a).
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Exchange and Support Agreement” means the agreement among the Company, Exchangeco and CallCo dated April 5, 2024, as it may be amended from time to time including in connection with the ExchangeCo Recapitalization.
“Exchange Fund” has the meaning specified in Section 2.03(a).
“Exchange Ratio” means the Aggregate Base Consideration divided by the Company Fully Diluted Capital.
“Exchangeable Common Shares” means the common exchangeable shares in the capital of ExchangeCo, including any exchangeable shares received by holders of Exchangeable Common Shares in exchange for such common exchangeable shares in connection with the ExchangeCo Recapitalization.
“Exchangeable Preferred Shares” means the preferred exchangeable shares in the capital of ExchangeCo, including any exchangeable shares received by holders of Exchangeable Preferred Shares in exchange for such preferred exchangeable shares in connection with the ExchangeCo Recapitalization.
“Exchangeable Share Consideration” means, as applicable, (a) one (1) Company Common Share for each Exchangeable Common Share and (b) one (1) Company Series A Preferred Share for each Exchangeable Preferred Share.
“Exchangeable Shares” means, collectively, the Exchangeable Common Shares and the Exchangeable Preferred Shares which are issued and outstanding immediately prior to the Effective Time.
“ExchangeCo” means Terrestrial Energy Canada (Exchange) Inc.
“ExchangeCo Articles” means the articles of incorporation of ExchangeCo, as amended by the articles of amendment dated April 4, 2024, as may be further amended in connection with the ExchangeCo Recapitalization.
“ExchangeCo Recapitalization” has the meaning specified in the Recitals.
“ExchangeCo Shareholder Approval” has the meaning set forth in Section 6.29
“ExchangeCo Shareholder Meeting” has the meaning set forth in Section 6.29.
“ExchangeCo Shareholders” means the holders of the Exchangeable Shares as of the record date for the ExchangeCo Shareholder Meeting.
“Excluded Share” has the meaning specified in Section 2.02(b)(i).
“Extension” has the meaning specified in Section 6.03(a).
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“Federal Securities Law” has the meaning specified in Section 6.07.
“Fraud Claim” means any claim for deliberate fraud as defined under the common law of the State of Delaware by a Party to this Agreement, in the making of a statement of material fact in the express representations and warranties set forth in Article IV or Article V of this Agreement, as applicable, and not with respect to any other matter and will only be found to exist if such Party is finally determined, by a court of competent jurisdiction, to have committed deliberate fraud with the specific intent to deceive another Party and finds that such party made: (a) a false representation of material fact; (b) with actual knowledge (as opposed to constructive, imputed or implied knowledge) that such representation is false; (c) with a specific intention to induce the party to whom such representation is made to act or refrain from acting in reliance upon it; (d) causing that party, in justifiable reliance upon such false representation, to take or refrain from taking action; and (e) causing such Party to suffer damage by reason of such reliance. For the avoidance of doubt, Fraud does not and shall not include any constructive fraud, equitable fraud, promissory fraud, unfair dealings fraud or any tort (including fraud) based on recklessness or negligence. Fraud by a Person shall not be imputed to any other Person.
“GAAP” means generally accepted accounting principles as in effect in the United States of America.
“Governmental Authority” means any federal, state, municipal, local or other foreign or domestic governmental, quasi-governmental, or administrative body, instrumentality, department or agency, any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body, or any government-owned entity.
“Hazardous Material” means any waste, gas, liquid or other substance or material that is defined, listed, classified or designated as a “hazardous substance”, “pollutant”, “contaminant”, “hazardous waste”, “regulated substance”, “hazardous chemical”, “toxic chemical”, or “waste” (or by any similar term) under any Environmental Law, or any other material regulated, or that could result in the imposition of Liability or responsibility, under any Environmental Law, including oil, petroleum, petroleum products and by-products, petroleum breakdown products, asbestos, radioactive materials, polychlorinated biphenyls, radon, mold, urea formaldehyde insulation and per- and polyfluoroalkyl substances.
“HCM Group” has the meaning specified in Section 9.14(a)(i).
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
“Indebtedness” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money (including the outstanding principal and accrued but unpaid interest), (b) all obligations for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business), (c) any other indebtedness of such Person that is evidenced by a note, bond, debenture, credit agreement or similar instrument, (d) all obligations of such Person under leases that should be classified as capital leases in accordance with GAAP (other than real estate leases and any other leases that would be required to be capitalized only upon adoption of ASC 842), (e) all obligations of such Person for the reimbursement of any obligor on any line or letter of credit, banker’s acceptance, guarantee or similar credit transaction, in each case, that has been drawn or claimed against, (f) all interest rate and currency swaps, caps, collars and similar agreements or hedging devices under which payments are obligated to be made by such Person, whether periodically or upon the happening of a contingency, (g) all obligations secured by a Lien securing debt for borrowed money on any property of such Person (other than Permitted Liens), (h) any premiums, prepayment fees or other penalties, fees, costs or expenses associated with the prepayment of any Indebtedness of such Person and (i) all obligation described in clauses (a) through (h) above of any other Person which is directly or indirectly guaranteed by such Person or which such Person has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which it has otherwise assured a creditor against loss.
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“Indemnification Obligation” has the meaning specified in Section 6.19(c).
“Insurance Policies” has the meaning specified in Section 4.23(a).
“Intellectual Property” means any and all intellectual or proprietary property and all rights, title, and interest therein or thereto arising anywhere in the world, including all United States, international and foreign: (a) patents and patent applications, patent improvements, disclosures and inventions, (whether patentable or unpatentable and whether or not reduced to practice), including any continuations, divisions, continuations in part, renewals, divisionals, extensions, substitutions, reexaminations, reissues or foreign counterparts of any of the foregoing (“Patents”); (b) all trade names, trade dress, trademarks, service marks, slogans, logos or internet domain name registrations, social media usernames, handles, and any other similar identifiers of source of origin, including all goodwill associated therewith, together with all registrations and applications relating thereto (“Trademarks”); (c) copyrights (whether registered or unregistered), original works of authorship, copyrightable works and subject matter, together with all registrations and applications relating thereto (“Copyrights”); (d) all proprietary databases and data; (e) all industrial designs and any registrations and applications therefor throughout the world; (f) Trade Secrets; (g) Software and data, databases, compilations, and any other electronic data files, including any and all collections of data, whether machine readable or otherwise; (h) rights to sue or recover and retain damages and costs and attorneys’ fees for the past, present or future infringement, dilution, misappropriation, or other violation of any of the foregoing anywhere in the world; (i) any and all other intellectual or industrial property rights protectable by applicable law in any jurisdiction; and (j) all issuances, renewals, registrations and applications of or for any of the foregoing.
“Intended Tax Treatment(s)” has the meaning specified in the Recitals.
“Interim Financial Statements” has the meaning specified in Section 6.04(b).
“Interim Financing” means any additional debt or equity financing the Company may from time to time raise, up to a maximum of twenty million dollars ($20,000,000).
“Interim Period” has the meaning specified in Section 6.01(a).
“Interim Period Option Issuance” has the meaning specified in Section 6.03(b)(a)(ii).
“Internal Reorganization” means those certain transactions undertaken by the Company and certain of its Subsidiaries pursuant to that Agreement and Plan of Merger dated December 23, 2024.
“International Trade Laws” means (a) all U.S. import and export Laws (including those Laws administered by the U.S. Departments of Commerce (Bureau of Industry and Security)) codified at 15 C.F.R., Parts 700-774; Homeland Security (Customs and Border Protection) codified at 19 C.F.R., Parts 1-192; State (Directorate of Defense Trade Controls) codified at 22 C.F.R., Parts 103, 120-130; and the Treasury (Office of Foreign Assets Control) codified at 31 C.F.R., Parts 500-598) and (b) all comparable applicable Laws outside the United States.
“IPO” means the initial public offering of Cayman Purchaser Units pursuant to the IPO Prospectus.
“IPO Prospectus” means the final prospectus of the Purchaser, dated as of August 15, 2024 (File No. 333-280283).
“IRS” means the U.S. Internal Revenue Service (or any successor Governmental Authority).
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“IT Assets” technology, devices, computers, hardware, Software (including firmware and middleware), systems, sites, servers, networks, workstations, routers, hubs, circuits, switches, interfaces, websites, platforms, data communications lines, automated networks and control systems, cloud computing arrangements, and all other information or operational technology, telecommunications, or data processing assets, facilities, systems services, or equipment, and all data stored therein or processed thereby, and all associated documentation, in each case, owned or leased by, licensed to, or used by the Target Companies in the conduct of their respective businesses.
“JOBS Act” has the meaning specified in Section 5.06(f).
“K&S” has the meaning specified in Section 9.14(a)(i).
“Key Holders” means the Persons set forth on Section 1.1(a) of the Company Disclosure Letter.
“Key Holders Lock-Up Agreement” has the meaning specified the Recitals.
“Knowledge” means, with respect to (a) the Company, the actual knowledge, after reasonable inquiry of such Person’s direct reports, of the individuals set forth on Schedule 10-A of the Company Disclosure Letter and (b) the Purchaser, the actual knowledge, after reasonable inquiry, of the individuals set forth on Schedule 10-A of the Purchaser Disclosure Letter.
“Law” means any federal, state, local, municipal, foreign or other law, statute, legislation, principle of common law, ordinance, code, edict, decree, proclamation, treaty, convention, rule, regulation, directive, requirement, writ, injunction, settlement, Order or Consent that is or has been issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Governmental Authority.
“Legal Proceeding” means any notice of noncompliance or violation, or any claim, demand, charge, action, suit, litigation, audit, settlement, complaint, stipulation, assessment or arbitration, or examination, or any request (including any request for information), inquiry, hearing, proceeding or investigation, by or before any Governmental Authority.
“Letter of Instruction” has the meaning specified in Section 2.03(c).
“Letter of Transmittal” has the meaning specified in Section 2.03(b).
“Liabilities” means any and all liabilities, Indebtedness, Legal Proceedings or obligations of any nature (whether absolute, accrued, contingent or otherwise, whether known or unknown, whether direct or indirect, whether matured or unmatured, whether due or to become due).
“Lien” means any mortgage, deed of trust, pledge, security interest, attachment, right of first refusal, right of first offer, option, proxy, voting trust, license, encumbrance, easement, covenant, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof), restriction (whether on voting, sale, transfer, disposition or otherwise), any subordination arrangement in favor of another Person, or any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar Law.
“Material Current Government Contract” has the meaning specified in Section 4.10.
“Merger” has the meaning specified in the Recitals.
“Merger Sub” has the meaning specified in the Preamble.
“Modification in Recommendation” has the meaning specified in Section 6.13(b).
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“Nasdaq” has the meaning specified in Section 5.06(a).
“NRC” means the United States Nuclear Regulatory Commission or any successor agency that regulates civilian nuclear energy activities in the United States.
“Nuclear Laws” means the Atomic Energy Act of 1954, as amended, and the relevant NRC implementing regulations.
“OFAC” has the meaning specified in Section 4.25(b).
“Off-the-Shelf Software” means “shrink wrap,” “click wrap,” and “off the shelf” software agreements and other agreements for Software commercially available to the public on standard terms and conditions with an annual cost of less than $100,000 per year.
“Offer Documents” has the meaning specified in Section 6.13(a)(i).
“Open Source Software” means any code or software governed by any license meeting the Open Source Definition (as promulgated by the Open Source Initiative) or the Free Software Definition (as promulgated by the Free Software Foundation), or any substantially similar license, including any license approved by the Open Source Initiative or any Creative Commons License.
“Order” means any order, decree, ruling, judgment, injunction, writ, determination, binding decision, verdict, judicial award or other action that is or has been made, entered, rendered, or otherwise put into effect by or under the authority of any Governmental Authority.
“Organizational Documents” means, with respect to any Person that is an entity, its certificate of incorporation or formation, bylaws, operating agreement, memorandum and articles of association or similar organizational documents, in each case, as amended. “Organizational Documents” shall be deemed to include the documents entered into by the Target Companies in connection with the Redomiciliation or the ExchangeCo Recapitalization.
“Other Indemnitors” has the meaning specified in Section 6.19(c).
“Outside Date” has the meaning specified in Section 8.01(c).
“Owned Intellectual Property” means any and all Intellectual Property which any of the Target Companies owns (or purports to own), in whole or in part, and includes the Company Software and all Company Registered IP.
“Party(ies)” has the meaning specified in the Preamble.
“Patents” has the meaning specified in the definition of “Intellectual Property”.
“PCAOB” means the U.S. Public Company Accounting Oversight Board (or any successor thereto).
“PCAOB Financial Statements” has the meaning specified in Section 6.04(a).
“Per Share Base Consideration” has the meaning specified in Section 2.01.
“Permits” means all federal, state, local or foreign or other third-party permits, grants, easements, consents, approvals, authorizations, exemptions, licenses, franchises, concessions, ratifications, permissions, clearances, confirmations, endorsements, waivers, certifications, designations, ratings, registrations, qualifications or orders of any Governmental Authority or any other Person.
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“Permitted Liens” means (a) Liens for Taxes or assessments and similar governmental charges or levies, which either are (i) not yet due and payable or (ii) being contested in good faith and by appropriate proceedings, and adequate reserves have been established with respect thereto in accordance with GAAP; (b) mechanics’, materialmen’s, carriers’, workers’, repairers’ and other similar liens arising or incurred in the ordinary course of business relating to obligations as to which there is no default on the part of the applicable Target Company or the validity of which are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP; (c) zoning, entitlement, environmental or conservation restrictions and other land use and environmental regulations imposed by Governmental Authorities which, to the Knowledge of the Company, are not violated in any material respects; (d) non-monetary Liens of record, so long as such matters do not materially interfere with or detract from the Target Companies’ ability to conduct its business at such property; (e) all matters that would be disclosed on an accurate survey of the Target Companies’ real property; (f) Liens incurred or deposits made in the ordinary course of business in connection with social security; (g) Liens on goods in transit incurred pursuant to documentary letters of credit, in each case arising in the ordinary course of business; (h) Liens arising under this Agreement or any Ancillary Document; (i) non-exclusive licenses of Owned Intellectual Property granted to customers, vendors or service providers in the ordinary course of business; or (i) Liens disclosed in Section 4.03(b) of the Company Disclosure Letter.
“Person” means an individual, corporation, company, partnership (including a general partnership, limited partnership or limited liability partnership), limited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political subdivision thereof, or an agency or instrumentality thereof.
“Personal Property” means any machinery, equipment, tools, vehicles, furniture, leasehold improvements, office equipment, plant, parts and other tangible personal property.
“PIPE Investment” has the meaning specified in the Recitals.
“PIPE Investors” has the meaning specified in the Recitals.
“PIPE Subscription Agreements” has the meaning specified in the Recitals.
“Post-Closing Bylaws” has the meaning specified in Section 6.28.
“Post-Closing Charter” has the meaning specified in Section 6.28.
“Post-Closing Purchaser Board” has the meaning specified in Section 6.18(a).
“Proxy Statement” has the meaning specified in Section 6.13(a)(i).
“Proxy Statement/Registration Statement” has the meaning specified in Section 6.13(a)(i).
“Public Certifications” has the meaning specified in Section 5.06(a).
“Purchaser” has the meaning specified in the Preamble.
“Purchaser Class A Ordinary Shares” means prior to the Domestication, Class A ordinary shares of the Purchaser, par value $0.0001 per share.
“Purchaser Class B Ordinary Shares” means prior to the Domestication, Class B ordinary shares of the Purchaser, par value $0.0001 per share.
“Purchaser Closing Certificate” has the meaning specified in Section 3.02(a).
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“Purchaser Confidential Information” means all confidential or proprietary documents and information concerning the Purchaser or any of its Representatives; provided, however, that Purchaser Confidential Information shall not include any information which, (a) at the time of disclosure by the Company or any of its Representatives, is generally available publicly and was not disclosed in breach of this Agreement or (b) at the time of the disclosure by the Purchaser or its Representatives to the Company or any of its Representatives, was previously known by such receiving party without violation of Law or any confidentiality obligation by the Person receiving such Purchaser Confidential Information. For the avoidance of doubt, from and after the Closing, Purchaser Confidential Information will include the confidential or proprietary information of the Target Companies.
“Purchaser Disclosure Letter” has the meaning specified in the Preamble to Article V.
“Purchaser Material Adverse Effect” means any Event, that, individually or when aggregated with other changes, events, or occurrences, has had a materially adverse effect on the business, assets, financial condition or results of operations of the Purchaser; provided, however, that no change or effect related to any of the following, alone or in combination, shall be taken into account in determining whether a Purchaser Material Adverse Effect has occurred: (a) the announcement of this Agreement and consummation of the transactions contemplated hereby, including any termination of, reduction in or similar adverse impact (but in each case only to the extent attributable to such announcement or consummation) on relationships, contractual or otherwise, with any landlords, customers, suppliers, distributors, partners or employees of the Purchaser or Merger Sub; (b) the taking of any action required by this Agreement or any Ancillary Document; (c) any natural disaster (including hurricanes, storms, tornados, flooding, earthquakes, volcanic eruptions or similar occurrences), pandemic or change in climate; (d) any acts of terrorism or war, the outbreak or escalation of hostilities, geopolitical conditions, local, national or international political conditions; (e) the Redemption; (f) any breach of any covenants, agreements or obligations of any investor in any PIPE Investment, under any agreement related to financing the Company or Purchaser (including any breach of such Person’s obligations to fund any amounts thereunder when required); (g) changes or proposed changes in applicable Law, regulations or interpretations thereof or decisions by courts or any Governmental Authority after the date of this Agreement; (h) changes or proposed changes in GAAP (or any interpretation thereof) after the date of this Agreement; or (i) any downturn in general economic conditions, including changes in the credit, debt, securities, financial, capital or reinsurance markets (including changes in interest or exchange rates, prices of any security or market index or commodity or any disruption of such markets), in each case, in the United States or anywhere else in the world.
“Purchaser Ordinary Shares” means the Purchaser Class A Ordinary Shares and the Purchaser Class B Ordinary Shares.
“Purchaser SEC Reports” has the meaning specified in Section 5.06(a).
“Purchaser Shareholder Approval” means the approval of (a) those Transaction Proposals identified in clauses (B) and (C) and of Section 6.13(b), in each case, by special resolution under Cayman Islands Law, being an affirmative vote of the holders of a majority of at least two-thirds (2/3) of the outstanding Purchaser Ordinary Shares entitled to vote, who attend and vote thereupon (as determined in accordance with the Purchaser’s Organizational Documents) at the Purchaser Shareholders’ Meeting, (b) those Transaction Proposals identified in clauses (A), (D) (F) and (G) of Section 6.13(b), in each case, by an ordinary resolution under Cayman Islands Law, being an affirmative vote of the holders of at least a majority of the outstanding Purchaser Ordinary Shares entitled to vote, who attend and vote thereupon (as determined in accordance with the Purchaser’s Organizational Documents), and (c) with respect to any other proposal proposed to the Purchaser Shareholders, the requisite approval required under the Purchaser’s Organizational Documents, the Cayman Companies Act or any other applicable Law, in each case, at a Purchaser Shareholders’ Meeting.
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“Purchaser Shareholders” means the holders of the Purchaser Ordinary Shares.
“Purchaser Shareholders’ Meeting” has the meaning specified in Section 6.13(b).
“Purchaser Transaction Costs” means (a) all fees, costs and expenses of the Purchaser incurred prior to and through the Closing Date in connection with the negotiation, preparation, execution and performance of this Agreement, the other Ancillary Documents and the consummation of the Transactions and the Extension, whether paid or unpaid prior to the Closing, including any and all professional or transaction related costs, fees and expenses of legal, accounting and financial advisors, consultants, auditors, accountants and brokers, including any deferred underwriting commissions being held in the Trust Account (with respect to deferred underwritten expenses, not to exceed the amount set forth in Schedule 10.01-B of the Purchaser Disclosure Letter) and (b) any Indebtedness of the Purchaser owed to its Affiliates or stockholders pursuant to the Convertible Promissory Note.
“Redemption” has the meaning specified in the Recitals.
“Redemption Price” shall mean an amount equal to the price at which each Purchaser Class A Ordinary Share may be redeemed pursuant to the Redemption.
“Redomiciliation” means those certain transactions undertaken by the Company and certain of its Subsidiaries pursuant to that Arrangement Agreement dated December 13, 2023.
“Registration Rights Agreement” has the meaning specified in the Recitals.
“Registration Statement” means the Registration Statement on Form S-4, or other appropriate form, including any pre-effective or post-effective amendments or supplements thereto, to be filed with the SEC by Purchaser under the Securities Act with respect to the Registration Statement Securities.
“Registration Statement Securities” has the meaning specified in Section 6.13(a)(i).
“Related Person” means any officer, director, manager, employee, trustee or beneficiary of a Target Company or any of its Affiliates and any immediate family member of any of the foregoing.
“Release” or “Released” means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, migrating or leaching into the indoor or outdoor environment, or into or out of any property.
“Remedial Legal Proceeding” means all actions to (a) clean up, remove, treat, or in any other way address any Hazardous Material, (b) prevent the Release of any Hazardous Material so it does not endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, (c) perform pre-remedial studies and investigations or post-remedial monitoring and care, or (d) correct or otherwise respond to a condition of noncompliance with Environmental Laws.
“Representatives” means, as to any Person, such Person’s Affiliates and the respective managers, directors, officers, employees, independent contractors, consultants, advisors (including financial advisors, counsel and accountants), agents and other legal representatives of such Person or its Affiliates.
“Restricted Company Securityholders” has the meaning specified in the Recitals.
“Sanctioned Jurisdiction” has the meaning specified in Section 4.25(b).
“Sanctions Laws” means applicable trade, economic and financial sanctions Laws, regulations, embargoes, and restrictive measures administered or enforced by (a) the United States (including without limitation the U.S. Department of the Treasury’s Office of Foreign Assets Control, the U.S. Department of State, and the U.S. Department of Commerce), (b) the European Union and enforced by its member states, (c) the United Nations, (d) His Majesty’s Treasury, or (e) any country in which the Purchaser or any Target Company or any agent acting on behalf of the forgoing is performing activities.
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“SDN List” has the meaning specified in Section 4.25(b).
“SEC” means the U.S. Securities and Exchange Commission (or any successor Governmental Authority).
“Securities Act” means the Securities Act of 1933, as amended.
“Signing Filing” has the meaning specified in Section 6.15(b).
“Signing Press Release” has the meaning specified in Section 6.15(b).
“Software” means any and all software, firmware and computer programs and applications, including any and all source code, descriptions, schematics, specifications, flow charts, object code, middleware, utilities, computer programs, application programming interfaces, algorithms, plugins, libraries, subroutines, tools, drivers, microcode, scripts, batch files, instruction sets and macros, models, methodologies and other work product used in design, plan, organize and develop any of the foregoing, in each case of the foregoing whether in source code, executable or object code form, documentation related thereto including user manuals, user documentation, and training materials, filed, records and other work product related to any of the foregoing and all software modules, tools and databases and collections of data.
“Sponsor” means HCM Investor Holdings II, LLC, a Cayman Islands limited liability company.
“Sponsor Lock-Up Agreement” has the meaning specified in the Recitals.
“Sponsor Share Conversion” has the meaning specified in the Recitals.
“Sponsor Support Agreement” has the meaning specified in the Recitals.
“Subsidiary” means, with respect to any Person, any corporation, partnership, association or other business entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (b) if a partnership, association or other business entity, a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons will be deemed to have a majority ownership interest in a partnership, association or other business entity if such Person or Persons will be allocated a majority of partnership, association or other business entity gains or losses or will be or control the managing director, managing member, general partner or other managing Person of such partnership, association or other business entity. A Subsidiary of a Person will also include any variable interest entity which is consolidated with such Person under applicable accounting rules.
“Supporting Company Stockholders” has the meaning specified in the Recitals.
“Surviving Company” has the meaning specified in the Recitals.
“Surviving Company Share” has the meaning specified in Section 1.02(d).
“Target Companies” means, collectively, the Company and its direct and indirect Subsidiaries, each of which is a “Target Company” for purposes of this Agreement.
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“Tax Act” means the Income Tax Act, RSC 1985, c1 (5th Supp).
“Tax Return” means any return, form, declaration, election, disclosure, report, claim for refund, information return or other documents (including any related or supporting schedules, statements or information) filed or required to be filed in connection with the determination, assessment or collection of any Taxes or the administration of any Laws or administrative requirements relating to any Taxes.
“Taxes” means all direct or indirect federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, value-added, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, social security and related contributions due in relation to the payment of compensation to employees, excise, severance, stamp, occupation, premium, property, windfall profits, alternative minimum, estimated, customs, duties or other taxes, fees, assessments or charges in the nature of a tax, together with any interest and any penalties, additions to tax or additional amounts with respect thereto imposed by a Governmental Authority.
“TE Group” has the meaning specified in Section 9.14(a)(ii).
“TEI Securities” means, collectively, the Company Securities and the Exchangeable Shares.
“Top Customers” has the meaning specified in Section 4.24(a).
“Top Suppliers” has the meaning specified in Section 4.24(b).
“Trade Secrets” means any trade secrets, confidential business information, concepts, ideas, designs, research or development information, processes, procedures, techniques, technical information, specifications, operating and maintenance manuals, engineering drawings, methods, know-how, data, mask works, discoveries, inventions, modifications, extensions, improvements, and other proprietary rights (whether or not patentable or subject to Copyright, Trademark, or trade secret protection).
“Trademarks” has the meaning set for in the definition of “Intellectual Property”.
“Trading Day” means any day on which shares of Domesticated Purchaser Common Stock are actually traded on the principal securities exchange or securities market on which shares of Domesticated Purchaser Common Stock are then traded.
“Transaction Proposals“ has the meaning specified in Section 6.13(b).
“Transaction Support Agreement” means that certain Transaction Support Agreement, dated as of the date hereof (as it may be amended or supplemented from time to time), by and between the Purchaser, the Company and the Supporting Company Stockholder party thereto.
“Transaction Support Agreement Deadline” has the meaning specified in Section 6.26(a).
“Transactions” has the meaning specified in the Recitals.
“Transfer Taxes” has the meaning specified in Section 6.11(c).
“Transferred Information” has the meaning specified in Section 9.17.
“Treasury Regulations” means the regulations (including temporary regulations) promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Code. All references herein to sections of the Treasury Regulations shall include any corresponding provisions or provisions of succeeding, similar or substitute, temporary or final Treasury Regulations.
“Trust Account” means that certain trust account established pursuant to the Trust Agreement.
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“Trust Agreement” has the meaning specified in Section 5.15.
“Trustee” has the meaning specified in Section 5.15.
“Update Schedule” has the meaning specified in Section 6.08(b).
“Warrant Agreement” means that certain Warrant Agreement, dated as of August 15, 2024, by and between the Purchaser and Continental, as warrant agent.
“Warrant Assignment and Assumption Agreement” has the meaning specified in the Recitals.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each Party hereto has caused this Business Combination Agreement to be signed and delivered as of the date first written above.
| The Purchaser: | ||
| HCM II Acquisition Corp. | ||
| By: | /s/ Shawn Matthews | |
| Name: | Shawn Matthews | |
| Title: | Chief Executive Officer | |
| The Company: | ||
| Terrestrial Energy Inc. | ||
| By: | /s/ Simon Irish | |
| Name: | Simon Irish | |
| Title: | Chief Executive Officer | |
| Merger Sub: | ||
| HCM II Merger Sub Inc. | ||
| By: | /s/ Shawn Matthews | |
| Name: | Shawn Matthews | |
| Title: | Chief Executive Officer | |
{Signature Page to Business Combination Agreement}
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Exhibit A
Form of Certificate of Merger
Exhibit B
Transaction Support Agreements
Exhibit C
Form of Registration Rights Agreement
FINAL FORM
FORM OF
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of [●], 2025, is made and entered into by and among HCM II Acquisition Corp., a Delaware corporation (formerly a Cayman Islands exempted company limited by shares, prior to the Domestication (as defined herein)) (the “Company”), Cantor Fitzgerald & Co., a New York general partnership (“Cantor”), HCM Investor Holdings II, LLC, a Cayman Islands limited liability company (the “Sponsor”), the members of the Sponsor identified on the signature page hereto under “Other Sponsor Holders” (such members, together with the Sponsor, the “Sponsor Holders”) and each of the undersigned parties listed on the signature page hereto under “Terrestrial Energy Holders” (the “Terrestrial Energy Holders” and each such party, together with the Sponsor, the Sponsor Holders, Cantor and any person or entity who hereafter becomes a party to this Agreement pursuant to Section 5.2 of this Agreement, a “Holder” and collectively the “Holders”).
RECITALS
WHEREAS, the Company, Cantor, and the Sponsor are party to that certain Registration Rights Agreement, dated as of August 15, 2024 (the “Original RRA”);
WHEREAS, the Company is party to that certain Business Combination Agreement, dated as of March 26, 2025 (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Business Combination Agreement” and the transactions contemplated thereby, the “Business Combination”), by and between the Company, Terrestrial Energy Inc., a Delaware corporation (“Legacy Terrestrial Energy”), and HCM II Merger Sub Inc., a Delaware corporation and a direct, wholly owned subsidiary of the Company;
WHEREAS, prior to the date hereof and subject to the conditions of the Business Combination Agreement, the Company transferred by way of continuation from the Cayman Islands to Delaware and domesticated as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended, and Part XII of the Companies Act (as revised) of the Cayman Islands (the “Domestication”), and as part of the Domestication, (i) each Class B ordinary share, par value $0.0001 per share, of the Company converted into one Class A ordinary share, (ii) each Class A ordinary share, par value $0.0001 per share, of the Company converted into one share of common stock, par value $0.0001 per share, of the Company (the “Common Stock”) and (iii) each warrant to purchase one Class A ordinary share of the Company converted into one warrant to purchase one share of Common Stock (the “Warrants”);
WHEREAS, prior to the consummation of the Business Combination and subject to the conditions of the Business Combination Agreement, the Legacy Terrestrial Energy and the Company will enter into an assignment and assumption agreement, which will provide for the assignment and assumption by the Company of the Legacy Terrestrial Energy’s rights and obligations under the Terrestrial Energy Warrants, which will be effective as of the Effective Time (as defined in the Business Combination Agreement);
WHEREAS, pursuant to the transactions contemplated by the Business Combination Agreement and subject to the terms and conditions set forth therein, the Terrestrial Energy Holders and the other pre-Business Combination security holders of Legacy Terrestrial Energy received an aggregate of [●] shares of Common Stock.
WHEREAS, pursuant to Section 5.5 of the Original RRA, the provisions, covenants and conditions set forth therein may be amended or modified upon the written consent of the Company and the Holders (as defined in the Original RRA) (the “Original Holders”) of at least a majority in interest of the Registrable Securities (as defined in the Original RRA) (the “Original Registrable Securities”) at the time in question, and the Sponsor Holders party hereto are Original Holders of at least a majority in interest of the Original Registrable Securities as of the date hereof; and
WHEREAS, in connection with the consummation of the transactions described above, the Company and the Original Holders desire to amend and restate the Original RRA in its entirety as set forth herein, and the Company and the Holders desire to enter into this Agreement, pursuant to which the Company shall grant the Holders certain registration rights with respect to the Registrable Securities (as defined below) on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the representations, covenants and agreements contained herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
| 1.1 | Definitions. The terms defined in this ARTICLE 1 shall, for all purposes of this Agreement, have the respective meanings set forth below: |
“Additional Holder” shall have the meaning given in Section 5.11.
“Additional Holder Common Stock” shall have the meaning given in Section 5.11.
“Adverse Disclosure” shall mean any public disclosure of material non-public information, which disclosure, in the good faith judgment of the Chief Executive Officer or Chief Financial Officer of the Company or the Board, in each case, after consultation with counsel to the Company, (i) would be required to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements contained therein (in the case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading, (ii) would not be required to be made at such time if the Registration Statement were not being filed, declared effective or used, as the case may be, and (iii) the Company has a bona fide business purpose for not making such information public.
“Agreement” shall have the meaning given in the Preamble hereto.
“Block Trade” shall have the meaning given in Section 2.4.1.
“Board” shall mean the board of directors of the Company.
“Business Combination” shall have the meaning given in the Recitals hereto.
“Business Combination Agreement” shall have the meaning given in the Recitals hereto. “Business Day” shall mean a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Law to close.
“Cantor” shall have the meaning given in the Preamble hereto.
“Closing” shall have the meaning given in the Business Combination Agreement.
“Closing Date” shall have the meaning given in the Business Combination Agreement.
“Commission” shall mean the U.S. Securities and Exchange Commission.
“Common Stock” shall have the meaning given in the Recitals hereto.
“Company” shall have the meaning given in the Preamble hereto and includes the Company’s successors by recapitalization, merger, consolidation, spin-off, reorganization or similar transaction.
“Demanding Holder” shall have the meaning given in Section 2.1.4.
“Domestication” shall have the meaning given in the Recitals hereto.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as it may be amended from time to time.
“Exchangeable Shares” shall have the meaning given in the Business Combination Agreement.
“Floor Price” shall mean $1.00.
“Form S-1 Shelf” shall have the meaning given in Section 2.1.1.
“Form S-3 Shelf” shall have the meaning given in Section 2.1.1.
“Governmental Authority” shall mean any federal, state, local, foreign or other governmental, quasi-governmental or administrative body, instrumentality, department or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body.
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“Holder Information” shall have the meaning given in Section 4.1.2.
“Holders” shall have the meaning given in the Preamble.
“Joinder” shall have the meaning given in Section 5.11.
“Law” shall mean any federal, state, local, municipal, foreign or other law, statute, legislation, principle of common law, ordinance, code, edict, decree, proclamation, treaty, convention, rule, regulation, directive, requirement, writ, injunction, settlement, order or consent that is or has been issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Governmental Authority.
“Legacy Terrestrial Energy” shall have the meaning given in the Recitals hereto.
“Legal Proceeding” shall mean any notice of noncompliance or violation, or any claim, demand, charge, action, suit, litigation, audit, settlement, complaint, stipulation, assessment or arbitration, or any request (including any request for information), inquiry, hearing, proceeding or investigation, by or before any Governmental Authority.
“Lock-Up Agreements” shall mean the TEI Holder Lock-Up Agreement and the Sponsor Holder Lock-Up Agreement, collectively.
“Lock-Up Period” shall mean (a) with respect to the Sponsor Holder and their respective Permitted Transferees, the lock-up period specified with respect to a party in the Sponsor Holder Lock-Up Agreement and (b) with respect to the Terrestrial Energy Holders and their respective Permitted Transferees, the lock-up period specified with respect to a party in the TEI Holder Lock-Up Agreement.
“Maximum Number of Securities” shall have the meaning given in Section 2.1.5.
“Minimum Takedown Threshold” shall have the meaning given in Section 2.1.4.
“Misstatement” shall mean an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement or Prospectus, or necessary to make the statements in a Registration Statement or Prospectus (in the case of a Prospectus, in the light of the circumstances under which they were made) not misleading.
“Original Registrable Securities” shall have the meaning given in the Recitals hereto.
“Original RRA” shall have the meaning given in the Recitals hereto.
“Other Coordinated Offering” shall have the meaning given in Section 2.4.1.
“Permitted Transferees” shall mean persons to whom a holder of Registrable Securities is permitted to transfer such Registrable Securities prior to the expiration of the applicable Lock-Up Period pursuant to the applicable Lock-Up Agreement.
“Person” shall mean an individual, corporation, partnership (including a general partnership, limited partnership or limited liability partnership), limited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political subdivision thereof, or an agency or instrumentality thereof.
“Piggyback Registration” shall have the meaning given in Section 2.2.1.
“Prospectus” shall mean the prospectus included in any Registration Statement, as supplemented by any and all prospectus supplements and as amended by any and all post-effective amendments and including all material incorporated by reference in such prospectus.
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“Registrable Security” or “Registrable Securities” shall mean: (i) any outstanding shares of Common Stock held by a Holder following the Closing that are issued in connection with the transactions contemplated by the Business Combination Agreement, including, for the avoidance of doubt, any shares of Common Stock issued in connection with the Domestication and shares of Common Stock issuable in respect of certain convertible notes of Legacy Terrestrial Energy in connection with the Business Combination; (ii) any shares of Common Stock that may be acquired by Holders upon the exercise, conversion, exchange or redemption of any other security of the Company or other right of a Holder to acquire Common Stock following the Closing that are issued in connection with the transactions contemplated by the Business Combination Agreement, including, for the avoidance of doubt, the shares of Common Stock issuable upon exercise of Warrants, shares of Common Stock issuable upon exercise of the Terrestrial Energy Warrants, shares of Common Stock issuable upon exercise of the Terrestrial Energy Options, and shares of Common Stock that may be acquired directly or indirectly by Holders upon exchange of any Exchangeable Shares; (iii) any outstanding Warrants held by a Holder with respect to any outstanding shares of Common Stock; (iv) any outstanding shares of Common Stock or warrants to purchase shares of Common Stock (including any shares of Common Stock issued or issuable upon the exercise of any such warrant) of the Company held by a Holder following the date hereof to the extent that such securities are “restricted securities” (as defined in Rule 144) or are otherwise held by an “affiliate” (as defined in Rule 144) of the Company; and (v) any other equity security of the Company issued or issuable with respect to any securities referenced in clause (i), (ii), (iii) or (iv) above by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation, spin-off, reorganization, exchange or similar transaction; provided, however, that, as to any particular Registrable Security, such securities shall cease to be Registrable Securities upon the earliest to occur of the following events: (i) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement by the applicable Holder to a Person that is not an “affiliate” (as defined in Rule 144) of the Company and new certificates for such securities not bearing (or book-entry positions not subject to) a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of such securities shall not require registration under the Securities Act; (ii) such securities shall have been otherwise transferred (or moved to a brokerage account), new certificates for such securities not bearing (or book-entry positions not subject to) a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of such securities shall not require registration under the Securities Act; (iii) such securities shall have ceased to be outstanding; (iv) such securities may be sold without registration pursuant to Rule 144 (but with no volume or other restrictions or limitations including as to manner or timing of sale or current public information requirements); (v) such securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or other public securities transaction; and (vi) the expiration of five (5) years after the closing of the Business Combination, which such five (5)-year period may be extended the Company in its sole discretion.
“Registration” shall mean a registration, including related Shelf Takedowns, effected by preparing and filing a Registration Statement, Prospectus or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective.
“Registration Expenses” shall mean the documented, out-of-pocket expenses of a Registration, including, without limitation, the following:
(A) all registration and filing fees (including fees with respect to filings required to be made with the Financial Industry Regulatory Authority, Inc. and any national securities exchange on which the Common Stock are then listed);
(B) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel for the Underwriters in connection with blue sky qualifications of Registrable Securities);
(C) printing, messenger, telephone and delivery expenses;
(D) reasonable fees and disbursements of counsel for the Company;
(E) reasonable fees and disbursements of all independent registered public accountants of the Company incurred specifically in connection with such Registration; and
(F) reasonable fees and expenses of one (1) legal counsel selected by the majority-in-interest of the Demanding Holders in an Underwritten Offering or Other Coordinated Offering, provided, however, that such reimbursable fees and expenses of counsel shall not exceed $125,000.
“Registration Statement” shall mean any registration statement that covers Registrable Securities pursuant to the provisions of this Agreement, including any Shelf, and in each case, including the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such registration statement, and all exhibits to and all material incorporated by reference in such registration statement.
“Requesting Holders” shall have the meaning given in Section 2.1.5.
