Palladyne AI Corp 8-K, filed Apr 6, 2021
Palladyne AI Corp. (PDYN)
About this 8-K
Palladyne AI Corp filed this 8-K on April 6, 2021, reporting on events of April 5, 2021.
Items reported
- Item 1.01: Entered into a material agreement
- Item 3.02: Unregistered sale of equity
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 5, 2021
ROTOR ACQUISITION CORP.
(Exact name of registrant as specified in its charter)
| Delaware | 001-39897 | 85-2838301 | ||
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) | (I.R.S.
Employer Identification Number) |
The Chrysler Building 405 Lexington Avenue New York, New York |
10174 | |
| (Address of principal executive offices) | (Zip Code) |
(212) 818-8800
Registrant’s telephone number, including area code
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 to the registrant under any of the following provisions:
| ☒ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) |
Name of each exchange on which registered | ||
| Units, each consisting of one share of Class A Common Stock and one-half of one redeemable warrant | ROT.U | The New York Stock Exchange | ||
| Class A Common Stock, par value $0.0001 per share | ROT | The New York Stock Exchange | ||
| Redeemable warrants, exercisable for shares of Class A Common Stock at an exercise price of $11.50 per share | ROT WS | The New York Stock Exchange |
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.
General
On April 5, 2021, Rotor Acquisition Corp., a Delaware corporation (“we,” “us,” “our” or the “Company”), entered into an Agreement and Plan of Merger (as it may be amended, supplemented or otherwise modified from time to time, the “Merger Agreement”), by and among the Company, Rotor Merger Sub Corp., a Delaware corporation and a wholly owned Subsidiary of the Company (“Merger Sub”), and Sarcos Corp., a Utah corporation (“Sarcos”). The transactions set forth in the Merger Agreement, including the Merger (defined below), will constitute a “Business Combination” as contemplated by the Company’s Amended and Restated Certificate of Incorporation. Unless expressly stated otherwise herein, capitalized terms used but not defined herein shall have such meanings ascribed to them in the Merger Agreement.
The Merger Agreement
Subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into Sarcos, with Sarcos surviving as a wholly owned subsidiary of the Company (the “Merger”). Upon the Closing, the Company will change its name to “Sarcos Technology and Robotics Corp.”
Consideration
Subject to the terms and conditions set forth in the Merger Agreement, in consideration of the Merger, holders of Sarcos’ equity (including shares of common stock, preferred stock, restricted stock awards, options, restricted stock units and warrants) will receive 120,000,000 shares of common stock of the Company in the aggregate, plus, if a Pre-Closing Financing is consummated by Sarcos prior to the Closing, an additional amount of shares of Company common stock based on the amount of gross equity proceeds received by Sarcos from such Pre-Closing Financing (if any), not to exceed an additional 5,000,000 shares of Company common stock in the aggregate (the “Closing Merger Consideration”). In addition, each holder of Sarcos capital stock (including any capital stock subject to restricted stock awards) will be entitled to a right to receive additional contingent consideration following the Closing in the form of an earn-out. This earnout will become payable as follows: (a) 14,062,500 shares of common stock of the Company if the closing share price of a share of common stock of the Company is equal to or exceeds $15.00 for 20 trading days in any 30 consecutive trading day period at any time during the period beginning on the first anniversary of the Closing and ending on the fourth anniversary of the Closing, and (b) 14,062,500 shares of common stock of the Company if the closing share price of a share of common stock of the Company is equal to or exceeds $20.00 for 20 trading days in any 30 consecutive trading day period at any time during the period beginning on the first anniversary of the Closing and ending on the fifth anniversary of the Closing.
The amount of shares of Company common stock into which each share of Sarcos capital stock will convert at the Closing of the Merger will be determined by reference to an Exchange Ratio, which is calculated in accordance with the terms of the Merger Agreement, by dividing the Closing Merger Consideration by the amount of fully-diluted outstanding Sarcos shares.
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At the Closing, each option to purchase shares of Sarcos’ common stock will be converted into an option exercisable into a number of shares of common stock of the Company equal to the number of Sarcos shares subject to such Sarcos option as of immediately prior to the Closing, multiplied by the Exchange Ratio. Each award of Sarcos’ restricted stock units will be converted into a right to receive restricted stock units based on shares of the common stock of the Company equal to the number of Sarcos shares subject to such Sarcos restricted stock unit as of immediately prior to the Closing, multiplied by the Exchange Ratio.
Representations and Warranties
The Merger Agreement contains customary representations and warranties of the parties thereto with respect to the parties, the transactions contemplated by the Merger Agreement and their respective business operations and activities. The representations and warranties of the parties do not survive the Closing.
Covenants
The Merger Agreement contains customary covenants of the parties thereto, including (a) the requirement to make appropriate filings and obtain clearance pursuant to the HSR Act, (b) the use of reasonable best efforts to obtain the PIPE Financing, (c) preparation and filing of a proxy statement (the “Proxy Statement”), and (d) the preparation and delivery of PCAOB audited financial statements for Sarcos.
The Merger Agreement also contains mutual exclusivity provisions prohibiting (a) Sarcos and its representatives and subsidiaries from initiating, soliciting, or otherwise encouraging an Acquisition Proposal, (subject to certain limited exceptions specified therein), or entering into any contracts or agreements in connection therewith and (b) the Company and its subsidiaries from initiating, soliciting, or otherwise encouraging any merger, capital stock exchange, asset acquisition, stock purchase, reorganization, recapitalization or similar business combination (subject to limited exceptions specified therein) or entering into any contracts or agreements in connection therewith.
Conditions to Consummation of the Transactions
Consummation of the transactions contemplated by the Merger Agreement is subject to conditions of the respective parties that are customary for a transaction of this type, including, among others: (a) approval by the Company’s shareholders of certain proposals to be set forth in the Proxy Statement; (b) approval of the Merger by the stockholders of Sarcos; (c) there being no laws or injunctions by governmental authorities or other legal restraint prohibiting consummation of the transactions contemplated under the Merger Agreement; (d) the waiting period applicable to the Mergers under the HSR Act having expired (or early termination having been granted); and (e) the Company having at least $5,000,001 in net tangible assets.
Sarcos has separate closing conditions, including, among others: (a) that the sum of the amount in the Company’s trust account (calculated net of any stockholder redemptions but prior to the payment of any Company transaction expenses), plus the proceeds of the PIPE Financing, equals or exceeds $200 million; and (ii) the Waiver Agreement has not been amended or modified, other than as consented to in writing by Sarcos.
The Company has separate closing conditions, including, among others: (a) that no Company Material Adverse Effect has occurred and is continuing and uncured; (b) the Company shall have entered into employment agreements with certain executives of Sarcos; (c) Sarcos shall have received the consent of Sarcos’ preferred stock to effect the conversion of shares of Sarcos’ preferred stock into shares of Sarcos’ Class A common stock as of immediately prior to the Effective Time; and (d) Sarcos’ Warrants shall have been exercised as contemplated by the Warrant Exercise Notices.
Termination
The Merger Agreement may be terminated under certain customary and limited circumstances prior to the closing of the Merger, including:
| (i) | by mutual written consent of the Company and Sarcos; |
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| (ii) | by either party if the other party’s representations or warranties are not true and correct or if the other party failed to perform any of its covenants set forth in the Merger Agreement or any Ancillary Document such that the conditions to closing would not be satisfied and such failure cannot or has not been cured within the earlier of 30 days’ notice by the other party; |
| (iii) | subject to certain provisions for extension, by either party if the Closing has not occurred on or prior to six months following the execution of the Merger Agreement; |
| (iv) | by either party if there is a final non-appealable Governmental Order preventing the consummation of the transactions contemplated by the Merger Agreement; |
| (v) | by either party if the stockholders of the Company fail to approve certain of the necessary stockholder approvals; |
| (vi) | by Sarcos if the Special Committee changes its recommendation, provided that Sarcos exercises its termination right within ten business days of such change of recommendation; |
| (vii) | by the Company if Sarcos fails to deliver the written consent of the stockholders of Sarcos approving the Merger Agreement within 24 hours following the execution and delivery of the Merger Agreement; |
| (viii) | by the Company if the Conversion Written Consent is, at any time, no longer valid or is otherwise revoked or rescinded and no longer effective to approve the Company Preferred Conversion; and |
| (ix) | by the Company if Sarcos fails to deliver its PCAOB-compliant audited financials prior to 5:00 pm Eastern Time on April 15, 2021. |
If the Merger Agreement is validly terminated, none of the parties will have any liability or any further obligation under the Merger Agreement with certain limited exceptions, including liability arising out of Fraud.