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“Rule 144” shall mean Rule 144 promulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto that may be promulgated by the Commission.
“Securities Act” shall mean the Securities Act of 1933, as amended from time to time.
“Shelf” shall mean the Form S-1 Shelf, the Form S-3 Shelf, or any Subsequent Shelf Registration, as the case may be.
“Shelf Registration” shall mean a registration of securities pursuant to a registration statement filed with the Commission in accordance with and pursuant to Rule 415 promulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto that may be promulgated by the Commission.
“Shelf Takedown” shall mean an Underwritten Shelf Takedown or any proposed transfer or sale using a Registration Statement, including a Piggyback Registration.
“Sponsor” shall have the meaning given in the Preamble hereto.
“Sponsor Holders” shall have the meaning given in the Preamble hereto.
“Sponsor Holder Lock-Up Agreement” shall mean the lock-up agreement, dated [●], 2025, entered into by the Company and the Sponsor.
“Sponsor Majority Holders” shall mean the Sponsor Holders holding in the aggregate a majority of the Registrable Securities then held by the Sponsor Holders on an as-converted to Common Stock basis.
“Subsequent Shelf Registration” shall have the meaning given in Section 2.1.2.
“TEI Holder Lock-Up Agreements” shall mean the lock-up agreements, dated [●], 2025, entered into by and among the Company and the applicable Terrestrial Energy Holder named therein.
“Terrestrial Energy Holders” shall have the meaning given in the Preamble hereto.
“Terrestrial Energy Options” shall mean the options outstanding as of the date of the Business Combination Agreement to purchase shares of common stock of Legacy Terrestrial Energy outstanding as of immediately prior to the effective time of the Business Combination Agreement.
“Terrestrial Energy Warrants” shall mean the warrants outstanding as of the date of the Business Combination Agreement to purchase shares of common stock of Legacy Terrestrial Energy and all other warrants to purchase any shares or other equity interests of the Legacy Terrestrial Energy outstanding as of immediately prior to the effective time of the Business Combination Agreement.
“Total Limit” shall have the meaning given in Section 2.1.6.
“Transfer” shall mean the (i) sale or assignment of, offer to sell, contract or agreement to sell, hypothecation, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to, any security, (ii) 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) public announcement of any intention to effect any transaction specified in clause (i) or (ii).
“Transfer Agent” shall have the meaning given in Section 2.5.
“Underwriter” shall mean a securities dealer who purchases any Registrable Securities as principal in an Underwritten Offering and not as part of such dealer’s market-making activities.
“Underwritten Lock-Up Period” shall have the meaning given in Section 2.3.
“Underwritten Offering” shall mean a Registration in which securities of the Company are sold to an Underwriter in a firm commitment underwriting for distribution to the public.
“Underwritten Shelf Takedown” shall have the meaning given in subsection 2.1.4.
“Withdrawal Notice” shall have the meaning given in Section 2.1.6.
“Yearly Limit” shall have the meaning given in Section 2.1.4.
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ARTICLE 2
REGISTRATIONS
| 2.1 | Shelf Registration. |
| 2.1.1 | Filing. The Company shall, subject to Section 3.4, use its commercially reasonable efforts to submit or file within 30 calendar days following the Closing Date a Registration Statement for a Shelf Registration on Form S-1 (the “Form S-1 Shelf”) or, if the Company is eligible to use a Registration Statement on Form S-3, a Shelf Registration on Form S-3 (the “Form S-3 Shelf”), in each case, covering the resale of all Registrable Securities (determined as of two (2) Business Days prior to such submission or filing and assuming that all Terrestrial Energy Warrants are exercised in full at an exercise price equal to the Floor Price) on a delayed or continuous basis and shall use its commercially reasonable efforts to have such Shelf declared effective as soon as reasonably practicable after the filing thereof, but no later than the earlier of (a) the 90th calendar day (or 120th calendar day if the Commission notifies the Issuer that it will “review” the Registration Statement) following the filing date thereof if the Commission notifies the Company that it will “review” the Registration Statement and (b) the tenth (10th) Business Day after the date the Company is notified (orally or in writing, whichever is earlier) by the Commission that the Registration Statement will not be “reviewed” or will not be subject to further review; provided that if such deadline falls on a Saturday, Sunday or other day that the Commission is closed for business, such deadline shall be extended to the next Business Day on which the Commission is open for business. Such Shelf shall provide for the resale of the Registrable Securities included therein pursuant to any method or combination of methods legally available to, and requested by, any Holder named therein. Subject to Sections 2.1.3 and 3.4, the Company shall maintain a Shelf in accordance with the terms hereof, and shall prepare and file with the Commission such amendments, including post-effective amendments, and supplements as may be necessary to keep a Shelf continuously effective, available for use to permit the Holders named therein to sell their Registrable Securities included therein and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities. In the event the Company files a Form S-1 Shelf, the Company shall use its commercially reasonable efforts to convert the Form S-1 Shelf (and any Subsequent Shelf Registration) to a Form S-3 Shelf as soon as reasonably practicable after the Company is eligible to use Form S-3. |
| 2.1.2 | Subsequent Shelf Registration. If any Shelf ceases to be effective under the Securities Act for any reason at any time while Registrable Securities are still outstanding, the Company shall, subject to Section 3.4, use its commercially reasonable efforts to, as promptly as is reasonably practicable, cause such Shelf to again become effective under the Securities Act (including using its commercially reasonable efforts to obtain the prompt withdrawal of any order suspending the effectiveness of such Shelf), and shall use its commercially reasonable efforts to, as promptly as is reasonably practicable, amend such Shelf in a manner reasonably expected to result in the withdrawal of any order suspending the effectiveness of such Shelf or file an additional registration statement as a Shelf Registration (a “Subsequent Shelf Registration”) registering the resale of all Registrable Securities under such Shelf (determined as of two (2) Business Days prior to such filing and assuming that all Terrestrial Energy Warrants are exercised in full at an exercise price equal to the Floor Price), and pursuant to any method or combination of methods legally available to, and requested by, any Holder named therein. If a Subsequent Shelf Registration is filed, the Company shall use its commercially reasonable efforts to (i) cause such Subsequent Shelf Registration to become effective under the Securities Act as promptly as is reasonably practicable after the filing thereof (it being agreed that the Subsequent Shelf Registration shall be an automatic shelf registration statement (as defined in Rule 405 promulgated under the Securities Act) if the Company is a well-known seasoned issuer (as defined in Rule 405 promulgated under the Securities Act) at the most recent applicable eligibility determination date) and (ii) keep such Subsequent Shelf Registration continuously effective, available for use to permit the Holders named therein to sell their Registrable Securities included therein and in compliance with the provisions of the Securities Act until such time as there are no longer any Registrable Securities. Any such Subsequent Shelf Registration shall be on Form S-3 to the extent that the Company is eligible to use such form. Otherwise, such Subsequent Shelf Registration shall be on another appropriate form. |
| 2.1.3 | New Registrable Securities. Subject to Section 3.4, in the event that any Holder holds Registrable Securities that are not registered for resale on a delayed or continuous basis, the Company shall, upon the written request of such Holder, promptly use its commercially reasonable efforts to cause the resale of such Registrable Securities to be covered by either, at the Company’s option, any then-available Shelf (including by means of a post-effective amendment) or a Subsequent Shelf Registration and cause the same to become effective as soon as practicable after such filing and such Shelf or Subsequent Shelf Registration shall be subject to the terms hereof; provided, however, that the Company shall only be required to cause such Registrable Securities to be so covered twice per calendar year for each of (i) the Sponsor Holders, collectively and (ii) the Terrestrial Energy Holders, collectively. |
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| 2.1.4 | Requests for Underwritten Shelf Takedowns. Subject to Section 3.4, at any time and from time to time when an effective Shelf is on file with the Commission, any Holder (a “Demanding Holder”) may request to sell all or any portion of its Registrable Securities in an Underwritten Offering or other coordinated offering that is registered pursuant to the Shelf (each, an “Underwritten Shelf Takedown”); provided that the Company shall only be obligated to effect an Underwritten Shelf Takedown if such offering shall include Registrable Securities proposed to be sold by the Demanding Holder, either individually or together with other Demanding Holders, with a total offering price reasonably expected to exceed, in the aggregate, $25 million (the “Minimum Takedown Threshold”). All requests for Underwritten Shelf Takedowns shall be made by giving written notice to the Company, which shall specify the approximate number of Registrable Securities proposed to be sold in the Underwritten Shelf Takedown. Subject to Section 2.4.4, the Company shall have the right to select the Underwriters for such offering (which shall consist of one or more reputable nationally recognized investment banks), subject to the initial Demanding Holder’s prior approval (which approval shall not be unreasonably withheld, conditioned or delayed). Subject to Section 2.4.6, each of (i) the Sponsor Holders, collectively and (ii) the Terrestrial Energy Holders, collectively, may demand Underwritten Shelf Takedowns pursuant to this Section 2.1.4 (x) not more than two (2) times in any 12-month period (the “Yearly Limit”). Notwithstanding anything to the contrary in this Agreement, the Company may effect any Underwritten Offering pursuant to any then-effective Registration Statement, including a Form S-3, that is then available for such offering. |
| 2.1.5 | Reduction of Underwritten Offering. If the managing Underwriter or Underwriters in an Underwritten Shelf Takedown, in good faith, advises the Company, the Demanding Holders and the Holders requesting piggy back rights pursuant to this Agreement with respect to such Underwritten Shelf Takedown (the “Requesting Holders”) (if any) in writing that the dollar amount or number of Registrable Securities that the Demanding Holders and the Requesting Holders (if any) desire to sell, taken together with all other shares of Common Stock or other equity securities that the Company desires to sell all other shares of Common Stock or other equity securities, if any, that have been requested to be sold in such Underwritten Offering pursuant to separate written contractual piggy-back registration rights held by any other stockholders who desire to sell, exceeds the maximum dollar amount or maximum number of equity securities that can be sold in the Underwritten Offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of such securities, as applicable, the “Maximum Number of Securities”), then the Company shall include in such Underwritten Offering, before including any shares of Common Stock or other equity securities proposed to be sold by the Company or by other holders of Common Stock or other equity securities, the Registrable Securities of the Demanding Holders and the Requesting Holders (if any) (pro rata, as nearly as possible, based on the respective number of Registrable Securities that each Demanding Holder and Requesting Holder (if any) has requested be included in such Underwritten Shelf Takedown and the aggregate number of Registrable Securities that the Demanding Holders and Requesting Holders have requested be included in such Underwritten Shelf Takedown that can be sold without exceeding the Maximum Number of Securities). To facilitate the allocation of Registrable Securities in accordance with the above provisions, the Company or the Underwriters may round the number of shares allocated to any Holder to the nearest ten (10) Registrable Securities. |
| 2.1.6 | Underwritten Shelf Takedown Withdrawal. Prior to the filing of the applicable “red herring” prospectus or prospectus supplement used for marketing such Underwritten Shelf Takedown, a majority in interest of the Demanding Holders initiating an Underwritten Shelf Takedown shall have the right to withdraw from such Underwritten Shelf Takedown for any or no reason whatsoever upon written notification (a “Withdrawal Notice”) to the Company and the Underwriter or Underwriters (if any) of their intention to withdraw from such Underwritten Shelf Takedown; provided that any other Demanding Holder(s) may elect to have the Company continue an Underwritten Shelf Takedown if the Minimum Takedown Threshold would still be satisfied by the Registrable Securities proposed to be sold in the Underwritten Shelf Takedown by the Demanding Holder(s). If withdrawn, a demand for an Underwritten Shelf Takedown shall constitute a demand for an Underwritten Shelf Takedown by the withdrawing Demanding Holder for purposes of Section 2.1.4 and shall count toward the Yearly Limit and the Total Limit, unless either (i) the Demanding Holder(s) making the withdrawal has not previously withdrawn any Underwritten Shelf Takedown or (ii) the Demanding Holder(s) making the withdrawal reimburses the Company for all Registration Expenses with respect to such Underwritten Shelf Takedown (or, if there is more than one Demanding Holder, a pro rata portion of such Registration Expenses based on the respective number of Registrable Securities that each Demanding Holder has requested be included in such Underwritten Shelf Takedown); provided that, if any other Demanding Holder(s) elects to continue an Underwritten Shelf Takedown pursuant to the proviso in the immediately preceding sentence, such Underwritten Shelf Takedown shall instead count as an Underwritten Shelf Takedown demanded by such Demanding Holder(s) for purposes of Section 2.1.4 and shall count toward the Yearly Limit and the Total Limit. Following the receipt of any Withdrawal Notice, the Company shall promptly forward such Withdrawal Notice to any other Requesting Holders. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with a Shelf Takedown prior to its withdrawal under this Section 2.1.6, other than if a Demanding Holder elects to pay such Registration Expenses pursuant to clause (ii) of the second sentence of this Section 2.1.6. |
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| 2.2 | Piggyback Registration. |
| 2.2.1 | Piggyback Rights. If the Company or any Holder proposes to conduct a registered offering of, or if the Company proposes to file a Registration Statement under the Securities Act with respect to the Registration of, equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into equity securities, or Company equity securities for its own account or for the account of stockholders of the Company (or by the Company and by the securityholders of the Company including, without limitation, an Underwritten Shelf Takedown pursuant to Section 2.2.1), other than a Registration Statement (or any registered offering with respect thereto) (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the Company’s existing securityholders, (iii) pursuant to a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), (iv) for an offering of debt that is convertible into equity securities of the Company, (v) for a dividend reinvestment plan, or (vi) a Block Trade or an Other Coordinated Offering (which shall be subject to Section 2.4), then the Company shall give written notice of such proposed offering to all of the Holders of Registrable Securities as soon as practicable but not less than seven days before the anticipated filing date of such Registration Statement or, in the case of an Underwritten Offering pursuant to a Shelf Registration, the applicable “red herring” prospectus or prospectus supplement used for marketing such offering, which notice shall (A) describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, in such offering, and (B) offer to all of the Holders of Registrable Securities the opportunity to include in such registered offering such number of Registrable Securities as such Holders may request in writing within two (2) Business Days after transmission of such written notice (such Registration, a “Piggyback Registration”). Subject to Section 2.2.2, the Company shall, in good faith, cause such Registrable Securities to be included in such Piggyback Registration and, if applicable, shall use its commercially reasonable efforts to cause the managing Underwriter or Underwriters of such Piggyback Registration to permit the Registrable Securities requested by the Holders pursuant to this Section 2.2.1 to be included therein on the same terms and conditions as any similar securities of the Company included in such registered offering and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. The inclusion of any Holder’s Registrable Securities in a Piggyback Registration shall be subject to such Holder’s agreement to enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering by the Company. |
| 2.2.2 | Reduction of Piggyback Registration. If the managing Underwriter or Underwriters in an Underwritten Offering that is to be a Piggyback Registration, in good faith, advises the Company and the Holders of Registrable Securities participating in the Piggyback Registration in writing that the dollar amount or number of shares of Common Stock or other equity securities that the Company or the Demanding Holders desire to sell, taken together with (i) the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been demanded pursuant to separate written contractual arrangements with Persons other than the Holders of Registrable Securities hereunder (ii) the Registrable Securities as to which Registration has been requested pursuant to this Section 2.2, and (iii) the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to separate written contractual piggy-back registration rights of Persons other than the Holders of Registrable Securities hereunder, exceeds the Maximum Number of Securities, then: |
| (a) | If the Registration or registered offering is undertaken for the Company’s account, the Company shall include in any such Registration or registered offering (A) first, the shares of Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to subsection 2.2.1 hereof (pro rata, as nearly as practicable, based on the respective number of Registrable Securities that such Holder has requested be included in such Underwritten Offering and the aggregate number of Registrable Securities that the Holders have requested to be included in such Underwritten Offering), which can be sold without exceeding the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to separate written contractual piggy-back registration rights of Persons other than the Holders of Registrable Securities hereunder, which can be sold without exceeding the Maximum Number of Securities; |
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| (b) | If the Registration or registered offering is pursuant to a request by Persons other than the Holders of Registrable Securities, then the Company shall include in any such Registration or registered offering (A) first, the shares of Common Stock or other equity securities, if any, of such requesting Persons, other than the Holders of Registrable Securities, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to Section 2.2.1, pro rata, as nearly as practicable, based on the respective number of Registrable Securities that each Holder has requested be included in such Underwritten Offering and the aggregate number of Registrable Securities that the Holders have requested to be included in such Underwritten Offering, which can be sold without exceeding the Maximum Number of Securities; (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the shares of Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (D) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A), (B) and (C), the shares of Common Stock or other equity securities, if any, as to which Registration or a registered offering has been requested pursuant to separate written contractual piggy-back registration rights of such Persons other than the Holder of Registrable Securities hereunder, which can be sold without exceeding the Maximum Number of Securities; and |
| (c) | If the Registration or registered offering is pursuant to a request by Holder(s) of Registrable Securities pursuant to Section 2.1, then the Company shall include in any such Registration or registered offering securities in the priority set forth in Section 2.1.5. |
| 2.2.3 | Piggyback Registration Withdrawal. Any Holder of Registrable Securities (other than a Demanding Holder, whose right to withdraw from an Underwritten Shelf Takedown, and related obligations, shall be governed by Section 2.1.6) shall have the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of his, her or its intention to withdraw from such Piggyback Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Piggyback Registration or, in the case of a Piggyback Registration pursuant to a Shelf Registration, the filing of the applicable “red herring” prospectus or prospectus supplement with respect to such Piggyback Registration used for marketing such transaction. The Company (whether on its own good faith determination or as the result of a request for withdrawal by persons pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the Commission in connection with a Piggyback Registration at any time prior to the effectiveness of such Registration Statement. Notwithstanding anything to the contrary in this Agreement (other than Section 2.1.6), the Company shall be responsible for the Registration Expenses incurred in connection with the Piggyback Registration prior to its withdrawal under this Section 2.2.3. |
| 2.2.4 | Unlimited Piggyback Registration Rights. For purposes of clarity, subject to Section 2.1.6, any Piggyback Registration effected pursuant to Section 2.2 hereof shall not be counted as an Underwritten Shelf Takedown under Section 2.1.4 and shall not count toward the Yearly Limit or the Total Limit. |
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| 2.3 | Market Stand-off. In connection with any Underwritten Offering of equity securities of the Company (other than a Block Trade or Other Coordinated Offering), if requested by the managing Underwriter, each Holder that is an executive officer or director of the Company or a Holder in excess of 5.0% of the then-outstanding Common Stock or securities convertible thereinto (and for which it is customary for such a Holder to agree to a lock-up) agrees that it shall not Transfer any shares of Common Stock or other equity securities of the Company (other than those included in such offering pursuant to this Agreement), without the prior written consent of the Company, during the 90-day period (or such shorter time agreed to by the managing Underwriters) beginning on the date of pricing of such offering (the “Underwritten Lock-Up Period”), except (i) to Permitted Transferees, (ii) as expressly permitted in writing by the Company or (iii) in the event the Underwriters managing the offering otherwise consent in writing. Each such Holder agrees to execute a customary lock-up agreement in favor of the Underwriters to such effect (in each case on substantially the same terms and conditions as all other Holders). The terms of such lock-up agreements shall be negotiated among the applicable Holders, the Company and the Underwriters and shall include customary exclusions from the restrictions on Transfer set forth therein. The Company will not be obligated to undertake an Underwritten Shelf Takedown during any Underwritten Lock-Up Period binding on the Holders, nor will the Company be obligated to include in any Piggyback Registration any Registrable Securities that are then subject to a “lock-up” agreement. |
| 2.4 | Block Trades; Other Coordinated Offerings. |
| 2.4.1 | Notwithstanding any other provision of this ARTICLE 2 but subject to Section 3.4, at any time and from time to time when an effective Shelf is on file with the Commission, if a Demanding Holder wishes to engage in (a) an underwritten registered offering not involving a “roadshow,” an offer commonly known as a “block trade” (a “Block Trade”) or (b) an “at the market” or similar registered offering through a broker, sales agent or distribution agent, whether as agent or principal, (an “Other Coordinated Offering”), in each case, with an anticipated aggregate offering price of, either (x) at least $25 million or (y) all remaining Registrable Securities held by the Demanding Holder, then such Demanding Holder only needs to notify the Company of the Block Trade or Other Coordinated Offering at least five (5) Business Days prior to the day such offering is to commence and the Company shall as expeditiously as possible use its commercially reasonable efforts to facilitate such Block Trade or Other Coordinated Offering; provided that the Demanding Holders representing a majority of the Registrable Securities wishing to engage in the Block Trade or Other Coordinated Offering shall use commercially reasonable efforts to work with the Company and any Underwriters, brokers, sales agents or placement agents prior to making such request in order to facilitate preparation of the registration statement, prospectus and other offering documentation related to the Block Trade or Other Coordinated Offering. |
| 2.4.2 | Prior to the filing of the applicable “red herring” prospectus or prospectus supplement used in connection with a Block Trade or Other Coordinated Offering, a majority-in-interest of the Demanding Holders initiating such Block Trade or Other Coordinated Offering shall have the right to submit a Withdrawal Notice to the Company, the Underwriter or Underwriters (if any) and any brokers, sale agents or placement agents (if any) of their intention to withdraw from such Block Trade or Other Coordinated Offering. Notwithstanding anything to the contrary in this Agreement, the Demanding Holder shall be responsible for the Registration Expenses incurred in connection with a Block Trade or Other Coordinated Offering prior to its withdrawal under this Section 2.4.2. |
| 2.4.3 | Notwithstanding anything to the contrary in this Agreement, Section 2.2 shall not apply to a Block Trade or Other Coordinated Offering initiated by a Demanding Holder pursuant to this Agreement. |
| 2.4.4 | The Demanding Holder in a Block Trade or Other Coordinated Offering shall have the right to select the Underwriters and any brokers, sale agents or placement agents (if any) for such Block Trade or Other Coordinated Offering (in each case, which shall consist of one or more reputable nationally recognized investment banks). |
| 2.4.5 | Subject to Section 2.4.6, each of (i) the Sponsor Holders, as a group, and (ii) the Terrestrial Energy Holders, as a group, may demand no more than two (2) Block Trades or Other Coordinated Offerings pursuant to this Section 2.4 in any twelve (12) month period. For the avoidance of doubt, any Block Trade or Other Coordinated Offering effected pursuant to this Section 2.4 shall not be counted as a demand for an Underwritten Shelf Takedown pursuant to Section 2.1.4. |
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| 2.4.6 | Notwithstanding anything to the contrary in this Agreement, with respect to (i) the Sponsor Holders, as a group, or (ii) the Terrestrial Energy Holders, as a group, in no event may the number of Block Trades or Other Coordinated Offerings demanded pursuant to this Section 2.4 plus the number of Underwritten Shelf Takedowns demanded pursuant to Section 2.1.4 exceed a total of three (3) demands for such group in any twelve (12) month period. |
| 2.5 | Legends. In connection with any sale or other disposition of the Registrable Securities by a Holder pursuant to Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission) and upon compliance by the Holder with the requirements of this Section 2.5, if requested by the Holder, the Company shall use its commercially reasonable efforts to instruct the transfer agent for the Registrable Securities (the “Transfer Agent”) to remove any restrictive legends related to the book entry account holding such Registrable Securities (if the requirements of Rule 144 have been met) and make a new, unlegended entry for such book entry shares sold or disposed of without restrictive legends promptly after any such request therefor from the Holder; provided that the Company and the Transfer Agent have timely received from the Holder customary representations and other documentation reasonably acceptable to the Company and the Transfer Agent in connection therewith. Subject to receipt from the Holder by the Company and the Transfer Agent of customary representations and other documentation reasonably acceptable to the Company and the Transfer Agent in connection therewith, the Holder may request that the Company remove any legend from the book entry position evidencing its Registrable Securities and the Company will, if required by the Transfer Agent, use its commercially reasonable efforts to cause its legal counsel to deliver a legal opinion, in a form reasonably acceptable to the Transfer Agent, to the effect that the removal of such restrictive legends in such circumstances may be effected under the Securities Act, following the earliest of such time as such Registrable Securities (i) are subject to or have been or are about to be sold pursuant to an effective registration statement or (ii) have been or are about to be sold pursuant to Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission). If restrictive legends are no longer required for such Registrable Securities pursuant to the foregoing, the Company shall, in accordance with the provisions of this Section 2.5 promptly after any request therefor from the Holder accompanied by such customary and reasonably acceptable representations and other documentation referred to above establishing that restrictive legends are no longer required, deliver to the Transfer Agent irrevocable instructions that the Transfer Agent shall make a new, unlegended entry for such book entry shares. The Company shall be responsible for the fees of its Transfer Agent, its legal counsel and all DTC fees associated with such issuance. |
| 2.6 | FINRA Compliance. Notwithstanding anything herein to the contrary, Cantor may not (i) exercise demand registration rights after five (5) years from the commencement of sales in the Company’s initial public offering, (ii) exercise demand rights on more than one occasion or (iii) exercise its “piggyback” registration rights after seven (7) years from the effective date of the Company’s initial public offering. |
ARTICLE 3
COMPANY PROCEDURES
| 3.1 | General Procedures. In connection with any Shelf and/or Shelf Takedown, the Company shall use its commercially reasonable efforts to effect such Registration to permit the sale of such Registrable Securities in accordance with the intended plan of distribution thereof (and including all manners of distribution in such Registration Statement as Holders may reasonably request in connection with the filing of such Registration Statement and as permitted by law, including distribution of Registrable Securities to a Holder’s members, securityholders or partners), and pursuant thereto the Company shall, as expeditiously as possible: |
| 3.1.1 | prepare and file with the Commission, as soon as reasonably practicable, a Registration Statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such Registration Statement to become effective and remain effective until all Registrable Securities have ceased to be Registrable Securities; |
| 3.1.2 | prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement, and such supplements to the Prospectus, as may be reasonably requested by any Holder that holds at least five percent (5%) of the Registrable Securities registered on such Registration Statement or any Underwriter of Registrable Securities or as may be required by the rules, regulations or instructions applicable to the registration form used by the Company or by the Securities Act or rules and regulations thereunder to keep the Registration Statement effective until all Registrable Securities covered by such Registration Statement are sold in accordance with the intended plan of distribution set forth in such Registration Statement or supplement to the Prospectus; |
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| 3.1.3 | prior to filing a Registration Statement or Prospectus, or any amendment or supplement thereto, furnish without charge to the Underwriters, if any, and the Holders of Registrable Securities included in such Registration, and such Holders’ legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement (including each preliminary Prospectus), and such other documents as the Underwriters and the Holders of Registrable Securities included in such Registration or the legal counsel for any such Holders may request in order to facilitate the disposition of the Registrable Securities owned by such Holders; |
| 3.1.4 | prior to any public offering of Registrable Securities, use its commercially reasonable efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as the Holders of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may request (or provide evidence reasonably satisfactory to such Holders that the Registrable Securities are exempt from such registration or qualification) and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable the Holders of Registrable Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify or take any action to which it would be subject to general service of process or taxation in any such jurisdiction where it is not then otherwise so subject; |
| 3.1.5 | use commercially reasonable efforts to cause all such Registrable Securities to be listed on each national securities exchange or automated quotation system on which similar securities issued by the Company are then listed; |
| 3.1.6 | provide a transfer agent or warrant agent, as applicable, and registrar for all such Registrable Securities no later than the effective date of such Registration Statement; |
| 3.1.7 | advise each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued; |
| 3.1.8 | prior to the filing of any Registration Statement or Prospectus or any amendment or supplement to such Registration Statement or Prospectus as may be (a) necessary in order to comply with the Securities Act, the Exchange Act and the rules and regulations promulgated under the Securities Act or Exchange Act, as applicable or (b) advisable in order to reduce the number of days that sales are suspended pursuant to Section 3.4, furnish a copy thereof to each seller of such Registrable Securities and by means of one counsel on behalf of all such sellers (excluding any exhibits thereto and any filing made under the Exchange Act that is to be incorporated by reference therein); |
| 3.1.9 | notify the selling Holders at any time when a Prospectus relating to such Registration Statement is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes a Misstatement, and then to correct such Misstatement as set forth in Section 3.4 hereof; |
| 3.1.10 | in the event of an Underwritten Offering, a Block Trade, an Other Coordinated Offering, or sale by a broker, placement agent or sales agent that is registered pursuant to a Registration Statement, permit a representative of the Holders (such representative to be selected by a majority of the participating Holders), the Underwriters or other financial institutions facilitating such Underwritten Offering, Block Trade, Other Coordinated Offering or other sale pursuant to such Registration, if any, and any attorney, consultant or accountant retained by such Holders collectively, Underwriters or other financial institutions to participate, at each such Person’s own expense, in the preparation of the Registration Statement, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any such representative, Underwriter, financial institution, attorney, consultant or accountant in connection with the Registration; provided, however, that such representative, Underwriters or financial institutions agree to confidentiality arrangements, in form and substance reasonably satisfactory to the Company, prior to the release or disclosure of any such information; |
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| 3.1.11 | use commercially reasonable efforts to obtain a “comfort” letter (including a bring-down letter dated as of the date the Registrable Securities are delivered for sale pursuant to such Registration) from the Company’s independent registered public accountants in the event of an Underwritten Offering, a Block Trade, an Other Coordinated Offering or a sale by a broker, placement agent or sales agent pursuant to a Registration Statement (subject to such Underwriter or other financial institution facilitating such offering providing such certification or representation as reasonably requested by the Company’s independent registered public accountings and the Company’s counsel), to the extent customary, in customary form and covering such matters of the type customarily covered by “comfort” letters as the managing Underwriter or other similar type of sales agent or placement agent may reasonably request; |
| 3.1.12 | use commercially reasonable efforts to obtain, in the event of an Underwritten Offering, a Block Trade, an Other Coordinated Offering or sale by a broker, placement agent or sales agent pursuant to a Registration Statement, to the extent customary, on the date the Registrable Securities are delivered for sale pursuant to such Registration, obtain an opinion and negative assurance letter, dated such date, of counsel representing the Company for the purposes of such Registration, addressed to the participating Holders, the broker, the placement agent or sales agent, if any, and the Underwriters, if any, covering such legal matters with respect to the Registration in respect of which such opinion is being given as the participating Holders, broker, placement agent, sales agent, or Underwriter may reasonably request and as are customarily included in such opinions and negative assurance letters, provided, in each case, that such participating Holders provide such information to such counsel as is customarily required for, or is reasonably requested by such counsel for purposes of, such opinion or negative assurance letter; |
| 3.1.13 | in the event of any Underwritten Offering, a Block Trade, an Other Coordinated Offering or sale by a broker, placement agent or sales agent pursuant to a Registration Statement, enter into and perform its obligations under an underwriting agreement, purchase agreement, sales agreement or placement agreement in usual and customary form, with the managing Underwriter or broker, sales agent or placement agent of such offering or sale; |
| 3.1.14 | make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any successor rule promulgated thereafter by the Commission); |
| 3.1.15 | with respect to an Underwritten Offering pursuant to Section 2.1.4, use its commercially reasonable efforts to make available senior executives of the Company to participate in customary “road show” presentations that may be reasonably requested (in light of the circumstances of the Company at the time) by the Underwriter in such Underwritten Offering; and |
| 3.1.16 | otherwise, in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the Holders participating in such Registration, consistent with the terms of this Agreement, in connection with such Registration. |
Notwithstanding the foregoing, the Company shall not be required to provide any documents or information to an Underwriter or other sales agent or placement agent if such Underwriter or other sales agent or placement agent has not then been named with respect to the applicable Underwritten Offering or other offering involving a registration as an Underwriter or broker, sales agent or placement agent, as applicable.
| 3.2 | Registration Expenses. The Registration Expenses of all Registrations shall be borne by the Company. It is acknowledged by the Holders that the Holders shall bear all incremental selling expenses relating to the sale of Registrable Securities, such as Underwriters’ or agents’ commissions and discounts, brokerage fees, Underwriter marketing costs and, other than as set forth in the definition of “Registration Expenses,” all reasonable fees and expenses of any legal counsel representing the Holders. |
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| 3.3 | Requirements for Participation in Underwritten Offerings. The Holders of Registrable Securities shall provide such information as may reasonably be requested by the Company, or the managing Underwriter or placement agent or sales agent, if any, in connection with the preparation of any Registration Statement or Prospectus, including amendments and supplements thereto, in order to effect the registration of any Registrable Securities under the Securities Act pursuant to ARTICLE 2 and in connection with the Company’s obligation to comply with federal and applicable state securities Laws. Notwithstanding anything in this Agreement to the contrary, if any Holder does not timely provide the Company with its requested Holder Information, the Company may exclude such Holder’s Registrable Securities from the applicable Registration Statement or Prospectus if the Company determines, based on the advice of counsel, that such information is necessary to effect the registration and such Holder continues thereafter to withhold such information. No Person may participate in any Underwritten Offering or other coordinated offering for equity securities of the Company pursuant to a Registration initiated by the Company hereunder unless such Person (i) agrees to sell such Person’s securities on the basis provided in any arrangements approved by the Company and (ii) timely completes and executes all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting or other agreements and other customary documents as may be reasonably required under the terms of such arrangements. The exclusion of a Holder’s Registrable Securities as a result of this Section 3.3 shall not affect the registration of the other Registrable Securities to be included in such Registration. |
| 3.4 | Suspension of Sales; Adverse Disclosure; Restrictions on Registration Rights. |
| 3.4.1 | Upon receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement, each of the Holders shall forthwith discontinue disposition of Registrable Securities until he, she or it has received copies of a supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to prepare and file such supplement or amendment as soon as practicable after the time of such notice), or until he, she or it is advised in writing by the Company that the use of the Prospectus may be resumed. |
| 3.4.2 | If the filing, initial effectiveness or continued use of a Registration Statement in respect of any Registration at any time would (i) require the Company to make an Adverse Disclosure, (ii) require the inclusion in such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the Company’s control or (iii) in the good faith judgment of the majority of the Board, be seriously detrimental to the Company, and the majority of the Board concludes as a result that it is essential to defer such filing, initial effectiveness or continued use at such time, the Company may, upon giving prompt written notice of such action to the Holders (which notice shall not specify the nature of the event giving rise to such delay or suspension), delay the filing or initial effectiveness of, or suspend use of, such Registration Statement for the shortest period of time determined in good faith by the Company to be necessary for such purpose. In the event the Company exercises its rights under this Section 3.4.2, the Holders agree to suspend, immediately upon their receipt of the notice referred to above, their use of the Prospectus relating to any Registration in connection with any sale or offer to sell Registrable Securities until such Holder receives written notice from the Company that such sales or offers of Registrable Securities may be resumed, and in each case maintain the confidentiality of such notice and its contents. |
| 3.4.3 | Subject to Section 3.4.4, if (i) during the period starting with the date 60 days prior to the Company’s good faith estimate of the date of the filing of, and ending on a date 120 days after the effective date of, a Company-initiated Registration, and provided that the Company continues to actively employ, in good faith, all commercially reasonable efforts to maintain the effectiveness of the applicable Shelf Registration, or (ii) if, pursuant to Section 2.1.4, Holders have requested an Underwritten Shelf Takedown and the Company and such Holders are unable to obtain the commitment of underwriters to firmly underwrite such offering, then, in each case, the Company may, upon giving prompt written notice of such action to the Holders, delay any other registered offering pursuant to Section 2.1.4. |
| 3.4.4 | The right to delay or suspend any filing, initial effectiveness or continued use of a Registration Statement pursuant to Section 3.4.2 or a registered offering pursuant to Section 3.4.3 shall be exercised by the Company, in the aggregate, for not more than 90 consecutive calendar days or more 120 total calendar days in each case, during any 12-month period. |
| 3.5 | Reporting Obligations. As long as any Holder shall own Registrable Securities, the Company, at all times while it shall be a reporting company under the Exchange Act, covenants to use commercially reasonable efforts to file timely (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Sections 13(a) or 15(d) of the Exchange Act. Upon the request of any Holder, the Company shall deliver to such Holder a written certification of a duly authorized officer as to whether it has complied with such requirements. |
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ARTICLE 4
INDEMNIFICATION AND CONTRIBUTION
| 4.1 | Indemnification. |
| 4.1.1 | The Company agrees to indemnify, to the extent permitted by law, each Holder of Registrable Securities, its officers, directors and agents and each Person who controls such Holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and reasonable and documented out-of-pocket expenses (including, without limitation, reasonable outside attorneys’ fees) resulting from any untrue or alleged untrue statement of material fact contained in or incorporated by reference in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto filed pursuant to this Agreement or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information or affidavit so furnished in writing to the Company by such Holder expressly for use therein. The Company shall indemnify the Underwriters, their officers and directors and each Person who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to the indemnification of the Holder. |
| 4.1.2 | In connection with any Registration Statement filed pursuant to this Agreement in which a Holder of Registrable Securities is participating, such Holder shall furnish (or cause to be furnished) to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus (the “Holder Information”) and, to the extent permitted by law, shall indemnify the Company, its directors, officers and agents and each Person who controls the Company (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and reasonable and documented out-of-pocket expenses (including, without limitation, reasonable outside attorneys’ fees) resulting from any untrue or alleged untrue statement of material fact contained in or incorporated by reference in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement is contained in (or not contained in, in the case of an omission) any information or affidavit so furnished in writing by such Holder expressly for use therein; provided, however, that the obligation to indemnify shall be several, not joint and several, among such Holders of Registrable Securities, and the liability of each such Holder of Registrable Securities shall be in proportion to and limited to the net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. The Holders of Registrable Securities shall indemnify the Underwriters, their officers, directors and each person or entity who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to indemnification of the Company. |
| 4.1.3 | Any Person entitled to indemnification herein shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any Person’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement includes a statement or admission of fault and culpability on the part of such indemnified party or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. |
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| 4.1.4 | The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and shall survive the transfer of securities. The Company and each Holder of Registrable Securities participating in an offering also agrees to make such provisions as are reasonably requested by any indemnified party for contribution to such party in the event the Company’s or such Holder’s indemnification is unavailable for any reason. |
| 4.1.5 | If the indemnification provided under Section 4.1 hereof from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and out-of-pocket expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and out-of-pocket expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by (or not made by, in the case of an omission), or relates to information supplied by (or not supplied by, in the case of an omission), such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action; provided, however, that the liability of any Holder under this Section 4.1.5 shall be limited to the amount of the net proceeds received by such Holder in such offering giving rise to such liability. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in Sections 4.1.1, 4.1.2 and 4.1.3 above, any legal or other fees, charges or out-of-pocket expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4.1.5 were determined by pro rata allocation or by any other method of allocation, which does not take account of the equitable considerations referred to in this Section 4.1.5. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 4.1.5 from any Person who was not guilty of such fraudulent misrepresentation. |
| 4.2 | Waiver of Medallion Guaranty. The Company agrees to use commercially reasonable efforts to enter into that certain indemnification agreement, substantially in the form attached as Exhibit B to this Agreement, in favor of Continental Stock Transfer & Trust Company (or any successor transfer agent or warrant agent of the Company) in connection with the waiver of any requirement to provide a medallion guarantee in connection with any Transfer of any equity securities of the Company by any Sponsor Holder or Cantor or any of their respective Permitted Transferees; provided that, in each case, as a prerequisite to the Company’s entry into such indemnification agreement, such Sponsor Holder or Cantor or their respective Permitted Transferee enters into an indemnification agreement, substantially in the form attached as Exhibit C to this Agreement, in favor of the Company. |
ARTICLE 5
MISCELLANEOUS
| 5.1 | Notices. All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered (i) in person, (ii) by email or other electronic means (including email), (iii) one (1) Business Day after being sent, if sent by reputable, nationally recognized overnight courier service or (iv) three (3) Business Days after being mailed, if sent by registered or certified mail, pre-paid and return receipt requested, in each case to the applicable party at the following addresses (or at such other address for a party as shall be specified by like notice). Any notice or communication under this Agreement must be addressed, if to the Company, to: HCM II Acquisition Corp., Attention: [●], Email: [●], with a copy (which shall not constitute notice) to King & Spalding, 1185 Avenue of the Americas, 34th Floor, New York, New York 10046, Attention: Kevin E. Manz, Tim FitzSimons, Email: kmanz@kslaw.com, TFitzsimons@kslaw.com; and if to any Holder, at such Holder’s address or contact information as set forth in the Company’s books and records. Any party may change its address for notice at any time and from time to time by written notice to the other parties hereto, and such change of address shall become effective thirty (30) days after delivery of such notice as provided in this Section 5.1. |
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| 5.2 | Assignment; No Third Party Beneficiaries. |
| 5.2.1 | This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part. |
| 5.2.2 | This Agreement and the rights, duties and obligations of the Holders hereunder may not be assigned or delegated by the Holders in whole or in part; provided, however, that, subject to Section 5.2.5, a Holder may assign the rights and obligations of such Holder hereunder relating to particular Registrable Securities in connection with the transfer of such Registrable Securities to a Permitted Transferee of such Holder (it being understood that no such Transfer shall reduce any rights of the Holder with respect to Registrable Securities still held by such Holder). A Permitted Transferee receiving Registrable Securities from a Sponsor Holder shall become a Sponsor Holder, a Permitted Transferee receiving Registrable Securities from a Terrestrial Energy Holder shall become a Terrestrial Energy Holder and a Permitted Transferee receiving Registrable Securities from an other Holder shall become an other Holder. |
| 5.2.3 | This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and its successors and the permitted assigns of the Holders, which shall include Permitted Transferees. |
| 5.2.4 | This Agreement shall not confer any rights or benefits on any Persons that are not parties hereto, other than as expressly set forth in this Agreement and Section 5.2 hereof. |
| 5.2.5 | No assignment by any party hereto of such party’s rights, duties and obligations hereunder shall be binding upon or obligate the Company unless such assignment is permitted under Section 5.2.2 unless and until the Company shall have received (i) written notice of such assignment as provided in Section 5.1 hereof and (ii) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement). Any transfer or assignment made other than as provided in this Section 5.2 shall be null and void. |
| 5.3 | Counterparts. This Agreement may be executed and delivered (including by facsimile or other electronic transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. |
| 5.4 | Governing Law. This Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to principles or rules of conflict of Laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction. |
| 5.5 | Jurisdiction. Any Legal Proceeding based upon, arising out of or related to this Agreement or the transactions contemplated hereby must be brought in the Court of Chancery of the State of Delaware (or, to the extent such court does not have jurisdiction, in the United States District Court for the District of Delaware and to the extent such court does not have subject matter jurisdiction, the Superior Court of the State of Delaware), and each of the parties irrevocably (i) submits to the exclusive jurisdiction of each such court in any such Legal Proceeding, (ii) waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, (iii) agrees that all claims in respect of the Legal Proceeding shall be heard and determined only in any such court, and (iv) agrees not to bring any Legal Proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by Law or to commence Legal Proceedings or otherwise proceed against any other party in any other jurisdiction, in each case, to enforce judgments obtained in any Legal Proceeding, suit or proceeding brought pursuant to this Section 5.5. |
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| 5.6 | Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY, UNCONDITIONALLY AND VOLUNTARILY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY. |
| 5.7 | Amendments and Modifications. Upon the written consent of the Company and the Holders of at least a majority in interest of the Registrable Securities at the time in question, compliance with any of the provisions, covenants and conditions set forth in this Agreement may be waived, or any of such provisions, covenants or conditions may be amended or modified; provided, however, that notwithstanding the foregoing, any amendment hereto or waiver hereof that adversely affects the Sponsor Holders shall also require the written consent of the Sponsor Majority Holders so long as the Sponsor Holders hold, in the aggregate, at least two percent (2%) of the outstanding shares of Common Stock (on an as converted to Common Stock basis); and provided, further, that any amendment hereto or waiver hereof that adversely affects one Holder, solely in his, her or its capacity as a holder of the shares of capital stock of the Company, in a manner that is materially different from the other Holders (in such capacity) shall require the consent of the Holder so affected. No course of dealing between any Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party. |
| 5.8 | Other Registration Rights. Other than as provided in that certain Warrant Agreement, dated as of August 15, 2024, between the Company and Continental Stock Transfer & Trust Company, the Company represents and warrants that no Person, other than a Holder of Registrable Securities, has any right to require the Company to register any securities of the Company for sale or to include such securities of the Company in any Registration Statement filed by the Company for the sale of securities for its own account or for the account of any other Person. Further, the Company represents and warrants that this Agreement supersedes any other registration rights agreement or agreement with similar terms and conditions, and in the event of a conflict between any such agreement or agreements and this Agreement, the terms of this Agreement shall prevail. |
| 5.9 | Term. This Agreement shall terminate upon the earlier of (i) the fifth anniversary of the date of this Agreement and (ii) with respect to any Holder, the date that such Holder no longer holds any Registrable Securities. The provisions of ARTICLE 4 shall survive any termination. |
| 5.10 | Holder Information. Each Holder agrees, if requested in writing, to represent to the Company the total number of Registrable Securities held by such Holder in order for the Company to make determinations hereunder. |
| 5.11 | Additional Holders; Joinder. In addition to Persons who may become Holders pursuant to Section 5.2, subject to the prior written consent of at least a majority in interest of the aggregate Registrable Securities at the time in question, the Company may make any Person who acquires Common Stock or rights to acquire Common Stock after the date hereof a party to this Agreement (each such Person, an “Additional Holder”) by obtaining an executed joinder to this Agreement from such Additional Holder in the form of Exhibit A attached hereto (a “Joinder”). Such Joinder shall specify the rights and obligations of the applicable Additional Holder under this Agreement. Upon the execution and delivery and subject to the terms of a Joinder by such Additional Holder, the Common Stock of the Company then owned, or underlying any rights then owned, by such Additional Holder (the “Additional Holder Common Stock”) shall be Registrable Securities to the extent provided herein and therein, and such Additional Holder shall be a Holder under this Agreement with respect to such Additional Holder Common Stock. |
| 5.12 | Severability. In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a jurisdiction, such provision shall be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity, legality or enforceability of such provision be affected thereby in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties will substitute for any invalid, illegal or unenforceable provision a suitable and equitable provision that carries out, so far as may be valid, legal and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision. |
| 5.13 | Entire Agreement; Restatement. This Agreement and the documents or instruments referred to herein, including any exhibits and schedules attached hereto, which exhibits and schedules are incorporated herein by reference, embody the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or the documents or instruments referred to herein, which collectively supersede all prior agreements and the understandings among the parties with respect to the subject matter contained herein. Upon the Closing, the Original RRA shall no longer be of any force or effect. |
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above.
| COMPANY: | ||
| HCM II Acquisition Corp., a Delaware corporation | ||
| By: | ||
| Name: | ||
| Title: | ||
| Terrestrial Energy HOLDERS: | ||
| [●] | ||
| [●] | ||
| [●] | ||
| SPONSOR: | ||
| HCM INVESTOR HOLDINGS II, LLC, a Cayman Islands limited liability company | ||
| By: | ||
| Name: | ||
| Title: | ||
| OTHER SPONSOR HOLDERS: | ||
| [●] | ||
| By: | ||
| Name: | ||
| Title: | ||
| [●] | ||
| By: | ||
| Name: | ||
| Title: | ||
| CANTOR FITZGERALD & CO. | ||
| By: | ||
| Name: | ||
| Title: | ||
Exhibit A
REGISTRATION RIGHTS AGREEMENT
JOINDER
The undersigned is executing and delivering this joinder (this “Joinder”) pursuant to the Registration Rights Agreement, dated as of [____], 2025 (as the same may hereafter be amended, the “Registration Rights Agreement”), among HCM II Acquisition Corp., a Delaware corporation (the “Company”), and the other Persons named as parties therein. Capitalized terms used but not otherwise defined herein shall have the meanings provided in the Registration Rights Agreement.
By executing and delivering this Joinder to the Company, and upon acceptance hereof by the Company upon the execution of a counterpart hereof, the undersigned hereby agrees to become a party to, to be bound by and to comply with the Registration Rights Agreement as a Holder of Registrable Securities in the same manner as if the undersigned were an original signatory to the Registration Rights Agreement as [a Sponsor Holder / a Terrestrial Energy Holder / an other Holder], and the undersigned’s [shares of Common Stock] shall be included as Registrable Securities under the Registration Rights Agreement to the extent provided therein; provided, however, that the undersigned and its permitted assigns (if any) shall not have any rights as Holders, and the undersigned’s (and its transferees’) [shares of Common Stock] shall not be included as Registrable Securities, for purposes of the Excluded Sections.
For purposes of this Joinder, “Excluded Sections” shall mean [________________].
Accordingly, the undersigned has executed and delivered this Joinder as of the __________ day of __________, 20__.
| Signature of Stockholder | ||
| Print Name of Stockholder | ||
| Its: | ||
| Address: | ||
Agreed and Accepted as of ____________, 20__
| [●] | ||
| By: | ||
| Name: | ||
| Its: |
Exhibit B
HCM II Acquisition Corp.
[●]
[●]
[●], 2025
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, NY 10004
Re: Indemnification in-lieu-of Medallion Signature Guarantee
To whom it may concern:
This letter is in regards to the transfer by [HCM Investor Holdings II, LLC / Name of Sponsor Holder] to [●], of [●] [shares of Common Stock / warrants] of HCM II Acquisition Corp. (the “Company”). Please be advised that the Company authorizes Continental Stock Transfer & Trust Company to process the subject transfer, which includes securities that have been duly endorsed by the registered holder but do not bear a customary medallion signature guarantee. The Company agrees to indemnify Continental Stock Transfer & Trust Company against all losses, liability or costs that may ensue as a result of its processing the above referenced transaction.
I, [●], a duly authorized officer of the Company, have the authority to execute this indemnification on behalf of the Company.
| Very truly yours, | ||
| HCM II Acquisition Corp. | ||
| By: | ||
| Name: | ||
| Title: | ||
Exhibit C
[HCM Investor Holdings II, LLC]
[●]
[●]
[●], 2025
Terrestrial Energy Inc.
[●]
[●]
Re: Indemnification in-lieu-of Medallion Signature Guarantee
To whom it may concern:
This letter is in regards to the transfer by [HCM Investor Holdings II, LLC] (the “Transferor”) to [●], of [●] [shares of Common Stock / warrants] of HCM II Acquisition Corp. (the “Company”). Please be advised that the Transferor authorizes the Company and Continental Stock Transfer & Trust Company to process the subject transfer, which includes securities that have been duly endorsed by the Transferor but do not bear a customary medallion signature guarantee. The Transferor agrees to indemnify the Company against all losses, liability or costs that may ensue as a result of its processing the above referenced transaction.
I, [●], a duly authorized officer of the Company, have the authority to execute this indemnification on behalf of the Company.
| Very truly yours, | ||
| [HCM Investor Holdings II, LLC] | ||
| By: | ||
| Name: | ||
| Title: | ||
Exhibit D
Form of Sponsor Lock-Up Agreement
FINAL FORM
FORM OF LOCK-UP AGREEMENT
THIS LOCK-UP AGREEMENT (this “Agreement”), dated as of [●], is made and entered into by and among HCM II Acquisition Corp., a Delaware corporation (“SPAC”) (formerly a Cayman Islands exempted company limited by shares, prior to its domestication as a Delaware corporation), and HCM Investor Holdings II LLC, a Cayman Islands limited liability company (the “Sponsor” and, together with any Person who hereafter becomes a party to this Agreement pursuant to Section 2 or Section 7 of this Agreement, the “Securityholders” and each, a “Securityholder”). Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Business Combination Agreement (as defined herein).
WHEREAS, simultaneously with the execution and delivery of this Agreement, SPAC and Terrestrial Energy Inc., a Delaware corporation (“TEI”) are consummating a business combination (the “Business Combination”) pursuant to that certain Business Combination Agreement, dated as of March 25, 2025 (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Business Combination Agreement”), by and among SPAC, TEI, and HCM II Merger Sub Inc., a Delaware corporation and direct wholly owned subsidiary of SPAC;
WHEREAS, immediately prior to the Business Combination, SPAC transferred by way of continuation to and domesticated as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law, as amended, and the Companies Act (As Revised) of the Cayman Islands (the “Domestication”);
WHEREAS, prior to the Domestication, the Sponsor owned (i) 5,750,000 Purchaser Class B Ordinary Shares and (ii) 4,275,000 Purchaser Private Placement Warrants;
WHEREAS, (i) immediately prior to the Domestication, each then issued and outstanding Purchaser Class B Ordinary Share converted automatically, on a one-for-one basis, into one (1) Purchaser Class A Ordinary Share and (ii) immediately following such conversion, in connection with the Domestication, (a) each then issued and outstanding Purchaser Class A Ordinary Share converted automatically, on a one-for-one basis, into one (1) share of Domesticated Purchaser Common Stock and (b) each then issued and outstanding Cayman Purchaser Warrant converted automatically into a Domesticated Purchaser Warrant, following which the Sponsor will own (i) 5,750,000 shares of Domesticated Purchaser Common Stock (the “Lock-Up Shares”) and (ii) 4,275,000 Domesticated Purchaser Warrants (the “Lock-Up Warrants”); and
WHEREAS, in connection with the Business Combination, the parties hereto wish to set forth herein certain understandings between such parties with respect to restrictions on transfer of equity interests in SPAC.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be legally bound hereby, hereby agree as follows:
1. Transfer Restrictions.
| (i) | Subject to the exceptions set forth herein, each Securityholder agrees not to, without the prior written consent of the board of directors of SPAC, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, any Lock-Up Shares, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Lock-Up Shares or (iii) take any action in furtherance of any of the matters described in the foregoing clauses (i) or (ii) (the actions specified in clauses (i)-(iii), collectively, “Transfer”) prior to the date that is the earliest of (a) the twelve (12) month anniversary of the date hereof, and (b) following the 180th day following the date hereof, (i) with respect to 50% of the Lock-Up Shares, the date on which the VWAP equals or exceeds $15.00 per share (subject to equitable adjustment), and (ii) with respect to 100% of the Lock-Up Shares, the date on which the VWAP equals or exceeds $20.00 per share (subject to equitable adjustment) (the “Common Stock Lock-Up Period”).” |
| (ii) | Each Securityholder further agrees not to Transfer any Lock-Up Warrants (or any shares of Domesticated Purchaser Common Stock issued or issuable upon the exercise of such Lock-Up Warrants), prior to the date that is the earliest of (a) the twelve (12) month anniversary of the date hereof, and (b) following the 180th day following the date hereof, (i) with respect to 50% of the Lock-Up Warrants, the date on which the VWAP equals or exceeds $15.00 per share (subject to equitable adjustment), and (ii) with respect to 100% of the Lock-Up Warrants, the date on which the VWAP equals or exceeds $20.00 per share (subject to equitable adjustment) (the “Warrant Lock-Up Period” and, each of the Common Stock Lock-Up Period and the Warrant Lock-Up Period, a “Lock-Up Period”). |
| (iii) | For the purposes of this Agreement, “Principal Market” means the Nasdaq Capital Market; provided, however, that in the event Domesticated Purchaser’s Common Stock is ever listed or traded on an alternative market, then the “Principal Market” shall mean such alternative market on which Domesticated Purchaser’s Common Stock is then listed or traded. |
| (iv) | For the purposes of this Agreement, “VWAP” means, for the Domesticated Purchaser Common Stock for a period of 20 Business Days ending on any given determination date, the dollar volume-weighted average price for the Domesticated Purchaser Common Stock on the Principal Market, for such period, as reported by Bloomberg through its “AQR” function (excluding, for the avoidance of doubt, the opening and closing print of each VWAP purchase date), or any successor thereto. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction during such period. |
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2. Permitted Transfers. The restrictions set forth in Section 1 shall not apply to:
| (i) | Transfers of any securities other than (a) the Lock-Up Shares, (b) the Lock-Up Warrants, (c) any shares of Domesticated Purchaser Common Stock issued or issuable upon the exercise of such Lock-Up Warrants, (d) any securities that may be acquired by Securityholders upon the exercise, conversion or redemption of any of the securities described in clauses (a), (b) or (c), and (e) any other equity security of SPAC issued or issuable with respect to any securities referenced in clauses (a), (b), (c) or (d) above by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation, spin-off, reorganization or similar transaction; |
| (ii) | Transfers to SPAC’s officers or directors, any Affiliate or family member of any of SPAC’s officers or directors, any members or partners of the Sponsor or their Affiliates, any Affiliates of the Sponsor, or any employees of such Affiliates; |
| (iii) | In the case of an individual, Transfers to any Affiliates or family members of the Securityholder; |
| (iv) | Transfers to any investment funds or vehicles controlled or managed by the Securityholder or any of its Affiliates; |
| (v) | Transfers by gift to a trust, the beneficiary of which is a Person to whom a Transfer would be permitted under Section 2(iii), or to a charitable organization; |
| (vi) | in the case of an individual, Transfers by virtue of laws of descent and distribution upon death of such individual; |
| (vii) | in the case of an individual, Transfers pursuant to a qualified domestic relations order; |
| (viii) | Transfers to a nominee or custodian of a Person to whom a Transfer would be permitted under Section 2(iii); |
| (ix) | by private sales or transfers made in connection with any forward purchase agreement or similar arrangement at prices no greater than the price at which the Lock-Up Shares or Lock-Up Warrants (as applicable) were originally purchased; |
| (x) | Transfers in connection with any legal, regulatory or other order; |
| (xi) | in the case of an entity that is a trust, Transfers to a trustor or beneficiary of the trust or to the estate of a beneficiary of such trust; |
| (xii) | in the case of an entity, Transfers as part of a distribution to members, partners, shareholders or equityholders of the Securityholder; |
| (xiii) | in the case of an entity, Transfers by virtue of the laws of the state of the entity’s organization and the entity’s organizational documents upon dissolution of the entity; |
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| (xiv) | the exercise of stock options or warrants to purchase shares of Domesticated Purchaser Common Stock or the vesting of stock awards relating to shares of Domesticated Purchaser Common Stock and any related Transfer of shares of Domesticated Purchaser Common Stock in connection therewith (x) deemed to occur upon the “cashless” or “net” exercise of such options or warrants or (y) for the purpose of paying the exercise price of such options or warrants, it being understood that all shares of Domesticated Purchaser Common Stock received upon such exercise, vesting or transfer will remain subject to the restrictions of this Agreement during the Lock-Up Period; |
| (xv) | Transfers to SPAC pursuant to any contractual arrangement in effect as of the date hereof that provides for the repurchase by SPAC or forfeiture of shares of Domesticated Purchaser Common Stock or other securities convertible into, or exercisable, redeemable or exchangeable for, Domesticated Purchaser Common Stock in connection with the termination of the Securityholder’s service to SPAC or its Subsidiaries (including, for the avoidance of doubt, TEI); |
| (xvi) | the entry, by the Securityholder, at any time after the closing of the Business Combination, of any trading plan providing for the sale of shares of Domesticated Purchaser Common Stock by the Securityholder, which trading plan meets the requirements of Rule 10b5-1(c) under the Exchange Act; provided, however, that such plan does not provide for, or permit, the sale of any shares of Domesticated Purchaser Common Stock during any applicable Lock-Up Period and no public announcement or filing is voluntarily made or required regarding such plan during any applicable Lock-Up Period; |
| (xvii) | Transfers in the event of the completion of a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of SPAC’s securityholders having the right to exchange their shares of Domesticated Purchaser Common Stock for cash, securities or other property; and |
| (xviii) | Transfers to satisfy any U.S. federal, state, or local income tax obligations of a Securityholder (or its direct or indirect owners) arising from a change in the U.S. Internal Revenue Code of 1986, as amended (the “Code”), or the U.S. Treasury Regulations promulgated thereunder (the “Regulations”) after the date on which the Business Combination Agreement was executed by the parties, and such change prevents the Domestication or the Merger from qualifying as a “reorganization” pursuant to Section 368 of the Code (and the Domestication and the Merger do not qualify for similar tax-free treatment pursuant to any successor or other provision of the Code or Regulations taking into account such changes), in each case solely and to the extent necessary to cover any tax liability as a direct result of the transaction. |
provided, however, that (A) in the case of clauses (ii) through (xii), as a prerequisite to such Transfer, such permitted transferee(s) must enter into joinder to this Agreement, substantially in the form of Exhibit A hereto, in order to become a “Securityholder” for purposes of this Agreement. For purposes of this Section 2, “family member” shall mean a spouse, domestic partner, child (including by adoption), father, mother, brother or sister of the Securityholder, and lineal descendant (including by adoption) of the Securityholder or of any of the foregoing persons.
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3. Termination. This Agreement shall terminate upon the earlier of (i) the expiration of the Common Stock Lock-Up Period, (ii) the closing of a merger, liquidation, stock exchange, reorganization or other similar transaction after the date hereof that results in all of the public stockholders of SPAC having the right to exchange their shares of Domesticated Purchaser Common Stock for cash securities or other property and (iii) the liquidation of SPAC.
4. Prohibited Transfers. In furtherance of the foregoing, SPAC, and any duly appointed transfer agent for the registration or transfer of the securities described therein, are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or breach of this Agreement.
5. Amendment. This Agreement may be amended, supplemented or modified only by execution of a written instrument signed by SPAC and the Securityholders holding a majority of the aggregate number of shares of Domesticated Purchaser Common Stock then held by all Securityholders as to which this Agreement has not been terminated, executed in the same manner as this Agreement and which makes reference to this Agreement.
6. Entire Agreement. This Agreement and the documents or instruments referred to herein embody the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or the documents or instruments referred to herein, which collectively supersede all prior agreements and the understandings among the parties hereto with respect to the subject matter contained herein.
7. 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 successors and permitted assigns. This Agreement shall not be assigned by operation of Law or otherwise without the prior written consent of the parties hereto, and any assignment without such consent shall be null and void; provided that no such assignment shall relieve the assigning party of its obligations hereunder.
8. Governing Law. This Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to principles or rules of conflict of Laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction.
9. Jurisdiction. Any Legal Proceeding based upon, arising out of or related to this Agreement or the transactions contemplated hereby must be brought in the Court of Chancery of the State of Delaware (or, to the extent such court does not have jurisdiction, in the United States District Court for the District of Delaware and to the extent such court does not have subject matter jurisdiction, the Superior Court of the State of Delaware), and each of the parties irrevocably (i) submits to the exclusive jurisdiction of each such court in any such Legal Proceeding, (ii) waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, (iii) agrees that all claims in respect of the Legal Proceeding shall be heard and determined only in any such court, and (iv) agrees not to bring any Legal Proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by Law or to commence Legal Proceedings or otherwise proceed against any other party in any other jurisdiction, in each case, to enforce judgments obtained in any Legal Proceeding, suit or proceeding brought pursuant to this Section 9.
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10. WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY, UNCONDITIONALLY AND VOLUNTARILY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
11. Counterparts. This Agreement (and any joinder to this Agreement) may be executed and delivered (including by facsimile or other electronic transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
12. Severability. In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a jurisdiction, such provision shall be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity, legality or enforceability of such provision be affected thereby in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties will substitute for any invalid, illegal or unenforceable provision a suitable and equitable provision that carries out, so far as may be valid, legal and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.
13. Liability. The liability of any Securityholder hereunder is several (and not joint). Notwithstanding any other provision of this Agreement, in no event will any Securityholder be liable for any other Securityholder’s breach of such other Securityholder’s obligations under this Agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
| SPAC: | ||
| HCM II ACQUISITION CORP. | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Sponsor Lock-Up Agreement]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.
| SPONSOR: | ||
| HCM Investor Holdings II LLC | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Sponsor Lock-Up Agreement]
EXHIBIT A
JOINDER TO LOCKUP AGREEMENT
[●], 20__
Reference is made to the Lockup Agreement, dated as of [●], by and among [Entity Name] (the “Company”) and the Securityholders (as defined therein) from time to time party thereto (as amended, supplemented or otherwise modified from time to time, the “Lockup Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Lockup Agreement.
Each of the Company and the undersigned holder of equity interests in the Company (the “New Securityholder”) agrees that this Joinder to the Lockup Agreement (this “Joinder”) is being executed and delivered for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.
The New Securityholder hereby agrees to and does become party to the Lockup Agreement as a Securityholder. This Joinder shall serve as a counterpart signature page to the Lockup Agreement and by executing below, the New Securityholder is deemed to have executed the Lockup Agreement with the same force and effect as if originally named a party thereto.
This Joinder may be executed and delivered (including by facsimile or other electronic transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
[Remainder of Page Intentionally Left Blank.]
IN WITNESS WHEREOF, the undersigned have duly executed this Joinder as of the date first set forth above.
| [ENTITY NAME] | ||
| By: | ||
| Name: | ||
| Title: | ||
| new securityholder: | ||
| [●] | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Joinder to Sponsor Lock-Up Agreement]
Exhibit E
Form of Key Holders Lock-Up Agreement
FINAL FORM
FORM OF LOCK-UP AGREEMENT
THIS LOCK-UP AGREEMENT (this “Agreement”), dated as of [●], is made and entered into by and among HCM II Acquisition Corp., a Delaware corporation (“SPAC”) (formerly a Cayman Islands exempted company limited by shares, prior to its domestication as a Delaware corporation), and the undersigned securityholder of Terrestrial Energy Inc., a Delaware corporation (“TEI”) listed on the signature page hereto under “Holder” (“Holder” and, together with any Person who hereafter becomes a party to this Agreement pursuant to Section 2 or Section 7 of this Agreement, the “Securityholders” and each, a “Securityholder”). Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Business Combination Agreement (as defined herein).
WHEREAS, simultaneously with the execution and delivery of this Agreement, SPAC and TEI are consummating a business combination (the “Business Combination”) pursuant to that certain Business Combination Agreement, dated as of March 26, 2025 (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Business Combination Agreement”), by and among SPAC, TEI, and HCM II Merger Sub Inc., a Delaware corporation and direct wholly owned subsidiary of SPAC;
WHEREAS, as of the closing of the Business Combination, Holder will be, the owner of record, or beneficially of, the number of Lock-Up Shares (as defined herein) as set forth underneath Holder’s name on the signature page hereto; and
WHEREAS, in connection with the Business Combination, the parties hereto wish to set forth herein certain understandings between such parties with respect to restrictions on transfer of the Lock-Up Shares.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be legally bound hereby, hereby agree as follows:
1. Transfer Restrictions.
| (i) | Subject to the exceptions set forth herein, each Securityholder agrees not to, without the prior written consent of the board of directors of SPAC, (a) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, any Lock-Up Shares, (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Lock-Up Shares or (c) take any action in furtherance of any of the matters described in the foregoing clauses (a) or (b) (the actions specified in clauses (a)-(c), collectively, “Transfer”), prior to the date that is the earliest of (1) the twelve (12) month anniversary of the date hereof, and (2) following the 180th day following the date hereof, (A) with respect to 50% of the Lock-Up Shares, the date on which the VWAP equals or exceeds $15.00 per share (subject to equitable adjustment), and (B) with respect to 100% of the Lock-Up Shares, the date on which the VWAP equals or exceeds $20.00 per share (subject to equitable adjustment) (the period of time between the date of this Agreement and the earliest to occur of clauses (A) and (B), the “Lock-Up Period”). |
| (ii) | For purposes of this Agreement, “Lock-Up Shares” means (a) the shares of common stock, par value $0.0001 per share, of SPAC (the “SPAC Common Stock”) received by Holder as Per Share Base Consideration in connection with the Business Combination, and (b) the shares of SPAC Common Stock underlying all other securities of the SPAC held by the Holder immediately following the closing of the Business Combination which are convertible into, or exercisable, or exchangeable for, SPAC Common Stock. |
| (iii) | For the purposes of this Agreement, “Principal Market” means the Nasdaq Capital Market; provided, however, that in the event SPAC’s Common Stock is ever listed or traded on an alternative market, then the “Principal Market” shall mean such alternative market on which SPAC’s Common Stock is then listed or traded. |
| (iv) | For the purposes of this Agreement, “VWAP” means, for SPAC Common Stock for a period of 20 Business Days ending on any given determination date, the dollar volume-weighted average price for SPAC Common Stock on the Principal Market, for such period, as reported by Bloomberg through its “AQR” function (excluding, for the avoidance of doubt, the opening and closing print of each VWAP purchase date) or any successor thereto. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction during such period. |
2. Permitted Transfers. The restrictions set forth in Section 1(i) shall not apply to:
| (i) | Transfers of any securities other than the Lock-Up Shares, including any securities that may be acquired by Securityholders upon the exercise, conversion or redemption of any of the securities other than the Lock-Up Shares, and any other equity security of SPAC issued or issuable with respect to any securities other than the Lock-Up Shares by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation, spin-off, reorganization or similar transaction; |
| (ii) | Transfers to SPAC’s officers or directors, any Affiliate or family member of any of SPAC’s officers or directors, any members or partners of the Securityholder or their Affiliates, any Affiliates of the Securityholder, or any employees of such Affiliates; |
| (iii) | in the case of an individual, Transfers to any Affiliates or family members of the Securityholder; |
| (iv) | Transfers to any investment funds or vehicles controlled or managed by the Securityholder or any of its Affiliates; |
| (v) | Transfers by gift to a trust, the beneficiary of which is a Person to whom a Transfer would be permitted under Section 2(iii), or to a charitable organization; |
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| (vi) | in the case of an individual, Transfers by virtue of laws of descent and distribution upon death of such individual; |
| (vii) | in the case of an individual, Transfers pursuant to a qualified domestic relations order; |
| (viii) | Transfers to a nominee or custodian of a Person to whom a Transfer would be permitted under Section 2(iii); |
| (ix) | by private sales or transfers made in connection with any forward purchase agreement or similar arrangement at prices no greater than the price at which the Lock-Up Shares were originally purchased; |
| (x) | Transfers in connection with any legal, regulatory or other order; |
| (xi) | in the case of an entity that is a trust, Transfers to a trustor or beneficiary of the trust or to the estate of a beneficiary of such trust; |
| (xii) | in the case of an entity, Transfers as part of a distribution to members, partners, shareholders or equityholders of the Securityholder; |
| (xiii) | in the case of an entity, Transfers by virtue of the laws of the state of the entity’s organization and the entity’s organizational documents upon dissolution of the entity; |
| (xiv) | the exercise of stock options or warrants to purchase shares of SPAC Common Stock or the vesting of stock awards relating to shares of SPAC Common Stock and any related Transfer of shares of SPAC Common Stock in connection therewith (x) deemed to occur upon the “cashless” or “net” exercise of such options or warrants or (y) for the purpose of paying the exercise price of such options or warrants, it being understood that all shares of SPAC Common Stock received upon such exercise, vesting or transfer will remain subject to the restriction of this Agreement during the Lock-Up Period; |
| (xv) | Transfers to SPAC pursuant to any contractual arrangement in effect as of the date hereof that provides for the repurchase by SPAC or forfeiture of Lock-Up Shares in connection with the termination of the Securityholder’s service to SPAC or its Subsidiaries (including, for the avoidance of doubt, TEI); |
| (xvi) | the entry, by the Securityholder, at any time after the closing of the Business Combination, of any trading plan providing for the sale of shares of the SPAC Common Stock by the Securityholder, which trading plan meets the requirements of Rule 10b5-1(c) under the Exchange Act; provided, however, that such plan does not provide for, or permit, the sale of any shares of the SPAC Common Stock during the Lock-Up Period; |
| (xvii) | Transfers in the event of the completion of a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of the holders of SPAC Common Stock having the right to exchange their shares of the SPAC Common Stock for cash, securities or other property; and |
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| (xviii) | Transfers to satisfy any U.S. federal, state, or local income tax obligations of a Securityholder (or its direct or indirect owners) arising from a change in the U.S. Internal Revenue Code of 1986, as amended (the “Code”), or the U.S. Treasury Regulations promulgated thereunder (the “Regulations”) after the date on which the Business Combination Agreement was executed by the parties, and such change prevents the Domestication or the Merger from qualifying as a “reorganization” pursuant to Section 368 of the Code (and the Domestication and the Merger do not qualify for similar tax-free treatment pursuant to any successor or other provision of the Code or Regulations taking into account such changes), in each case solely and to the extent necessary to cover any tax liability as a direct result of the transaction. |
provided, however, that in the case of clauses (ii) through (xiii), as a prerequisite to such Transfer, such permitted transferee(s) must enter into joinder to this Agreement, substantially in the form of Exhibit A hereto, in order to become a “Securityholder” for purposes of this Agreement. For purposes of this Agreement, “family member” shall mean a spouse, domestic partner, child (including by adoption), father, mother, brother or sister of the Securityholder, and lineal descendant (including by adoption) of the Securityholder or of any of the foregoing persons.
3. Termination. This Agreement shall terminate upon the earlier of (i) the expiration of the Lock-Up Period, (ii) the closing of a merger, liquidation, stock exchange, reorganization or other similar transaction after the date hereof that results in all of the public stockholders of SPAC having the right to exchange their shares of the SPAC Common Stock for cash, securities or other property and (iii) the liquidation of SPAC.
4. Prohibited Transfers. In furtherance of the foregoing, SPAC, and any duly appointed transfer agent for the registration or transfer of the securities described therein, are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or breach of this Agreement.
5. Amendment. This Agreement may be amended, supplemented or modified only by execution of a written instrument signed by SPAC and the Securityholders holding a majority of the aggregate number of Lock-Up Shares then held by all Securityholders as to which this Agreement has not been terminated, executed in the same manner as this Agreement and which makes reference to this Agreement.
6. Entire Agreement. This Agreement and the documents or instruments referred to herein embody the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or the documents or instruments referred to herein, which collectively supersede all prior agreements and the understandings among the parties hereto with respect to the subject matter contained herein.
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7. 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 successors and permitted assigns. This Agreement shall not be assigned by operation of Law or otherwise without the prior written consent of the parties hereto, and any assignment without such consent shall be null and void; provided that no such assignment shall relieve the assigning party of its obligations hereunder.
8. Governing Law. This Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without giving effect to principles or rules of conflict of Laws to the extent such principles or rules would require or permit the application of Laws of another jurisdiction.
9. Jurisdiction. Any Legal Proceeding based upon, arising out of or related to this Agreement or the transactions contemplated hereby must be brought in the Court of Chancery of the State of Delaware (or, to the extent such court does not have jurisdiction, in the United States District Court for the District of Delaware and to the extent such court does not have subject matter jurisdiction, the Superior Court of the State of Delaware), and each of the parties irrevocably (i) submits to the exclusive jurisdiction of each such court in any such Legal Proceeding, (ii) waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, (iii) agrees that all claims in respect of the Legal Proceeding shall be heard and determined only in any such court, and (iv) agrees not to bring any Legal Proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in any other court. Nothing herein contained shall be deemed to affect the right of any party to serve process in any manner permitted by Law or to commence Legal Proceedings or otherwise proceed against any other party in any other jurisdiction, in each case, to enforce judgments obtained in any Legal Proceeding, suit or proceeding brought pursuant to this Section 9.
10. WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY, UNCONDITIONALLY AND VOLUNTARILY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
11. Counterparts. This Agreement (and any joinder to this Agreement) may be executed and delivered (including by facsimile or other electronic transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
12. Severability. In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a jurisdiction, such provision shall be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity, legality or enforceability of such provision be affected thereby in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties will substitute for any invalid, illegal or unenforceable provision a suitable and equitable provision that carries out, so far as may be valid, legal and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.
13. Liability. The liability of any Securityholder hereunder is several (and not joint). Notwithstanding any other provision of this Agreement, in no event will any Securityholder be liable for any other Securityholder’s breach of such other Securityholder’s obligations under this Agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
| SPAC: | ||
| HCM II ACQUISITION CORP. | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Key Holder Lock-Up Agreement]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.
| HOLDER: | ||
| [_] | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Key Holder Lock-Up Agreement]
EXHIBIT A
JOINDER
TO LOCKUP AGREEMENT
[●], 20_______
Reference is made to the Lockup Agreement, dated as of [●], by and among [Entity Name] (the “Company”) and the Securityholders (as defined therein) from time to time party thereto (as amended, supplemented or otherwise modified from time to time, the “Lockup Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Lockup Agreement.
Each of the Company and the undersigned holder of equity interests in the Company (the “New Securityholder”) agrees that this Joinder to the Lockup Agreement (this “Joinder”) is being executed and delivered for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.
The New Securityholder hereby agrees to and does become party to the Lockup Agreement as a Securityholder. This Joinder shall serve as a counterpart signature page to the Lockup Agreement and by executing below, the New Securityholder is deemed to have executed the Lockup Agreement with the same force and effect as if originally named a party thereto.
This Joinder may be executed and delivered (including by facsimile or other electronic transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
[Remainder of Page Intentionally Left Blank.]
IN WITNESS WHEREOF, the undersigned have duly executed this Joinder as of the date first set forth above.
| [Entity Name] | ||
| By: | ||
| Name: | ||
| Title: | ||
| New Securityholder: | ||
| [●] | ||
| By: | ||
| Name: | ||
| Title: | ||
[Signature Page to Joinder to Key Holder Lock-Up Agreement]
Exhibit 10.1
SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT (this “Subscription Agreement”) is entered into on [●], 2025, by and between HCM II Acquisition Corp., a Cayman Islands exempted company (the “Issuer”; for the avoidance of doubt, references to the “Issuer” will include the “Post-Domestication Corporation” as defined below, except as the context may otherwise require), and the undersigned subscriber (“Subscriber”).
RECITALS
WHEREAS, concurrently with the execution of this Subscription Agreement, the Issuer is entering into a business combination agreement, by and among the Issuer, Terrestrial Energy Inc., a Delaware corporation (“TEI”), and HCM II Merger Sub Inc., a Delaware corporation and a direct wholly owned subsidiary of the Issuer (“Merger Sub”), pursuant to which (a) the Issuer will transfer by way of continuation to and domesticate as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law and Section 206 of the Companies Act (As Revised) of the Cayman Islands (the “Domestication” and the Issuer after the Domestication is sometimes referred to herein as the “Post-Domestication Corporation”) and (b) following the Domestication, Merger Sub will merge with and into TEI (the “Merger”), following which the separate corporate existence of Merger Sub will cease and TEI will continue as the surviving company of the Merger and as a direct wholly owned subsidiary of the Issuer (such agreement as amended, supplemented, restated or otherwise modified from time to time, the “Transaction Agreement” and, the transactions contemplated by the Transaction Agreement, the “Transaction”);
WHEREAS, in connection with the Transaction, Subscriber desires to subscribe for and purchase from the Issuer, on the terms and subject to the conditions contained in this Subscription Agreement, following the Domestication and immediately prior to or substantially concurrently with the consummation of the Transaction, that number of the Issuer’s newly issued shares of common stock, par value $0.0001 per share, as such shares will exist as common stock following the Domestication (the “Common Shares”), set forth on the signature page hereto (the “Committed Shares”, as may be decreased by any Non-Redeemed Shares (as defined below) pursuant to Section 1(b), after giving effect to such decrease, the “Subscribed Shares”) for a purchase price of $10.00 per share (the “Per Share Price” and, the aggregate of such Per Share Price for all Subscribed Shares, the “Purchase Price”), and the Issuer desires to issue and sell to Subscriber the Subscribed Shares in consideration of the payment of the Purchase Price by or on behalf of Subscriber to the Issuer; and
WHEREAS, concurrently with the execution of this Subscription Agreement, the Issuer is entering into subscription agreements substantially similar to this Subscription Agreement (the “Other Subscription Agreements” and, together with the Subscription Agreement, the “Subscription Agreements”) with certain other investors (the “Other Subscribers” and, together with Subscriber, the “Subscribers”), pursuant to which such Other Subscribers, severally and not jointly, have agreed to purchase on the Closing Date (as defined below), inclusive of the Subscribed Shares, an aggregate amount of up to [10,000,000] Common Shares at the Per Share Price (the “Other Subscribed Shares” and, together with the Subscribed Shares, the “Collective Subscribed Shares”).