The Company’s CEO, one of its other directors and certain members of the Sponsor who are not directors or officers of the Company are part of a group that (directly or through affiliates) acquired a minority equity investment in Sarcos in early 2020 (the “Rotor Sarcos Holders”). On January 30, 2021, the Company’s board of directors (the “Board”) authorized the formation of a transaction review committee consisting solely of disinterested independent directors of the Company (the “Special Committee”) and authorized the Special Committee to engage independent legal counsel. The Special Committee, which received a fairness opinion from Houlihan Lokey Capital, Inc., an independent financial advisory firm engaged by the Special Committee, unanimously recommended the approval of the Merger Agreement, the Merger and the transactions contemplated thereby to the Board and that the Board recommend to the holders of the Company’s common stock that they approve such matters. On April 5, 2021, having received the Special Committee’s recommendation, the Board unanimously approved the Merger Agreement, the Merger and the transactions contemplated thereby and recommended their approval to the holders of the Company’s common stock.
A copy of the Merger Agreement is filed with this Current Report on Form 8-K as Exhibit 2.1 and is incorporated herein by reference. The foregoing description of the Merger Agreement and the transactions contemplated thereby is not complete and is subject to, and qualified in its entirety by, reference to the actual agreement. The Merger Agreement has been included to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company, Sarcos or their respective subsidiaries or affiliates. The representations, warranties and covenants contained in the Merger Agreement were made only for purposes of the Merger Agreement and as of specific dates, were solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date hereof, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
Lock-up Agreement
Concurrent with the execution of the Merger Agreement, certain security holders of Sarcos (“Sarcos Holders”) entered into a lock-up agreement (each, a “Lock-up Agreement”) with the Company. Pursuant to the Lock-up Agreement, Sarcos Holders agreed, among other things, to the following transfer restrictions following the Closing:
Holders of shares of Sarcos preferred stock agreed, among other things, that (a) 50% of their shares may not be transferred, until the earlier to occur of (x) six months following Closing, and (y) 120 days following the Closing if the stock price of the Company’s common stock exceeds $13.00 for 20 trading days in any 30 consecutive trading day period, and (b) the remaining 50% of such shares may not be transferred for a period of one year following the Closing.
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Holders of Sarcos’ common stock, options, restricted stock awards and restricted stock unit awards agreed, among other things, that (1) 20% of such securities may not be transferred until the earlier to occur of (a) 120 days after Closing if the stock price of the Company’s common stock exceeds $13.00 for 20 trading days in any 30 consecutive trading day period, and (b) 6 months after closing; and (2) the remaining 80% can be transferred at the earlier of (A) delivery to customers of at least twenty Guardian® XO® and/or Guardian® XT commercial units to customers of the Constituent Corporations (but in no event prior to the close of business on the one year anniversary of the date of Closing) and (B) the close of business on the second anniversary of the date of Closing.
A copy of the form of Lock-up Agreement is filed with this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by reference, and may include such changes as are negotiated between the parties thereto. The foregoing description of the form of Lock-up Agreement is not complete and is subject to, and qualified in its entirety by, reference to the form thereof filed herewith.
Concurrent with the execution of the Merger Agreement, the Rotor Sarcos Holders, including the holders of all outstanding Company Warrants, entered into a lock-up agreement (the “Other Lock-up Agreement”) with the Company. Pursuant to the Other Lock-up Agreement, such stockholders agreed, among other things, to certain transfer restrictions for a period of one year following the Closing.
A copy of the Other Lock-up Agreement is filed with this Current Report on Form 8-K as Exhibit 10.2 and is incorporated herein by reference, and may include such changes as are negotiated between the parties thereto. The foregoing description of the Other Lock-up Agreement is not complete and is subject to, and qualified in its entirety by, reference to the form thereof filed herewith.
PIPE Financing (Private Placement)
Concurrent with the execution of the Merger Agreement, the Company entered into subscription agreements (each, a “Subscription Agreement”) with certain investors (the “PIPE Investors”) pursuant to which, among other things, the PIPE Investors have agreed to subscribe for and purchase, and the Company has agreed to issue and sell to the PIPE Investors an aggregate of 22,000,000 shares of common stock of the Company, at a per share price of $10.00 for an aggregate purchase price of $220 million concurrent with the Closing, on the terms and subject to the conditions set forth therein (the “PIPE Financing”). The Subscription Agreement contains customary representations and warranties of the Company, on the one hand, and each PIPE Investor, on the other hand, and customary conditions to closing, including the consummation of the transactions contemplated by the Merger Agreement. Each Subscription Agreement provides that the Company will grant the PIPE Investors certain customary registration rights. The form of the Subscription Agreement is attached as Exhibit 10.3 hereto and is incorporated herein by reference. The foregoing description of the Subscription Agreement is not complete and is subject to, and qualified in its entirety by, reference to the form filed herewith.
Waiver Agreement
Prior to the Closing, the Company, Sponsor, certain holders of Class B Common Stock in the Company entered into a waiver agreement (the “Waiver Agreement”) pursuant to which Sponsor and certain other holders of Class B Common Stock in the Company have agreed, among other things, to irrevocably waive their respective anti-dilution and conversion rights set forth in the Company’s Amended and Restated Certificate of Incorporation and to forfeit a certain number of Rotor Class B Shares and Rotor Warrants.
A copy of the form of the Waiver Agreement is filed with this Current Report on Form 8-K as Exhibit 10.4 and is incorporated herein by reference, and may include such changes as are negotiated between the parties thereto. The foregoing description of the Waiver Agreement is not complete and is subject to, and qualified in its entirety by, reference to the form thereof filed herewith.
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Registration Rights Agreement
The Merger Agreement contemplates that, at the Closing, the Company, the Sponsor, and certain Sarcos stockholders will enter into the Registration Rights Agreement pursuant to which, among other things, the Company will agree to undertake certain shelf registration obligations in accordance with the Securities Act of 1933, as amended (the “Securities Act”), and certain subsequent related transactions and obligations, including, among other things, undertaking certain registration obligations, and the preparation and filing of required documents.
A copy of the Registration Rights Agreement is filed with this Current Report on Form 8-K as Exhibit 10.5 and is incorporated herein by reference, and may include such changes as are negotiated between the parties thereto. The foregoing description of the form of Registration Rights Agreement is not complete and is subject to, and qualified in its entirety by, reference to the form thereof filed herewith.
Item 3.02 Unregistered Sales of Equity Securities.
The disclosures set forth in Item 1.01 of this Current Report on Form 8-K are incorporated by reference into this Item 3.02. Shares of common stock of the Company to be issued and sold to the PIPE Investors pursuant to the Subscription Agreements will not be registered under the Securities Act, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.
Item 7.01 Regulation FD Disclosure.
On April 6, 2021, the Company issued a press release announcing the execution of the Merger Agreement and announcing that Sarcos and the Company will hold a joint conference call on April 6, 2021 at 8:30 a.m. Eastern Time (the “Conference Call”). A copy of the press release, which includes information regarding participation in the Conference Call, is furnished herewith as Exhibit 99.1 and incorporated by reference herein.
Furnished herewith as Exhibit 99.2 hereto and incorporated into this Item 7.01 by reference is an investor presentation relating to the Merger and PIPE Financing.