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants, and subject to the conditions, herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
| 1. | Subscription. |
(a) Subject to the terms and conditions hereof, at the Closing, Subscriber hereby agrees to subscribe for and purchase, and the Issuer hereby agrees to issue and sell to Subscriber, upon the payment of the Purchase Price, the Committed Shares as set forth on the signature page of this Subscription Agreement. Subscriber acknowledges and agrees that, as a result of the Domestication, the Subscribed Shares that will be issued pursuant hereto shall be shares of common stock in a Delaware corporation (and not shares in a Cayman Islands exempted company).
(b) Notwithstanding anything to the contrary contained in this Subscription Agreement, if (i) Subscriber holds any of the Issuer’s Class A ordinary shares, par value $0.0001 per share, together with any related Redemption Rights (as defined below) (before giving effect to the Domestication, the “Class A Ordinary Shares”) as of the fifth calendar day after the effectiveness of the Issuer’s Registration Statement on Form S-4 with respect to the Transaction, (such shares held as of such date, the “Eligible Shares”); and (ii) Subscriber (1) does not exercise any right to redeem or convert Class A Ordinary Shares in connection with the redemption conducted by the Issuer in accordance with the Issuer’s organizational documents and final IPO prospectus in conjunction with the Closing (“Redemption Rights”) with respect to such Eligible Shares (including revoking any prior redemption or conversion elections made with respect to such Eligible Shares), (2) does not Transfer such Eligible Shares prior to the Closing Date, (3) does not vote such Eligible Shares with respect to any proposal contained in the Issuer’s proxy statement seeking shareholder approval of the Transactions (the “Proxy Statement”), and (4) notifies the Issuer of the purchase price paid for each Eligible Share, then such Eligible Shares shall be “Non-Redeemed Shares”, and the number of Committed Shares Subscriber is obligated to purchase under this Subscription Agreement may be reduced by the number of Non-Redeemed Shares. Subscriber shall not purchase any Eligible Shares at a price per share that exceeds the Redemption Price (as defined in the Transaction Agreement). In order to decrease the Committed Shares, Subscriber must, at least five Business Days prior to the date of the Issuer’s extraordinary general meeting of shareholders to be held pursuant to the Proxy Statement, deliver to the Issuer a certificate in the form attached hereto as Annex A, and shall further, upon the Issuer’s request, promptly provide such additional documents reasonably requested by the Issuer relating to the Eligible Shares. For purposes of this Section 1(b), “Transfer” means any (x) sale, offer to sell, contract or agreement to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) with respect to any relevant securities, (y) 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 relevant securities, or (z) public announcement of any intention to effect any transaction specified in clause (x) or (y).
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| 2. | Closing. |
(a) The consummation of the Subscription contemplated hereby (the “Closing”) is contingent upon the substantially concurrent consummation of the Transaction (the “Transaction Closing”). The Closing shall occur on the date of, and immediately prior to or substantially concurrently with, the consummation of the Transaction (the “Closing Date”) and it is conditioned upon the satisfaction or waiver of the conditions set forth in this Section 2.
(b) At least seven Business Days before the anticipated Closing Date, the Issuer shall deliver written notice to Subscriber (the “Closing Notice”) specifying (i) the anticipated Closing Date, (ii) that the Issuer reasonably expects all conditions to the closing of the Transaction to be satisfied or waived, and (iii) the wire instructions for delivery of the Purchase Price to the Issuer. Subscriber shall deliver via wire transfer to the account specified in the Closing Notice, no later than two Business Days prior to the Closing Date, the Purchase Price in cash, such cash to be held by the Issuer in immediately available funds until delivery of the Subscribed Shares to the Subscriber. On the Closing Date, the Issuer shall confirm to Subscriber in writing (it being understood that an email confirmation is sufficient) that all conditions to the closing of the Transaction have been satisfied or waived (other than those conditions that may only be satisfied at the closing of the Transaction, but subject to the satisfaction or waiver of such conditions as of the closing of the Transaction) and deliver to Subscriber against the payment of the Purchase Price thereof (i) the Subscribed Shares in book-entry form, free and clear of any liens or other restrictions whatsoever (other than those arising under state or federal securities laws or as set forth herein), registered in the name of Subscriber (or its nominee in accordance with its delivery instructions) or to a custodian designated by Subscriber, as applicable, and (ii) a statement of the Issuer’s transfer agent confirming the issuance and delivery of the Subscribed Shares to Subscriber (or such nominee or custodian) on and as of the Closing Date. In the event that the consummation of the Transaction does not occur within two Business Days after the anticipated Closing Date specified in the Closing Notice, the Issuer shall promptly (but in no event later than three Business Days after the anticipated Closing Date specified in the Closing Notice) return the funds so delivered by Subscriber to the Issuer by wire transfer of immediately available funds to the account specified by Subscriber, and any book entries shall be cancelled. For the purposes of this Subscription Agreement, “Business Day” means any day other than a Saturday, Sunday or any other day on which banks located in New York, New York, are required or authorized by law to be closed. Notwithstanding such return or cancellation, (x) a failure to consummate the Transaction on the Closing Date specified in the Closing Notice shall not, by itself, be deemed to be a failure of any of the conditions to Closing set forth in this Section 2 to be satisfied or waived on or prior to the Closing Date, and (y) unless and until this Subscription Agreement is terminated in accordance with Section 7 herein, Subscriber shall remain obligated (A) to redeliver funds to the Issuer following the Issuer’s delivery to Subscriber of a new Closing Notice and (B) to consummate the Closing upon satisfaction of the conditions set forth in this Section 2.
(c) The Closing shall be subject to the satisfaction or valid waiver in writing by both the Issuer, on the one hand, and Subscriber, on the other, of the conditions that, on the Closing Date:
(i) no applicable governmental authority shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, rule or regulation (whether temporary, preliminary or permanent) which is then in effect and has the effect of making the consummation of the transactions contemplated hereby illegal or otherwise restraining or prohibiting the consummation of the transactions contemplated hereby, and no such governmental authority shall have instituted or threatened in writing a proceeding seeking to impose any such restraint or prohibition; and
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(ii) all conditions precedent to the closing of the Transaction set forth in the Transaction Agreement, including all necessary approvals of the Issuer’s and TEI’s stockholders and regulatory approvals, if any, shall have been satisfied (as determined by the parties to the Transaction Agreement and other than those conditions under the Transaction Agreement which, by their nature, are to be satisfied at the closing of the Transaction (including to the extent that any such condition is dependent upon the consummation of the purchase and sale of the Subscribed Shares pursuant to this Subscription Agreement), but subject to the satisfaction or waiver of such conditions as of the closing of the Transaction) or waived in writing by the party entitled to the benefit thereof under the Transaction Agreement and the closing of the Transaction shall occur substantially concurrently with or immediately following the Closing.
(d) The obligation of the Issuer to consummate the Closing shall be subject to the satisfaction or valid waiver in writing by the Issuer of the additional conditions that, on the Closing Date:
(i) all representations and warranties of Subscriber contained in this Subscription Agreement shall be true and correct in all material respects at and as of the Closing Date (other than (A) representations and warranties that are qualified as to materiality or Subscriber Material Adverse Effect (as defined below), which representations and warranties shall be true and correct in all respects and (B) representations and warranties expressly made as of an earlier date, which shall be true and correct in all material respects (or, if qualified as to materiality or Subscriber Material Adverse Effect, in all respects) as of such date) and consummation of the Closing shall constitute a reaffirmation by Subscriber of each of such representations and warranties of Subscriber contained in this Subscription Agreement as of the Closing Date; and
(ii) Subscriber shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Subscription Agreement to be performed, satisfied or complied with by it at or prior to the Closing.
(e) The obligation of Subscriber to consummate the Closing shall be subject to the satisfaction or valid waiver in writing by Subscriber of the additional conditions that, on the Closing Date:
(i) all representations and warranties of the Issuer contained in this Subscription Agreement shall be true and correct in all material respects at and as of the Closing Date (other than (A) representations and warranties that are qualified as to materiality or Issuer Material Adverse Effect (as defined below), which representations and warranties shall be true and correct in all respects and (B) representations and warranties expressly made as of an earlier date, which shall be true and correct in all material respects (or, if qualified as to materiality or Issuer Material Adverse Effect, in all respects) as of such date) and consummation of the Closing shall constitute a reaffirmation by the Issuer of each of such representations and warranties of the Issuer contained in this Subscription Agreement as of the Closing Date;
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(ii) the Issuer shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Subscription Agreement to be performed, satisfied or complied with by it at or prior to the Closing;
(iii) the Transaction Agreement (as the same exists on the date of this Subscription Agreement) shall not have been terminated, rescinded or rendered invalid, illegal or unenforceable by law or otherwise without the Transaction being consummated, and the terms of the Transaction Agreement shall not have been amended, supplemented, modified or waived in a manner that would reasonably be expected to materially adversely affect the economic benefits that Subscriber would reasonably expect to receive under this Subscription Agreement without having received Subscriber’s prior written consent to such amendment, modification or waiver;
(iv) as of the Closing of the Transaction, the amount of cash that remains in the Trust Account (as defined below) (excluding the value of all Non-Redeemed Shares held by the Subscribers) after any redemptions by the Issuer’s public shareholders in connection with the closing of the Transaction and before any other payments or distributions (other than in respect of any redemptions) from the Trust Account shall not be less than $75,000,000;
(v) the Common Shares shall have been approved for listing on The Nasdaq Stock Market (“Nasdaq”), subject only to official notice of issuance;
(vi) the volume weighted average closing price of the VanEck Uranium and Nuclear Energy ETF (the “NLR ETF”) on the NYSE Arca for the twenty (20) trading days immediately preceding the date that is seven Business Days prior the Closing Date shall be greater than or equal to $63.00; and
(vii) the Issuer shall have delivered to Subscriber a copy of the Key Holders Lock-Up Agreement (as defined in the Transaction Agreement), in substantially the form attached as Exhibit E to the Transaction Agreement, executed by each of the Key Holders (as defined in the Transaction Agreement).
(f) At least three Business Days prior to the Closing, Subscriber shall deliver all such other information as is reasonably necessary in order for the Issuer to issue the Subscribed Shares to Subscriber, including, without limitation, a duly completed and executed Internal Revenue Service Form W-9 or appropriate Form W-8.
3. Issuer Representations and Warranties. The Issuer represents and warrants to Subscriber that:
(a) The Issuer (i) is an exempted company duly incorporated, validly existing and in good standing under the laws of the Cayman Islands, (ii) has the requisite power and authority to own, lease and operate its properties, to carry on its business as it is now being conducted and to enter into and perform its obligations under this Subscription Agreement, and (iii) is duly licensed or qualified to conduct its business and, if applicable, is in good standing under the laws of each jurisdiction (other than its jurisdiction of incorporation) in which the conduct of its business or the ownership of its properties or assets requires such license or qualification, except, with respect to the foregoing clause (iii), where the failure to be in good standing would not reasonably be expected to have an Issuer Material Adverse Effect. As of the Closing Date, following the Domestication, the Issuer will be duly incorporated, validly existing as a corporation and in good standing under the laws of the State of Delaware. For purposes of this Subscription Agreement, an “Issuer Material Adverse Effect” means an event, change, development, occurrence, condition or effect with respect to the Issuer and its subsidiaries, taken together as a whole (on a consolidated basis), that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on the business, properties, financial condition, shareholders’ equity or results of operations of the Issuer and its subsidiaries, taken together as a whole (on a consolidated basis) or on the Issuer’s ability to consummate the transactions contemplated hereby, including the issuance and sale of the Subscribed Shares.
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(b) As of the Closing Date, the Subscribed Shares will be duly authorized and, when issued and delivered to Subscriber against full payment therefor in accordance with the terms of this Subscription Agreement, will be validly issued, fully paid and non-assessable, free and clear of all liens or other restrictions (other than those arising under this Subscription Agreement or applicable federal and state securities laws) and will not have been issued in violation of or subject to any preemptive or similar rights created under the Issuer’s certificate of incorporation (as in effect at the time of such issuance) or under the Delaware General Corporation Law.
(c) This Subscription Agreement has been duly authorized, executed and delivered by the Issuer, and assuming the due authorization, execution and delivery of the same by Subscriber, this Subscription Agreement shall constitute the valid and legally binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors generally and by the availability of equitable remedies.
(d) Assuming the accuracy of the representations and warranties of Subscriber set forth in Section 4 of this Subscription Agreement, the execution and delivery of this Subscription Agreement, the issuance and sale of the Subscribed Shares and the compliance by the Issuer with all of the provisions of this Subscription Agreement and the consummation of the transactions contemplated herein do not and will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Issuer pursuant to the terms of (i) any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which the Issuer is a party or by which the Issuer is bound or to which any of the property or assets of the Issuer is subject; (ii) the organizational documents of the Issuer; or (iii) any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over the Issuer or any of its properties that, in the case of clauses (i) and (iii), would reasonably be expected to have an Issuer Material Adverse Effect.
(e) Assuming the accuracy of the representations and warranties of Subscriber set forth in Section 4 of this Subscription Agreement, the Issuer is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority, self-regulatory organization (including Nasdaq) or other person in connection with the execution, delivery and performance of this Subscription Agreement (including, without limitation, the issuance of the Subscribed Shares), other than (i) filings required by applicable state securities laws, (ii) the filing of the Registration Statement pursuant to Section 6 below, (iii) the filing of a Notice of Exempt Offering of Securities on Form D with in the United States Securities and Exchange Commission (the “Commission”) under Regulation D of the Securities Act of 1933 as amended (the “Securities Act”), and the rules and regulations of the Commission promulgated thereunder, if applicable (iv) those required by Nasdaq, including with respect to obtaining shareholder approval, (v) those required to consummate the Transaction as provided under the Transaction Agreement, (vi) the filing of notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, if applicable, and (vii) the failure of which to obtain would not be reasonably expected to have an Issuer Material Adverse Effect.
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(f) A copy of each form, report, statement, schedule, prospectus, proxy, registration statement and other document, if any, required to be filed by the Issuer with the Commission since its initial registration of the Class A Ordinary Shares under the Exchange Act (the “SEC Reports”) is available to Subscriber via the Commission’s EDGAR system. As of their respective dates, all SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Issuer included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing and fairly present in all material respects the financial position of the Issuer as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments. Notwithstanding the foregoing, this representation and warranty shall not apply to any statement or information in the SEC Reports that relates to changes to historical accounting policies of the Issuer in connection with any order, directive, guideline, comment or recommendation from the Commission or the Issuer’s auditors or accountants that is applicable to the Issuer or the Issuer’s auditor or accountants, nor shall any correction, amendment or restatement of the Issuer’s financial statements resulting from or relating to such result in a breach of any representation or warranty by the Issuer. Except as would not, individually or in the aggregate, be reasonably likely to have an Issuer Material Adverse Effect, the Issuer has timely filed each report, statement, schedule, prospectus, and registration statement that the Issuer was required to file with the Commission since its initial registration of the Class Shares under the Exchange Act. Except as would not, individually or in the aggregate, be reasonably likely to have an Issuer Material Adverse Effect, there are no outstanding or unresolved comments in comment letters from the staff of the Division of Corporation Finance of the Commission with respect to any of the SEC Reports.
(g) The Issuer is in compliance with all applicable law, except where such non-compliance would not be reasonably likely to have an Issuer Material Adverse Effect. The Issuer has not received any written communication from a governmental authority that alleges that the Issuer is not in compliance with or is in default or violation of any applicable law, except where such non-compliance, default or violation would not reasonably be expected to have, individually or in the aggregate, an Issuer Material Adverse Effect.
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(h) Except for such matters as have not had and would not be reasonably likely to have, individually or in the aggregate, an Issuer Material Adverse Effect, there is no (i) action, suit, claim, arbitration or other proceeding, in each case by or before any governmental authority or arbitrator pending, or, to the knowledge of the Issuer, threatened against the Issuer or (ii) judgment, decree, injunction, ruling or order of any governmental entity or arbitrator outstanding against the Issuer.
(i) As of the date hereof, the issued and outstanding Class A Ordinary Shares are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on Nasdaq under the symbol “HOND” (it being understood that the trading symbol will be different for the Issuer upon completion of the Transaction). There is no suit, action, proceeding or investigation pending or, to the knowledge of the Issuer, threatened against the Issuer by the Nasdaq or the Commission with respect to any intention by such entity to deregister the Class A Ordinary Shares or prohibit or terminate the listing of the Common Shares or Class A Ordinary Shares, respectively, on the Nasdaq. Except as contemplated by the Transaction Agreement, the Issuer has taken no action that is designed to terminate the registration of the Class A Ordinary Shares under the Exchange Act. Following the Domestication, the Common Shares will be registered under Section 12(b) of the Exchange Act and, as of the Closing Date, will be listed for trading on Nasdaq or another national stock exchange.
(j) Assuming the accuracy of Subscriber’s representations and warranties set forth in Section 4 of this Subscription Agreement, no registration under the Securities Act or any state securities (or Blue Sky) laws is required for the offer and sale of the Subscribed Shares by the Issuer to Subscriber.
(k) Neither the Issuer nor any person acting on its behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Subscribed Shares. Neither the Issuer nor any person acting on its behalf has, directly or indirectly, made any offers or sales of any Issuer security or solicited any offers to buy any security under circumstances that would adversely affect reliance by the Issuer on Section 4(a)(2) of the Securities Act for the exemption from registration for the transactions contemplated hereby or would require registration of the issuance of the Subscribed Shares under the Securities Act. The Subscribed Shares are not being offered in a manner involving a public offering under, or in a distribution in violation of, the Securities Act or any state securities laws. Neither the Issuer nor any person acting on their behalf has, directly or indirectly, at any time within the past six months, made any offer or sale of any security or solicitation of any offer to buy any security under circumstances that would eliminate the availability of the exemption from registration under Regulation D under the Securities Act in connection with the offer and sale by the Issuer of the Subscribed Shares as contemplated hereby. Neither the Issuer nor any person acting on their behalf has offered or sold or will offer or sell any securities, or has taken or will take any other action, which would reasonably be expected to subject the offer, issuance or sale of the Subscribed Shares, as contemplated hereby, to the registration provisions of the Securities Act.
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(l) As of the date of this Subscription Agreement, the authorized share capital of the Issuer consists of (i) 220,000,000 of the Issuer’s ordinary shares, par value $0.0001 per share (“Ordinary Shares”), with (A) 200,000,000 shares being designated as Class A Ordinary Shares and (B) 20,000,000 shares being designated as Class B ordinary shares, par value $0.0001 per share (“Class B Shares”), and (ii) 1,000,000 preference shares, par value $0.0001 per share (“Preferred Shares”). As of the date of this Subscription Agreement, (i) 23,000,000 Class A Ordinary Shares and 5,750,000 Class B Shares are issued and outstanding, all of which are validly issued, fully paid and non-assessable and not subject to any preemptive rights, (ii) none of the Ordinary Shares are held in the treasury of the Issuer, (iii) 6,850,000 private placement warrants (the “Private Placement Warrants”) are issued and outstanding and 6,850,000 Class A Ordinary Shares are issuable in respect of such Private Placement Warrants, and (iv) 11,500,000 public warrants (the “Public Warrants”) are issued and outstanding and 11,500,000 Class A Ordinary Shares are issuable in respect of such Public Warrants. Each Private Placement Warrant and Public Warrant is exercisable for one Class A Ordinary Share at an exercise price of $11.50. None of the Private Placement Warrants or Public Warrants are exercisable on or prior to the Closing. As of the date of this Subscription Agreement, there are no Preferred Shares issued and outstanding. As of the date of this Subscription Agreement, except as set forth above and pursuant to the Transaction Agreement, there are no outstanding options, warrants or other rights to subscribe for, purchase or acquire from the Issuer any Ordinary Shares or other equity interests in the Issuer (collectively, “Equity Interests”) or securities convertible into or exchangeable or exercisable for Equity Interests. As of the date of this Subscription Agreement, other than Merger Sub, the Issuer has no subsidiaries and does not own, directly or indirectly, interests or investments (whether equity or debt) in any person, whether incorporated or unincorporated.
(m) Except for such matters as have not had and would not be reasonably likely to have, individually or in the aggregate, an Issuer Material Adverse Effect, as of the date hereof there is no (i) action, suit, claim or other proceeding, in each case by or before any governmental authority pending, or, to the knowledge of the Issuer, threatened against the Issuer or (ii) judgment, decree, injunction, ruling or order of any governmental entity or arbitrator outstanding against the Issuer.
(n) Other than Cantor Fitzgerald & Co. (the “Placement Agent”), the Issuer has not entered into any agreement or arrangement entitling any agent, broker, investment banker, financial advisor or other person to any broker’s or finder’s fee or any other commission or similar fee in connection with the transactions contemplated by this Subscription Agreement for which Subscriber could become liable.
(o) The Issuer is not, and immediately after the consummation of the Transaction and the transactions contemplated by this Subscription Agreement and the Other Subscription Agreements will not be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
(p) The Other Subscription Agreements reflect the same Per Share Price and other terms and conditions with respect to the purchase of the Other Subscribed Shares that are no more favorable to such Other Subscribers thereunder than the terms of this Subscription Agreement, other than terms particular to the regulatory requirements of such Other Subscribers or their affiliates or related funds, and there is no side letter or other agreement that modifies such Per Share Price or such other terms and conditions with respect to the purchase of the Other Subscribed Shares. Subsequent to the date of this Subscription Agreement and prior to the Closing, the Issuer may (i) enter into one or more additional subscription or similar agreements with additional investors for other private placements, including private placements of equity, equity-linked and/or debt securities, and (ii) amend, supplement or modify any Other Subscription Agreement, provided that such additional subscription or similar agreements or amendments, supplements or modifications, as applicable, do not contain terms and conditions that are in any way more advantageous to such additional investors or Other Subscribers than the terms and conditions hereunder are to Subscriber.
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(q) There has been no action taken by the Issuer, or, to the knowledge of the Issuer, any officer, director, equityholder, manager, employee, agent or representative of the Issuer, in each case, acting on behalf of the Issuer, in violation of any applicable Anti-Corruption Laws (as herein defined). The Issuer has not (i) been convicted of violating any Anti-Corruption Laws or subjected to any investigation by a governmental authority for violation of any applicable Anti-Corruption Laws, (ii) conducted or initiated any internal investigation or made a voluntary, directed, or involuntary disclosure to any governmental authority regarding any alleged act or omission arising under or relating to any noncompliance with any Anti-Corruption Laws or (iii) received any written notice or citation from a governmental authority for any actual or potential noncompliance with any applicable Anti-Corruption Laws. As used herein, “Anti-Corruption Laws” means any applicable laws relating to corruption and bribery, including the U.S. Foreign Corrupt Practices Act of 1977 (as amended), the UK Bribery Act 2010, and any similar law that prohibits bribery or corruption.
(r) The Issuer and its representatives currently and for the five years prior to the date here-of have been in compliance with Anti-Corruption Laws and applicable laws related to (i) export controls, including the U.S. Export Administration Regulations, 15 C.F.R. §§ 730, et seq., and any other equivalent or comparable Laws of other countries (collectively, “Export Control Laws”), (ii) anti-money laundering, including the Money Laundering Control Act of 1986, 18 U.S.C. §§ 1956, 1957, and any other equivalent or comparable Laws of other countries (collectively, “Anti-Money Laundering Laws”), (iii) anti-boycott regulations, as administered by the U.S. Department of Commerce, and (iv) importation of goods, including Laws administered by the U.S. Customs and Border Protection, Title 19 of the U.S.C. and C.F.R., and any other equivalent or comparable Laws of other countries (collectively, “International Trade Control Laws”).
(s) Neither the Issuer nor its subsidiaries nor any of their respective directors, officers or employees, nor, to the knowledge of the Issuer, any agent or representative of the Issuer (acting on behalf of the Issuer), is or is acting under the direction of, on behalf of or for the benefit of a person that is (i) the subject or target of economic or financial sanctions, trade embargos or restrictions administered, enacted or enforced by any governmental authority (collectively, “Sanctions”); (ii) designated on any Sanctions or similar lists administered by a governmental authority, including the U.S. Department of the Treasury’s Specially Designated Nationals List, the U.S. Department of Commerce’s Denied Persons List and Entity List, the U.S. Department of State’s Debarred List, HM Treasury’s Consolidated List of Financial Sanctions Targets and the In-vestment Bank List, or any similar list enforced by any other relevant governmental authority, as amended from time to time, or any person owned or controlled by any of the foregoing (collectively, “Prohibited Party”); (iii) located, organized or resident in a country or territory that is, or whose government is, the subject or target of comprehensive Sanctions, including, as of the date of this Subscription Agreement, Crimea, the so-called Donetsk People’s Republic or Luhansk People’s Re-public regions of Ukraine, Cuba, Iran, North Korea, and Syria; or (iv) an officer or employee of any governmental authority or public international organization, or officer of a political party or candidate for political office. Neither the Issuer nor, to the knowledge of the Issuer, any representative of the Issuer (acting on behalf of the Issuer), (A) has participated in any transaction involving a Prohibited Party, or a person who is the target of any Sanctions, or any country or territory that was during such period or is, or whose government was during such period or is, the target of comprehensive Sanctions, (B) to the knowledge of the Issuer, has exported (including deemed exportation) or re-exported, directly or indirectly, any commodity, software, technology, or services in violation of any Export Control Laws, or (C) has participated in any transaction in violation of or connected with any purpose prohibited by Anti-Corruption Laws or any International Trade Control Laws, including support for international terrorism and nuclear, chemical, or biological weapons proliferation.
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(t) When the Subscribed Shares are issued pursuant to this Subscription Agreement, the Class A Ordinary Shares (and following the Domestication, any shares of Common Shares into which such Class A Ordinary Shares will be converted) will be eligible for clearing through The Depository Trust Company (the “DTC”), through its Deposit/Withdrawal At Custodian (DWAC) system, and the Issuer will be eligible and participating in the Direct Registration System (DRS) of DTC with respect to the Class A Ordinary Shares (and following the Domestication, any shares of Common Shares into which such Class A Ordinary Shares will be converted). The Issuer’s transfer agent will be a participant in DTC’s Fast Automated Securities Transfer Program.
(u) No “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) of the Securities Act (a “Disqualification Event”) is applicable to the Issuer, except for a Disqualification Event as to which Rule 506(d)(2)(ii–iv) or (d)(3) of the Securities Act is applicable.
(v) To the Issuer’s knowledge, the representations and warranties of TEI set forth in the Transaction Agreement are true and correct in all material respects as of the date hereof (except to the extent qualified by a material adverse effect, in such case as so qualified).
4. Subscriber Representations and Warranties. Subscriber represents and warrants to the Issuer that:
(a) Subscriber (i) is duly organized, validly existing and in good standing under the laws of its jurisdiction of formation or incorporation, and (ii) has the requisite power and authority to enter into and perform its obligations under this Subscription Agreement.
(b) This Subscription Agreement has been duly authorized, executed and delivered by Subscriber, and assuming the due authorization, execution and delivery of the same by the Issuer, this Subscription Agreement shall constitute the valid and legally binding obligation of Subscriber, enforceable against Subscriber in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors generally and by the availability of equitable remedies.
(c) The execution and delivery of this Subscription Agreement, the purchase of the Subscribed Shares and the compliance by Subscriber with all of the provisions of this Subscription Agreement and the consummation of the transactions contemplated herein will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of Subscriber pursuant to the terms of (i) any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which Subscriber is a party or by which Subscriber is bound or to which any of the property or assets of Subscriber is subject; (ii) if Subscriber is a legal entity, the organizational documents of Subscriber; or (iii) any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over Subscriber or any of its properties that, in the case of clauses (i) and (iii), would reasonably be expected to have, individually or in the aggregate, a Subscriber Material Adverse Effect. For purposes of this Subscription Agreement, a “Subscriber Material Adverse Effect” means an event, change, development, occurrence, condition or effect with respect to Subscriber that would reasonably be expected to have a material adverse effect on Subscriber’s ability to timely consummate the transactions contemplated hereby, including the purchase of the Subscribed Shares.
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(d) Subscriber (i) is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act) or an “accredited investor” (within the meaning of Rule 501(a) of Regulation D under the Securities Act) satisfying the applicable requirements set forth on Annex B, (ii) is acquiring the Subscribed Shares only for its own account and not for the account of others, or if Subscriber is subscribing for the Subscribed Shares as a fiduciary or agent for one or more investor accounts, each owner of such account is a qualified institutional buyer and Subscriber has full investment discretion with respect to each such account, and the full power and authority to make the acknowledgements, representations and agreements herein on behalf of each owner of each such account, and (iii) is not acquiring the Subscribed Shares with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act (and has provided the Issuer with the requested information on Annex B following the signature page hereto). Subscriber is not an entity formed for the specific purpose of acquiring the Subscribed Shares, unless all its equity owners are “accredited investors” (within the meaning of Rule 501(a) of Regulation D under the Securities Act).
(e) Subscriber understands that the Subscribed Shares are being offered in a transaction not involving any public offering within the meaning of the Securities Act and that the Subscribed Shares have not been registered under the Securities Act and that the Issuer is not required to register the Subscribed Shares except as set forth in Section 6 of this Subscription Agreement. Subscriber understands that the Subscribed Shares may not be offered, resold, transferred, pledged or otherwise disposed of by Subscriber absent an effective registration statement under the Securities Act, except (i) to the Issuer or a subsidiary thereof, or (ii) pursuant to an applicable exemption from the registration requirements of the Securities Act, and, in each of clauses (i) and (ii), in accordance with any applicable securities laws of the states and other jurisdictions of the United States, and that any certificates or book-entry statements representing the Subscribed Shares shall contain a legend to such effect. As a result of these transfer restrictions, Subscriber understands that Subscriber may not be able to readily resell, offer, pledge or otherwise dispose of the Subscribed Shares and may be required to bear the financial risk of an investment in the Subscribed Shares for an indefinite period of time. Subscriber acknowledges and agrees that the Subscribed Shares will not be eligible for offer, resale, transfer, pledge or disposition pursuant to Rule 144 promulgated under the Securities Act until at least one year from the date the Issuer files a Current Report on Form 8-K following the closing date of the Transaction that includes the “Form 10” information required under applicable Commission rules and regulations. Subscriber understands that it has been advised to consult legal counsel prior to making any offer, resale, pledge or transfer of any of the Subscribed Shares.
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(f) Subscriber understands and agrees that Subscriber is purchasing the Subscribed Shares directly from the Issuer. Subscriber further acknowledges that there have not been, and Subscriber hereby agrees that it is not relying on, any representations, warranties, covenants or agreements made to Subscriber by or on behalf of the Issuer, TEI or any other party to the Transaction or any of their respective affiliates or any control persons, officers, directors, employees, partners, agents (including the Placement Agent) or representatives of any of the foregoing, or any other person or entity, expressly or by implication, other than those representations, warranties, covenants and agreements of the Issuer set forth in this Subscription Agreement. Subscriber agrees that neither (i) any Other Subscriber pursuant to the Other Subscription Agreements (including the controlling persons, members, officers, directors, partners, agents, or employees of any such Other Subscriber) nor (ii) the Placement Agent, its affiliates or any of its or its affiliates’ respective control persons, officers, directors or employees, shall be liable to Subscriber pursuant to this Subscription Agreement for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the Subscribed Shares.
(g) In making its decision to purchase the Subscribed Shares, Subscriber has relied solely upon an independent investigation made by Subscriber and the representations and warranties of the Issuer in this Subscription Agreement. Without limiting the generality of the foregoing, Subscriber has not relied on any statements or other information provided by the Placement Agent concerning the Issuer, TEI or the Subscribed Shares, or the offer and sale of the Subscribed Shares. No disclosure or offering document has been provided by the Placement Agent in connection with the offer and sale of the Subscribed Shares. The Placement Agent and each of its members, directors, officers, employees, representatives and controlling persons have made no independent investigation with respect to the Issuer, TEI or the Subscribed Shares or the accuracy, completeness or adequacy of any information supplied to Subscriber by the Issuer or TEI. In connection with the issue and purchase of the Subscribed Shares, the Placement Agent has not made any recommendations regarding an investment in the Issuer, TEI or the Subscribed Shares. Subscriber agrees and acknowledges that the Placement Agent is acting as the Issuer’s placement agent in connection with the transactions contemplated by this Subscription Agreement and has not acted as Subscriber’s financial advisor or fiduciary. Subscriber further acknowledges and agrees that Subscriber has received or had access to such information as Subscriber deems necessary in order to make an investment decision with respect to the Subscribed Shares, including with respect to the Issuer and the Transaction (including TEI and its business). Subscriber acknowledges that Subscriber has consulted with Subscriber’s own legal, accounting, financial, regulatory and tax advisors, to the extent Subscriber deemed appropriate to make an investment decision with respect to the Subscribed Shares. Subscriber represents and agrees that Subscriber and Subscriber’s professional advisor(s), if any, have had the full opportunity to ask such questions, receive such answers and obtain such information as Subscriber and such undersigned’s professional advisor(s), if any, have deemed necessary to make an investment decision with respect to the Subscribed Shares. Without limiting the generality of the foregoing, Subscriber acknowledges that it has reviewed the Issuer’s filings with the Commission. Subscriber acknowledges and agrees that certain information provided by the Issuer was based on projections, and such projections were prepared based on assumptions and estimates that are inherently uncertain and are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the projections. Subscriber further acknowledges and agrees that the information provided to Subscriber was preliminary and subject to change, and that any changes to such information, including, without limitation, the information in the Registration Statement on Form S-4 and the related proxy statement that the Issuer intends to file with the Commission (which will include substantial additional information about the Issuer, TEI and the Transaction and will update and supersede the information previously provided to Subscriber) and any changes based on updated information or changes in terms of the Transaction, shall in no way impact Subscriber’s obligation to purchase the Subscribed Shares hereunder.
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(h) Subscriber became aware of this offering of the Subscribed Shares solely by means of direct contact between Subscriber and the Issuer, TEI, the Placement Agent or a representative of any of the foregoing, and the Subscribed Shares were offered to Subscriber solely by direct contact between Subscriber and the Issuer, TEI, the Placement Agent or a representative of any of the foregoing. Subscriber did not become aware of this offering of the Subscribed Shares, nor were the Subscribed Shares offered to Subscriber, by any other means. Subscriber acknowledges that the Issuer represents and warrants that the Subscribed Shares (i) were not offered by any form of general solicitation or general advertising and (ii) are not being offered in a manner involving a public offering under, or in a distribution in violation of, the Securities Act, or any state securities laws.
(i) Subscriber acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Subscribed Shares, including those set forth in the SEC Reports. Subscriber has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Subscribed Shares, and Subscriber has had an opportunity to seek, and has sought, such accounting, legal, business and tax advice as Subscriber has considered necessary to make an informed investment decision. Subscriber (i) is an institutional account as defined in FINRA Rule 4512(c), (ii) is a sophisticated investor, experienced in investing in private equity transactions and capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities, and (iii) has exercised independent judgment in evaluating its participation in the purchase of the Subscribed Shares.
(j) Subscriber has adequately analyzed and fully considered the risks of an investment in the Subscribed Shares and determined that the Subscribed Shares are a suitable investment for Subscriber and that Subscriber is able at this time and in the foreseeable future to bear the economic risk of a total loss of Subscriber’s investment in the Issuer. Subscriber acknowledges specifically that a possibility of total loss exists.
(k) Subscriber understands and agrees that no federal or state agency has passed judgment upon or endorsed the merits of the offering of the Subscribed Shares or made any findings or determination as to the fairness of this investment.
(l) Subscriber is not (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) or in any Executive Order issued by the President of the United States and administered by OFAC (“OFAC List”), or a person or entity prohibited by any OFAC sanctions program, (ii) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (iii) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank. Subscriber agrees to provide law enforcement agencies, if requested thereby, such records as required by applicable law, provided that Subscriber is permitted to do so under applicable law. Subscriber represents that if it is a financial institution subject to the Bank Secrecy Act (31 U.S.C. Section 5311 et seq.), as amended by the USA PATRIOT Act of 2001 and its implementing regulations (collectively, the “BSA/PATRIOT Act”), that Subscriber maintains policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act. Subscriber also represents that, to the extent required, it maintains policies and procedures reasonably designed for the screening of its investors against the OFAC sanctions programs, including the OFAC List. Subscriber further represents and warrants that, to the extent required, it maintains policies and procedures reasonably designed to ensure that the funds held by Subscriber and used to purchase the Subscribed Shares were legally derived.
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(m) Subscriber does not have, as of the date hereof, and during the 30-day period immediately prior to the date hereof such Subscriber has not entered into, any “put equivalent position” as such term is defined in Rule 16a-1 under the Exchange Act or short sale positions with respect to the securities of the Issuer.
(n) No foreign person (as defined in 31 C.F.R. Part 800.224) in which the national or subnational governments of a single foreign state have a substantial interest (as defined in 31 C.F.R. Part 800.244) will acquire a substantial interest in the Issuer as a result of the purchase and sale of Subscribed Shares hereunder such that a declaration to the Committee on Foreign Investment in the United States would be mandatory under 31 C.F.R. Part 800.401, and no foreign person will have control (as defined in 31 C.F.R. Part 800.208) over the Issuer from and after the Closing as a result of the purchase and sale of Subscribed Shares hereunder or over TEI from and after the consummation of the Transaction.
(o) If Subscriber is or is acting on behalf of an employee benefit plan that is subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), a plan, an individual retirement account or other arrangement that is subject to section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”) or an employee benefit plan that is a governmental plan (as defined in section 3(32) of ERISA), a church plan (as defined in section 3(33) of ERISA), a non-U.S. plan (as described in section 4(b)(4) of ERISA) or other plan that is not subject to the foregoing but may be subject to provisions under any other federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code or an entity whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement (each, a “Plan”) subject to the fiduciary or prohibited transaction provisions of ERISA or section 4975 of the Code, Subscriber represents and warrants that (i) neither the Issuer, nor any of its respective affiliates (the “Transaction Parties”) has acted as the Plan’s fiduciary, or has been relied on for advice, with respect to its decision to acquire and hold the Subscribed Shares, and none of the Transaction Parties shall at any time be relied upon as the Plan’s fiduciary with respect to any decision to acquire, continue to hold or transfer the Subscribed Shares and (ii) the acquisition and holding of the Subscribed Shares will not result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Code.
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(p) At the Closing, Subscriber will have sufficient funds to pay the Purchase Price pursuant to Section 1 and consummate the purchase and sale of the Subscribed Shares pursuant to this Subscription Agreement.
(q) Subscriber represents that no disqualifying event described in Rule 506(d)(1)(i)-(viii) under the Securities Act (a “Disqualification Event”) is applicable to Subscriber or any of its Rule 506(d) Related Parties (as defined below), except, if applicable, for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable. Subscriber hereby agrees that it shall notify the Issuer promptly in writing in the event a Disqualification Event becomes applicable to Subscriber or any of its Rule 506(d) Related Parties, except, if applicable, for a Disqualification Event as to which Rule 506(d)(2)(ii) or (iii) or (d)(3) is applicable. For purposes of this Section 4(s), “Rule 506(d) Related Party” shall mean a person or entity that is a beneficial owner of Subscriber’s securities for purposes of Rule 506(d) under the Securities Act.
(r) Subscriber agrees that none of (i) any Other Subscriber pursuant to any Other Subscription Agreement or any other agreement related to the private placement of Common Shares (including the controlling persons, officers, directors, partners, agents or employees of any such Other Subscriber), or (ii) the Issuer, its affiliates or any of their or their respective affiliates’ control persons, officers, directors, partners, agents, employees or representatives, shall be liable to any Other Subscriber pursuant to this Subscription Agreement or any other agreement with Subscriber related to the private placement of Common Shares for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the Subscribed Shares hereunder.
(s) No broker or finder is entitled to any brokerage or finder’s fee or commission solely in connection with the sale of the Subscribed Shares to Subscriber based on an arrangement made by Subscriber or its affiliates for which Issuer or its affiliates are or may be liable.
5. Additional Subscriber Agreement. Subscriber hereby agrees that, from the date of this Subscription Agreement until the earlier of the Closing or the termination of this Subscription Agreement in accordance with its terms, none of Subscriber or any person acting on behalf of Subscriber or pursuant to any understanding with Subscriber will engage, directly or indirectly, in any Short Sales with respect to securities of the Issuer. Subscriber further agrees that, from the date of this Subscription Agreement until the earlier of (i) the seventh Business Day before the Closing Date or (ii) the termination of this Subscription Agreement in accordance with its terms, none of Subscriber or any person or entity acting on behalf of Subscriber or pursuant to any understanding with Subscriber will engage, directly or indirectly, in any Short Sales with respect to securities of the NLR ETF. For purposes of this Section 5, “Short Sales” shall include, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act, and all types of direct and indirect stock pledges (other than pledges in the ordinary course of business as part of prime brokerage arrangements), forward sale contracts, options, puts, calls, swaps and similar arrangements (including on a total return basis), and sales and other transactions through non-U.S. broker dealers or foreign regulated brokers. For the avoidance of doubt, nothing contained herein shall prohibit Subscriber from engaging in any purchase of securities by Subscriber, its controlled affiliates or any person or entity acting on behalf of Subscriber or any of its controlled affiliates in an open market transaction after the execution of this Subscription Agreement. Notwithstanding anything to the contrary herein, (i) nothing herein shall prohibit other entities under common management or that share an investment advisor with Subscriber that have no knowledge of this Subscription Agreement or of Subscriber’s subscription (including Subscriber’s controlled affiliates and/or affiliates) from entering into any Short Sales and (ii) in the case of a Subscriber that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Subscriber’s assets and the portfolio managers have no knowledge of the investment decisions made by the portfolio managers managing other portions of such Subscriber’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Subscribed Shares covered by this Subscription Agreement. For the avoidance of doubt, nothing herein shall prohibit the Subscriber, its affiliates or any other person or entity from engaging, directly or indirectly, in any transactions or Short Sales with respect to securities of companies underlying, contained in, indexed by, or invested into by, the NLR ETF.
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6. Registration of Subscribed Shares.
(a) The Issuer agrees that, within thirty calendar days following the Closing (the “Filing Deadline”), the Issuer will file with the Commission (at the Issuer’s sole cost and expense) a registration statement registering the resale of the Subscribed Shares (the “Registration Statement”), and the Issuer shall use its commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable after the filing thereof, but no later than the earlier of (i) the 60th calendar day (or 90th calendar day if the Commission notifies the Issuer that it will “review” the Registration Statement) following the Filing Deadline and (ii) the 10th Business Day after the date the Issuer is notified (orally or in writing, whichever is earlier) by the Commission that the Registration Statement will not be “reviewed” or will not be subject to further review (such earlier date, the “Effectiveness Deadline”); provided, that if such day falls on a Saturday, Sunday or other day that the Commission is closed for business, the Effectiveness Deadline shall be extended to the next Business Day on which the Commission is open for business. The Issuer shall provide a draft of the Registration Statement to Subscriber for review at least two Business Days in advance of filing the Registration Statement; provided, that for the avoidance of doubt, in no event shall the Issuer be required to delay or postpone the filing of such Registration Statement as a result of or in connection with Subscriber’s review. With respect to the information to be provided by the Subscriber pursuant to the foregoing, the Issuer shall request such information at least three (3) Business Days prior to the anticipated initial filing date of the Registration Statement. In no event shall Subscriber be identified as a statutory underwriter in the Registration Statement unless requested by the Commission; provided, that if the Commission requests that Subscriber be identified as a statutory underwriter in the Registration Statement, Subscriber shall have an opportunity to withdraw the Subscribed Shares from the Registration Statement upon its written request to the Issuer, it being understood that such withdrawal shall not relieve the Issuer of its obligation to register for resale the Subscribed Shares at a later date. Notwithstanding the foregoing, if the Commission prevents the Issuer from including any or all of the Subscribed Shares proposed to be registered under the Registration Statement due to limitations on the use of Rule 415 under the Securities Act for the resale of the Subscribed Shares held by Subscriber or any Other Subscriber or otherwise, such Registration Statement shall register for resale such number of Common Shares which is equal to the maximum number of Subscribed Shares as is permitted to be registered by the Commission. In such event, the number of Subscribed Shares to be registered for each selling stockholder named in the Registration Statement shall be reduced pro rata among all such selling stockholders. The Issuer agrees that, except for such times as the Issuer is permitted hereunder to suspend the use of the prospectus forming part of a Registration Statement, the Issuer will use its commercially reasonable efforts to cause such Registration Statement to remain effective with respect to Subscriber, keep any qualification, exemption or compliance under state securities laws which the Issuer determines to obtain continuously effective with respect to Subscriber, and to keep the applicable Registration Statement or any subsequent shelf registration statement free of any material misstatements or omissions, until the earliest of (i) two years from the date on which the Registration Statement is initially declared effective by the Commission, (ii) the date on which all of the Subscribed Shares shall have been sold, or (iii) the first date on which the undersigned can sell all of its Subscribed Shares (or shares received in exchange therefor) under Rule 144 under the Securities Act without limitation as to the manner of sale, the amount of such securities that may be sold and without the requirement for the Issuer to be in compliance with the current public information required under Rule 144. For as long as the Registration Statement shall remain effective pursuant to the immediately preceding sentence, the Issuer shall use commercially reasonable efforts to file all reports, and provide all customary and reasonable cooperation, necessary to enable the undersigned to resell the Subscribed Shares pursuant to the Registration Statement or Rule 144 under the Securities Act (when Rule 144 under the Securities Act becomes available to the Issuer), as applicable, qualify the Subscribed Shares for listing on the applicable stock exchange on which the Common Shares are then listed, and update or amend the Registration Statement as necessary to include the Subscribed Shares. The undersigned agrees to disclose its beneficial ownership, as determined in accordance with Rule 13d-3 under the Exchange Act, of Subscribed Shares to the Issuer (or its successor) upon request to assist the Issuer in making the determination described above. The Issuer’s obligations to include the Subscribed Shares in the Registration Statement are contingent upon Subscriber furnishing in writing to the Issuer such information regarding Subscriber, the securities of the Issuer held by Subscriber and the intended method of disposition of the Subscribed Shares as shall be reasonably requested by the Issuer to effect the registration of the Subscribed Shares, and Subscriber shall execute such documents in connection with such registration as the Issuer may reasonably request that are customary for a selling stockholder in similar situations. In the case of the registration effected by the Issuer pursuant to this Subscription Agreement, the Issuer shall, upon reasonable request, inform Subscriber as to the status of such registration. Notwithstanding anything to the contrary contained herein, the Issuer may delay or postpone the effectiveness of the Registration Statement, and from time to time require Subscriber not to sell under the Registration Statement or suspend the use or effectiveness of any such Registration Statement, if (i) an amendment to the Registration Statement would be needed to include information that would at that time not otherwise be required in a current, quarterly, or annual report under the Exchange Act or (ii) the negotiation or consummation of a transaction by the Issuer or its subsidiaries is pending or an event has occurred, which negotiation, consummation or event, the Issuer’s board of directors reasonably believes, upon the advice of legal counsel, would require additional disclosure by the Issuer in the Registration Statement of material information that the Issuer has a bona fide business purpose for keeping confidential, and the non-disclosure of which in the Registration Statement would be expected, in the reasonable determination of the Issuer’s board of directors, upon the advice of legal counsel, to cause the Registration Statement to fail to comply with applicable disclosure requirements (each such circumstance, a “Suspension Event”); provided that (x) the Issuer shall not so delay, postpone or suspend the effectiveness or use of the Registration Statement on more than two occasions or for more than ninety consecutive calendar days or more than one hundred twenty total calendar days, in each case during any twelve-month period, and (y) the Issuer shall use commercially reasonable efforts to make such registration statement available for the sale by Subscriber of such securities as soon as practicable thereafter. Except for such times as the Issuer is permitted hereunder to suspend, and has suspended, the use of a prospectus forming part of a Registration Statement as contemplated by this Subscription Agreement, the Issuer shall use its commercially reasonable efforts to as soon as reasonably practicable prepare a post-effective amendment to such Registration Statement or a supplement to the related prospectus, or file any other required document so that, as thereafter delivered to purchasers of the Subscribed Shares included therein, such prospectus will not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. For purposes of clarification, any failure by the Issuer to file the Registration Statement by the Filing Deadline or to have such Registration Statement declared effective by the Effectiveness Deadline shall not otherwise relieve the Issuer of its obligations to file or effect the Registration Statement set forth in this Section 6.
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(b) Upon receipt of any written notice from the Issuer (which notice shall not contain any material non-public information regarding the Issuer) of the happening of any Suspension Event during the period that the Registration Statement is effective or if as a result of a Suspension Event the Registration Statement or related prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made (in the case of the prospectus), not misleading, Subscriber agrees that (i) it will immediately discontinue offers and sales of the Subscribed Shares under the Registration Statement (excluding, for the avoidance of doubt, sales conducted in accordance with Rule 144 or any other applicable exemption to the registration under the Securities Act to the extent then available rather than under the Registration Statement) until Subscriber receives copies of a supplemental or amended prospectus (which the Issuer agrees to promptly prepare) that corrects the misstatement(s) or omission(s) referred to above and receives notice that any post-effective amendment has become effective or unless otherwise notified by the Issuer that it may resume such offers and sales, and (ii) it will maintain the confidentiality of any information included in such written notice delivered by the Issuer, provided that Subscriber may disclose such confidential information to its professional advisors who are subject to confidentiality obligations to the extent necessary to obtain their services in connection with monitoring its investment in the Issuer or unless otherwise required by law, subpoena or regulatory request or other requirement. If so directed by the Issuer, Subscriber will deliver to the Issuer, or in the Issuer’s sole discretion, destroy all copies of the prospectus covering the Subscribed Shares in the undersigned’s possession; provided, however, that this obligation to deliver or destroy all copies of the prospectus covering the Subscribed Shares shall not apply (x) to the extent Subscriber is required to retain a copy of such prospectus (A) in order to comply with applicable legal, regulatory, self-regulatory or professional requirements or (B) in accordance with a bona fide pre-existing document retention policy or (y) to copies stored electronically on archival servers as a result of automatic data back-up. Subscriber shall not be required to execute any lock-up or similar agreement or otherwise be subject to any contractual restriction on the ability to transfer the Subscribed Shares except to the extent the Subscriber otherwise expressly agrees in order to participate in an underwritten public offering.
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(c) Subscriber may deliver written notice (an “Opt-Out Notice”) to the Issuer requesting that Subscriber not receive notices from the Issuer otherwise required by this Section 6; provided, that Subscriber may later revoke any such Opt-Out Notice in writing. Following receipt of an Opt-Out Notice from Subscriber (unless subsequently revoked), (i) the Issuer shall not deliver any such notices to Subscriber and Subscriber shall no longer be entitled to the rights associated with any such notice and (ii) each time prior to Subscriber’s intended use of an effective Registration Statement, Subscriber will notify the Issuer in writing at least two Business Days in advance of such intended use, and if a notice of a Suspension Event was previously delivered (or would have been delivered but for the provisions of this Section 6(c)) and the related suspension period remains in effect, the Issuer shall so notify Subscriber, within two Business Days of Subscriber’s notification to the Issuer, by delivering to Subscriber a copy of such previous notice of Suspension Event, and thereafter shall provide Subscriber with the related notice of the conclusion of such Suspension Event immediately upon its availability.
(d) The Issuer shall use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement as soon as reasonably practicable.
(e) The Issuer shall use its commercially reasonable efforts to cause all Subscribed Shares to be listed on each securities exchange or market, if any, on which the Common Shares has been listed.
(f) The Issuer shall use its commercially reasonable efforts to take all other steps necessary to effect the registration of the Subscribed Shares required hereby.
(g) For purposes of this Section 6, “Subscribed Shares” shall be deemed to include, as of any date of determination, the Subscribed Shares and any equity security issued or issuable with respect to such Subscribed Shares by way of share split, dividend, distribution, recapitalization, merger, exchange, replacement or similar event, and “Subscriber” shall mean the Subscriber or any affiliate of the Subscriber or other person to whom the rights under this Section 6 shall have been assigned.
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(h) The Issuer shall, notwithstanding any termination of this Subscription Agreement, indemnify, defend and hold harmless Subscriber (to the extent a seller under the Registration Statement), the officers, directors, employees, members, managers, partners, shareholders, affiliates and agents of Subscriber, and each person who controls Subscriber (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) to the fullest extent permitted by applicable law, from and against any and all out-of-pocket losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, that arise out of or are based upon (i) any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any prospectus included in the Registration Statement or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus or any document incorporated in the foregoing by reference, or arising out of or relating to any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, or (ii) any violation or alleged violation by the Issuer of the Securities Act, Exchange Act or any state securities law or any rule or regulation thereunder, in connection with the performance of its obligations under this Section 6, except to the extent, but only to the extent, that such untrue statements, alleged untrue statement, omissions or alleged omissions are based upon information regarding Subscriber furnished in writing to the Issuer by Subscriber expressly for use therein or Subscriber has omitted a material fact from such information or otherwise violated the Securities Act, Exchange Act or any state securities law or any rule or regulation thereunder, in each case in connection with the registration of the Subscribed Shares; provided, that the indemnification contained in this Section 6 shall not apply to amounts paid in settlement of any Losses if such settlement is effected without the consent of the Issuer (which consent shall not be unreasonably withheld, conditioned or delayed), nor shall the Issuer be liable for any Losses to the extent they arise out of or are based upon a violation which occurs (A) in reliance upon and in conformity with written information furnished by Subscriber, (B) in connection with any failure of Subscriber to deliver or cause to be delivered a prospectus made available by the Issuer in a timely manner, (C) as a result of offers or sales effected by or on behalf of any person by means of a “free writing prospectus” (as defined in Rule 405 under the Securities Act) that was not authorized in writing by the Issuer, or (D) in connection with any offers or sales effected by or on behalf of Subscriber in violation of this Section 6. The Issuer shall notify Subscriber promptly of the institution, threat or assertion of any proceeding arising from or in connection with the transactions contemplated by this Section 6 of which the Issuer is aware. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of an indemnified party and shall survive the transfer of the Subscribed Shares by Subscriber. Subscriber shall, notwithstanding any termination of this Subscription Agreement, indemnify, defend and hold harmless the Issuer, the officers, directors, employees, members, managers, partners, shareholders and agents of the Issuer, and each person who controls the Issuer (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) to the fullest extent permitted by applicable law, from and against any and all out-of-pocket Losses, as incurred, that arise out of or are based upon any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any prospectus included in the Registration Statement or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, solely to the extent, that such untrue statements, alleged untrue statements, omissions or alleged omissions are based upon information regarding Subscriber furnished in writing to the Issuer by Subscriber expressly for use therein or Subscriber has omitted a material fact from such information or otherwise violated the Securities Act, Exchange Act or any state securities law or any rule or regulation thereunder, in each case in connection with the registration of the Subscribed Shares; provided, that the indemnification contained in this Section 6 shall not apply to amounts paid in settlement of any Losses if such settlement is effected without the consent of Subscriber (which consent shall not be unreasonably withheld, conditioned or delayed). Subscriber shall notify the Issuer promptly of the institution, threat or assertion of any proceeding arising from or in connection with the transactions contemplated by this Section 6 of which Subscriber is aware. The indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of an indemnified party and shall survive the transfer of the Subscribed Shares by Subscriber.
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(i) Any person entitled to indemnification herein shall (1) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (2) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its written consent. An indemnifying party who elects not to assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of legal counsel to any indemnified party a conflict of interest exists between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party (which consent shall not be unreasonably withheld, conditioned or delayed), consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.
(j) If the indemnification provided under this Section 6 from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any Losses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by, such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the Losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in Section 6(i) above, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 6(j) from any person who was not guilty of such fraudulent misrepresentation. In no event shall the liability of Subscriber hereunder exceed the net proceeds received by Subscriber upon the sale of the Subscribed Shares giving rise to such indemnification or contribution obligation.
7. Termination. This Subscription Agreement shall terminate and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, upon the earliest to occur of (a) such date and time as the Transaction Agreement is terminated in accordance with its terms, (b) upon the mutual written agreement of the parties to terminate this Subscription Agreement, (c) if, on the Closing Date of the Transaction, any of the conditions to Closing set forth in Section 2 of this Subscription Agreement have not been satisfied as of the time required hereunder to be so satisfied or waived (to the extent a valid waiver is capable of being issued) by the party entitled to grant such waiver on or prior to the Closing and, as a result thereof, the transactions contemplated by this Subscription Agreement are not consummated at the Closing, and (d) February 28, 2026; provided that nothing herein will relieve any party hereto from liability for any willful breach hereof prior to the time of termination, and each party hereto will be entitled to any remedies at law or in equity to recover losses, liabilities or damages arising from such breach. The Issuer shall notify Subscriber of the termination of the Transaction Agreement promptly after the termination thereof. For the avoidance of doubt, if any termination hereof occurs after the delivery by Subscriber of the Purchase Price for the Subscribed Shares, the Issuer shall promptly (but not later than one Business Day thereafter) return the Purchase Price to Subscriber without any deduction for or on account of any tax, withholding, charges, or set-off.
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8. Trust Account Waiver. Subscriber hereby acknowledges that the Issuer has established a trust account (the “Trust Account”) containing the proceeds of its initial public offering (the “IPO”) and from certain private placements occurring simultaneously with the IPO (including interest accrued from time to time thereon) for the benefit of the Issuer’s public shareholders and certain other parties (including the underwriters of the IPO). For and in consideration of the Issuer entering into this Subscription Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Subscriber hereby (a) agrees that it does not now and shall not at any time hereafter have any right, title, interest or claim of any kind in or to any assets held in the Trust Account, and shall not make any claim against the Trust Account, regardless of whether such claim arises as a result of, in connection with or relating in any way to this Subscription Agreement or any other matter, and regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability (any and all such claims are collectively referred to hereafter as the “Released Claims”), (b) irrevocably waives any Released Claims that it may have against the Trust Account now or in the future as a result of, or arising out of, any negotiations, contracts or agreements with the Issuer, and (c) will not seek recourse against the Trust Account for any reason whatsoever; provided, however, that nothing in this Section 8 shall (i) be deemed to limit any Subscriber’s right to distributions from the Trust Account in accordance with the Issuer’s Amended and Restated Memorandum and Articles of Association in respect of any redemptions by Subscriber of its Class A Ordinary Shares acquired by any means other than pursuant to this Subscription Agreement, (ii) serve to limit or prohibit Subscriber’s right to pursue a claim against the Issuer for legal relief against assets held outside the Trust Account, for specific performance or other equitable relief, (iii) serve to limit or prohibit any claims that Subscriber may have in the future against Issuer’s assets or funds that are not held in the Trust Account, or (iv) be deemed to limit Subscriber’s right, title, interest or claim to the Trust Account by virtue of Subscriber’s record or beneficial ownership of Class A Ordinary Shares acquired by any means other than pursuant to this Subscription Agreement.
9. Miscellaneous.
(a) All notices, requests, demands, claims, and other communications hereunder shall be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given (i) when delivered personally to the recipient, (ii) when sent by electronic mail, on the date of transmission to such recipient; provided, that such notice, request, demand, claim or other communication is also sent to the recipient pursuant to clauses (i), (iii) or (iv) of this Section 9(a), (iii) one Business Day after being sent to the recipient by reputable overnight courier service (charges prepaid), or (iv) four Business Days after being mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, and, in each case, addressed to the intended recipient at its address specified on the signature page hereof or to such electronic mail address or address as subsequently modified by written notice given in accordance with this Section 9(a). A courtesy electronic copy of any notice sent by methods (i), (iii), or (iv) above shall also be sent to the recipient via electronic mail if provided in the applicable signature page hereof or to an electronic mail address as subsequently modified by written notice given in accordance with this Section 9(a).
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(b) If the Subscribed Shares are eligible to be sold pursuant to an effective registration statement or without restriction under Rule 144, including in connection with any transfer by Subscriber to the account of a DTC participant with or without prior sale, then at Subscriber’s request and upon delivery by Subscriber of representations and other documentation reasonably acceptable to the Issuer and the Transfer Agent, the Issuer will promptly use commercially reasonable efforts to cause the Issuer’s transfer agent (the “Transfer Agent”) to remove any remaining restrictive legend set forth on such Subscribed Shares upon delivery by Subscriber of representations and other documentation reasonably acceptable to the Issuer and the Transfer Agent. In connection therewith, if required by the Transfer Agent, the Issuer shall promptly use commercially reasonable efforts to cause an opinion of counsel in customary form to be delivered to with the Transfer Agent, together with any other authorizations, certificates and directions required by the Transfer Agent that authorize and direct the Transfer Agent to issue such Subscribed Shares without any such legend. The Issuer shall be responsible for the fees of its Transfer Agent, its legal counsel and all DTC fees associated with such issuance.
(c) With a view to making available to Subscriber the benefits of Rule 144 that permit Subscriber to sell securities of the Issuer to the public without registration, the Issuer agrees, for so long as Subscriber holds Subscribed Shares, to make and keep public information available, as those terms are understood and defined in Rule 144;
(d) Subscriber acknowledges that the Issuer and the Placement Agent will rely on the acknowledgments, understandings, agreements, representations and warranties of Subscriber contained in this Subscription Agreement; provided however that the foregoing clause of this Section 9(d) shall not give the Issuer or the Placement Agent any rights other than those expressly set forth herein. Prior to the Closing, Subscriber agrees to promptly notify the Issuer and the Placement Agent if it becomes aware that any of the acknowledgments, understandings, agreements, representations and warranties of Subscriber set forth herein are no longer accurate in all material respects. The Issuer acknowledges that Subscriber and the Placement Agent will rely on the acknowledgments, understandings, agreements, representations and warranties of the Issuer contained in this Subscription Agreement. Prior to the Closing, the Issuer agrees to promptly notify Subscriber and the Placement Agent if it becomes aware that any of the acknowledgments, understandings, agreements, representations and warranties of the Issuer set forth herein are no longer accurate in all material respects.
(e) Each of the Issuer and Subscriber is irrevocably authorized to produce this Subscription Agreement or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.
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(f) Each party shall pay all of its own expenses in connection with this Subscription Agreement and the transactions contemplated herein (for the avoidance of doubt, other than as provided in Section 6 and Section 9(b)).
(g) Neither this Subscription Agreement nor any rights that may accrue to Subscriber hereunder (other than the Subscribed Shares acquired hereunder, if any, and Subscriber’s rights under Section 6) may be transferred or assigned. Neither this Subscription Agreement nor any rights that may accrue to the Issuer hereunder may be transferred or assigned (provided, that, for the avoidance of doubt, the Issuer may transfer the Subscription Agreement and its rights hereunder in connection with the consummation of the Transaction). Notwithstanding the foregoing, Subscriber may assign its rights and obligations under this Subscription Agreement to one or more of its affiliates or, with the prior written consent of the Issuer, to another person, provided that no such assignment shall relieve Subscriber of its obligations hereunder if any such assignee fails to perform such obligations.
(h) All the agreements, representations and warranties made by each party hereto in this Subscription Agreement shall survive the Closing. All of the covenants and agreements made by each party hereunder shall survive the Closing until the third anniversary of the Closing or in accordance with their respective terms if later.
(i) The Issuer may request from Subscriber such additional information as the Issuer may reasonably deem necessary to evaluate the eligibility of Subscriber to acquire the Subscribed Shares, and Subscriber shall provide such information as may be reasonably requested; provided, that the Issuer agrees to keep any such information provided by Subscriber confidential. Subscriber acknowledges that the Issuer may file a copy of this Subscription Agreement with the Commission as an exhibit to a periodic report of the Issuer or a registration statement of the Issuer.
(j) Each of the Issuer and Subscriber hereto agrees that Subscriber’s identity, as well as the nature of Subscriber’s obligations hereunder, may be disclosed in public announcements and disclosures required by the Commission, including in any registration statements, proxy statements, consent solicitation statements and other Commission filings to be filed by the Issuer in connection with the Transaction; provided that such disclosure is limited to the extent required to comply with law, rules or regulations, in response to a comment or request from the staff of the Commission or another regulatory agency or under Nasdaq regulations; provided further that, to the extent permitted by the foregoing, Subscriber shall have an opportunity to review all disclosures in which it is named prior to filing or public release. In all other cases, the Issuer acknowledges and agrees that the it will not, and will cause its representatives not to publicly make reference to Subscriber or any of its affiliates in connection with the Transaction or this Subscription Agreement, including in a press release or marketing materials of the Issuer or for any similar or related purpose (provided that the Issuer may disclose its entry into this Subscription Agreement and the Purchase Price) without the prior written consent of Subscriber.
(k) This Subscription Agreement may not be amended, modified or waived or terminated (other than pursuant to the terms of Section 7 above) except by an instrument in writing, signed by each of the parties hereto. Section 3, Section 4, this Section 9(k), and Section 9(l) may not be amended, modified, terminated or waived in any manner that is material and adverse to the Placement Agent without the written consent of the Placement Agent. No failure or delay of any party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have hereunder.
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(l) This Subscription Agreement constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties hereto, with respect to the subject matter hereof. The parties hereto agree that the Placement Agent is an express third-party beneficiary of the representations, warranties and covenants of the Issuer contained in Section 3 and the representations, warranties and convents of Subscriber contained in Section 4, and its express rights set forth in Section 9(k) and this Section 9(l). Except as otherwise provided in Section 6(i), Section 9(k), Section 9(m), and this Section 9(l), this Subscription Agreement shall not confer any rights or remedies upon any person other than the parties hereto and their respective permitted successors and assigns.
(m) Except as otherwise provided herein, this Subscription Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives, and permitted assigns, and the agreements, representations, warranties, covenants and acknowledgments contained herein shall be deemed to be made by, and be binding upon, such heirs, executors, administrators, successors, legal representatives and permitted assigns.
(n) If any provision of this Subscription Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Subscription Agreement shall not in any way be affected or impaired thereby and shall continue in full force and effect.
(o) This Subscription Agreement may be executed and delivered in counterparts (including by electronic mail or in .pdf, including DocuSign) and by different parties in separate counterparts, with the same effect as if all parties hereto had signed the same document. All counterparts so executed and delivered shall be construed together and shall constitute one and the same agreement.
(p) The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Subscription Agreement were not performed in accordance with their specific terms or were otherwise breached and that money damages or other legal remedies would not be an adequate remedy for such damage. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Subscription Agreement and to enforce specifically the terms and provisions of this Subscription Agreement, this being in addition to any other remedy to which such party is entitled at law, in equity, in contract, in tort or otherwise. The parties hereto acknowledge and agree that TEI shall be entitled to specifically enforce Subscriber’s obligations to fund the Purchase Price and the provisions of the Subscription Agreement of which TEI is an express third-party beneficiary, in each case, on the terms and subject to the conditions set forth herein. The parties hereto acknowledge and agree that Subscriber shall be entitled to specifically enforce Issuer’s obligations to deliver the Subscribed Shares and the provisions of the Subscription Agreement, in each case, on the terms and subject to the conditions set forth herein. The parties hereto further acknowledge and agree: (x) that none of the parties hereto or the Placement Agent shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy referred to in this Section 9(p), and waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument; (y) not to assert that a remedy of specific enforcement pursuant to this Section 9(p) is unenforceable, invalid, contrary to applicable law or inequitable for any reason; and (z) to waive any defenses in any action for specific performance, including the defense that a remedy at law would be adequate.
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(q) No failure or delay by a party hereto in exercising any right, power or remedy under this Subscription Agreement, and no course of dealing between the parties hereto, shall operate as a waiver of any such right, power or remedy of such party. No single or partial exercise of any right, power or remedy under this Subscription Agreement by a party hereto, nor any abandonment or discontinuance of steps to enforce any such right, power or remedy, shall preclude such party from any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The election of any remedy by a party hereto shall not constitute a waiver of the right of such party to pursue other available remedies. No notice to or demand on a party not expressly required under this Subscription Agreement shall entitle the party receiving such notice or demand to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the party giving such notice or demand to any other or further action in any circumstances without such notice or demand.
(r) This Subscription Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the principles of conflicts of laws that would otherwise require the application of the law of any other state.
(s) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OR RELATED TO THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY HERETO OR ANY AFFILIATE OF ANY OTHER SUCH PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. THE PARTIES HERETO AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES HERETO FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS SUBSCRIPTION AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS SUBSCRIPTION AGREEMENT.
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(t) The parties hereto agree that all disputes, legal actions, suits and proceedings arising out of or relating to this Subscription Agreement must be brought exclusively in the Court of Chancery of the State of Delaware and any state appellate court therefrom within the State of Delaware (or, if the Court of Chancery of the state of Delaware declines to accept jurisdiction over a particular matter, any federal court within the State of Delaware or, in the event each federal court within the State of Delaware declines to accept jurisdiction over a particular matter, any state court within the state of Delaware) (collectively the “Designated Courts”). Each party hereto hereby consents and submits to the exclusive jurisdiction of the Designated Courts. No legal action, suit or proceeding with respect to this Subscription Agreement may be brought in any other forum. Each party hereto hereby irrevocably waives all claims of immunity from jurisdiction and any objection which such party may now or hereafter have to the laying of venue of any suit, action or proceeding in any Designated Court, including any right to object on the basis that any dispute, action, suit or proceeding brought in the Designated Courts has been brought in an improper or inconvenient forum or venue. Each of the parties hereto also agrees that delivery of any process, summons, notice or document to a party hereof in compliance with Section 9(a) of this Subscription Agreement shall be effective service of process for any action, suit or proceeding in a Designated Court with respect to any matters to which the parties hereto have submitted to jurisdiction as set forth above.
(u) This Subscription Agreement may only be enforced against, and any claim, action, suit or other legal proceeding based upon, arising out of, or related to this Subscription Agreement, or the negotiation, execution or performance of this Subscription Agreement, may only be brought against the entities that are expressly named as parties hereto and then only with respect to the specific obligations set forth herein with respect to such party. No past, present or future director, officer, employee, incorporator, sponsor, manager, member, partner, stockholder, affiliate, agent, attorney or other representative of any party hereto or of any affiliate of any party hereto, or any of their successors or permitted assigns, shall have any liability for any obligations or liabilities of any party hereto under this Subscription Agreement or for any claim, action, suit or other legal proceeding based on, in respect of or by reason of the transactions contemplated hereby.
(v) The Issuer shall, by 9:00 a.m., New York City time, on the second Business Day immediately following the execution of this Subscription Agreement, issue one or more press releases or file with the Commission a Current Report on Form 8-K (collectively, the “Disclosure Document”) disclosing, to the extent not previously publicly disclosed, all material terms of the transactions contemplated hereby (and by the Other Subscription Agreements), the Transaction and any other material, nonpublic information that the Issuer, TEI or the Placement Agent has provided to Subscriber at any time prior to the filing of the Disclosure Document. Upon the issuance of the Disclosure Document, to the Issuer’s knowledge, Subscriber shall not be in possession of any material, non-public information received from the Issuer or any of its officers, directors, employees or agents (including the Placement Agent) in connection with the transactions contemplated by this Subscription Agreement, and Subscriber shall no longer be subject to any confidentiality or similar obligations under any current agreement, whether written or oral with the Issuer or any of its officers, directors, employees or agents (including the Placement Agent) in connection with the transactions contemplated by this Subscription Agreement.
(w) If any change in the number, type or classes of authorized shares of the Issuer (including the Class A Ordinary Shares), other than as contemplated by the Transaction Agreement or any agreement contemplated by the Transaction Agreement, shall occur between the date hereof and immediately prior to the Closing by reason of reclassification, recapitalization, share split (including reverse share split) or combination, exchange or readjustment of shares, or any share dividend, the number of Subscribed Shares issued to Subscriber shall be appropriately adjusted to reflect such change.
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(x) The obligations of Subscriber under this Subscription Agreement are several and not joint with the obligations of any Other Subscriber or any other investor under the Other Subscription Agreements, and Subscriber shall not be responsible in any way for the performance of the obligations of any Other Subscriber under this Subscription Agreement or any Other Subscriber or other investor under the Other Subscription Agreements. The decision of Subscriber to purchase Subscribed Shares pursuant to this Subscription Agreement has been made by Subscriber independently of any Other Subscriber or any other investor and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Issuer or any of its subsidiaries which may have been made or given by any Other Subscriber or investor or by any agent or employee of any Other Subscriber or investor, and neither Subscriber nor any of its agents or employees shall have any liability to any Other Subscriber or investor (or any other person) relating to or arising from any such information, materials, statements or opinions. Nothing contained herein or in any Other Subscription Agreement, and no action taken by Subscriber or investor pursuant hereto or thereto, shall be deemed to constitute Subscriber and Other Subscribers or other investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that Subscriber and Other Subscribers or other investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Subscription Agreement and the Other Subscription Agreements. Subscriber acknowledges that no Other Subscriber has acted as agent for Subscriber in connection with making its investment hereunder and no Other Subscriber will be acting as agent of Subscriber in connection with monitoring its investment in the Subscribed Shares or enforcing its rights under this Subscription Agreement. Subscriber shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Subscription Agreement, and it shall not be necessary for any Other Subscriber or investor to be joined as an additional party in any proceeding for such purpose.
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IN WITNESS WHEREOF, each of the Issuer and Subscriber has executed or caused this Subscription Agreement to be executed by its duly authorized representative as of the date first set forth above.
| HCM II ACQUISITION CORP. | ||
| By: | ||
| Name: | ||
|
Title: Address for Notices: | ||
| SUBSCRIBER: | ||
| By: | ||
| Name: | ||
|
Title: Address for Notices: | ||
| Name in which shares are to be registered: | ||||
| Number of Subscribed Shares subscribed for: | ||||
| Price Per Subscribed Share: | $ | 10.00 | ||
| Aggregate Purchase Price: | $ | |||
You must pay the Purchase Price by wire transfer of United States dollars in immediately available funds to the Issuer specified by the Issuer in the Closing Notice.
[Signature Page to PIPE Subscription Agreement]
ANNEX A
SUBSCRIBER CERTIFICATE - NON-REDEEMED SHARES
Pursuant to Section 1(b) of the Subscription Agreement, dated [●], 2025 (the “Subscription Agreement”), between HCM II Acquisition Corp. (the “Issuer”) and the Subscriber named below, the undersigned (“Subscriber”) hereby certifies as follows:
| 1. | Subscriber wishes to decrease the number of Committed Shares which it is obligated to purchase under the Subscription Agreement by ____________ Non-Redeemed Shares. |
| 2. | Subscriber hereby represents and warrants that the shares listed in clause (i) qualify as Non-Redeemed Shares. In connection therewith, Subscriber agrees and acknowledges that in order to qualify as Non-Redeemed Shares, (a) as of fifth calendar day after the effectiveness of the Issuer’s Registration Statement on Form S-4 with respect to the Transaction, Subscriber must hold any of the Issuer’s Class A ordinary shares, par value $0.0001 per share, together with any related Redemption Rights, and such Class A Ordinary Shares, (b) Subscriber shall not exercise any Redemption Rights with respect to such shares (and shall revoke any prior redemption or conversion election made with respect to such shares), (c) Subscriber may not Transfer such shares prior to the Closing Date, and (d) such shares will not be voted with respect to any proposal contained in the Proxy Statement. Subscriber further agrees and acknowledges that it shall not take any action in breach of any of the foregoing clauses (b) — (d). |
| 3. | A true and correct Schedule of the dates and purchase prices of the Non-Redeemed Shares is attached hereto. |
Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Subscription Agreement.
| By: | ||
| Name: | ||
| Title: |
ANNEX B
ELIGIBILITY REPRESENTATIONS OF SUBSCRIBER
This Annex B should be completed and signed by Subscriber
and constitutes a part of the Subscription Agreement.
| A. | QUALIFIED INSTITUTIONAL BUYER STATUS (Please check the box, if applicable) |
| ☐ | Subscriber is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act). |
| B. | ACCREDITED INVESTOR STATUS (Please check the box) |
| ☐ | Subscriber is an “accredited investor” (within the meaning of Rule 501(a) of Regulation D under the Securities Act) and has marked and initialed the appropriate box below indicating the provision under which it qualifies as an “accredited investor.” |
| C. | AFFILIATE STATUS |
(Please check the applicable box)
SUBSCRIBER:
☐ is:
☐ is not:
an “affiliate” (as defined in Rule 144 under the Securities Act) of the Issuer or acting on behalf of an affiliate of the Issuer.