The foregoing (including the information presented in Exhibits 99.1 and 99.2) is being furnished pursuant to Item 7.01 and will not be deemed to be filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise be subject to the liabilities of that section, nor will it be deemed to be incorporated by reference in any filing under the Securities Act or the Exchange Act. The submission of the information set forth in this Item 7.01 shall not be deemed an admission as to the materiality of any information in this Item 7.01, including the information presented in Exhibit 99.1 and Exhibit 99.2, that is provided solely in connection with Regulation FD.
Additional Information
The proposed transactions will be submitted to shareholders of the Company for their consideration and approval at a special meeting of shareholders. In connection with the proposed transactions, the Company intends to file a preliminary and a definitive proxy statement to be distributed to Company shareholders in connection with the Company’s solicitation for proxies for the vote by the Company’s shareholders in connection with the proposed transactions and other matters as described in such proxy statement. The Company will mail a definitive proxy statement and other relevant documents to its shareholders as of the record date established for voting on the proposed transactions. Investors and security holders of the Company are advised to read, when available, the preliminary proxy statement, and any amendments thereto, and the definitive proxy statement in connection with the Company’s solicitation of proxies for its special meeting of shareholders to be held to approve the proposed transaction because the proxy statement will contain important information about the proposed transaction and the parties to the proposed transaction. Shareholders will also be able to obtain copies of the proxy statement, without charge, once available, at the SEC’s website at www.sec.gov or by directing a request to: c/o Rotor Acquisition Corp., The Chrysler Building, 405 Lexington Avenue, New York, New York 10174 Attn: Amy Salerno. E-mail: info@rotoracquisition.com.
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No Offer or Solicitation
This Current Report on Form 8-K and the exhibits thereto is not a proxy statement or solicitation of a proxy, and does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act.
Participants in the Solicitation
The Company and Sarcos and their respective directors, executive officers, other members of management, and employees, under SEC rules, may be deemed to be participants in the solicitation of proxies of the Company’s shareholders in connection with the proposed transaction. Information regarding the persons who may, under SEC rules, be deemed participants in the solicitation of the Company’s shareholders in connection with the proposed business combination will be set forth in the Company’s consent solicitation / proxy statement when it is filed with the SEC. Investors and security holders may obtain more detailed information regarding the names and interests in the proposed transaction of the Company’s directors and officers in the Company’s filings with the SEC and such information will also be in the proxy statement to be filed with the SEC by the Company for the proposed transaction.
Forward-Looking Statements
Certain statements in this Current Report on Form 8-K may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or the Company’s or Sarcos’ future financial or operating performance. For example, projections of future revenue and adjusted EBITDA and other metrics are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “would,” “plan,” “future,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, 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 the Company and its management, and Sarcos and its management, as the case may be, are inherently uncertain 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 merger agreement with respect to the business combination; 2) the outcome of any legal proceedings that may be instituted against 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 the Company, to obtain financing to complete the business combination 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 to meet the Nasdaq’s listing standards following the consummation of the business combination; 6) the risk that the business combination disrupts current plans and operations of Sarcos 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 Sarcos or the combined company may be adversely affected by other economic, business and/or competitive factors; 11) Sarcos’ estimates of its financial performance; 12) the impact of the novel coronavirus disease pandemic and its effect on business and financial conditions; and 13) other risks set forth in the Company’s Investor Presentation furnished herewith as Exhibit 99.2, other risks and uncertainties set forth in the section entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2020 and other documents of the Company filed, or to be filed, with the SEC. Although he Company believes the expectations reflected in the forward-looking statements are reasonable, nothing in this Current Report on Form 8-K should be regarded as a representation by any person that the forward-looking statements or projections set forth herein will be achieved or that any of the contemplated results of such forward looking statements or projections will be achieved. There may be additional risks that the Company and Sarcos presently do not know or that the Company and Sarcos currently believe are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Neither the Company nor Sarcos undertakes any duty to update these forward-looking statements, except as otherwise required by law.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| † | Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The Registrant agrees to furnish supplementally a copy of all omitted exhibits and schedules to the Securities and Exchange Commission upon its request. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: April 6, 2021
| ROTOR ACQUISITION CORP. | ||
| By: | /s/ Amy Salerno | |
| Name: | Amy Salerno | |
| Title: | Chief Financial Officer | |
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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ROTOR ACQUISITION CORP.,
ROTOR MERGER SUB CORP.,
AND
SARCOS CORP.
DATED AS OF APRIL 5, 2021
TABLE OF CONTENTS
Page | ||
| Article 1 CERTAIN DEFINITIONS | 3 | |
| Section 1.1 | Definitions | 3 |
| Article 2 PURCHASE AND SALE | 23 | |
| Section 2.1 | Merger; Closing | 23 |
| Section 2.2 | Effect of the Merger; Allocation of Total Merger Consideration | 24 |
| Section 2.3 | Payment of Closing Merger Consideration; Other Closing Date Payments | 28 |
| Section 2.4 | Withholding | 28 |
| Section 2.5 | Payment of Contingent Merger Consideration | 29 |
| Section 2.6 | PPP Loans; PPP Escrow | 29 |
| Article 3 REPRESENTATIONS AND WARRANTIES RELATING TO THE GROUP COMPANIES | 30 | |
| Section 3.1 | Organization and Qualification | 30 |
| Section 3.2 | Capitalization of the Group Companies | 30 |
| Section 3.3 | Authority | 32 |
| Section 3.4 | Financial Statements; No Undisclosed Liabilities | 32 |
| Section 3.5 | Consents and Requisite Governmental Approvals; No Violations | 33 |
| Section 3.6 | Permits | 34 |
| Section 3.7 | Material Contracts | 34 |
| Section 3.8 | Absence of Changes | 37 |
| Section 3.9 | Litigation | 38 |
| Section 3.10 | Compliance with Applicable Law | 38 |
| Section 3.11 | Employee Plans | 38 |
| Section 3.12 | Environmental Matters | 40 |
| Section 3.13 | Intellectual Property | 41 |
| Section 3.14 | Labor Matters | 43 |
| Section 3.15 | Insurance | 44 |
| Section 3.16 | Tax Matters | 44 |
| Section 3.17 | Brokers | 46 |
| Section 3.18 | Real and Personal Property | 46 |
| Section 3.19 | Transactions with Affiliates | 47 |
| Section 3.20 | Material Customers and Suppliers | 47 |
| Section 3.21 | Data Privacy and Security Requirements | 48 |
| Section 3.22 | Compliance with International Trade & Anti-Corruption Laws | 48 |
| Section 3.23 | Information Supplied | 49 |
| Section 3.24 | Indebtedness; PPP Loans | 49 |
| Section 3.25 | Government Contracts | 50 |
| Section 3.26 | Investigation; No Other Representations | 51 |
| Section 3.27 | EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES | 52 |
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| Article 4 REPRESENTATIONS AND WARRANTIES RELATING TO THE ROTOR PARTIES | 52 | |
| Section 4.1 | Organization and Qualification | 52 |
| Section 4.2 | Authority | 53 |
| Section 4.3 | Consents and Requisite Government Approvals; No Violations | 53 |
| Section 4.4 | Brokers | 53 |
| Section 4.5 | Financing | 54 |
| Section 4.6 | Information Supplied | 54 |
| Section 4.7 | Capitalization of the Rotor Parties | 55 |
| Section 4.8 | SEC Filings | 55 |
| Section 4.9 | Trust Account | 56 |
| Section 4.10 | Absence of Changes | 56 |
| Section 4.11 | Litigation | 56 |
| Section 4.12 | Compliance with Applicable Law | 56 |
| Section 4.13 | Internal Controls; Listing; Financial Statements. | 57 |
| Section 4.14 | No Undisclosed Liabilities | 58 |
| Section 4.15 | Matters | 58 |
| Section 4.16 | Employees | 60 |
| Section 4.17 | Opinion of Financial Advisor | 60 |
| Section 4.18 | Rotor Transaction Expenses | 60 |
| Section 4.19 | No Prior Operations of Merger Sub | 60 |
| Section 4.20 | Not Foreign Person | 60 |
| Section 4.21 | Investigation; No Other Representations | 61 |
| Section 4.22 | EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES | 61 |
| Article 5 COVENANTS | 61 | |
| Section 5.1 | Conduct of Business of the Group Companies | 61 |
| Section 5.2 | Efforts to Consummate | 65 |
| Section 5.3 | Access to Information | 66 |
| Section 5.4 | Public Announcements | 67 |
| Section 5.5 | Indemnification; Directors’ and Officers’ Insurance | 68 |
| Section 5.6 | Tax Matters | 70 |
| Section 5.7 | Financing | 71 |
| Section 5.8 | Exclusive Dealing | 72 |
| Section 5.9 | Preparation of Proxy Statement | 73 |
| Section 5.10 | Rotor Party Approvals | 74 |
| Section 5.11 | Pre-Closing Holder Related Party Transactions | 75 |
| Section 5.12 | No Trading | 75 |
| Section 5.13 | Conduct of Business of Rotor | 75 |
| Section 5.14 | Trust Account | 77 |
| Section 5.15 | Merger Written Consent | 77 |
| Section 5.16 | PCAOB Financials | 77 |
| Section 5.17 | Post-Closing Directors and Officers | 78 |
| Section 5.18 | Certain Other Covenants | 79 |
| Section 5.19 | Section 280G | 79 |
| Section 5.20 | Employee Matters | 80 |
| Section 5.21 | Section 16 Matters | 81 |
| Section 5.22 | Listing | 81 |
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| Article 6 CONDITIONS TO CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT | 81 | |
| Section 6.1 | Conditions to the Obligations of the Parties | 81 |
| Section 6.2 | Other Conditions to the Obligations of the Rotor Parties | 82 |
| Section 6.3 | Other Conditions to the Obligations of the Company | 83 |
| Section 6.4 | Frustration of Conditions | 84 |
| Article 7 TERMINATION | 84 | |
| Section 7.1 | Termination | 84 |
| Section 7.2 | Effect of Termination | 86 |
| Article 8 MISCELLANEOUS | 87 | |
| Section 8.1 | Survival | 87 |
| Section 8.2 | Entire Agreement; Assignment | 87 |
| Section 8.3 | Amendment | 87 |
| Section 8.4 | Notices | 87 |
| Section 8.5 | Governing Law | 89 |
| Section 8.6 | Fees and Expenses | 89 |
| Section 8.7 | Construction; Interpretation | 89 |
| Section 8.8 | Exhibits and Schedules | 90 |
| Section 8.9 | Parties in Interest | 90 |
| Section 8.10 | Severability | 90 |
| Section 8.11 | Counterparts; Electronic Signatures | 90 |
| Section 8.12 | Knowledge of Company; Knowledge of Rotor | 91 |
| Section 8.13 | No Recourse | 91 |
| Section 8.14 | Extension; Waiver | 91 |
| Section 8.15 | Waiver of Jury Trial | 92 |
| Section 8.16 | Jurisdiction | 92 |
| Section 8.17 | Remedies | 92 |
| Section 8.18 | Trust Account Waiver | 93 |
| EXHIBITS | |
| Exhibit A | Form of Registration Rights Agreement |
| Exhibit B | Form of Lock-Up Agreement |
| Exhibit C | Form of Conversion Written Consent |
| Exhibit D | Form of Warrant Exercise Notice |
| Exhibit E-1 | Form of Certificate of Merger |
| Exhibit E-2 | Form of Articles of Merger |
| Exhibit F | Executed Subscription Agreements |
| Exhibit G | Form of New Incentive Plans |
| Exhibit H | Form of Governing Documents of Rotor |
| Exhibit I | Form of Merger Written Consent |
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of April 5, 2021, is made by and among Rotor Acquisition Corp., a Delaware corporation (“Rotor”), Rotor Merger Sub Corp., a Delaware corporation and a wholly owned Subsidiary of Rotor (“Merger Sub”), and Sarcos Corp., a Utah corporation (the “Company”). Rotor, Merger Sub, and the Company shall be referred to herein from time to time collectively as the “Parties.” Capitalized terms used but not otherwise defined herein have the meanings set forth in Section 1.1.
WHEREAS, (a) Rotor is a blank check company that was incorporated as a Delaware corporation on August 27, 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, and (b) Merger Sub is, as of the date hereof, a wholly owned Subsidiary of Rotor that was formed for the purpose of consummating the transactions contemplated by this Agreement and the Ancillary Documents;
WHEREAS, pursuant to the Governing Documents of Rotor, Rotor is required to provide an opportunity for its stockholders to have their outstanding Rotor Class A Shares redeemed on the terms and subject to the conditions set forth therein in connection with obtaining the Rotor Stockholder Approval;
WHEREAS, subject to the terms and conditions of this Agreement, and in accordance with Section 252 of the Delaware General Corporation Law, as amended (the “DGCL”) and Section 16-10a-1107 of the Utah Revised Business Corporation Act, as amended (the “Act”), at the Closing, Merger Sub will merge with and into the Company, the separate corporate existence of Merger Sub will cease, and the Company will be the surviving company and a wholly owned subsidiary of Rotor, and, upon the Effective Time of the Merger, all shares of Company Stock will be converted into the right to receive the consideration set forth in Article 2 of this Agreement;
WHEREAS, concurrently with the execution of this Agreement, Rotor is entering into subscription agreements (collectively, the “Subscription Agreements”) with certain investors (collectively, the “PIPE Investors”) pursuant to which, among other things, the PIPE Investors have agreed to subscribe for and purchase from Rotor, and Rotor has agreed to issue and sell to the PIPE Investors, Rotor Class A Shares in exchange for an aggregate purchase price equal to the PIPE Financing Amount immediately prior to or substantially concurrent with the Closing, on the terms and subject to the conditions set forth in the Subscription Agreements (such equity financing hereinafter referred to as the “PIPE Financing”);
WHEREAS, in connection with the transactions contemplated by this Agreement, Rotor shall file a proxy statement of Rotor relating to the transactions contemplated by this Agreement and the Ancillary Documents (the “Proxy Statement”), and it is a condition to the consummation of the transactions contemplated by this Agreement that the Rotor Stockholder Approval has been obtained;
WHEREAS, at or prior to the Closing (a) Rotor, Sponsor, and certain Pre-Closing Holders shall enter into a registration rights agreement, substantially in the form attached hereto as Exhibit A (the “Registration Rights Agreement”), and (b) certain Pre-Closing Holders shall enter into a lock-up agreement, substantially in the form attached hereto as Exhibit B (the “Lock-Up Agreement”);
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WHEREAS, Sponsor and the other holders of Rotor Class B Shares have delivered to the Company an executed Waiver Agreement, dated as of the date hereof (the “Waiver Agreement”), whereby in connection with the consummation of the transactions contemplated by this Agreement and the Ancillary Documents, Sponsor and such other holders of Rotor Class B Shares have agreed to waive certain of their anti-dilution and conversion rights in connection with the PIPE Financing and the Merger and to forfeit a certain number of Rotor Class B Shares and the Rotor Warrants in connection with the Merger;
WHEREAS, the board of directors of Rotor, acting upon the unanimous recommendation of a special committee comprised solely of disinterested and independent directors (the “Special Committee”), has unanimously (a) recommended, among other things, the approval of this Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby (including the Merger) by the holders of Rotor Shares entitled to vote thereon, (b) determined that this Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby (including the Merger) are in the best interests of Rotor and the stockholders of Rotor, and declared it advisable to enter into this Agreement, the Ancillary Documents to which Rotor is or will be a party and the transactions contemplated hereby and thereby (including the Merger) and (c) recommended, among other things, acceptance of the transactions contemplated by this Agreement (including the Merger) and the Ancillary Documents and the approval of this Agreement and the Ancillary Documents by the holders of Rotor Shares entitled to vote thereon;
WHEREAS, the board of directors of the Company (the “Company Board”) has unanimously (a) approved this Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby (including the Merger), (b) determined that this Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby (including the Merger) are in the best interests of the Company and the holders of Company Stock entitled to vote thereon, and declared it advisable to enter into 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) and (c) recommended, among other things, the approval of this Agreement and the Merger by the holders of Company Stock entitled to vote thereon;
WHEREAS, the board of directors of Merger Sub has unanimously (a) approved this Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby (including the Merger), (b) determined that this Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby (including the Merger) is in the best interests of Merger Sub and Rotor, in its capacity as the sole stockholder of Merger Sub, and declared it advisable to enter into this Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby (including the Merger) and (c) recommended, among other things, the approval of this Agreement and the Ancillary Documents and acceptance of the transactions contemplated hereby and thereby (including the Merger) by Rotor, in its capacity as the sole stockholder of Merger Sub;
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WHEREAS, in connection with the Company’s entry into this Agreement, certain Pre-Closing Holders who, collectively, constitute at least Requisite Threshold have executed and delivered to the Company an irrevocable written consent in the form set forth on Exhibit C (the “Conversion Written Consent”) in order to effect a conversion of all of the Company Preferred Stock to Company Class A Common Stock in accordance with Section 4(b) of Article 5 of the Amended and Restated Certificate of Incorporation of Sarcos Corp., as amended (the “Company Charter”), with the effective time for such conversion to be conditioned upon the consummation the Closing and to occur as of immediately prior to the Effective Time (the “Company Preferred Conversion”);
WHEREAS, in connection with the Company’s entry into this Agreement, the holders of the Company Warrants have delivered warrant exercise notices in the form attached hereto as Exhibit D (the “Warrant Exercise Notices”), pursuant to which all Company Warrants then outstanding shall, immediately prior to the Effective Time, be exercised into Company Class A Common Stock in accordance with the terms thereof (the “Company Warrant Exercise”); and
WHEREAS, each of the Parties intends that, for U.S. federal income tax purposes, the Merger shall qualify for the Intended Tax Treatment described in Section 5.6.