Rule 501(a), in relevant part, states that an “accredited investor” shall mean any person who comes within any of the below listed categories, or who the issuer reasonably believes comes within any of the below listed categories, at the time of the sale of the securities to that person. Subscriber has indicated, by marking and initialing the appropriate box below, the provision(s) below which apply to Subscriber and under which Subscriber accordingly qualifies as an “accredited investor.”
| ☐ | (a) Any individual (not a partnership, corporation, etc.) whose individual net worth (excess of total assets at fair market value, including homes (but excluding the value of the primary residence of such individual), automobiles and personal property, over total liabilities (excluding the amount of indebtedness secured by the individual’s primary residence up to its fair market value, but including the amount of any such indebtedness in excess of such fair market value)), or joint net worth with his or her spouse, or spousal equivalent, presently exceeds $1,000,000; |
| ☐ | (b) Any individual (not a partnership, corporation, etc.) who had an income in excess of $200,000 in each of the two most recent years, or joint income with his or her spouse, or spousal equivalent, in excess of $300,000 in each of those years (in each case including foreign income, tax exempt income and full amount of capital gains and losses but excluding any income of other family members and any unrealized capital appreciation) and has a reasonable expectation of reaching the same income level in the current year; |
| ☐ | (c) Any director or executive officer (e.g., president or any vice president in charge of a principal business unit, division or function such as sales, administration or finance) of the Issuer; |
| ☐ | (d) Any corporation, partnership, Massachusetts business trust, limited liability company, or non-profit organization within the meaning of Section 501(c)(3) of the Internal Revenue Code, or other entity, in each case not formed for the specific purpose of acquiring the Committed Shares and with total assets in excess of $5,000,000; |
| ☐ | (e) Any trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Committed Shares, whose purchase would be directed by a “sophisticated person” as described in Rule 506(b)(2)(ii); |
| ☐ | (f) Any revocable trust which may be amended or revoked by the grantors, and all of the grantors satisfy the conditions of clauses (a), (b) or (c) above; |
| ☐ | (g) Any bank, broker or dealer, investment adviser, insurance company, investment company, Small Business Investment Company, employee benefit plan, state plan, private business development company meeting the criteria described in Rule 501(a) clause (1); |
| ☐ | (h) Any entity all the equity owners of which are “accredited investors” within one or more of the above categories; |
| ☐ | (i) Any a natural person who holds, in good standing, one of the following professional licenses: the General Securities Representative license (Series 7), the Private Securities Offerings Representative license (Series 82), or the Investment Adviser Representative license (Series 65); |
| ☐ | (j) Any natural person who is a “knowledgeable employee,” as defined in Rule 3c-5(a)(4) under the Investment Company Act of 1940, of the Issuer; and |
| ☐ | (k) Any “family office” or “family client” as defined in rule 202(a)(11)(G)-1 that meets the requirements described in Rule 501(a) clause (12). |
| SUBSCRIBER: | ||
| By: | ||
| Name: | ||
| Title: | ||
Exhibit 10.2
EXECUTION VERSION
SPONSOR SUPPORT AGREEMENT
This Sponsor Support Agreement (this “Agreement”) is dated as of March 26, 2025, by and among HCM Investor Holdings II, LLC, a Cayman Islands limited liability company (the “Sponsor”), HCM II Acquisition Corp., a Cayman Islands exempted company (which shall domesticate as a Delaware corporation prior to the Closing) (the “Purchaser”), and Terrestrial Energy Inc., a Delaware corporation (the “Company”). Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Business Combination Agreement (as defined below).
WHEREAS, as of the date hereof, the Sponsor is the holder of record and the “beneficial owner” (within the meaning of Rule 13d-3 under the Exchange Act) of 5,750,000 Purchaser Class B Ordinary Shares (which constitute all of the outstanding Purchaser Class B Ordinary Shares) and 4,275,000 Purchaser Private Placement Warrants (collectively, the “Subject Securities”);
WHEREAS, contemporaneously with the execution and delivery of this Agreement, the Purchaser, the Company and HCM II Merger Sub Inc., a Delaware corporation and direct wholly owned subsidiary of the Purchaser, have entered into the Business Combination Agreement (as it may be amended, supplemented, restated or otherwise modified from time to time in accordance with its terms, the “Business Combination Agreement”), dated as of the date hereof, pursuant to which, among other transactions, the Purchaser and the Company intend to consummate a business combination; and
WHEREAS, as an inducement to the Purchaser and the Company to enter into the Business Combination Agreement and to consummate the Transactions, the parties hereto desire to agree to certain matters as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be legally bound hereby, hereby agree as follows:
ARTICLE
I
SPONSOR SUPPORT AGREEMENT; COVENANTS
Section 1.1 Binding Effect of Business Combination Agreement. The Sponsor hereby acknowledges that it has read the Business Combination Agreement and this Agreement and has had the opportunity to consult with its tax and legal advisors. The Sponsor shall be bound by, be subject to and comply with Sections 6.06 (No Solicitation), 6.15 (Public Announcements), 6.16 (Confidential Information) and 9.17 (Transferred Information) of the Business Combination Agreement (and any relevant definitions contained in any such Sections) as if the Sponsor was an original signatory to the Business Combination Agreement with respect to such provisions.
Section 1.2 No Transfer.
(a) Unless otherwise deemed a Permitted Transfer (as defined below), during the period commencing on the date hereof and ending on the earliest of (a) the Closing, (b) such date and time as the Business Combination Agreement shall be terminated in accordance with Section 8.01 (Termination) thereof and (c) the liquidation of the Purchaser (the earliest of (a), (b) and (c), the “Expiration Time”), the Sponsor shall not, without the prior written consent of the Company, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, file (or participate in the filing of) a registration statement with the SEC (other than the Proxy Statement/Registration Statement) or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, with respect to any Subject Securities owned by the Sponsor, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Subject Securities owned by the Sponsor or (iii) take any action in furtherance of any of the matters described in the foregoing clause (i) or (ii) (each, a “Transfer”). The Sponsor agrees to promptly notify the Company in writing of any Permitted Transfer.
(b) “Permitted Transfer” means any Transfer of Subject Securities: (i) to (A) any officer or director of the Purchaser, the Company or the Sponsor, (B) any Affiliates or family members of the officers or directors of the Purchaser, the Company or the Sponsor, or (C) any direct or indirect partners, members or equity holders of the Sponsor or any related investment funds or vehicles controlled or managed by such Persons or their respective Affiliates (including, for the avoidance of doubt, where such Person is a partnership, to its general partner or a successor partnership or fund, or any other funds managed by such partnership); (ii) to a nominee or custodian of a Person to whom a Transfer would be permitted under clause (i); (iii) in connection with any legal, regulatory or other order; (iv) to a third party in connection with any non-redemption, backstop arrangement or other similar arrangement; (v) as otherwise mutually agreed upon between the Sponsor, the Purchaser and the Company; or (vi) to the Purchaser, the Company or the Sponsor; provided, however, that in the case of clauses (i) through (vi), as a precondition to such Transfer, such transferee must enter into a written agreement with the Company and the Purchaser agreeing to assume all of the obligations under this Agreement with respect to such Subject Securities and to be bound by the transfer restrictions set forth in this Agreement (to the extent applicable); provided, further, that, no Transfer permitted under this Section 1.2 shall relieve Sponsor or any holder of Subject Securities pursuant to a Permitted Transfer of its obligations under this Agreement.
Section 1.3 New Shares. In the event that (a) any Purchaser Ordinary Shares, Purchaser Warrants or other equity securities of the Purchaser are issued to the Sponsor after the date of this Agreement pursuant to any stock dividend, stock split, recapitalization, reclassification, combination or exchange of, on or affecting the Purchaser Ordinary Shares or the Purchaser Warrants owned by the Sponsor or otherwise, (b) the Sponsor purchases or otherwise acquires beneficial ownership of any Purchaser Ordinary Shares, Purchaser Warrants or other equity securities of the Purchaser after the date of this Agreement, or (c) the Sponsor acquires the right to vote or share in the voting of any Purchaser Ordinary Shares or other equity securities of the Purchaser after the date of this Agreement (such Purchaser Ordinary Shares, Purchaser Warrants or other equity securities of the Purchaser, collectively, the “New Securities”), then such New Securities acquired or purchased by the Sponsor shall be subject to the terms of this Agreement to the same extent as if they constituted the Subject Securities owned by the Sponsor as of the date hereof.
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Section 1.4 Closing Date Deliverables. On the Closing Date, the Sponsor shall deliver to the Purchaser and the Company a duly executed copy of the Registration Rights Agreement and the Sponsor Lock-Up Agreement.
Section 1.5 Agreements.
(a) At any meeting of the Purchaser Shareholders, however called, or at any adjournment thereof, or in any other circumstance in which the vote, consent or other approval of the Purchaser Shareholders is sought, the Sponsor shall (i) appear at each such meeting or otherwise cause all of its Subject Securities, which are entitled to vote, to be counted as present thereat for purposes of calculating a quorum and (ii) vote (or cause to be voted), or execute and deliver a written consent (or cause a written consent to be executed and delivered) covering, all of its Subject Securities, which are entitled to vote:
(i) in favor of each Transaction Proposal;
(ii) against any Alternative Transaction or any proposal relating to an Alternative Transaction (in each case, other than the Transaction Proposals);
(iii) against any merger agreement or merger (other than the Business Combination Agreement and the Transactions), consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by the Purchaser;
(iv) against any change in the business, management or board of directors of the Purchaser (other than in connection with the Transaction Proposals or pursuant to the Business Combination Agreement or the Ancillary Documents);
(v) against any proposal, action or agreement that would (A) impede, interfere, frustrate, prevent or nullify any provision of this Agreement, the Business Combination Agreement or the Transactions, (B) result in a breach in any respect of any covenant, representation, warranty or any other obligation or agreement of the Purchaser under the Business Combination Agreement, (C) result in any of the conditions set forth in Article VII (Closing Conditions) of the Business Combination Agreement not being fulfilled, (D) result in a breach of any covenant, representation or warranty or other obligation or agreement of the Sponsor contained in this Agreement or the Purchaser contained in the Business Combination Agreement or (E) change in any manner the dividend policy or capitalization of, including the voting rights of any class of capital stock of, the Purchaser; and
(vi) in favor of any proposal to adjourn a meeting at which there is a proposal for shareholders of the Company to approve and adopt the Transaction Proposals to a later date if there are not sufficient votes to approve and adopt the Transaction Proposals or if there are not sufficient shares present in person or represented by proxy at such meeting to constitute a quorum.
The Sponsor hereby agrees that the Sponsor shall not commit or agree to take any action inconsistent with the foregoing.
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(b) The Sponsor shall comply with, and fully perform all of its obligations, covenants and agreements set forth in, the Insider Letter (as defined below), including the obligations of the Sponsor pursuant to Section 1 therein to not redeem any Purchaser Ordinary Shares owned by the Sponsor in connection with the Transactions.
Section 1.6 No Challenges. The Sponsor agrees not to commence, join in, facilitate, assist or encourage, and agrees to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against Purchaser, the Company or any of their respective successors or directors (a) challenging the validity of, or seeking to enjoin the operation of, any provision of this Agreement or (b) alleging a breach of any fiduciary duty of any person in connection with the evaluation, negotiation or entry into this Agreement, the Business Combination Agreement or the Transactions. Notwithstanding anything herein to the contrary, nothing in this Agreement shall limit or restrict the ability of the Sponsor to enforce its rights under this Agreement or any other Ancillary Document to which such Person is a party or seek any other remedies with respect to any breach of this Agreement or such other Ancillary Document by any other party hereto or thereto, including by commencing any action in connection therewith.
Section 1.7 Further Assurances. The Sponsor shall take, or cause to be taken, all actions and do, or cause to be done, all things reasonably necessary under applicable Laws, or as reasonably requested by the Company, to effect the actions set forth herein and to consummate the transactions contemplated hereby on the terms and subject to the conditions set forth herein and the Transactions on the terms and subject to the conditions set forth in the Business Combination Agreement.
Section 1.8 No Inconsistent Agreement. The Sponsor hereby represents and covenants that the Sponsor has not entered into, and shall not enter into, any agreement that would restrict, limit or interfere with the performance of the Sponsor’s obligations hereunder.
Section 1.9 Appraisal Rights. The Sponsor hereby waives and agrees not to exercise any rights of appraisal or rights to dissent from the Transactions that it may have with respect to the Subject Securities under applicable Law.
Section 1.10 Insider Letter. Neither the Sponsor nor the Purchaser shall amend, terminate or otherwise modify that certain letter agreement, dated as of August 15, 2024, by and among the Purchaser, the Sponsor and certain of the Purchaser’s current and former officers and directors (the “Insider Letter”) without the Company’s prior written consent.
Section 1.11 Waiver of Anti-Dilution Provision. The Sponsor hereby (but subject to the consummation of the Transactions) waives (for itself, for its successors, heirs and assigns), to the fullest extent permitted by law and the amended and restated memorandum and articles of association of the Purchaser (as may be amended from time to time, the “Articles”), any and all anti-dilution rights with respect to the rate that the Purchaser Class B Ordinary Shares held by the Sponsor convert into Purchaser Class A Ordinary Shares in connection with the transactions contemplated by the Business Combination Agreement. The waiver specified in this Section 1.11 shall be applicable only in connection with the Transactions and the transactions contemplated by this Agreement (and any Purchaser Class A Ordinary Shares, shares of Domesticated Purchaser Common Stock or equity-linked securities issued in connection with the Transactions and the transactions contemplated by this Agreement) and shall be void and of no force and effect if the Business Combination Agreement shall be terminated for any reason.
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Section 1.12 Conversion of Purchaser Class B Ordinary Shares. The Sponsor hereby agrees that, not prior to the Business Day following the Redemption, and immediately prior to the Domestication, the Purchaser Class B Ordinary Shares held by the Sponsor shall automatically convert into Purchaser Class A Ordinary Shares pursuant to the Articles. The conversion specified in this Section 1.12 shall be applicable only in connection with the Transactions and the transactions contemplated by this Agreement and shall be void and of no force and effect if the Business Combination Agreement shall be terminated for any reason.
ARTICLE
II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of the Sponsor. The Sponsor represents and warrants as of the date hereof to the Purchaser and the Company as follows:
(a) Organization; Due Authorization. The Sponsor is duly organized, validly existing and in good standing as a limited liability company under the Laws of the jurisdiction in which it is formed, organized or constituted, and the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby are within the Sponsor’s limited liability company powers and have been duly authorized by all necessary limited liability company actions on the part of the Sponsor. This Agreement has been duly executed and delivered by the Sponsor and, assuming due authorization, execution and delivery by the other parties to this Agreement, this Agreement constitutes a legally valid and binding obligation of the Sponsor, enforceable against the Sponsor in accordance with the terms hereof (except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies). If this Agreement is being executed in a representative or fiduciary capacity, the Person signing this Agreement has full power and authority to enter into this Agreement on behalf of the Sponsor.
(b) Ownership. The Sponsor is the record and beneficial owner (as defined in Rule 13d-3 of the Exchange Act) of, and has good title to, all of the Subject Securities, and there exist no Liens or any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such Subject Securities (other than transfer restrictions under the Securities Act)) affecting any such Subject Securities, other than Liens pursuant to (i) this Agreement, (ii) the Purchaser’s Organizational Documents, (iii) the Business Combination Agreement, (iv) the Insider Letter, (v) the Sponsor’s Organizational Documents, (vi) agreements between the Sponsor and its members or (vii) any applicable securities Laws. The Subject Securities are the only equity securities in the Purchaser owned of record or beneficially by the Sponsor on the date of this Agreement, and none of the Subject Securities are subject to any proxy, voting trust or other agreement or arrangement with respect to the voting of such Subject Securities, except as provided hereunder and under the Insider Letter. Other than the Subject Securities, the Sponsor does not hold or own any rights to acquire (directly or indirectly) any equity securities of the Purchaser or any equity securities convertible into, or which can be exchanged for, equity securities of the Purchaser.
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(c) No Conflicts. The execution and delivery of this Agreement by the Sponsor does not, and the performance by the Sponsor of its obligations hereunder will not, (i) conflict with or result in a violation of the organizational documents of the Sponsor or (ii) require any consent or approval that has not been given or other action that has not been taken by any Person (including under any Contract binding upon the Sponsor or the Sponsor’s Subject Securities), in each case, to the extent such consent, approval or other action would prevent, enjoin or materially delay the performance by the Sponsor of its obligations under this Agreement.
(d) Adequate Information. The Sponsor has been furnished or given access to adequate information concerning the business and financial condition of Purchaser and the Company to make an informed decision regarding this Agreement and the Transactions and has independently and without reliance upon Purchaser or the Company and based on such information as the Sponsor has deemed appropriate, made its own analysis and decision to enter into this Agreement. The Sponsor acknowledges that Purchaser and the Company have not made and do not make any representation or warranty, whether express or implied, of any kind or character except as expressly set forth in this Agreement. The Sponsor acknowledges that the agreements contained herein with respect to the Subject Securities are irrevocable and result in the waiver of any right of the undersigned to demand appraisal in connection with the Transactions under applicable Law.
(e) Litigation. There are no Legal Proceedings pending against the Sponsor, or to the knowledge of the Sponsor threatened against the Sponsor, before (or, in the case of threatened Legal Proceedings, that would be before) any arbitrator or any Governmental Authority, which in any manner challenge or seek to prevent, enjoin or materially delay the performance by the Sponsor of its obligations under this Agreement.
(f) Brokerage Fees. Except as described on Section 5.16 (Finders and Broker) of the Purchaser Disclosure Letter, no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with the Transactions based upon arrangements made by the Sponsor, for which the Purchaser or any of its Affiliates may become liable.
(g) Acknowledgment. The Sponsor understands and acknowledges that each of the Purchaser and the Company is entering into the Business Combination Agreement in reliance upon the Sponsor’s execution and delivery of this Agreement.
ARTICLE
III
MISCELLANEOUS
Section 3.1 Termination. This Agreement and all of its provisions shall terminate and be of no further force or effect upon the earliest of (a) the Expiration Time, (b) the liquidation of the Purchaser and (c) the written agreement of the Sponsor, the Purchaser, and the Company. Upon such termination of this Agreement, all obligations of the parties under this Agreement will terminate, without any liability or other obligation on the part of any party hereto to any Person in respect hereof or the transactions contemplated hereby, and no party hereto shall have any claim against another (and no person shall have any rights against such party), whether under contract, tort or otherwise, with respect to the subject matter hereof; provided, however, that the termination of this Agreement shall not relieve any party hereto from liability arising in respect of any breach of this Agreement prior to such termination. This ARTICLE III shall survive the termination of this Agreement.
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Section 3.2 Assignment. This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder will be assigned (including by operation of law) without the prior written consent of the parties hereto.
Section 3.3 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 in the chancery court or any other state or federal court within the State of Delaware, this being in addition to any other remedy to which such party is entitled at law or in equity. In the event that any action shall be brought in equity to enforce the provisions of this Agreement, no party shall allege, and each party hereby waives the defense, that there is an adequate remedy at law, and each party agrees to waive any requirement for the securing or posting of any bond in connection therewith.
Section 3.4 Amendment. This Agreement may not be amended, changed, supplemented, waived or otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by the Purchaser, the Company and the Sponsor.
Section 3.5 Miscellaneous. Sections 9.02 (Notices), 9.05 (Governing Law), 9.06 (Jurisdiction), 9.07 (Waiver of Jury Trial), 9.09 (Severability), 9.11 (Entire Agreement), 9.12 (Interpretation), 9.13 (Counterparts) and 9.15 (Waiver of Claims Against Trust) of the Business Combination Agreement are each hereby incorporated into this Agreement (including any relevant definitions contained in any such Sections), mutatis mutandis.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the Sponsor, the Purchaser and the Company have each caused this Agreement to be duly executed as of the date first written above.
| SPONSOR: | |||
| HCM Investor HoldingS II, LLC | |||
| By: | /s/ Shawn Matthews | ||
| Name: | Shawn Matthews | ||
| Title: | Chief Executive Officer | ||
[Signature Page to Sponsor Support Agreement]
IN WITNESS WHEREOF, the Sponsor, the Purchaser and the Company have each caused this Agreement to be duly executed as of the date first written above.
| PURCHASER: | |||
| HCM II Acquisition Corp. | |||
| By: | /s/ Shawn Matthews | ||
| Name: | Shawn Matthews | ||
| Title: | Chief Executive Officer | ||
[Signature Page to Sponsor Support Agreement]
IN WITNESS WHEREOF, the Sponsor, the Purchaser and the Company have each caused this Agreement to be duly executed as of the date first written above.
| COMPANY: | |||
| Terrestrial Energy Inc. | |||
| By: | /s/ Simon Irish | ||
| Name: | Simon Irish | ||
| Title: | Chief Executive Officer | ||
[Signature Page to Sponsor Support Agreement]
Exhibit 99.1
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Terrestrial Energy to Become First Publicly Traded Molten Salt Nuclear Reactor Developer Through Combination with HCM II Acquisition Corp.
| ● | Terrestrial Energy Inc. (“Terrestrial Energy” or the “Company”) is developing a small modular nuclear plant (the Terrestrial “IMSR plant”) using proprietary Generation IV Integral Molten Salt Reactor (IMSR) nuclear technology. Terrestrial Energy’s IMSR plant will supply high- temperature, clean, firm and flexible heat and electricity, with sector-competitive economics and leading time-to-market at fleet scale. |
| ● | The Transaction will provide approximately $280 million in gross proceeds consisting of $50 million in common stock PIPE commitments at $10.00 per share from new non-affiliated fundamental institutional investors, and approximately $230 million of cash held in HCM II Acquisition Corp.’s (“HCM II”) trust account before potential redemptions. Proceeds will be used to accelerate commercial deployment of Terrestrial Energy's IMSR technology and to pay transaction expenses. |
| ● | The Transaction values Terrestrial Energy at a pre-money equity value of $925 million, providing an attractive entry point for HCM II shareholders. The pro forma enterprise value of the new public company is expected to be approximately $1 billion with a pro forma equity value of approximately $1.3 billion, before considering anticipated PIPE financing proceeds and the impact of potential redemptions. |
| ● | Terrestrial Energy’s IMSR plant technology benefits from strong demand forecasts across key growth sectors, including data center power supply, industrial heat and power, grid power, and the production of advanced low-carbon fuels and materials. The Company has partnerships and agreements with notable organizations such as Westinghouse Fuels, Energy Solutions, Schneider Electric, the U.S. Department of Energy (DOE), and Argonne National Laboratory, among others. |
| ● | Texas A&M University recently selected Terrestrial Energy to partner on the construction of a commercial IMSR plant at the Texas A&M RELLIS campus, contributing to the university’s goal of achieving 1 GW of generating capacity at the site by the mid-2030s. |
| ● | Terrestrial Energy is led by Chief Executive Officer Simon Irish and a highly experienced management team, supported by a top-tier board of directors consisting of former C-Suites of leading U.S. nuclear utilities and engineering firms. |
| ● | Terrestrial Energy’s market leadership in the small modular reactor (SMR) sector is demonstrated by its delivery of key regulatory milestones. In 2023, the Canadian Nuclear Safety Commission (CNSC) completed its programmatic Vendor Design Review of the IMSR plant design, the first Generation IV reactor design to complete Canada’s CNSC Vendor Design Review, and a historic industry first for a nuclear plant powered with molten salt reactor technology. The Company’s U.S. Nuclear Regulatory Commission (NRC) engagement commenced in 2016 and includes a successful interagency joint review of the IMSR technology under a CNSC-U.S. NRC Memorandum of Cooperation and concurrent with the CNSC’s completion of the Vendor Design Review. |
| ● | Terrestrial Energy’s CAPEX-light, long-duration business model leverages four distinct and mission-critical recurring revenue streams across the IMSR Plant’s 50+ year lifecycle, spanning from pre-construction revenue activities and construction services/component supply to post- construction IMSR core-unit component and fuel supply, to deliver sustainable, long-term cash flows. |
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| ● | All Terrestrial Energy shareholders will roll 100% of their equity holdings into the new public company and Terrestrial Energy’s management team, Terrestrial Energy’s primary shareholders, HCM II’s sponsor and certain affiliates of HCM II’s sponsor have committed to customary lock-ups. |
| ● | The Transaction is expected to be completed during the fourth quarter of 2025 subject to customary closing conditions. The combined entity will apply for listing on Nasdaq under the ticker symbol “IMSR”. |
CHARLOTTE, NC & STAMFORD, CT – March 26, 2025 – Terrestrial Energy Inc., a developer of small modular nuclear power plants using advanced reactor technology, and HCM II Acquisition Corp. (Nasdaq: HOND), today announced an agreement for a business combination (the “Transaction” or the “Business Combination”) that will result in Terrestrial Energy becoming a public company to be listed on Nasdaq under the ticker symbol “IMSR”.
Company Background
Terrestrial Energy is a developer of Generation IV nuclear plants using proprietary Integral Molten Salt Reactor (IMSR) technology. IMSR technology captures the transformative operating benefits of molten salt reactor technology in a small modular plant design that represents true innovation in affordability, efficiency, and versatility of nuclear energy supply.
Terrestrial Energy’s IMSR plants will supply zero-carbon, clean, firm, low-cost, high-temperature industrial heat and/or electricity for a dual-use energy role. Industrial applications include data center power supply, industrial heat and power, grid power, and green fuels sectors. The company’s IMSR plant design, consisting of two operating IMSRs, has an 822 MWth / 390 MWe capacity. Terrestrial Energy’s IMSR technology is differentiated from legacy nuclear technology through its use of molten salt reactor technology, which offers high efficiency and inherently safe operation.
Terrestrial Energy’s IMSR plants are designed to make pragmatic use of low-cost, readily available Standard-Assay Low Enriched Uranium (LEU enriched to under 5% U235) fuel, enabling secure and scalable fuel supply chains necessary for widespread fleet deployment. Terrestrial Energy believes the use of LEU fuel is a key advantage given significant challenges to the commercial supply of High-Assay Low- Enriched Uranium (HALEU is enriched to between 15% and 20% U235) due to geopolitical tensions.
In February 2025, Terrestrial Energy announced the IMSR plant’s selection by Texas A&M University in a competitive RFP process to site a commercial IMSR plant at the Texas A&M-RELLIS campus. The partnership will provide a platform for Terrestrial Energy to showcase a commercial IMSR plant with a project that benefits from the Texas A&M University System’s national leadership in nuclear technology research and development.
Led by CEO Simon Irish and a highly experienced management team, Terrestrial Energy is supported by a top-tier board of directors consisting of former C-Suite executives of leading U.S. nuclear utilities and engineering firms. The company is also supported by an expert advisory board, which includes former U.S. Secretary of Energy Ernest Moniz serving as senior counsel to the advisory board, as well as former Prime Minister of Canada, Stephen Harper, and former BP p.l.c. President and CEO, Lord John Browne, along with other highly experienced professionals from energy, industrials, aerospace and defense, finance and government. The HCM II Board of Directors also features extensive experience, including Mike Connor, former Navy Vice Admiral in charge of the U.S. Nuclear Submarine Fleet, as well as Shawn Matthews, former CEO of Cantor Fitzgerald & Co.
Today, the Company is engaged with engineers, regulators, suppliers and industrial partners to build, license and commission IMSR plants for fleet operation in the 2030s.
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CAPEX-Light Business Model Delivers Long-Term, Recurring Revenue Streams
Terrestrial Energy’s CAPEX-light business model and flexible energy output delivers competitive and customized solutions to customer-specific requirements across a 50+ year IMSR plant lifecycle, enabling sustainable, long-term revenue streams. Terrestrial Energy’s services include the delivery of engineering and construction services for commissioning IMSR plants, supply of critical components to construct and operate IMSR plants including long-term supply of replacement IMSR core-units every 7 years and IMSR fuel, in addition to operating, maintenance and decommissioning services. End-users are industrial and municipal counterparties requiring low-cost, clean, firm, high-temperature heat and/or electrical power, including data center operators and utilities, among others.
The high-margin plant economics of Terrestrial Energy’s IMSR plants derive from its reactor technology and plant design choices. The high thermal stability of molten salt coolant allows for high-temperature and low-pressure operation, with inherent safety attributes, all economic virtues. This drives high capital and operating efficiencies for low-cost heat and power, resulting in improved power plant revenue and profitability. The IMSR’s high-temperature heat supply enables a 50% increase in the efficiency of electric power generation compared to legacy nuclear technologies, which it achieves with low-cost, standard industrial turbines. Furthermore, the IMSR avoids the complexity and costs of high-pressure nuclear systems, structures, and components, contributing to lower plant CAPEX, improved affordability, and lower-cost electric power compared to legacy nuclear power plants.
Terrestrial Energy has partnerships and agreements in place with Westinghouse Fuel, Energy Solutions, Schneider Electric, the U.S. Department of Energy, and Argonne National Laboratory, among others. The company has a portfolio of multiple IMSR plant projects, which are sourced from a portfolio of consortium relationships. These are offering sites, construction, fuel supply, plant operating services, as well as heat and power offtake, with the capabilities to deliver further IMSR plant projects. They cover a range of deployment use-cases including co-location for data center power supply, co-located industrial plant heat and power supply, and distributed on-grid generation.
Industry-First Milestones Demonstrating Regulatory Capability Driving Progress Towards Licensed IMSR Plants
In April 2023, Canada’s CNSC completed its multi-year Vendor Design Review (VDR) of the IMSR plant design and no fundamental barriers to licensing IMSR for commercial use were identified. The IMSR was the first Generation IV reactor design to complete this CNSC VDR, a historic first for a nuclear plant powered with molten salt reactor technology. The Company’s U.S. Nuclear Regulatory Commission (NRC) engagement commenced in 2016 and includes a successful interagency joint review of the IMSR technology under a CNSC-U.S. NRC Memorandum of Cooperation and concurrent with the CNSC’s completion of the Vendor Design Review. The Company and IMSR plant development have benefitted from multiple grant awards from the U.S., U.K., and Canadian governments, which have supported regulatory actions, reactor design and fuel supply development.
Additionally, Terrestrial Energy’s IMSR plant design is well-suited for repurposing existing and recently retired coal plants, maintaining firm power generation for grid reliability with clean and air pollution-free nuclear powered electricity generation. In 2022, DOE commissioned a report that found 80% of all retired and operating coal power plant sites can host an advanced nuclear reactor, totaling 290 sites, in addition to identifying significant primary and secondary environmental and economic benefits of IMSR technology for these applications. This represents up to 174 GW of potential replacement capacity to be met with IMSR plants in the U.S. alone as of April 2024, according to DOE.
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Management Commentary
Simon Irish, CEO and Director of Terrestrial Energy, said: “Extraordinary innovations in major industrial sectors are driving electric power demand growth at unprecedented rates, unleashing rapidly growing interest in our transformative IMSR plant, and its molten salt reactor Generation IV nuclear technology. Flexibility to meet a broad range of industrial heat and power requirements and a scalable supply chain together position Terrestrial Energy’s IMSR plant as a preferred solution for meeting this new and growing demand. Data center operators, utilities, industrial companies, and grid operators are all seeking safe, reliable, cost-effective, and clean energy, and Terrestrial Energy’s IMSR plant delivers an optimal blend of high-temperature, low-CAPEX, carbon-free heat and electricity to meet these requirements. We believe the proposed business combination with HCM II will accelerate our CAPEX-light business model and deployment strategy, through constructing, licensing, and commissioning of a fleet of IMSR plants.”
Shawn Matthews, Chairman and CEO of HCM II, commented: “We firmly believe in the transformational nature of Terrestrial Energy’s IMSR plant design and technology, as well as in the role it stands to play in delivering the safe, reliable, and low-cost power to meet the rapidly growing demand for electricity and heat across a wide range of industrial applications. Terrestrial Energy has built an expert-laden leadership team with decades of experience in the nuclear and supply chain sectors and is uniquely positioned to capitalize on accelerating enthusiasm for nuclear energy as a scalable solution to meet surging power demands. We believe the business combination with HCM II will further accelerate Terrestrial Energy’s growth and deliver long-term shareholder value.”
Transaction Overview
The Transaction will provide approximately $280 million in gross proceeds to accelerate commercial deployment of Terrestrial Energy's IMSR technology and to pay transaction expenses. The $230 million of gross proceeds consists of $50 million in common stock PIPE commitments at $10.00 per share from new non-affiliated fundamental institutional investors, and approximately $230 million of cash held in HCM II’s trust account (before giving effect to potential redemptions).
The Transaction values Terrestrial Energy at a pre-money equity value of $925 million, which is a significant discount to publicly traded comparable SMR peers, providing an attractive entry point for HCM II shareholders. It also implies a pro-forma enterprise value of the new public company of approximately $1 billion and a pro-forma equity value of approximately $1.3 billion (each assuming no redemptions and anticipated PIPE proceeds).
Terrestrial Energy’s existing management team will continue to lead the company following the completion of the Transaction. All Terrestrial Energy shareholders will roll 100% of their equity holdings into the new public company. Additionally, Terrestrial Energy’s management team, Terrestrial Energy’s primary shareholders, HCM II’s sponsor and certain affiliates of HCM II’s sponsor have committed to customary lock-ups.
The proposed Transaction was unanimously approved by the Boards of Directors of HCM II and Terrestrial Energy. Completion of the proposed Transaction is anticipated to occur in the fourth quarter of 2025 subject to customary closing conditions.
Additional information about the proposed Transaction, including a copy of the business combination agreement and the investor presentation, will be provided in a report on Form 8-K to be filed by HCM II with the U.S. Securities and Exchange Commission (SEC) and available at www.sec.gov.
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Advisors
Cantor Fitzgerald & Co. is acting as exclusive capital markets advisor and sole PIPE placement agent. King & Spalding LLP is acting as legal advisor to HCM II. Bryan Cave Leighton Paisner LLP is acting as legal advisor to Terrestrial Energy. DLA Piper LLP (US) acted as legal counsel to the placement agent, Cantor Fitzgerald & Co.
About Terrestrial Energy
Terrestrial Energy is a developer of Generation IV nuclear plants that use its proprietary Integral Molten Salt Reactor (IMSR) technology. IMSR technology captures the full transformative operating benefits of molten salt reactor technology in a plant design that represents true innovation in cost reduction, versatility and functionality of nuclear energy supply. IMSR plants will supply zero-carbon, reliable, dispatchable, low-cost, high-temperature industrial heat and electricity for a dual-use energy role relevant to many industrial applications, such as chemical synthesis and desalination. In so doing, they extend the application of nuclear energy far beyond electric power markets. IMSR plants have the potential to make substantial contributions to industrial competitiveness, energy security, and economic growth. Their deployment will support rapid global decarbonization of the primary energy system across a broad spectrum. Terrestrial Energy uses an innovative design, together with proven and demonstrated molten salt reactor technology, which offers a unique set of operating characteristics to deliver high and compelling commercial potential. Terrestrial Energy is engaged with regulators, suppliers and industrial partners to build, license and commission the first IMSR plants in the early 2030s.
About HCM II Acquisition Corp.
HCM II Acquisition Corp. (“HCM II”) is a blank check company formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. HCM II may pursue an initial business combination target in any business or industry or at any stage of its corporate evolution. Its primary focus, however, will be in completing a business combination with an established business of scale poised for continued growth, led by a highly regarded management team. HCM II’s Class A ordinary shares and warrants are listed on the NASDAQ under the ticker symbols “HOND” and “HONDW”, respectively.
HCM II’s management team is led by Shawn Matthews, its Chairman of the Board and Chief Executive Officer, and Steven Bischoff, its President and Chief Financial Officer. HCM II’s Board of Directors includes Andrew Brenner, Michael J. Connor and Jacob Loveless.
Important Information for Shareholders
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or constitute a solicitation of any vote or approval.
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In connection with the business combination, HCM II and Terrestrial Energy will file with the SEC registration statement on Form S-4 (the “Registration Statement”), which will include a preliminary prospectus of HCM II relating to the offer of securities to be issued in connection with the business combination, and a preliminary proxy statement of HCM II to be distributed to holders of HCM II’s capital shares in connection with HCM II’s solicitation of proxies for vote by HCM II’s shareholders with respect to the Business Combination and other matters described in the Registration Statement HCM II and Terrestrial Energy also plan to file other documents with the SEC regarding the business combination. After the Registration Statement has been declared effective by the SEC, a definitive proxy statement/prospectus will be mailed to the shareholders of HCM II and Terrestrial Energy. INVESTORS OF HCM II AND TERRESTRIAL ENERGY ARE URGED TO READ THE REGISTRATION STATEMENT, THE PROXY STATEMENT/PROSPECTUS CONTAINED THEREIN (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND ALL OTHER DOCUMENTS RELATING TO THE BUSINESS COMBINATION THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE BUSINESS COMBINATION.
Investors will be able to obtain free copies of the proxy statement/prospectus and other documents containing important information about HCM II and Terrestrial Energy once such documents are filed with the SEC, through the website maintained by the SEC at http://www.sec.gov. In addition, the documents filed by HCM II may be obtained free of charge from HCM II’s website at https://hcmacquisition.com/ or by written request to HCM II at 100 First Stamford Place, Suite 330 Stamford, CT 06902.
Participants in the Solicitation
HCM II and Company, and their respective directors and executive officers, may be considered participants in the solicitation of proxies with respect to the potential transaction described in this communication under the rules of the SEC. Information about the directors and executive officers of HCM II is set forth in HCM II’s filings with the SEC. Information regarding other persons who may, under the rules of the SEC, be deemed participants in the solicitation of the shareholders in connection with the potential transaction and a description of their direct and indirect interests will be set forth in the Registration Statement (and will be included in the proxy statement/prospectus) and other relevant documents when they are filed with the SEC. These documents can be obtained free of charge from the sources indicated above.
Forward Looking Statements
The statements contained in this press release that are not purely historical are forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding our 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,” “intends,” “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.
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The forward-looking statements contained in this press release are based on our current expectations and beliefs concerning future developments and their potential effects on HCM II and the Company. There can be no assurance that future developments affecting HCM II and the Company will be those that we have anticipated. These forward-looking statements speak only as of the date this press release is actually delivered and 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. Should one more or 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. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the definitive agreements with respect to the Business Combination; (2) the outcome of any legal proceedings that may be instituted against HCM II, the Company, the combined company or others following the announcement of the Business Combination and any definitive agreements with respect thereto; (3) the inability to complete the Business Combination due to the failure to obtain approval of the shareholders of HCM II or the SEC’s declaration of the effectiveness of the Registration Statement (which will including the proxy statement/prospectus contained therein) to be filed by HCM II and the Company or to satisfy other conditions to closing; (4) changes to the proposed structure of the Business Combination that may be required or appropriate as a result of applicable laws or regulations or as a condition to obtaining regulatory approval of the Business Combination; (5) the ability of HCM II to meet stock exchange listing standards following the consummation of the Business Combination; (6) the risk that the Business Combination disrupts current plans and operations of the Company as a result of the announcement and consummation of the Business Combination; (7) the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; (8) costs related to the Business Combination, including the reorganization described in the business combination agreement; (9) changes in applicable laws or regulations; (10) the possibility that the Company or the combined company may be adversely affected by other economic, business, and/or competitive factors; (11) the amount of redemption requests made by HCM II shareholders and (12) other risk factors described herein as well as the risk factors and uncertainties described in that certain prospectus of HCM II dated August 15, 2024 and the HCM II’s other filings with the SEC, as well as any further risks and uncertainties to be contained in the proxy statement/prospectus filed after the date hereof. In addition, there may be additional risks that neither HCM II or Company presently know, or that HCM II or Company currently believe are immaterial, that could also cause actual results to differ from those contained in the forward-looking statements. Nothing in this communication should be regarded as a representation by any person that the forward- looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made.
None of HCM II, the Company, any placement agent nor any of their respective affiliates, officers, employees or agents, makes any representation or warranty, either express or implied, in relation to the fairness, reasonableness, adequacy, accuracy, completeness or reliability of the information, statements or opinions, whichever their source, contained in this press release or any oral information provided in connection herewith, or any data it generates and accept no responsibility, obligation or liability (whether direct or indirect, in contract, tort or otherwise) in relation to any of such information. HCM II, the Company and their respective affiliates, officers, employees and agents further expressly disclaim any and all liability relating to or resulting from the use of this press release and any errors therein or omissions therefrom. Further, the information contained herein is preliminary, is provided for discussion purposes only, is only a summary of key information, is not complete and is subject to change without notice.
In addition, the information contained in this press release is provided as of the date hereof and may change, and neither HCM II nor the Company undertakes any obligation to update or revise any forward- looking statements, whether as a result of new information, inaccuracies, future events or otherwise, except as may be required under applicable securities laws.
Terrestrial Energy Investor Center:
https://www.terrestrialenergy.com/investors
Terrestrial Energy Media & Investor Contact:
TerrestrialEnergy@icrinc.com
HCM II Investor Contact:
HCM II Acquisition Corp.