NOW, THEREFORE, in consideration of the premises and the mutual promises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, each intending to be legally bound, hereby agree as follows:
Article
1
CERTAIN DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following terms have the respective meanings set forth below.
“280G Approval” has the meaning set forth in Section 5.19.
“Accounting Principles” means GAAP as in effect at the date of the financial statement to which it refers or as in effect as of any other relevant date of determination, using and applying the same accounting principles, practices, procedures, policies and methods (with consistent classifications, judgments, elections, inclusions, exclusions and valuation and estimation methodologies) used and applied by the Group Companies in the preparation of the latest audited Financial Statements.
“Acquisition Proposal” has the meaning set forth in Section 5.8(a).
“Act” has the meaning set forth in the recitals to this Agreement.
“Additional Rotor SEC Reports” has the meaning set forth in Section 4.8.
“Adjusted Restricted Stock Award” has the meaning set forth in Section 2.2(b)(ii).
“Adjusted Restricted Stock Unit Award” has the meaning set forth in Section 2.2(b)(iii).
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“Affiliate” means, with respect to any Person, any other Person who directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” 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, and the terms “controlled” and “controlling” have meanings correlative thereto.
“Affiliated Group” means an affiliated group as defined in Section 1504(a) of the Code (or any analogous combined, consolidated or unitary group defined under state, local or non-U.S. Law relating to income Tax).
“Aggregate Rotor Transaction Proceeds” means an amount equal to the sum of (a) the cash proceeds to be received by Rotor at Closing from the Trust Account in connection with the transactions contemplated hereby (which proceeds shall, for the avoidance of doubt, be determined (i) after giving effect to the Rotor Stockholder Redemption and (ii) prior to the payment of, and without regard to, any Rotor Transaction Expenses) and (b) the cash proceeds to be received by Rotor at Closing in respect of the PIPE Financing or any Alternative PIPE Financing or any other additional third-party financing pursuant to Section 5.7(b).
“Agreement” has the meaning set forth in the introductory paragraph to this Agreement.
“Allocation Schedule” has the meaning set forth in Section 2.2(e).
“Alternative PIPE Financing” has the meaning set forth in Section 5.7(b).
“Alternative Subscription Agreement” has the meaning set forth in Section 5.7(b).
“Ancillary Documents” means this Agreement, each Subscription Agreement, the Registration Rights Agreement, each Lock-Up Agreement, the Warrant Exercise Notices, the Waiver Agreement, each Employment Agreement and each other agreement, document, instrument and/or certificate contemplated by this Agreement to be executed in connection with the transactions contemplated hereby.
“Anti-Corruption Laws” means, collectively: (a) the U.S. Foreign Corrupt Practices Act (FCPA); (b) the UK Bribery Act 2010; and (c) any other anti-bribery or anti-corruption Laws related to combatting bribery, corruption and money laundering.
“Audited Financials” has the meaning set forth in Section 3.4(a)(i).
“Base Merger Consideration” has the meaning set forth in the definition of Closing Merger Consideration.
“Business” means the business of, directly or indirectly, designing and producing robotic systems, and other ancillary services related thereto, and all other businesses currently conducted by any Group Company.
“Business Combination” has the meaning set forth in Section 8.18.
“Business Combination Proposal” has the meaning set forth in Section 5.10.
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“Business Data” means all business information and all Personal Data (whether of employees, contractors, consultants, customers, consumers, or other Persons and whether in electronic or any other form or medium) that is accessed, collected, used, processed, stored, shared, distributed, transferred, disclosed, destroyed, or disposed of by any of the Company IT Systems or the Group Companies in connection with the Business.
“Business Day” means a day, other than a Saturday or Sunday, on which commercial banks in Salt Lake City, Utah or New York, New York are open for the general transaction of business.
“Business Intellectual Property” has the meaning set forth in Section 3.13(b).
“CARES Act” means the Coronavirus Aid, Relief and Economic Security Act, as signed into law by the President of the United States on March 27, 2020, as amended.
“CBA” has the meaning set forth in Section 3.14(e).
“Certificate of Merger” has the meaning set forth in Section 2.1(a).
“Change in Recommendation” has the meaning set forth in Section 5.10(a).
“Claims” has the meaning set forth in Section 8.18.
“Closing” has the meaning set forth in Section 2.1(c).
“Closing Date” has the meaning set forth in Section 2.1(c).
“Closing Filing” has the meaning set forth in Section 5.4(b).
“Closing Merger Consideration” means the sum of (a) 120,000,000 Rotor Common Shares in the aggregate (the “Base Merger Consideration”), plus (b) if a Pre-Closing Financing has been consummated, the Pre-Closing Financing Shares (if any), which sum, for the avoidance of doubt, includes the Rotor Common Shares allocated in respect of the Company Options, the Company Warrants, the Company Restricted Stock Awards, the Company Restricted Stock Unit Awards in accordance with Section 2.2(e), and any Equity Securities issued pursuant to the Pre-Closing Financing (if any).
“Closing Press Release” has the meaning set forth in Section 5.4(b).
“COBRA” means Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code and any similar state Law.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company” has the meaning set forth in the introductory paragraph to this Agreement.
“Company Charter” has the meaning set forth in the recitals to this Agreement.
“Company Class A Common Stock” means the Class A Common Stock of the Company, $0.001 par value per share.
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“Company Class B Common Stock” means the Class B Common Stock of the Company, $0.001 par value per share.
“Company Common Share” has the meaning set forth in Section 2.2(a).
“Company Common Stock” means, collectively, the Company Class A Common Stock and the Company Class B Common Stock.
“Company D&O Persons” has the meaning set forth in Section 5.5(a).
“Company D&O Tail Policy” has the meaning set forth in Section 5.5(c).
“Company Earnout Shares” means the total number of shares of Company Common Stock outstanding immediately prior to the Effective Time, including (i) the number of shares of Company Common Stock issued upon the Company Preferred Conversion and the Company Warrant Exercise (for clarity, after giving effect to the issuance of any Pre-Closing Financing Shares) and (ii) the number of shares of Company Common Stock subject to the Company Restricted Stock Awards, whether vested or unvested, outstanding immediately prior to the Effective Time.
“Company Equity Plan” means the Company’s 2015 Equity Incentive Plan, and each other plan that provides for the award of rights of any kind to receive Equity Securities of any Group Company or benefits measured in whole or in part by reference to Equity Securities of any Group Company.
“Company Expenses” means, without duplication, the aggregate amount payable by any Group Company that is unpaid as of any time of determination, for (a) out-of-pocket fees, costs and expenses incurred in connection with the negotiation, preparation or execution of the letter of intent between Rotor and the Company and this Agreement or any Ancillary Documents and the consummation of the transactions contemplated hereby and thereby (including the fees and expenses of outside legal counsel, accountants, advisors, investment bankers, brokers, consultants or other agents), (b) the cost of the Company D&O Tail Policy to be obtained pursuant to Section 5.5, (c) change-in-control payments, transaction bonuses, retention payments, severance or similar compensatory payments payable in cash by the Company or any of its Subsidiaries to any current or former employee (including any amounts due under any consulting agreement with any such former employee), independent contractor, officer, or director of the Company or any of its Subsidiaries as a result of the transactions contemplated hereby (and not tied to any subsequent event or condition, such as a termination of employment), including the employer portion of payroll Taxes arising therefrom, (d) all payments by any Group Company to obtain any third-party consent required under any Contract in connection with the consummation of the transactions contemplated by this Agreement or any Ancillary Document, and (e) any other fees, expenses, commissions or other amounts that are expressly allocated to any Group Company pursuant to this Agreement or any Ancillary Document, in each case as of such determination time.
“Company Fundamental Representations” means the representations and warranties set forth in Sections 3.1(a) and (b) (Organization and Qualification) (other than representations and warranties regarding the Company’s Subsidiaries), 3.2(a) through (d) (Capitalization of the Company), 3.3 (Authority), 3.5(i) and (iii) (No Violations) and 3.17 (Brokers).
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“Company IT Systems” means all computer systems, Software (including Company Products) and hardware, communication systems, servers, and all other information technology or network equipment and related items of automated, computerized or Software systems, and related documentation, in each case, relied on, owned, licensed or leased by, or otherwise provided under contract to, a Group Company in the conduct of the Business.
“Company Material Adverse Effect” means any change, event, effect, development or occurrence (each, an “Effect”) that, individually or in the aggregate with any other Effect, has had or would reasonably be expected to have a material adverse effect on (a) the condition (financial or otherwise), business, assets, or results of operations of the Group Companies, taken as a whole, or (b) the ability of any Group Company to consummate the transactions contemplated hereby or thereby; provided, however, that, in the case of clause (a), none of the following shall be taken into account in determining whether a Company Material Adverse Effect has occurred or would be reasonably expected to occur: any Effect from or related to (i) conditions affecting the United States or the global economy generally, (ii) any national or international political or social conditions in the United States or any other country, (iii) changes in conditions of the financial, banking or securities markets generally, (iv) changes in any applicable Laws (including any Pandemic Response Law) or GAAP, (v) any Effect that is generally applicable to the industries or markets in which the Group Companies operate, (vi) the public announcement of the transactions contemplated by this Agreement, (vii) the taking of any action expressly required to be taken by the terms and conditions of this Agreement by the Company (or expressly permitted to be taken as set forth in Section 5.1 hereof or Section 5.1 or the Company Schedules or that is otherwise consented to in writing by Rotor), (viii) any failure, in and of itself, by the Group Companies to meet any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics for any period ending before, on or after the date of this Agreement (although the underlying facts and circumstances resulting in such failure may be taken into account to the extent not otherwise excluded from this definition pursuant to the other clauses of this definition) or (ix) the effects of any hurricane, tornado, flood, earthquake, tsunami, natural disaster or act of God, epidemics, pandemics or disease outbreaks (including COVID-19); provided, however, that any Effect resulting from a matter described in any of the foregoing clauses (i) through (iii) may be taken into account in determining whether a Company Material Adverse Effect has occurred or is reasonably likely to occur to the extent such Effect has a materially disproportionate effect on the Group Companies, taken as a whole, relative to other similarly situated companies operating in the industries or markets in the geographies in which the Group Companies operate.
“Company Option” means any option to purchase Company Common Stock granted pursuant to a Company Equity Plan.
“Company Outstanding Shares” means the total number of shares of Company Common Stock outstanding immediately prior to the Effective Time but after giving effect to the Company Warrant Exercise and the Pre-Closing Financing (if any), expressed on a fully diluted and as-converted to Company Common Stock basis, including, without duplication, (i) the number of shares of Company Common Stock issued upon the Company Preferred Conversion, (ii) the number of shares of Company Common Stock subject to the Company Restricted Stock Awards, (iii) the number of shares of Company Common Stock subject to the Company Restricted Stock Unit Awards, (iv) the aggregate number of shares of Company Common Stock issuable upon the net exercise of all Company Warrants, and (v) the aggregate number of Option Shares issuable upon the exercise of all Company Options, whether vested or unvested, outstanding immediately prior to the Effective Time in accordance with their respective terms.
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“Company Owned Intellectual Property” means all Intellectual Property owned or purported to be owned by any Group Company.
“Company Plan” means each Employee Benefit Plan that is maintained, sponsored or contributed to or required to be contributed to the Company or any of its Subsidiaries or under or with respect to which the Company or any of its Subsidiaries has any Liability, including on account of an ERISA Affiliate.
“Company Preferred Conversion” has the meaning set forth in the recitals to this Agreement.
“Company Preferred Stock” means the Preferred Stock, par value $0.001 per share, of the Company, and consisting of the Series A Preferred Stock, Series B Preferred Stock and the Series C Preferred Stock.
“Company Products” means all Software and other products from which any of the Group Companies are currently deriving revenue from the sale, license, support, development maintenance or other provision thereof.
“Company Registered Intellectual Property” means all of the following owned by, or filed by or in the name of, any Group Company: issued Patents, pending Patent applications, registered Marks (including internet domain name registrations), pending applications for registration of Marks, registered copyrights, and pending applications for registration of copyrights.
“Company Restricted Stock Award” means an award of restricted shares of Company Common Stock granted under the Company Equity Plan, which includes any shares of Company Common Stock issued pursuant to early exercised Company Options that remain subject to vesting conditions.
“Company Restricted Stock Unit Award” means an award of restricted stock units based on shares of Company Common Stock (whether to be settled in cash or shares), granted under the Company Equity Plan.
“Company Schedules” means the disclosure schedules to this Agreement delivered to Rotor by the Company on the date hereof.
“Company Shareholder Agreements” means each of the Contracts set forth on Section 1.1(a) of the Company Schedules.
“Company Stock” means the Company Common Stock and the Company Preferred Stock.
“Company Stockholder Package” has the meaning set forth in Section 5.15(b).
“Company Warrant Exercise” has the meaning set forth in the recitals to this Agreement.
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“Company Warrants” means the warrants issued by the Company to purchase Company Class A Common Stock.
“Confidentiality Agreement” means that certain Confidentiality Agreement, dated January 19, 2021, by and between Rotor and the Company.
“Consent” means any notice, authorization, qualification, registration, filing, notification, waiver, order, consent or approval to be obtained from, filed with or delivered to, a Governmental Entity or other Person.
“Constituent Corporations” has the meaning set forth in Section 2.1(a).
“Contaminants” has the meaning set forth in Section 3.21(a).
“Contingent Merger Consideration” means, collectively, the First Level Trading Price Consideration and the Second Level Trading Price Consideration.
“Contracts” means any agreement, contract, license, lease, obligation, undertaking or other commitment, understanding or arrangement, whether written or oral, that is legally binding upon a Person or any of his, her, or its properties or assets.