Steven Bischoff
sbischoff@hondiuscapital.com
(203) 930-2200
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Exhibit 99.2
Delivering carbon - free thermal and electrical energy M A R C H 2 0 2 5 HCM II / Terrestrial Energy Investor Presentation
HCM II / Terrestrial Energy Investor Presentation | Private and Confidential | March 2025 2 HCM II / Terrestrial Energy Investor Presentation | March 2025 This presentation and any accompanying oral presentation (this “Presentation”) has been prepared solely for informational purposes and is being delivered to interested parties in making their own evaluation with respect to a potential investment in HCM II Acquisition Corp . , a special purpose acquisition company (the “SPAC” ; ) and/or Terrestrial Energy, Inc . (“Terrestrial” or the “Company” and collectively with the SPAC, “we”, “our” or “us”) . This Presentation should not be construed as a prospectus or offering document and you should not rely upon it or use it to form the definitive basis for any decision, contract, commitment or action whatsoever, with respect to any proposed transaction or otherwise . This Presentation shall not constitute an offer to sell or the solicitation of an offer to buy, or a recommendation to buy, any securities of the SPAC or the Company, nor shall there be any sale of any securities of the SPAC or the Company in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction . In addition, this Presentation shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the proposed business combination between the Company and SPAC (the “Business Combination”) . This Presentation does not create any legally binding obligations on the part of the SPAC or the Company. Any reproduction or distribution of this Presentation, in whole or in part, or the disclosure of its contents, is prohibited without the prior consent of the SPAC. By reviewing or reading this Presentation, each recipient agrees: to use this Presentation for the sole purpose of evaluating an investment in the SPAC or the Company, and not to reproduce or copy (in whole or in part) any information provided in the Presentation. Certain information contained herein has been derived from sources prepared by third parties. While such information is believed to be reliable for the purposes used herein, none of the SPAC, the Company, any placement agent or their respective affiliates or representatives makes any representation or warranty with respect to the accuracy or completeness of such information. The information contained in the third - parties citations referenced in this Presentation is not incorporated by reference into this Presentation. The statements contained in this Presentation that are not purely historical are forward - looking statements. These forward - looking statements include, but are not limited to, statements regarding our 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," "intends," "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. The forward - looking statements contained in this Presentation are based on our current expectations and beliefs concerning future developments and their potential effects on the SPAC and the Company. There can be no assurance that future developments affecting the SPAC and the Company will be those that we have anticipated. These forward - looking statements speak only as of the date this Presentation is actually delivered and 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. Should one more or 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. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of any definitive agreements with respect to the Business Combination; (2) the outcome of any legal proceedings that may be instituted against the SPAC, the Company, the combined company or others following the announcement of the Business Combination and any definitive agreements with respect thereto; (3) the inability to complete the Business Combination due to the failure to obtain shareholder approval, to obtain financing to complete the Business Combination or to satisfy the minimum cash or other conditions to closing; (4) changes to the proposed structure of the Business Combination that may be required or appropriate as a result of applicable laws or regulations or as a condition to obtaining regulatory approval of the Business Combination; (5) the ability of the SPAC to meet stock exchange listing standards following the consummation of the Business Combination; (6) the risk that the Business Combination disrupts current plans and operations of the Company as a result of the announcement and consummation of the Business Combination; (7) the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; (8) costs related to the Business Combination; (9) changes in applicable laws or regulations; (10) the possibility that the Company or the combined company may be adversely affected by other economic, business, and/or competitive factors; (11) the amount of redemption requests made by the SPAC shareholders; and (12) other risk factors described herein as well as the risk factors and uncertainties described in that certain prospectus of the SPAC dated August 15, 2024 and the SPAC other filings with the Securities and Exchange Commission (“SEC”), as well as any further risks and uncertainties to be contained in the proxy statement/prospectus filed after the date hereof. None of the SPAC, the Company, any placement agent nor any of their respective affiliates, officers, employees or agents, makes any representation or warranty, either express or implied, in relation to the fairness, reasonableness, adequacy, accuracy, completeness or reliability of the information, statements or opinions, whichever their source, contained in this Presentation or any oral information provided in connection herewith, or any data it generates and accept no responsibility, obligation or liability (whether direct or indirect, in contract, tort or otherwise) in relation to any of such information . The SPAC, the Company and their respective affiliates, officers, employees and agents further expressly disclaim any and all liability relating to or resulting from the use of this Presentation and any errors therein or omissions therefrom . Further, the information contained herein is preliminary, is provided for discussion purposes only, is only a summary of key information, is not complete and is subject to change without notice . In addition, the information contained in this Presentation is provided as of the date hereof and may change, and neither the SPAC nor the Company undertakes any obligation to update or revise any forward - looking statements, whether as a result of new information, inaccuracies, future events or otherwise, except as may be required under applicable securities laws . The unit economics in this presentation were prepared solely for internal use and not with a view toward public disclosure or toward complying with Generally Accepted Accounting Principles, any published guidelines of the SEC or any guidelines established by the American Institute of Certified Public Accountants. The unit economics constitute forward - looking information, and is for illustrative purposes only, and should not be relied upon as necessarily being indicative of future results. The assumptions and estimates underlying the unit economics are inherently uncertain and are subject to a wide variety of significant business, economic, competitive, and other risks and uncertainties. See disclaimer regarding forward - looking statements” above earlier in this Presentation as well as “Risk Factors” at the end of this presentation. Actual results may differ materially from the results contemplated by unit economics contained in this Presentation, and the inclusion of such information in this Presentation should not be regarded as a representation by any person that the results reflected by the unit economics will be achieved. Certain statements and case studies contained herein relate to us and certain of our team members. Historical results or prior transactions of us or our team members are not indicative of our future performance which may differ materially. This Presentation does not purport to contain all of the information that may be required to evaluate a possible transaction. This Presentation is not intended to form the basis of any investment decision by the recipient and does not constitute investment, tax or legal advice. The recipient should consult its own counsel, tax advisors and financial advisors as to the legal and related matters concerning the matters described herein. By reviewing this Presentation, the recipient confirms that it is not relying upon the information contained herein to make any decision. This Presentation contains references to trademarks and marks belonging to other entities . Solely for convenience, trademarks and trade names referred to in this Presentation may appear without the ® or symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names . The Sponsor and the SPAC do not intend the use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of the Sponsor or the SPAC by, any other companies . The SPAC intends to file a registration statement on Form S - 4 (the “Registration Statement”) that will include a proxy statement/prospectus of the SPAC. The Registration Statement is not yet effective. The Registration Statement, including the proxy statement/prospectus contained therein, when it is declared effective by the SEC, will contain important information about the Business Combination and the other matters to be voted upon at a meeting of the SPAC’s shareholders to be held to approve the Business Combination and other matters (the “Special Meeting”). The SPAC may also file other documents with the SEC regarding the proposed Business Combination. SPAC shareholders and other interested persons are advised to read, when available, the Registration Statement, including the proxy statement/prospectus contained therein, as well as any amendments or supplements thereto, because they will contain important information about the Business Combination. When available, the definitive proxy statement /prospectus will be mailed to SPAC shareholders as of a record date to be established for voting on the Business Combination and the other matters to be voted upon at the Special Meeting. The SPAC, the Company and their respective directors and executive officers, under SEC rules, may be deemed to be participants in the solicitation of proxies of the SPAC’s shareholders in connection with the Business Combination. You may obtain more detailed information regarding the names and interests in the Business Combination of the SPAC’s directors and officers in the SPAC’s filings with the SEC. Information regarding the persons who may, under SEC rules, be deemed participants in the solicitation of proxies to the SPAC's shareholders in connection with the Business Combination will be set forth in the proxy statement/prospectus forming a part of the Registration Statement. Investors and security holders of the SPAC and the Company are urged to carefully read in their entirety the proxy statement/prospectus and other relevant documents that will be filed with the SEC, when they become available, because they will contain important information about the Business Combination. Investors and security holders will be able to obtain free copies of the proxy statement/prospectus and other documents containing important information about the SPAC and the Company once such documents are filed with the SEC, through the website maintained by the SEC at www.sec.gov. Copies of the documents filed with the SEC by the SPAC can be obtained free of charge from the SPAC’s website at https://hcmacquisition.com/ or by directing a written request to HCM II Acquisition Corp. at 100 First Stamford Place, Suite 330, Stamford, CT 06902. HCM II / Terrestrial Energy Investor Presentation Disclaimer
HCM II / Terrestrial Energy Investor Presentation | Private and Confidential | March 2025 Executive Summary HCM II Acquisition Corp (“HCM II”, Nasdaq: HOND) intends to combine with Terrestrial Energy, Inc. (“Terrestrial Energy”) at a $925 million pre money equity value , with the use of proceeds intended to accelerate commercialization of Terrestrial Energy’s Integral Molten Salt Reactor (“IMSR”), a Generation IV (“Gen IV”) Small Modular Nuclear Reactor (“SMR”). We believe this is a market - leading nuclear technology company due to its intelligent application of advanced Gen IV reactor technology, its pragmatic use of readily available Standard - Assay Low Enriched Uranium (“SALEU”) fuel, contracted supply from four of the world’s leading suppliers, and the milestones reached with U.S. and Canadian nuclear regulators. IMSR will supply high temperature clean carbon - free thermal energy and electricity for direct use and power generation, and its operational capabilities and team capabilities extend to high compound annual growth rate medical isotope production as well. Technology, nuclear fuel and plant design choices are expected to have exceptional economic performance with the highest standards of safety, thermal efficiency and sustainability. Terrestrial Energy’s fast - to - market and low - Capex business model is designed to capture these advantages in a $1.4 trillion serviceable addressable market (SAM) across Organization for Economic Cooperation and Development (OECD) economies with potential high - margin, long term revenue streams from component and service supply over the 50+ year operating life cycle of each IMSR. Terrestrial Energy’s IMSR is already generating revenue from pre - construction contracted engagements from a diverse pipeline of potential industrial offtake and nuclear plant operators. Commercialization progress – benefitting now from a track record of impressive milestones, government grant support, clear regulatory progress with U.S. NRC and Canadian CNSC and the sector - competitive merits of IMSR technology and plant design – is now pivoting around recent international and US policy declarations (e.g. COP28, 29) to triple nuclear energy supply by 2050. HCM II / Terrestrial Energy Investor Presentation 3
HCM II / Terrestrial Energy Investor Presentation | Private and Confidential | March 2025 HCM II Overview Our management team has an extensive track record of acquiring attractive assets at disciplined valuations, investing in growth while fostering financial discipline and improving business results. • We believe in quality management teams that lead attractive target businesses • We have been and continue to be entrepreneurs, managers, board members and investors in public and private enterprises that we find compelling • Unlocking value and growth potential for our investors, our business combination targets, and ourselves is a balanced multi - part equation crafted through an alignment of incentives and an incremental injection of value from and across all stakeholders Differentiated Approach Business Strategy • We seek to acquire established businesses of scale • We seek to acquire businesses that we believe are poised for continued growth with capable management teams and proven unit economics • Our target companies may potentially be in need of financial, operational, strategic or managerial enhancement to maximize value Our management team employs an active and thematically - based sourcing strategy to take advantage of our sector expertise and proprietary deal flow Management: • Shawn Matthews • Steven Bischoff Independent Directors: • Jacob Loveless • Mike Connor • Andrew Brenner Experienced Team HCM II / Terrestrial Energy Investor Presentation 4
HCM II: Experienced Management Team Shawn Matthews Chairman and Chief Executive Officer Steven Bischoff Chief Financial Officer HCM II / Terrestrial Energy Investor Presentation 5 HCM II / Terrestrial Energy Investor Presentation 5 30+ years of management experience in public and private corporations Founder and Chief Investment Officer of Hondius Capital Management, an alternative investment firm Founder & CEO of Hondius Energy Former Chairman and CEO of HCM Acquisition Corp, which closed its business combination with Murano Global Investments, Ltd., a Mexican development company Former Chief Executive Officer, member of the Executive Committee of Cantor Fitzgerald & Co. COO of Hondius Capital Management & Hondius Energy Co - founder of Amherst Securities Former Partner, served on the board of directors at NatAlliance Securities LLC., a broker dealer where he oversaw investment banking and asset management Former Head of Fixed Income Trading and co - COO of Capital Markets at Cantor Fitzgerald Former Director of HCM Acquisition Corp
HCM II: Experienced Management Team (Cont.) Mike Connor Director • Founder, Chairman and CEO of ThayerMahan Inc., a global leader in autonomous maritime surveillance technologies • Vice Admiral (Ret.) of United States Navy • Mahan Scholar and distinguished graduate of the U.S. Naval War College • Recipient of the Distinguished Service Medal, the Defense Superior Service Medal, the Legion of Merit, the Meritorious Service Medal, Navy and Marine Corps Commendation Medal, and Navy and Marine Corps Achievement Medal Andrew Brenner Director • Head of International Fixed Income at National Alliance Securities LLC, a boutique investment bank and broker dealer • Former Global Head of Special Situations at Guggenheim Partners • Wharton MBA Jacob Loveless Director • Chief Executive Officer of Edgemesh Corporation, a privately held technology firm he co - founded in 2016 • Former board director for Perseus Telecom Ltd . , a financial services - focused telecommunications company • Former Chief Executive Officer of Lucera Financial Services LLC • Former Partner at Cantor Fitzgerald L.P. • Former Chief Technology Officer and co - founder of Data Scientific Corporation HCM II / Terrestrial Energy Investor Presentation 5 HCM II / Terrestrial Energy Investor Presentation 6
Terrestrial Energy at a Glance From technology selection and plant design, the IMSR offers high - temperature, clean carbon - free heat and electricity supply with sector - competitive nuclear economics and time - to - market. Developer of the small and modular Integral Molten Salt Reactor plant (“IMSR Plant”) that uses Gen IV nuclear technology. Up to $890M HCM II / Terrestrial Energy Investor Presentation 5 HCM II / Terrestrial Energy Investor Presentation 7 2020 $1.4T >$130M >12 years 80 Loan guarantee application accepted for review in the advanced invitation - only phase in 2017 by the US Department of Energy’s Loan Programs Office to finance the first IMSR Plant First revenues from the provision of pre - construction IMSR Plant site - and use - specific engineering services Directly addresses a $1.4 trillion serviceable SAM for industrial process heat and electricity in OECD markets Capital raised to date including government grants Corporate history achieved with management’s many decades of experience Company headcount working on development and commercialization of the IMSR Plant
Terrestrial Energy Leadership A distinguished Board of Directors and Board of Advisors with extensive experience across scientific, commercial, and policy realms support Terrestrial Energy - including a former NRC Commissioner Simon Irish CEO, Director • Extensive investment banking and investment management experience • Former U.S. investment head of a leading global investment business David LeBlanc, PhD CTO, Director • Globally recognized expert leader on molten salt reactors • Sole private sector member to Gen IV International Forum inter - government research group on advanced reactors William Smith, P. Eng. SVP Ops Engineering • Over 40 years experience in nuclear energy • Former SVP of Siemens Energy Canada • Former VP at Ontario Power Generation Robin Rickman VP BD North America • Over 40 years of nuclear experience, including with U.S. Navy/DoD, U.S. DoE, and private sector • Former director of Westinghouse New Reactor Projects Iftikhar Haque VP Nuclear Supply Chain • Over 35 years of supply chain experience, over 20 in the utilities sector as a supply chain leader • Former VP supply chain at multiple utilities and suppliers HCM II / Terrestrial Energy Investor Presentation 5 HCM II / Terrestrial Energy Investor Presentation 8
Partnership Accelerates Energy Security and Generation Progress • IMSR purpose - built to solve legacy nuclear deployment and fuel challenges • Differentiated technology and business model from both legacy nuclear (including SMR) and other Gen IV tech capable of large - scale fleet deployment in the 2030s • Reduced plant complexity and cost to streamline deployment in an ever - increasing power - hungry world • Attractive unit economics, with 56 years of expected recurring revenue Potential to unlock value through strategic synergies to expand commercial opportunities and accelerate IMSR development Capital market and energy project development experience to deploy capital at scale and velocity, creating first mover competitive moat Business developed by an experienced management team with opportunity to be introduced to the HCM II affiliated ecosystem • Hands - on senior executives with a proven track record with investments spanning across the globe • Significant investment experience and execution across energy space • Founded and oversaw the industry leading SPAC practice at Cantor Fitzgerald • Successfully managed completion of several SPAC transactions driving post close value creation and capital market access HCM II / Terrestrial Energy Investor Presentation 5 HCM II / Terrestrial Energy Investor Presentation 9
Investment
Investment Highlights 1 Compelling tailwinds with advanced nuclear as a key component in addressing immediate power demands derived from AI datacenter growth & decarbonization of the industrial complex 2 Innovative IMSR Gen IV technology delivers high - temperature heat and power for industry, and addresses fundamental weaknesses and limitations of legacy nuclear technology 3 Significant market opportunity with early mover advantage with strong customer pipeline from 50+ potential engagements. Optional high - CAGR use cases such as medical radioisotopes 4 Potential for large economic upside from strong unit economics, high - margin and defensible revenue streams, and a Capex - light business model 6 Strategy to revenue growth , with a strong track record including, successful nuclear regulatory engagements, achieving milestones, and grant support in the U.S., U.K. and Canada 7 Experienced management team supported by a top - tier board of directors and advisors 5 Differentiated technology and business model from both legacy nuclear (including SMRs) and other Gen IV technologies, and expected to be capable of large - scale fleet deployment in the 2030s HCM II / Terrestrial Energy Investor Presentation 11
IMSR Plant Innovation Reaches New Markets and Sectors IMSR has the operational capability to supply all four major demand sectors and federal incentives Focused on markets with clear policy support for nuclear energy: 01 Data center power supply Increasing demand for computing driven by the AI industry that requires behind - the - meter clean energy. The IMSR can be installed at near - location sites to supply electricity to data centers at giga - watt scale with baseload reliability, high efficiency and zero emissions. 02 Industrial heat and power Thermal energy (heat) for industrial processes that make the products of today’s modern world is produced almost entirely from combustion of oil, coal and natural gas – forming a large replacement market to be filled with IMSR technology. IMSR opens multi - year non - carbon emitting solutions and credits meeting petrochem and fossil fuel 2035 mandates. 03 Grid power The IMSR can be installed on an existing grid, generating carbon - free electric power with high efficiency, minimizing transmission access speed. Existing coal power plants can be re - powered with clean IMSR technology, leveraging existing sites. 04 Green fuels and materials Cogeneration is needed to produce industrial - scale green hydrogen and ammonia. Their use provides potential pathways to low - carbon transport fuels, as well as for cement, glass, ceramics and metal refining, which are made with very high - temperature industrial processes. HCM II / Terrestrial Energy Investor Presentation 12
Terrestrial Energy’s IMSR is Designed to Deliver the Benefits of Nuclear Energy by Addressing the Weaknesses and Limitations of Legacy Nuclear Technology Terrestrial Energy IMSR Gen IV Advanced Modular Reactor High capital efficiency due to: • High - temperature thermal energy supply • Low - pressure operation • High inherent safety Wide range of essential industrial uses requiring high - temperature heat & electric power • On - grid electricity generation • Co - located industrial cogeneration Capital efficient, smaller to be right - sized, modular design for fast construction, and financeable. High commercial value delivered quickly Legacy Nuclear Technology LWR Gen III and III+ (including SMRs) Low capital efficiency due to: • Low - temperature thermal energy supply • High pressure operation • High active and/or passive safety Single use case (electricity generation only) Uneconomic and difficult to finance without government support HALEU (15 - 20%) is unlikely to be available in time or within cost for 2030s fleet deployment HCM II / Terrestrial Energy Investor Presentation 13 U.S. DOE initiates a new 2025 HALEU proliferation risk study, indicative of further delay SALEU is highly available and understood by NRC & IAEA countries for both supply and waste
IMSR Uses Readily - Available and Inexpensive Standard - Assay Low - Enriched Uranium (SALEU) as its Fuel 1. Third Way, How Much Does It Cost to Develop New Nuclear Fuel Capacity? 2. HALEU is 5 - 20% enrichment, but the product relevant for comparison (i.e. Gen IV fuel) is 15 - 20% enrichment, i.e. HALEU (15 - 20) . High - Assay Low - Enriched Uranium HALEU (15 - 20) Standard - Assay Low - Enriched Uranium SALEU 15% - 20% U - 235 2 Uranium - 235 enrichment level <5% U - 235 $32,600 / kgU 1 Cost $2,700 / kgU 1 Almost all other Gen IV reactors today require HALEU at 15% - 20% U - 235 Typical use case Terrestrial Energy IMSR (Gen IV), Gen III/III+ (light - water reactors) Complex and uncertain (many protocols such as waste disposal not yet developed) Regulatory requirements Known and straightforward (both production and transportation) Russian commercial suppliers of 15 - 20; US production only started for test reactor quantity size in 2024, multiyear process to produce at FCP with no clear supply pathway for fleet operation Suppliers for fleet deployment Centrus (US) Westinghouse (US) / Springfields (UK) Orano (Europe) Urenco (Europe) HCM II / Terrestrial Energy Investor Presentation 14
Energy Market Fundamentals Backed by Public Valuations Have Created an Overwhelming Case Today for a Massive Expansion in Nuclear Energy Supply 125% - 250% increase in valuations of first two SMR SPACs over the last 6 months Terrestrial Energy technical differentiators create uncorrelated market valuation The necessity for reliability of nuclear for low - cost, clean, secure, supply at fossil fuel scale is driving nuclear innovation Nuclear energy can help make the energy sector’s journey away from unabated fossil fuels faster and more secure U.S. Sets Targets to Triple Nuclear Energy Capacity by 2050 Energy Security HCM II / Terrestrial Energy Investor Presentation 15 Energy Transition
IMSR Serves Two Vast and Linked Markets: Industrial Process Heat ($0.8 T) and Electricity ($0.6 T) in OECD Economies $1.4 T current SAM Total serviceable addressable market (SAM) for IMSR Plants is expected to grow 35% to $1.9 T by 2050 Industrials require clean firm low - cost thermal energy at high - temperatures for manufacturing processes. This is beyond the capabilities of legacy nuclear plant and today it is almost universally supplied with fossil fuel combustion. IMSR Plants provide additional tax credits for coal conversion and carbon credits IMSR Plants have high - temperature thermal output, which is an alternative to fossil fuel combustion in many industrial processes. It also enables electricity generation at up to 50% higher efficiency than legacy nuclear for transformative cost improvement IMSR Plant heat supply systems can be customized and without requiring nuclear regulatory re - approval, to “cogenerate” both high - temperature heat and low - cost electricity for industrial use IMSR Plant provides clean firm electric power for industry and municipal use. It is a logical solution for large data center supply and for coal plant replacement, two large markets IMSR Plant output can rapidly load - follow (i.e., adjusts its output to demand) for hybrid installations with renewables decades of clean firm power IMSR Plants enable distributed generation as they are deployable at or near industrial site, including “behind the fence” for dedicated industrial heat and power supply IMSR Plant design is smaller and modular, which enables fast construction and decentralized generation at individual industrial sites, coal plant sites, data centers, for smaller grids/electrical markets IMSR Plants have a 50+ year operating life, which is more competitive than coal - fired power generation fuel supply, inclusive of coal and transportation costs OECD industrial heat market ($800 B) OECD electricity market ($600 B) HCM II / Terrestrial Energy Investor Presentation 16
Legacy Nuclear Technology is Experiencing Economic and Efficiency Challenges Existing large scale nuclear power plants built with legacy nuclear technology are fundamentally uneconomic Capital inefficient with huge upfront Capex Low - temperature heat limited to electric production Difficult to finance without government support Limited to on - grid electricity generation and transmission National Association of Regulatory Utility Commissioners (NARUC) apprehensive to support large legacy nuclear after Vogtle HCM II / Terrestrial Energy Investor Presentation 17
IMSR Plant at a Glance: High - temperature, Low - pressure, and High Inherent Safety in Operations is Designed to Deliver Superior Capital Efficiency Over Legacy Nuclear Technologies 585 ƒ C IMSR heat supply is best - in - class, vs 270 - 299 ƒ C from Gen III+ and 440 - 585 ƒ C from other Gen IV competitors 44% vs 30% Electricity is generated up to ~50% more efficiently than legacy nuclear power plants $8.6 Exceptional levelized cost of heat (LCOH) $8.6 per MMBTu $69 Exceptional levelized cost of electricity (LCOE) $69 per MWh(e) for dispatchable/ base load applications 822 MWt IMSR provides co - located “behind the fence” cogeneration at industrial scale (822 MWt / 390 MWe net) 65 years IMSR builds on over 65 years of proven, prototyped and demonstrated molten salt technology using innovative enhancements on base U.S. DOE Oak Ridge National Labs design 50+ years Long operational life of IMSR Plants Standard fuel IMSR Plants use commercially available nuclear fuel (standard - assay low enriched uranium), readily available from North American and Western European sources HCM II / Terrestrial Energy Investor Presentation 18 HCM II / Terrestrial Energy Investor Presentation 18
Proven: For Speed - to - market, IMSR is Built on 65 Years of National Lab Proven Demonstrated MSR Technology IMSR is a molten salt reactor that uses: Fluoride chemistry SALEU once - through fuel cycle Thermal spectrum Graphite moderator Integral core architecture 2010 1958 - 1969 • Small Modular Advanced High - Temperature Reactor (Sm - AHTR) design, using solid fuel and molten salt cooling 3 • Key innovation : Cartridge core design Molten Salt Reactor (MSR) research program started in the 1950s 1 • Molten Salt Reactor Experiment (MSRE) at Oak Ridge National Laboratory (ORNL) highly successful and lays foundation for future molten salt reactor designs • Built/operated for 13,000 hours • Denatured Molten Salt Reacto r (DMSR) 2 conceptual design developed at ORNL • Key innovation : Use of SALEU with a once - through fuel cycle for strong proliferation defenses 1980 1. ORNL, Molten Salt Reactor History and ORNL - 2474 Quarterly Progress Reports 1958 - 1976 2. ORNL, Conceptual Design Characteristics of a Denatured Molten - Salt Reactor with Once - Through Fueling 3. ORNL, Pre - Conceptual Design of a Fluoride - Salt - Cooled Small Modular Advanced High - Temperature Reactor (SmAHTR) Source: ResearchGate; ORNL; Company >2012 Terrestrial Energy’s IMSR combines these critical innovations • Use of SALEU fuel with a once - through fuel cycle • Integral core architecture HCM II / Terrestrial Energy Investor Presentation 19
IMSR’s Innovative, Patented Replaceable “Core - unit” Solves the Key Maintenance Challenge to Commercial Operation (illustrative) IMSR Core - unit cut - away 01 All primary reactor components will be contained in the sealed and replaceable “Core - unit” Key innovation is integration of all primary reactor components into a sealed, compact and replaceable reactor vessel designed to have a 7 - year operating life: • Reactor graphite core • Primary heat exchanger • Pumps This “integral” design captures commercial value through: • Maintenance simplicity of “plug - and - play” • High capital efficiency IMSR Plant has defensible IP • 90 patents pending or granted across 6 invention families Core - unit replaced every 7 years Primary Heat Exchangers Flow of salt Passive cooling system Graphite Moderator 02 Truck transport of Core - unit (illustrative) 03 Cut - away reactor building, one of two in the IMSR Plant (illustrative) 18m 4.1m Core - units transportable via truck, rail, sea. HCM II / Terrestrial Energy Investor Presentation 20 One Core - unit in each reactor building, forms part of the dual - reactor facility.
IMSR Plant is Designed to Deliver “Behind the Fence” – Customized Cogeneration to Industry Note: Example is for a dual reactor core IMSR Plant. Scaling up is possible. Separation of nuclear from thermal and electrical systems allows: • Standardized reactor design, while giving the end - user the flexibility to use thermal, electric or both • Easier for coal plant conversion • Ability to bid hybrid renewable and IMSR generation appeals to diverse pension and capital base • Safe harbor tax, jobs and other incentives with regulatory deadlines A Standardized dual IMSR Nuclear Facility • Subject to nuclear regulation • Standardized, simplifying design and saving costs • 884 MW (gross) thermal energy production for 585 ƒ C supply B Customized non - nuclear Thermal and Electrical facility • Converts 884 MW (gross) thermal energy from two IMSRs to 585 ƒ C 822 MW (net) thermal or 390 MW (net) electric power for commercial supply – or any heat/electric power mix in between • Can include molten - salt thermal energy storage and buffering to enhance its inherent strong load - following capability for commercial advantage • Separate Nuclear Facility & non - nuclear Cogeneration Facility enables incentive safe harbor post - 2035 C Prospective industrial cogeneration off - takers • Chemical and petrochemical plant • Hydrogen / ammonia / fertilizer plant • Other industrials requiring clean heat & power Prospective municipal off - takers • Electric grid • Desalination • Edge AI Datacenters A HEAT POWER Conversion loss HEAT 585 ƒ C Principal flow of energy 822 MWt (thermal) 390 MWe (electrical) 585 ƒ C Dual IMSR Nuclear Facility A End - user heat / power (industry / grid electric power) C IMSR Non - nuclear Thermal and Electric Facility B Thermal storage HCM II / Terrestrial Energy Investor Presentation 21
Compared to Legacy Nuclear Technology, IMSR Offers Transformative Advantages on a Range of Technical and Economic Factors Coolant Molten Salt Water 585 ƒ C ~270 ƒ C Temperature of Thermal Supply Net Thermal Efficiency of Electricity Generation 44% ~30% Pressure Low: 1 bar (atmospheric) High: 55 - 150 bar Application Industrial heat & electric power Electric power only Modularity Standardized, factory prod. Bespoke on one - off basis Inherent load - following Yes No Construction & Commissioning Time Under 4 Years ~10 Years Unit Capital Cost ~$1 - 2 B upfront 1 Over $10 B upfront Capacity (net) 822 MWt / 390 MWe 1,000+ MWe 8.60 N/A Levelized Cost of Heat ($/MMBTU) Levelized Cost of Electricity ($/MWh) 69 Over 140 Fuel Cycle 7 years 18 - 24 months Waste 32% less fission product waste per kWh(e) by mass Baseline waste quantities IMSR reactor flow 1. Range for IMSR reflects estimated unit capital cost to the owner - operator at First Commercial Plant (FCP) to Nth Commercial Plant (NCP) status. Legacy nuclear plants are all one - off/bespoke, so FCP/NCP dynamics do not apply. See appendix for further discussion on unit economics assumptions. Source: Company IMSR's key technology advantage is from the use of a molten salt coolant and fuel Molten salt is a superior coolant relative to traditional cooling mechanisms of legacy nuclear (pumps, actuators, etc.) and is foundational to the compelling economic and use - case advantages of the IMSR Plant IMSR Plant Legacy Nuclear Plant HCM II / Terrestrial Energy Investor Presentation 22
At Fleet Scales, IMSR Plant Offers Clean Firm Electricity Generation at the Cost and Scale Required Unsubsidized high and low levelized cost of electricity (LCOE) across multiple and power generation sources, ($ / MWhe) 1 1. IMSR LCOE is Terrestrial Energy’s management estimate at NCP status. All other ranges are from the Lazard 2024 LCOE+ report. 2. Lazard 2024 LCOE+ report indicates limited public and/or observable data available for new - build geothermal, coal, and nuclear projects. Dispatchable Non - dispatchable $69 $45 – $108 $69 – $168 $64 – 106 $60 – $210 $45 – $133 $74 – 139 IMSR Natural gas (combined cycle) HCM II / Terrestrial Energy Investor Presentation 23 HCM II / Terrestrial Energy Investor Presentation 23 Coal 2 Legacy nuclear 2 $142 – $222 Geothermal 2 Solar + Storage Wind (onshore) + Storage Wind (offshore)
$69 $142 – $222 IMSR’s Fission Technology Drives Down the LCOE - Illustrative High temperature leads directly to increased thermal and capital efficiency, and lower LCOE Low pressure systems are more robust and less complex than high - pressure systems Inherent safety uses the natural properties of the system itself and not complex active mechanisms using control rods, pumps, valves, and actuators Smaller leads directly to losses of economies of unit - scale driving LCOE higher Modularity expected to produce gains from economies of serial production driving LCOE lower but extent of this is uncertain IMSR LCOE Inherent Safety Low pressure High temperature Modular construction "Smaller" right - Large Scale Legacy with volume production sized plant Nuclear LCOE HCM II / Terrestrial Energy Investor Presentation 24
Business Model Terrestrial Energy’s customers are IMSR Plant owner - operators Terrestrial Energy achieved its first customer revenues in 2020 - 2021 for design services Terrestrial Energy’s business is to: Deliver engineering and construction services for commissioned IMSR Plants Supply critical components to operate IMSR Plants Provide a long - term supply of replacement IMSR Core - units and IMSR fuel, as well as operating, maintenance and decommissioning services Revenues start well before construction and lasts for the entire operation of the plant Full project lifecycle Project Development Model Operations Non - recurring Revenues • Supply of services • Supply of components Recurring Revenue • Terrestrial Energy’s scope: 30% of total IMSR Plant cost • EPC Firms, Suppliers, Service providers: 70% of IMSR Plant cost • IMSR Core - unit supply every 7 years • IMSR Core - unit maintenance • IMSR Fuel Salt • Refueling services 56 - year plant life Site selection & Feasibility Contract Site - specific Engineering and Licensing Support Contract Engineering Construction and Procurement Contract IMSR Plant Maintenance Contract IMSR Plant Supply Contract Supply of IMSR Core - units Customer A Investors Customer B Investors Pre - construction revenues Construction Plant 2 Plant 3 … Plant 2 Plant 3 … Plant construction is financed by Terrestrial Energy’s customers, backed by their own balance sheets and/or a consortium of investors HCM II / Terrestrial Energy Investor Presentation 25 End - users are industrial and municipal parties requiring low - cost high - temperature heat and/or electrical power Standardized parts of the IMSR Plants can be efficiently rolled out at multiple sites with minimal site - specific customization requirements
Terrestrial Energy’s Low - Capex Business Model Taps Four Revenue Streams Across the IMSR Plant’s 50+ year Lifecycle Note: Unit economics reflect Terrestrial Energy management estimates at NCP status. See appendix for further details. HCM II / Terrestrial Energy Investor Presentation 26 Delivery Model for construction and the power plants for the duration of ongoing operation of an IMSR Plant 31% 4% Site selection, site and use - specific $75 Pre - construction services 27% 23% Supply of services and components as set out in the Company’s Product $486 commissioning of an IMSR Plant Construction services & component supply 20% 55% Supply of replacement IMSR Core - units every seven years. Contracted ongoing O&M services to $1,148 operational life (50+ years) Post construction IMSR Core - unit supply 20% 18% Supply of IMSR Fuel Salt for the $389 Post construction IMSR fuel supply 22% 100% $2,098 Cumulative engineering studies for construction and licensing planning preparation Cumulative revenue $M Gross margin % Total % Segment Description
IMSR Plants can Uniquely “Retrofit” Existing Coal Plants for Carbon - free and Air Pollution - free Electricity Generation 1. US EIA, Electricity by source and CO2 emissions by source 2. US Department of Energy, Investigating Benefits and Challenges of Converting Retiring Coal Plants into Nuclear Plants Retrofitting coal - to - nuclear results in significant primary and secondary benefits 2 Coal is dirty yet essential 1 16% 53% Percentage of U.S. electricity generated from coal Percentage of U.S. CO2 emissions from coal - fired electricity Nuclear in general and IMSR in particular are an ideal “hand - in - glove” solution 2 In 2022, U.S. DOE commissioned a report that found: • 80% of all retired and operating coal power plant sites can host an advanced nuclear reactor • Significant primary and secondary environmental and economic benefits of IMSR • IMSR Plants supply steam at 585 ƒ C, the equivalent temperature and pressure of a coal - fired boiler (the “polluting part of a coal plant”) • IMSR Plants separation of Nuclear Facility from non - nuclear Cogeneration Facility fits retired coal plants’ existing footprints (0.5 - 1 mile radius) • Terrestrial Energy funded under engineering contract with U.S. DOE and largest coal fleet Operator 86% Reduction in green - house gas emissions per region HCM II / Terrestrial Energy Investor Presentation 27 650 Permanent new jobs created per region $275M Additional economic activity per region 92% Implied increase in tax revenue per region 15 - 35% Capital costs savings vs. greenfield due to ability to reuse existing equipment and infrastructure CO 2
IMSR’s Technological and Commercial Progress A B C D E HCM II / Terrestrial Energy Investor Presentation 28 Development program with a track record of milestones achieved Among market leaders in regulatory engagement and grant support First Gen IV reactor design to complete Canada’s CNSC Vendor Design Review. Only molten salt reactor selected for a joint CNSC - U.S. NRC Memorandum of Cooperation review. Supported by top - tier suppliers and fuel availability Large and diverse potential customer base with a growing project pipeline
A. Milestone Progress Systematic development program for IMSR with a track record of milestones achieved 2015 x Initiated regulatory program with Canadian Nuclear Safety Commission’s (CNSC) phased Vendor Design Review (VDR) process 2016 x U.S. Nuclear Regulatory Commission (USNRC) regulatory engagement started x Initiated discussion with and submitted application to the U.S. DOE Loan Program Office (LPO) on loan guarantees 2017 x Leads the field with successful completion of phase 1 of CNSC’s VDR x Application accepted for review by U.S. DOE LPO for up to $890M project financing support for first U.S. IMSR Plant 2019 x IMSR Plant selected by USNRC and CNSC for first joint and collaborative cross - border next - generation reactor technology reviews 2020 x IMSR Plant short - listed for final procurement evaluations by a major North American utility x International Atomic Energy Agency (IAEA) engagement started x C$20Mn investment from the Canadian Federal Government’s flagship “Strategic Innovation Fund” 2021 x $8Mn revenues for site - and use - specific engineering as procurement activities proceed x BWXT, Siemens, Orano, Aecon, Cameco, KSB, Westinghouse contracted for major components supply and part of supplier consortium 2023 x CNSC completes Vendor Design Review of IMSR Plant, concluding “no fundamental barriers to licensing”, which positions Terrestrial Energy for commercial contracts x Site - and use - specific engineering studies with large industrial cogeneration users commence x UK Government provides grant funding to support for the development of IMSR fuel supply at Westinghouse’s UK Springfields facility 2024 - 2029 • Revenue growth expected from additional pre - construction services, progress on construction contracts (at a site to be selected), and additional customer engagements • USNRC IMSR application expected to be submitted • Licensing applications expected to be filed to advance construction of first IMSR Plant • First IMSR Plant construction expected to start with first operations targeted for 2034 HCM II / Terrestrial Energy Investor Presentation 29
B. Among Market Leaders in Regulatory Engagement and Grant Support Terrestrial Energy’s regulatory program started early with the commencement of the CNSC’s Vendor Design Review (VDR) process in 2016 – completed in 2023 HCM II / Terrestrial Energy Investor Presentation 30 Accepted an application for review of up to $890M loan guarantee in the advanced invitation - only phase to finance construction of first U.S. IMSR Plant. Following site and project selection identification, DOE expected to commence its formal due diligence review of the application, including technical, financial, and environmental due diligence together with assessing the project's risks, financial structure, technology readiness and potential impacts leading to a conditional loan commitment USD (‘000’s) Jurisdiction 7,877 USA (Federal) 18,606 Canada (Federal and Provincial) 3,623 United Kingdom (Federal) 30,106 Total IMSR development has received $30.1 M of grant awards from multiple governments Canada CNSC VDR scope covers all aspects of IMSR Plant construction, operation and decommissioning VDR successfully completed in 2023, an industry first for a Gen IV reactor USA Commenced USNRC engagement in 2017, with a program of technical reviews involving White Papers and Topical Reports for IMSR Plant Completed a joint US - Canadian inter - agency (USNRC/CNSC) collaborative regulatory review of IMSR technology in 2021, the first Gen IV reactor to be selected for such a regulatory review International Commenced engagement with the International Atomic Energy Agency (IAEA) in 2020 Source: Company
C . Regulatory Review in Process in the U . S . and Complete in Canada Terrestrial Energy successfully completed CNSC VDR in 2023, an industry first for Gen IV technology 1 The VDR concludes that “no fundamental barriers to licensing” IMSR for commercial use were identified National regulators cover both vendor reviews and owner/operator licensing CNSC VDR Applicant: Technology Developer Applicant: Owner/Operator • Construction Permit • Construction License • Operating License • License Amendments • CNSC – Vendor Design Review (VDR) • USNRC – Design Certification and/or Standard Design • ONR (UK) – Generic Design Assessment USNRC engaged Upcoming Pre - application activities underway No fundamental barriers to licensing In April 2023, Canadian Nuclear Safety Commission (CNSC) concluded that “no fundamental barriers to licensing” the IMSR Plant for commercial operation were identified in the VDR • Complies with Canadian nuclear safety requirements for a nuclear power plant • Does not rely on unproven engineering practices (including inadequately supported analysis, R&D, or both) • Limited requests for technical clarification and follow - up in future reviews Scope of VDR • High - level review covering IMSR life - cycle while design is evolving to provide timely feedback during design process • Scope defined by “19 Focus Areas”, which correspond to the ”Safety and Control Areas” of a future license application • Review and audit of Terrestrial Energy’s engineering processes, design and analysis procedures and methodologies Significance of the completion of the Vendor Design Review • Provides critical first step in licensing IMSR Plant for commercial use • Terrestrial Energy ready to enter into agreements to proceed to site licensing and construction of IMSR Plant on Canadian soil License for plant commercial operation 1. CNSC, Pre - Licensing Vendor Design Review HCM II / Terrestrial Energy Investor Presentation 31
D. Contracts Entered into Today with Leading Group of Suppliers for Services and Components Plant & Infrastructure Nuclear fuel R&D Blue - chip service and major component suppliers support deployment readiness Graphite Awards and suppliers engineering and operations reputation inspire nuclear market confidence Services * HCM II / Terrestrial Energy Investor Presentation 32
E. Terrestrial Energy is Scaling Up its Project Pipeline Market demand and policy developments are driving deployment in major markets Recent developments illustrate path - to - market, and strategy for fast deployment of an IMSR Plant fleet operating in the 2030s Mining H 2 Ammonia and hydrogen Data centers Capital goods Utilities Industrials Recent commercial developments Energy Oil & Gas Project Developer Company Public MOU MOU MOU MOU DOE Award MOU Partnership Technology CNCS VDR Announcement February 2025 December 2024 November 2024 September 2024 June 2024 August 2024 April 2024 Development Agreement April 2023 February 2025 March 2024 Texas A&M announces plans Signs MOU to collaborate Signs MOU to site a Signs MOU to collaborate Signs MOU to collaborate DOE award to support Signs MOU to collaborate Terrestrial Energy Signs technology development Completion of CNSC’s to site a commercial IMSR on IMSR Plant development commercial IMSR Plant at the on IMSR Plant development on IMSR Plant development IMSR code and salt testing on IMSR Plant development redomiciles to U.S. and signs agreement for industrial facility regulatory review of Plant at its RELLIS campus and deployment RELLIS campus and deployment and deployment and deployment collaboration on zero - carbon IMSR Plant energy solutions Off - takers/customers Consortium Partners Site owners HCM II / Terrestrial Energy Investor Presentation 33 10+ projects already formed from 15+ consortium relationships involved in projects, including potential customers seeking IMSR to meet power requirements and capable of delivering further projects. Portfolio of 50+ consortium relationships with the potential to deliver additional projects to deploy IMSR Plants covering a range of deployment use - cases including co - location for data center power supply, co - located industrial plant heat and power supply, and distributed on - grid generation Basic materials Petrochemicals and plastics Marine propulsion Chemicals Fossil fuel retrofits Merchant power
Transaction Overview
71.2% 17.7% 3.8% 4.4% 2.9% Terrestrial Rollover Equity PIPE Equity from Convertible Debt Public Shareholders Sponsor Shares Shares (M) Ownership % Rollover Equity Equity from Convertible Debt 3.73 2.9% Transaction Highlights Estimated Sources & Uses Uses ($M) Equity to Terrestrial $925 Equity from Convertible Debt $37.3 Cash to balance sheet $265 Illustrative transaction expenses $15 Total $1,242.3 Sources ($M) Terrestrial Rollover $925 Equity from Convertible Debt $37.3 Cash in Trust $230 PIPE $50 Total $1,242.3 Pro Forma Valuation 129.98 PF Shares Outstanding (M) $10.00 Share Price ($) $1,299.83 PF Equity Value ($M) 276 ( - ) PF Cash ($M) $1,023.83 PF Enterprise Value ($M) Pro Forma Ownership Assumptions: 1. 129.98M pro forma shares outstanding at $10.00 per common share. Total sponsor shares of 5.75M 2. PIPE priced at $10.00 per share 3. PF Cash consists of $265M of cash to balance sheet and $11M of existing cash 4. Assumes $230.0M remaining in trust (0% Redemptions). Excludes interest earned in the trust. SPAC cash amount is subject to change depending on the actual interest earned in the trust and total number of redemptions. Assumes newly issued shares will be delivered to PIPE investors rather than subscriptions being satisfied through non - redeemed shares Business Combination Structure • HCM II Acquisition Corp intends to complete a business combination with Terrestrial Energy, a provider and developer of industry - leading Gen IV, LEU fueled, high temperature commercial nuclear power generation technology • The business combination is expected to close in Q4 2025 Valuation • The business combination implies a pro forma combined enterprise value of approximately $1.00 billion • Existing Terrestrial Energy shareholders would roll over 100% of their equity as part of the business combination Capital Structure • The business combination is to be funded by a combination of HCM II cash held in trust and PIPE financing 71.2% 92.5 1 Terrestrial 17.7% 23.0 2 Public Shareholders 3.8% 5.0 3 PIPE 4.4% 5.75 4 Sponsor Shares 5 HCM II / Terrestrial Energy Investor Presentation 35 5. All charts and tables exclude 11.5M SPAC warrants and 6.85M Private Placement warrants. All warrants have a strike price of $11.50 per common share 6. $37.3M of Equity from Convertible Debt is from $25M of convertible debt plus accrued interest that converts at a 25% discount at the consummation of the De - SPAC transaction. Accrued interest based on assumed 9/30 closing
from AI datacenter growth and decarbonization Innovative, early mover advantage for large economic upside technology and business model for revenue growth Seasoned, HCM II / Terrestrial Energy Investor Presentation 36
Appendix
High - temperature, High - quality Industrial Process Heat in OECD Markets is Terrestrial Energy’s Primary Market 1. US EIA, International Energy Outlook, World total primary energy consumption by region (reference case) 2. German Energy Agency (dena), Powerfuels in Industry: Process Heat (20% of all heat being industrial process heat) multiplied IEA, Industrial heat demand by temperature range (50% of industrial process heat being up to 400 ƒ C, an underestimate as IMSR can supply up to 585 ƒ C) 3. Conversion factor, i.e. mathematical constant 4. Assumption of uptime, i.e. operating time less maintenance and other downtime events, calculated as 24 hours/day î 365 days/year î 95% utilization factor 5. Cost of constructing and operating the IMSR Plant are the same regardless of whether the end customer elects to use it for heat or electricity Implied number of IMSR Plants Implied SAM (US$ T) 10% of primary energy consumption is high - temp industrial process heat 2 822 MWth î 2.93 î 10 8 MWh / quad 3 · $800 M / IMSR Plant 5 Current market size implied to be ~ 1 , 000 IMSR Plants , growing to > 1 , 200 by 2050 Cumulative upfront and average annual recurring revenue to Terrestrial Energy per IMSR Plant Implied serviceable addressable market (US trillions) 8,322 hours / year (95% utilization factor 4 ) · î = î = 1,062 1,205 $0.8 HCM II / Terrestrial Energy Investor Presentation 38 $1.0 Primary energy consumption (Quadrillion BTUs) 1 886 Non 668 OECD 605 420 OECD 281 248 2050 2025 US EIA has estimated 248 quads of primary energy consumption in 2025, growing to 281 quads by 2050 2025 2050 2025 2050
Global Nuclear Electricity Generation in OECD Markets Represents a Large Additional Market 1. McKinsey & Company, What will it take for nuclear power to meet the climate challenge? 2. US EIA, calculated share of nuclear electricity installed generating capacity OECD and World 3. Cost of constructing and operating the IMSR Plant are the same regardless of whether the end customer elects to use it for heat or electricity Demand for nuclear power (GWe) 1 Implied number of IMSR Plants Implied SAM (US$ T) 277 479 693 Non OECD 1,172 2023 2050 1,000 MWe / GWe · 390 MWe / IMSR Plant 710 1,228 2023 2050 $1.0 McKinsey & Company projects significant new nuclear capacity demand to meet both dispatchable power demand and net - zero targets Current market size implied to be >700 IMSR Plants , growing to >1,200 by 2050 Cumulative upfront and average annual recurring revenue to Terrestrial Energy per IMSR Plant Implied serviceable addressable market (US trillions) Each IMSR Plant (2x reactor Core - units) able to generate 390 MWe electricity (net) î OECD 413 = $800 M / IMSR Plant 3 î = HCM II / Terrestrial Energy Investor Presentation 39 $0.6 136 2020 2050
IMSR Technology and Design Choices Drive Plant Economics High thermal stability of molten salt enables safe high - temperature and low - pressure operation with high inherent safety This drives high capital and operating efficiencies, as well as power plant revenue and profitability Molten salt coolant Superior reactor coolant • High thermal stability • High radiation stability • High heat capacity C B Use of a molten salt coolant and fuel delivers high inherent safety • Negative temperature coefficient of reactivity for inherent power control and load - following • Fluid convection supports passive dissipation of fuel heat No high - pressure nuclear systems, structures, or components • Plant simplification • Lower costs, quicker construction time and more financeable Operates at high temperature for up to 50% greater thermal efficiency vs. legacy nuclear (water - cooled nuclear technology) • Generates up to 50% more kWh(e)s for more revenues • More capital efficient and profitable operation High inherent safety in Plant operations Low pressure Lower Plant Capex High temperature Increased Plant revenues A HCM II / Terrestrial Energy Investor Presentation 40
Key Assumptions on Unit Economics Unit economics reflects management’s estimates based on detailed cost engineering work with prospective customers in 2020 - 2021 (without inflation adjustments) as well as management’s collective expertise in industrial and nuclear engineering. Capital costs of Nth Commercial Plant (NCP) reflect industrial learning curve effects from volume component production and repeat project execution over a 20 IMSR Plant deployment cycle. Higher costs are anticipated for earlier plants, and lower costs for later plants. Capital costs of NCP are represented in the unit economic model. Levelized cost of electricity (LCOE) and levelized cost of heat (LCOH) of IMSR Plants incorporates higher fuel costs from recent increases on the price of natural uranium and uranium enrichment services. Unit economics covers the full IMSR Plant life cycle and consist of: HCM II / Terrestrial Energy Investor Presentation 41 • Pre - construction activities including site specific engineering and plant license preparation (4 years) • Construction activities including procurement and license completions (4 years) • Commercial operating life (56 years). During operating life, IMSR Core - units are replaced every 7 years. • Decommissioning. Not part of Terrestrial Energy illustrated unit economics.