“Copyrights” has the meaning set forth in the definition of Intellectual Property.
“COVID-19” means the COVID-19 or SARS-CoV-2 virus (or any mutation or variation thereof or related health condition).
“D&O Persons” has the meaning set forth in Section 5.5(a).
“Data Privacy and Security Requirements” means, collectively, all of the following to the extent relating to the Group Companies’ Processing of Personal Data with respect to privacy, security, or data breach notification requirements (including those under consumer protection Laws) that are applicable to any Group Company: (i) the Group Companies’ published privacy policies; (ii) all applicable Laws (including, as applicable, the General Data Protection Regulation and the California Consumer Privacy Act); (iii) binding industry standards applicable to the industry in which the Business operates (which shall include, if applicable, the Payment Card Industry Data Security Standard); and (iv) applicable provisions of contracts into which any Group Company has entered or by which they are otherwise bound.
“DGCL” has the meaning set forth in the recitals to this Agreement.
“Dissenting Shares” has the meaning set forth in Section 2.2(f).
“Dissenting Stockholder” has the meaning set forth in Section 2.2(f).
“DPA” has the meaning set forth in Section 4.20.
“Effect” has the meaning set forth in the definition of “Company Material Adverse Effect.”
“Effective Time” has the meaning set forth in Section 2.1(c).
9
“Employee Benefit Plan” means each “employee benefit plan” (as such term is defined in Section 3(3) of ERISA, whether or not subject to ERISA), each pension, retirement, profit-sharing, savings, health, welfare, bonus, incentive, commission, stock option, equity or equity-based, deferred compensation, severance, retention, accident, disability, employment, change of control, stock purchase, restricted stock, separation, consulting, salary continuation, post-termination or post-employment health or welfare, vacation, paid time off, fringe benefit and each other benefit or compensatory plan, program, policy or Contract.
“Employment Agreement” has the meaning set forth in Section 5.20(a).
“Environmental Laws” means all Laws and Orders concerning pollution, protection of the environment, or human health or safety.
“Equity Plan Approval” means the approval of the Equity Plan Proposal, at the Rotor Stockholders Meeting where a quorum is present, by the affirmative vote of holders of at least a majority of the votes cast by the Pre-Closing Rotor Holders present in person or represented by proxy at the Rotor Stockholders Meeting and entitled to vote on such matter.
“Equity Plan Proposal” means Rotor board and stockholder approval of the New Incentive Plans for Rotor, to be effective at the Closing.
“Equity Rights” has the meaning set forth in Section 3.2(b).
“Equity Securities” means, with respect to any Person, any share, share capital, capital stock, partnership, membership, joint venture or similar interest in such Person (including any stock appreciation, phantom stock, profit participation or similar rights), and any option, warrant, right or security (including debt securities) convertible, exchangeable or exercisable therefor.
“ERISA” means the Employee Retirement Income Security Act of 1974.
“ERISA Affiliate” means any Person that, together with the Company or any of its Subsidiaries, is (or at any relevant time has been or would be) treated as a single employer under Section 414 of the Code.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Exchange Agent” has the meaning set forth in Section 2.3(a).
“Exchange Agent Agreement” means a paying and exchange agent agreement, in form and substance reasonably acceptable to Rotor and the Company.
“Exchange Ratio” means the following ratio (rounded to ten decimal places): (i) the Closing Merger Consideration divided by (ii) the Company Outstanding Shares.
“Federal Securities Laws” means U.S. federal securities laws and the rules and regulations of the SEC and any applicable Stock Exchange promulgated thereunder.
“Financial Statements” has the meaning set forth in Section 3.4(a).
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“First Level Trading Price Consideration” means, if, at any time during the period beginning on the first anniversary of the Closing Date and ending on the fourth anniversary of the Closing Date, the closing share price of a Rotor Common Share is equal to or exceeds Fifteen Dollars ($15.00) for twenty (20) trading days in any thirty (30) consecutive trading day period (the “First Trading Price Threshold”), 14,062,500 Rotor Common Shares.
“First Trading Price Threshold” has the meaning set forth in the definition of “First Level Trading Price Consideration.”
“Foreign Plan” has the meaning set forth in Section 3.11(i).
“Fraud” means actual fraud with the intention to deceive.
“GAAP” means generally accepted accounting principles in the United States of America.
“Governing Documents” means the legal document(s) by which any Person (other than an individual) establishes its legal existence or which govern its internal affairs. For example, the “Governing Documents” of a U.S. corporation are its certificate or articles of incorporation and by-laws, the “Governing Documents” of a U.S. limited partnership are its limited partnership agreement and certificate of limited partnership, and the “Governing Documents” of a U.S. limited liability company are its operating or limited liability company agreement and certificate of formation.
“Government Bid” means any bid, proposal, offer or quotation made by the Company, any Subsidiary or by a contractor team or joint venture in which the Company or any Subsidiary is participating, that, if accepted, would lead to a Government Contract.
“Government Contract” means any Contract between a Group Company, on the one hand, and (a) the United States Government or any State government, (b) any prime contractor to the United States Government or any State government in its capacity as a prime contractor, or (c) any subcontractor with respect to any Contract described in clause (a) or clause (b) above, on the other hand. A task order or delivery order shall not be considered a Government Contract, for purposes of this definition, but shall be considered part of the Government Contract under which it was issued.
“Governmental Entity” means any United States or non-United States (a) transnational, federal, state, local, municipal or other government, (b) governmental or quasi-governmental entity of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal) or (c) body exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature, including any arbitral tribunal (public or private) or commission.
“Group Companies” means, collectively, the Company and its Subsidiaries.
“Group Company” means, individually, any of the Group Companies.
“Group Company Permits” has the meaning set forth in Section 3.6.
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“Hazardous Substance” means any substance, material, or waste which is regulated by, or may give rise to Liability or standards of conduct pursuant to, any Environmental Law, including any petroleum products or byproducts, asbestos, lead, polychlorinated biphenyls, per- and poly-fluoroakyl substances, mold, radon, noise, odor, or radiation.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
“Immediate Family Member” means, with respect to any Person, his or her “Child” (defined as biological, adopted, or foster child, legal ward or child of such Person standing in loco parentis), grandchild, spouse, domestic partner, parent, grandparent, a Child or parent of such Person’s spouse or domestic partner, or sibling (including a half, adopted, or step sibling), or any trust or foundation for the benefit of any of the foregoing Persons.
“Inbound Licenses” has the meaning set forth in Section 3.13(b).
“Indebtedness” means, as of any time, without duplication, with respect to any Person, all amounts arising under any obligations of such Person and its Subsidiaries (on a consolidated basis) for, or in respect to, (a) indebtedness for borrowed money or indebtedness issues or incurred in substitution or exchange for borrowed money (including the PPP Loans), (b) other obligations evidenced by any note, bond, debenture or other debt security, (c) obligations (contingent or otherwise) for the deferred purchase price of property, assets or a business, including “earn-outs,” “seller notes,” contingent or deferred consideration or purchase price adjustments calculated at the full amount of the possible payment outstanding, (d) reimbursement and other obligations with respect to letters of credit, bank guarantees, bankers’ acceptances or other similar instruments, in each case, solely to the extent drawn, (e) derivative, hedging, swap, foreign exchange or similar arrangements, including swaps, caps, collars, hedges or similar arrangements, (f) indebtedness evidenced by letters of credit, assurances against loss, bankers’ acceptances or surety bonds (in each case, only to the extent drawn or cash collateralized prior to the Closing Date), (g) unfunded or underfunded Liabilities under any defined benefit pension, supplemental retirement or post-employment welfare plan or arrangement, (h) with respect to Rotor, any Affiliate payables or amounts payable to any Affiliate under any management or similar agreement or pursuant to termination of any Contract with any Affiliate at Closing or with respect to the Company, any payables under any Pre-Closing Holder Related Party Transactions or any amounts payable to any Affiliate under any management or similar agreement or pursuant to the termination of any Pre-Closing Holder Related Party Transactions, (i) all obligations for accrued and unpaid dividends and other distributions, (j) all obligations created or arising under any conditional sale or other title retention agreement, (k) all obligations secured by a Lien, (l) all obligations under leases which shall have been or should be, in accordance with GAAP, recorded as capital leases, (m) the items identified in Section 1.1(b) (Identified Indebtedness) of the Company Schedules and (n) any of the obligations of any other Person of the type referred to in clauses (a) through (m) above directly or indirectly guaranteed by such Person or secured by any assets of such Person, whether or not such Indebtedness has been assumed by such Person, and with respect to clauses (a) through (n), including all accrued and unpaid interest, fees, expenses and other payment obligations (including any prepayment penalties, premiums, costs, breakage or other amounts payable upon the discharge thereof) arising under or in respect of such Indebtedness.