Only Gen IV Reactors Operate at High Temperatures (>400 ƒ C) and have the Potential to Transform Nuclear Energy Use Generation I Prototype reactors • Based on U.S. Navy nuclear submarine propulsion or weapons production technology • Largely research and/or non - commercial Generation II Large commercial reactors • Most operating reactors in use today • Relies on active safety • Electric grid applications Generation IV Next - gen advanced modular reactors (AMRs) • Transformative potential • High - temperature reactors • Inherent safety • Multiple industrial uses Generation III Evolutionary commercial reactors • Evolutionary improvements in design, safety and efficiency • Electric grid applications Generation III+ Gen III with evolutionary improvements (inc. SMRs) • Evolutionary improvements with some modularity and passive safety • Includes SMRs • Electric grid applications 1960s – 1990s 1950s 1990s – 2010s 2010s – present Late 2020s – onward HCM II / Terrestrial Energy Investor Presentation 42
Illustrative IMSR Plant Unit Economics (USD M) Revenue breakdown by phase $69 (10%) $144 (19%) $486 (62%) $75 (9.7%) $320 (24%) $1005 (76%) $389 (19%) $1,148 (55%) $486 (23%) IMSR fuel supply and services IMSR Core - unit supply and services Construction services & component procurement Pre - construction services $774 $1,324 $2,098 + = Construction & commissioning Operating life Total plant life Note: Unit economics reflect Terrestrial Energy management estimates at NCP status. See appendix for further details, including without limitation the Key Assumptions on Unit Economics above. Subject to 2024 Revision by Terrestrial Energy $75 (4%) Total plant life Operating life Construction and Commissioning to T=0 ($ in M USD) 60+ years 56 years T - 1 T - 2 T - 3 T - 4 <T - 4 Revenues 75 - - - - - 75 Preconstruction services 486 - 158 161 105 63 - Construction services and component procurement 1,148 1,005 144 - - - - IMSR Core - unit supply and services 389 320 69 - - - - IMSR fuel supply and services 2,098 1,324 370 161 105 63 75 Total revenues Gross profit 23 - - - - - 23 Preconstruction services 31% - - - - - 31% Gross margin 132 - 43 44 28 17 - Construction services and component procurement 27% - 27% 27% 27% 27% - Gross margin 230 201 29 - - - - IMSR Core - unit supply and services 20% 20% 20% - - - - Gross margin 78 64 14 - - - - IMSR fuel supply and services 20% 20% 20% - - - - Gross margin 462 265 85 44 28 17 23 Total gross profit 22% 20% 23% 27% 27% 27% 31% Gross margin HCM II / Terrestrial Energy Investor Presentation 43
IMSR Plant technology and design incorporates inherent safety, with compelling cost and commercial advantages over legacy active and passive safety systems IMSR Uses Inherent Safety, Unlike Legacy Nuclear Technologies Control Fission heat generation is inherently load - following . IMSR fission power immediately drops to zero when heat demand ceases without operator intervention Cool Molten salts are superior reactor coolants , and the fuel is mixed with the coolant. This uniquely enables inherent nuclear fuel cooling through convection. Additional passive cooling systems remove decay heat from the reactor vessel Contain Molten salt reactors enable the use of low - pressure cooling systems. As the fuel is mixed with the coolant, fission products are inherently contained by salt chemistry – this simplifies engineering and containment requirements IMSR inherent safety methods reduce Capex of nuclear energy across all three safety pillars of commercial reactor operation HCM II / Terrestrial Energy Investor Presentation 44
Advisory Board: Seasoned, Experienced Team Policy, Regulation and Environmental Technical, Industrial and Financial Ray O. Johnson, PhD Former CTO of Lockheed Martin Corporation • Served 9 years as SVP of Corporate Engineering, Technology and Operations and CTO of Lockheed Martin Corporation • PhD in Electrical Engineering from Air Force Institute of Technology, former Officer at United States Air Force for 12 years Ben Heard, PhD Executive Director of Bright New World • Professor in sustainability and climate change at University of Adelaide, speaker, research and publisher and strategy development in sustainability • PhD in Clean Energy Systems and Advanced Nuclear Ray A. Rothrock Distinguished venture capitalist, nuclear/clean energy advocate • Ray is a recognized expert in venture technology investments, company building, and governance • BS Nuclear Engineering from Texas A & M University, MS Nuclear Engineering from MIT, MBA Harvard Business School Lord Duncan of Springbank Life Peer U.K. House of Lords. Former U.K. Minister of Climate Change • Former Government Minister for Climate Change within Department of Business Energy and Industrial Strategy and elected to the European Parliament in 2014 • PhD in Paleontology from Bristol University Lord Browne of Madingley Former CEO of BP • Chairman of BeyondNetZero, Windward, SparkCognition, Queen Elizabeth Prize for Engineering, Francis Crick Institute, and Courtauld Institute of Art • Served as CEO of BP from 1995 to 2007, leading it through significant growth and transformation • Joined Riverstone in 2007 as co - head of the world’s largest renewable energy PE - fund until 2015 Rt. Hon. Stephen Harper, PhD Former Canadian Prime Minister • Served as Prime Minister from 2006 to 2015 • Known for assertive leadership, principled diplomacy, disciplined economic policy with strong stance on international peace and security with tenures in G - 7, G - 20, NATO and United Nations memberships Diana Walters Independent director, board chairman and senior advisor • 30 years of management and investment experience primarily in the natural resources sector • Bachelor of Arts degree and a Master of Arts in Energy and Mineral Resources from the University of Texas at Austin Robert Litterman, PhD Former Head of Risk at Goldman Sachs & Co • Founding Partner at Kepos Capital, 23 years at GS where he served in research, risk management, investments and leadership • PhD in Economics from University of Minnesota Ernest Moniz, PhD Former US Secretary of Energy • Senior Counsel to Advisory Board • Served as the 13th United States Secretary of Energy from 2013 to 2017 • Cecil and Ida Green Professor of Physics and Engineering Systems Emeritus at Massachusetts Institute of Technology • PhD Theoretical Physics, Stanford University Jeffrey Merrifield, JD Former USNRC Commissioner and former SVP of the Shaw Group • Legal Counsel to Advisory Board • Former Commissioner, U.S. Nuclear Regulatory Commission, appointed by President Bill Clinton and reappointed by President George W. Bush • Chair of Board of Directors for USNIC and former NRC Commissioner from 1998 to 2007 HCM II / Terrestrial Energy Investor Presentation 45
Glossary Term Definition HCM II / Terrestrial Energy Investor Presentation 46 Base load The minimum amount of electric power delivered or required over a given time period at a steady rate. Core - unit The term to denote the vessel that contains the primary components of the IMSR, the reactor core, heat exchangers, pumps, etc. DOE and LPO The United States Department of Energy, and its affiliated Loan Programs Office, which provides loan guarantees to assist in financing energy infrastructure projects. FCP/NCP An engineering concept referring to First Commercial Plant and Nth Commercial Plant, reflecting the reduction in price as processes mature and companies proceed along the learning curve. Terrestrial Energy’s unit economics are based on NCP estimates, projected to be achieved at the 20th IMSR Plant. Full lifecycle The full lifespan of a specific plant, including pre - construction, construction, operations, and decommissioning. Gen IV Generation IV nuclear technology, which improves upon Generation III+ technologies (current reactors) through two important improvements: 1) ability to generate high - temperature heat (>400 ƒ C) appropriate for use in industrial applications, and 2) high inherent safety incorporated into the design, versus active and passive safety systems of previous generations. Generation IV technology governed by the Generation IV International Forum, an intergovernmental forum representing 40 countries. HALEU (15 - 20) HALEU (15 – 20) stands for “High - Assay Low Enriched Uranium” enriched to 15 - 20% (>15% is required for other Gen IV nuclear technology) SALEU SALEU stands for “Standard - Assay Low Enriched Uranium”, which is U - 235 which has been enriched to <5%. Currently, the only known commercial providers of HALEU (>15%) are from Russian sources, while SALEU is readily commercially available from North American and Western European suppliers. Inherent safety A proactive approach to process safety in which hazards are eliminated or lessened to reduce risk without engineered or procedural intervention. A nuclear reactor with high inherent safety may rely upon natural phenomenon such as natural circulation or negative feedback power coefficients to achieve a safe state as opposed to older plants that use active safety (e.g. pumps, actuators, valves) to manage risk. kWe/MWe vs. kWth/MWth The distinction between power being generated for electricity (“e”) versus for thermal/heat (“th”). Generating electricity is a direct function of the thermal efficiency of the plant. In the IMSR’s case, the plant generates 822 MWth or 390 MWe. kWh/MWh Kilowatt - hour / megawatt - hour, or the production of that amount of energy for an hour. LCOE Levelized cost of electricity. A measure of the all - in cost of electricity generation to the owner/operator over the life cycle of the plant, including upfront CAPEX, ongoing OPEX, etc. Legacy nuclear Nuclear reactor technologies used in the market today, such as Boiling Water Reactors and Pressurized Water Reactors. They are classified as “Generation III+” or below. Load - following A power plant that can adjust its power output on demand. NRC / CNSC US Nuclear Regulatory Commission and Canadian Nuclear Safety Commission, respectively, government agencies of their respective countries tasked with regulating civilian uses of nuclear energy. OECD Organisation of Economic Co - operation and Development, a multilateral organization of 38 member countries, the majority of which are high - income economies. Utilization factor A measure of “uptime” for a facility, which reflects total operating time less planned and unplanned downtime for maintenance, etc. Utilization factors of 90 - 95% are typical for nuclear power plants. VDR Vendor Design Review. A voluntary high - level review process offered by the CNSC to provide pre - licensing feedback regarding the extent to which the reactor design meets CNSC requirements.
Risk Factors (1/3) HCM II / Terrestrial Energy Investor Presentation 47 All references to “we,” “us,” “our” or the “Company” refer to the business of Terrestrial Energy Inc. and its affiliates. The risks presented below are certain of the general risks related to the business of the Company, HCM II Acquisition Corp. (“HCM II”) and the proposed transaction between the Company and HCM II (the “Proposed Business Combination”), and such list is not exhaustive. The list below has been prepared solely in connection with the investor presentation and not for any other purpose. Accordingly, the list below is qualified in its entirety by disclosures contained in future documents filed or furnished with the United States Securities and Exchange Commission (“SEC”), including the documents filed or furnished by HCM II or the combined company in connection with the Proposed Business Combination. The risks presented in such filings may differ significantly from and be more extensive than those presented below. 1. 2. 3. 4. 5. 6. 7. 8. The Company requires substantial additional funds to complete the design of the Integral Molten Salt Reactor plant (the “ IMSR Plant ”) and execute its business plan. The aggregate capital raised from the proposed interim and PIPE financings will not be sufficient to finance the total capital required for the business plan. To the extent we have significant redemptions in connection with the proposed business combination, we may be required to make significant adjustments to our business plan in light of our available capital resources. For example, we may need to reduce future costs, which could materially impact our business plan or not pursue some of our strategic objectives and/or limit the resources available to further develop our design, sales and manufacturing efforts. There is no guarantee that such funds will be available or that the proceeds of any given financing will be sufficient to achieve this. We have not yet manufactured or delivered an IMSR Plant to customers, which makes evaluating our business and future prospects difficult and increases the risk of investment. Our corporate expenditures, including our corporate level outspend, are subject to numerous risks and uncertainties, including rising costs and other impacts of inflation, evolving regulatory requirements, raw material availability, global conflicts, global supply chain challenges and component manufacturing and testing uncertainties, among other factors. Accordingly, it is possible that our overall expenses and related outspend could be higher than the levels we currently estimate, and any increase could have a material adverse effect on our business, financial conditions and results of operation. We may experience a disproportionately higher impact from inflation and rising costs. Although the impact of material cost, labor, or other inflationary or economically driven factors will impact the entire nuclear and energy transition industry (including renewable sources of electricity, like solar and wind), the relative impact will not be the same across the industry, and the particular effects within the industry will depend on a number of factors, including material use, technology, design, structure of supply agreements, project management and others, which could result in significant changes to the competitiveness of our technology and our ability to sell our IMSR Plant, which could have a material adverse effect on our business, financial condition and results of operations. In order to fulfill our business plan, we will require additional funding. To the extent we require such additional investor funding in the future, such funding may be dilutive to our investors and no assurances can be provided as to terms of any such funding. Any such funding and the associated terms will be highly dependent upon market conditions and the progress of our business at the time we seek such funding. The terms of any financing that we pursue may be less favorable than previously anticipated and could become less favorable depending on the amount of funds we may require. The market for IMSR Plant generating electric power and high - temperature heat is not yet established and may not achieve the growth potential we expect or may grow more slowly than expected. The Company has no present orders for IMSR Plants, and there is no guarantee that present or contemplated discussions will result in contractual engagements leading to customer orders. Our cost estimates are highly sensitive to broader economic factors, and our ability to control or manage our costs may be limited. Capital and operating costs for the deployment of a first - of - a - kind reactor such as our IMSR Plant are difficult to project, inherently variable and are subject to significant change based on a variety of factors including site specific factors, customer off - take requirements, regulatory oversight, operating agreements, supply chain availability, inflation and other factors. Opportunities for cost reductions with subsequent deployments are similarly uncertain. To the extent cost reductions are not achieved within the expected timeframe or magnitude, our IMSR Plant may not be cost competitive with alternative technologies, which could materially and adversely affect our expected revenues, gross margins and on the other information included in the illustrative unit economics. 9. The Company does not have a history of generating operating profits. The Company may be less successful in implementing its business strategy than a more seasoned company. Accordingly, it may experience significant fluctuations in its operating results and rate of growth. 10. The uncertainty of future regulatory actions required for commercial use of its technology and the development stage of the Company’s technology make it difficult to accurately forecast the level or source of the Company’s future revenues, when they may arise, and rates of growth. 11. The nuclear energy generation industry is highly regulated, and applicable legislation and regulations may adversely impact the Company’s financial performance and limit its operating flexibility and growth prospects. 12. Each country has a separate nuclear regulatory regime, and the Company will need to achieve regulatory milestones for IMSR Plant commercial use and for individual projects which will differ according to the market and will result in additional costs and time to deploy, with no certainty of successful outcomes or regulatory access. 13. Export and import regulations relating to nuclear dual use materials and technology may delay or prevent desired supply chain or customer relationships from being consummated in a timely fashion or at all. 14. The Company and its prospective customers must comply with applicable legislation and regulations, in particular those concerning environmental protection, employee protection, public health and nuclear safety. The Company may be subject to sanctions, including administrative sanctions, in the event of an incident or lack of compliance, and the rigor of applicable legislation and regulation may increase over time which could lead to delays, additional costs, or difficulties in market entry. 15. The Company’s activities and IMSR Plant operations are subject to stringent environmental laws and other similar permitting requirements and regulations promulgated and administered by various government agencies. Failure to comply with applicable environmental laws and regulations or to obtain or comply with any necessary environmental permits pursuant to such laws and regulations could result in fines or other sanctions being levied against the Company. 16. Environmental laws and other similar permitting requirements and regulations affecting nuclear energy generation are complex and are subject to policy changes and could impose additional costs or restrictions on the operation of the Company, which costs could materially and adversely affect the Company’s business or financial condition. 17. The Company is seeking legal patent protections for aspects of its IMSR Plant innovation, and has already obtained patents in certain jurisdictions. There is no guarantee that patent rights will be granted for the patents applied for, or for future patent applications in any or all applicable jurisdictions. There is no guarantee that third parties will not attempt to infringe the Company’s patent rights nor that the Company will be successful in enforcing its patent rights. 18. If any legitimate cause of action arose which was successfully prosecuted against the Company, it could have a material adverse effect on the Company’s business, financial condition and results of operations. In addition, settlement of claims by the Company could adversely affect the Company’s financial condition and results of operations. 19. Technical development of the IMSR Plant is in process and could be delayed due to the unavailability of technical personnel and unanticipated adverse experimental results related to aspects of the IMSR Plant design. 20. Our fuel designs differ from fuels currently licensed and used by commercial nuclear power plants, and our IMSR technology differs from reactors currently in operation, including with respect to potential industrial uses. As a result, the regulatory licensing and approval process for our plants may be delayed and made more costly, and industry acceptance of our technology may be hampered. 21. We must complete nuclear grade material qualifications and obtain regulatory approvals for the use of various materials in our IMSR reactor design. This includes long lead time irradiation testing and analysis, which may require redesign or use of alternative suppliers if results are unsatisfactory. Further, certain key nuclear grade materials and components, such as graphite, are only produced in limited quantity and predominantly outside of the United States. Cultivating expanded foreign or domestic U.S. supply chain manufacturing capacity for key materials and components depends on cooperation from government and supply chain partners that may result in shortages and delays if not accomplished within assumed timelines or costs. These key materials and components may also be particularly vulnerable to inflationary pressures and cost increases. 22. The IMSR Plant may experience equipment failure or, higher frequency of adverse operating events or be affected by external factors such severe weather which could unfavorably affect the amount of power produced by an IMSR Plant and its profitability, and thus the Company’s financial performance, including its revenues and cash available for distribution.
Risk Factors (2/3) HCM II / Terrestrial Energy Investor Presentation 48 23. If IMSR Plants do perform as expected, external factors such as grid connectivity issues may affect their output. Unplanned outages or prolonged downtime for maintenance and repair typically increase operation and maintenance expenses and reduce revenues. 24. The time frame for developing the IMSR Plant and for prospective customers to obtain operating licenses may be uncertain, and the actual time required may be longer than anticipated in the Company’s business plan. 25. Unexpected increases in the Company’s cost structure, many of which are beyond the control of the Company, could materially and adversely impact its financial performance. Examples of such costs include, but are not limited to: the cost of maintenance or the cost and durability of components for the Company’s IMSR Plants, unexpected increases in the cost of procuring materials and services required for IMSR Plant maintenance activities, , including the disposal of nuclear waste materials, and unexpected replacement or repair costs associated with equipment underperformance or lower - than - anticipated durability. 26. The Company and the owner - operator of the IMSR Plant may not be able to obtain insurance against certain requirement risks of IMSR Plant operation and may become subject to higher insurance premiums than it presently pays. Uninsured losses and other related expenses, to the extent not recovered from insurers or the nuclear industry, could be borne by us or the owner - operator of the IMSR Plant. 27. The Company’s business as a vendor of IMSR Plants is exposed directly or indirectly to the risks inherent in the development, construction and operation of nuclear reactors, such as failure to achieve development milestones, breakdowns, manufacturing defects, natural disasters, terrorist attacks, theft, and sabotage. Insurance will not be available for all such risks, or the premiums may be commercially prohibitive for IMSR Plant owners and operators. 28. A nuclear accident or other significant event at a nuclear plant, regardless of where located or whether the technology involved is similar to the Company’s technology could result in increased regulation and reduced public and political support for nuclear - fueled energy, and adversely affect the prospects of the business. 29. Certain test facilities used by the Company, such as nuclear irradiation facilities, have limited capacity, and there is no guarantee that they will be available when required, which may lead to delays in the completion of required testing programs in advance of IMSR Plant licensing. 30. The Company competes with other vendors of Generation IV reactors, as well as vendors of conventional reactors, which may have greater financial resources and therefore have the ability to sustain development and operations through market downturns and other adverse economic conditions. Such other vendors may also have other resources for new product development, which could provide such other vendors with a competitive advantage. 31. While the Company believes that the IMSR Plant is an innovative and commercially competitive product, other new nuclear or energy technologies could erode the contemplated competitive position of the IMSR Plant. In such scenarios, the Company may not be able to commercialize the IMSR Plant. 32. The Company and its technology are at risk of industrial espionage and/or breaches of confidentiality and similar obligations. Such acts of industrial espionage and contractual breaches may be outside of the Company’s control and could give an undue advantage to competitors, both private and sovereign. 33. There is no guarantee that a third party will not seek to develop a similar product to the IMSR Plant and bring that product to market faster than the Company. Such an outcome will erode the Company’s abilities to profit from the completion of IMSR Plant development and licensing. 34. There is no guarantee that any order for a first IMSR Plant would lead to subsequent orders. 35. IMSR Plants may suffer significant construction delays or cost increases as a result of a variety of factors. Any such delays could cause the construction of a project to ultimately be unprofitable for the Company or otherwise adversely affect the Company’s business, financial condition and results of operations. 36. Recovery of the capital investment in a nuclear technology development project has traditionally occurred over a long period of time given the protracted and uncertain timetables for the development, construction and licensing of nuclear plants. As a result, the Company must obtain funds from equity or debt financings, or licensing or other commercial arrangements, to finance the development of the technology and to pay the general and administrative costs of operating the Company’s business. The Company’s ability to arrange financing is uncertain, either at the corporate or project level, and the costs of such capital are dependent on numerous factors, including: general economic and capital market conditions; credit availability from banks and other financial institutions; investor and lender confidence in the Company; maintenance of acceptable credit ratings; and the Company’s cash flow. 37. Planned schedules for, inter alia , IMSR Plant regulatory submissions, technology and engineering development, and customer development milestones are illustrative. To the extent that financing is completed later than anticipated, there may be correlative changes to the scheduling of commencement and completion of regulatory submissions, design, engineering and other tasks, and such schedules are dependent on numerous other factors, many of which are outside of the control of the Company. 38. The Company’s success, including its ability to manage its growth and the complexity of its operations, depends on its ability to retain the current members of the Company’s senior management team and other key personnel. The loss of one or more key executives or other members of senior management could have an attendant negative impact on the Company’s business and operations. 39. The Company depends on its ability to retain and motivate key employees and attract qualified new employees. An inability to attract and retain sufficient technical, finance and managerial personnel could limit productivity or delay the Company’s growth plans, which could have a material adverse effect on the Company’s business, financial condition and results of operations. 40. The Company requires qualified staff to grow, and as the industry grows there may be a limited pool of prospective qualified recruits, which may lead to an inability to recruit qualified staff or escalation of compensation in order to be successful in the competition for staff. 41. The Company also competes with other nuclear reactor vendor companies, including Generation IV reactor companies, for the limited pool of personnel with requisite industry knowledge and experience. A possible loss of experienced personnel to competitors, and a possible transfer of know - how and trade secrets associated therewith, including the patenting by our competitors of technology built on our know - how obtained through former employees, could negatively affect the Company’s long - term growth prospects. 42. The Company has no manufacturing capacity of its own and is dependent on access to equipment and services from key suppliers and the Company may be adversely affected by financial instability of those suppliers or a lack of capacity in the nuclear supply chain. Furthermore, the Company may be unable to successfully develop commercial - scale manufacturing capabilities internally or through partnerships. 43. The Company’s ability to compete and expand will be dependent on having access, at a reasonable cost, to high quality equipment, parts and components and related maintenance services provided by reliable third parties that are technologically and economically competitive with those utilized by the Company’s competitors. There can be no assurance that the operations of such third - party suppliers will continue to be viable or that such suppliers will be available in the event of an expansion of the sector. 44. Certain materials used in the Company’s IMSR technology have limited sources of supply and manufacture. There is no guarantee that such materials will be available in the quantities required on schedule. 45. There are a limited number of potential fuel enrichers and fabricators, and the Company is reliant on entering into fuel supply contracts with one or more of such parties to ensure availability of IMSR fuel to the Company’s prospective customers. The Company anticipates that its present fuel supply program, including its pilot scale fuel production contract with Springfields Fuel Limited, will ultimately lead to a commercial scale fuel production contract, but there is no guarantee that present contracts with fuel suppliers will be successfully completed or lead to anticipated commercial scale supply and contracts or that the commercial terms of any such contracts will be favorable to the Company. 46. The Company’s IMSR technology depends on a reliable supply of enriched uranium, and supply restrictions or major cost increases in the international market for natural uranium and uranium enrichment and/or conversion services could have material adverse effect on the Company’s business, financial condition and results of operations. 47. The Company intends to enter into contracts with suppliers of equipment, materials and other goods and services for construction and maintenance. If these suppliers do not perform their obligations, or do not meet service and quality standards expectations, the Company may have to enter into new contracts with other suppliers at a higher cost, perform the necessary work in - house and/or experience schedule disruptions affecting the amount of time and expense required to complete a task. 48. Sites for nuclear plants require the appropriate licenses. The number of such sites is limited, as is the number of prospective owners of such sites and prospective operators. The time required to obtain permissions to deploy nuclear plants on new sites involves political and community engagement, which may cause significant delay and incur significant costs, adversely affecting the time to revenue and the profitability of projects.
Risk Factors (3/3) 49. The Company has not trained operators for the IMSR Plants to date. Commercial deployment will require the development and completion of appropriate training. If such training is more difficult, requires greater time, or is met with market resistance, the Company’s operations, market position, and financial results could be adversely impacted. 50. The Generation IV reactor industry is in its early stages and changing and developing rapidly, the Company may wish to expand into other international markets. Risks inherent to an expansion of international operations into new markets may include the following: lack of local expertise to develop and construct projects; regulatory lack of capacity in new markets; restrictions on repatriation of earnings and cash; multiple, conflicting and changing laws and regulations; difficulties in enforcing agreements in foreign legal systems; changes in general economic and political conditions; political and economic instability, including wars, acts of terrorism; difficulties with recruiting and retaining local individuals skilled in international business operations; international business practices that may conflict with local customs; risk of nationalization or other expropriation of private enterprises; financial risks, such as longer sales and payment cycles and greater difficulty collecting accounts receivable; fluctuations in currency exchange rates; high rates of inflation; inability to obtain, maintain or enforce intellectual property rights; and inability to locate adequate capital funding on attractive terms and conditions. 51. The regulation of the nuclear industry and its political sensitivity has historically led to a high degree of central and state, municipal or provincial government involvement. This implies that contracts may be awarded or withheld for reasons governed by politics as well as commercial merit. 52. International sales of nuclear reactors have often involved government to government financing or been linked to other trade which may cause political factors to prevail over technical merit in international reactor sales with governmental support. 53. The Company’s management team has limited experience in operating a public company. 54. The Company will incur significant increased expenses and administrative burdens as a public company, which could have an adverse effect on our business, financial condition and results of operations. 55. The valuation of the Company in the Business Combination Agreement will be subject to market factors after the shares of the resulting issuer are listed on the NASDAQ stock exchange, and there is no guarantee that the trading price of the shares will not fall. 56. The cost of electricity generated from nuclear sources may not be cost competitive with other electricity generation sources in some markets, which could materially and adversely affect the Company’s business. 57. The Company may compete with state - sponsored nuclear technology suppliers who are entirely or partially funded by the state and are, therefore, able to substantially discount sales costs of nuclear plants in their respective markets. The Company may not be able to compete with such suppliers with materially greater financial resources. 58. Changes in the availability and cost of electricity, natural gas and other forms of energy are subject to volatile market conditions that could adversely affect the Company’s business. Unanticipated and major changes in the cost of energy from non - nuclear competitors such as wind, solar, geothermal and/or fusion or a substantial drop in fossil fuels such as natural gas could adversely impact the ability of the Company to remain competitive as an energy supplier. 59. The business combination agreement may be terminated upon the occurrence of certain events and circumstances. 60. The parties may be unable to recognize the anticipated benefits of the Proposed Business Combination, which may be affected by, among other things, the amount of cash available following any redemptions by HCM II’s stockholders. 61. The combined company may be unable to meet the initial listing standards of the stock exchange or market upon which the combined company’s securities are listed or traded upon consummation of the Proposed Business Combination. 62. There may not be an active trading market for the new combined company securities, which may make it difficult to sell shares of the combined company. 63. The parties may be unable to complete the Proposed Business Combination by HCM II’s business combination deadline. 64. The parties may be unable to satisfy the conditions to the consummation of the Proposed Business Combination, including, without limitation, the approval of the Proposed Business Combination by the stockholders of HCM II or any other required regulatory approval. 65. HCM II’s officers and directors have interests that are different from, or in addition to, the interests of HCM II’s public shareholders, and a conflict of interest may have existed in determining whether the Proposed Business Combination is appropriate as HCM II’s initial business combination. Such interests include that HCM II’s sponsor, as well as HCM II’s officers and directors, will lose their entire investment in HCM II if HCM II does not complete an initial business combination. HCM II / Terrestrial Energy Investor Presentation 49
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