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“Intellectual Property” means any intellectual property or proprietary right arising under the Laws of any jurisdiction throughout the world, including: (a) patents and patent applications, industrial designs and design patent rights, including any continuations, divisionals, continuations-in-part and provisional applications and any patents issuing on any of the foregoing and any reissues, reexaminations, substitutes and extensions of any of the foregoing (collectively, “Patents”); (b) trademarks, service marks, trade names, service names, brand names, trade dress rights, logos, Internet domain names, social media handles, corporate names and other source or business identifiers, together with the goodwill associated with any of the foregoing, and all applications, registrations, extensions and renewals of any of the foregoing, (collectively, “Marks”); (c) copyrights and works of authorship, database and design rights, mask work rights and moral rights, whether or not registered or published, and all registrations, applications, renewals, extensions and reversions of any of any of the foregoing (“Copyrights”); (d) trade secrets, know-how and confidential and proprietary information, processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, financial and marketing plans and customer and supplier lists and information, formulae, algorithms, compositions, industrial models, architectures, plans, proposals, data, technical data, databases, data repositories or other collections of data, source code (collectively, “Trade Secrets”); (e) any of the foregoing rights in clauses (a) through (d) in Software or other technology; (f) rights in data classifications and data analysis methods, enrichment, measurement and management tools; and (i) and all copies and tangible embodiments of any item referenced in any of clauses (a) through (f) (in whatever form or medium).
“Intended Tax Treatment” has the meaning set forth in Section 5.6.
“Intervening Event” means an Effect that is materially adverse to the condition (financial or otherwise), business, or results of operations of the Company and its Subsidiaries, taken as a whole (but specifically excluding any matters described in clauses (i) through (x) of the definition of “Company Material Adverse Effect”) and that was not known by and was not reasonably foreseeable to the board of directors of Rotor as of the date of this Agreement, and that becomes known to the board of directors of Rotor after the date of this Agreement.
“Investment Company Act” means the Investment Company Act of 1940.
“IP Licenses” means (i) all Inbound Licenses and (ii) Contracts pursuant to which any Group Company has granted a license or covenant not to sue under any Company Owned Intellectual Property.
“IPO” has the meaning set forth in Section 8.18.
“JOBS Act” means the Jumpstart Our Business Startups Act of 2012.
“Latest Balance Sheet” has the meaning set forth in Section 3.4(a)(ii).
“Law” means any federal, state, local, foreign, national or supranational statute, law (including common law), act, statute, ordinance, treaty, rule, code, regulation or other binding directive or binding guidance issued, promulgated or enforced by a Governmental Entity having jurisdiction over a given matter, as well as any Order.
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“Leased Real Property” has the meaning set forth in Section 3.18(b).
“Liability” means any liability, debt, obligation, claim or other loss of any kind or nature whatsoever, whether asserted or unasserted, whether or not contingent, known or unknown, accrued or unaccrued, liquidated or unliquidated, and whether due or become due and regardless of when asserted, and including all costs and expenses relating thereto.
“Lien” means any mortgage, pledge, security interest, lien, charge, trust or similar restriction or other similar encumbrance of any kind or nature whatsoever.
“Lock-Up Agreement” has the meaning set forth in the recitals to this Agreement.
“Marks” has the meaning set forth in the definition of Intellectual Property.
“Material Contracts” has the meaning set forth in Section 3.7(a).
“Material Customers” has the meaning set forth in Section 3.20.
“Material Data Supply Agreements” has the meaning set forth in Section 3.21(d).
“Material Suppliers” has the meaning set forth in Section 3.20.
“Merger” has the meaning set forth in Section 2.1(a).
“Merger Sub” has the meaning set forth in the introductory paragraph to this Agreement.
“Merger Sub Sole Stockholder Approval” means the approval of Rotor, in its capacity as the sole stockholder of Merger Sub, of this Agreement, the Ancillary Documents to which Rotor is a party, and the transactions contemplated hereby and thereby (including the Merger).
“Merger Written Consent” has the meaning set forth in Section 5.15(a).
“Minimum Cash Condition” has the meaning set forth in Section 6.1(h).
“Multiemployer Plan” has the meaning set forth in Section 3(37) or Section 4001(a)(3) of ERISA.
“Nasdaq” means the Nasdaq Capital Market.
“New Incentive Plan” has the meaning set forth in Section 5.10(a).
“Nonparty Affiliate” has the meaning set forth in Section 8.13.
“NYSE” means the New York Stock Exchange.
“Open Source Software” means any Software that is licensed pursuant to: (i) any license that is a license now or in the future approved by the Open Source Initiative and listed at http://www.opensource.org/licenses, which licenses include all versions of the GNU General Public License (GPL), the GNU Lesser General Public License (LGPL), the GNU Affero GPL, the MIT license, the Eclipse Public License, the Common Public License, the CDDL, the Mozilla Public License (MPL), the Artistic License, the Netscape Public License, the Sun Community Source License (SCSL), the Sun Industry Standards License (SISL), and the Server Side Public License (SSPL) or (ii) any license to Software that is classified as “free” or “open source software,” including by the Open Source Foundation or the Free Software Foundation.
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“Option Shares” means the shares of Company Common Stock issuable pursuant to a Company Option in accordance with terms of such Company Option.
“Order” means any outstanding writ, order, judgment, injunction, settlement, decision, determination, award, ruling, subpoena, verdict or decree entered, issued, made or rendered by any Governmental Entity.
“Ordinary Course Contracts” means the following Contracts: (a) standard, non-negotiated shrink-wrap, click-wrap or similar Contracts provided in connection with commercially available “off-the-shelf” technology (including technology offered on a SaaS, PaaS, or IaaS or similar basis and Software available through retail stores, distribution networks or that is pre-installed as a standard part of hardware purchased by the Company) for an annual license fee of less than one hundred thousand US dollars ($100,000), (b) customary non-disclosure agreements that have been entered into in the ordinary course of business that do not include a license in favor of any third party, and interest in and to developments to and for the sole benefit of the Group Companies, and (c) non-exclusive licenses or grants of rights relating to or agreeing to provide any Company Products pursuant to a Standard Form or other license agreement that does not materially deviate from the allocation of Intellectual Property rights in the Standard Form.
“Other Required Filings” has the meaning set forth in Section 5.9.
“Pandemic Response Law” means any Law or financial assistance program implemented by any Governmental Entity in connection with or in response to COVID-19, including the Families First Coronavirus Response Act, Pub. L. No. 116-127 (116th Cong.) (Mar. 18, 2020), the Coronavirus Aid, Relief, and Economic Security Act, Pub. L. 116–136 (116th Cong.) (Mar. 27, 2020), the Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster, dated August 8, 2020) and, in each case, any subsequent guidance issued in respect thereof, and any other similar or additional federal, state, local, or non-U.S. Law, or administrative guidance in connection with or in response to COVID-19 and the associated economic downturn, including any quarantine, “shelter in place”, “stay at home”, workforce reduction, social distancing, shut down, closure or sequester order or guideline.
“Parties” has the meaning set forth in the introductory paragraph to this Agreement.
“Patents” has the meaning set forth in the definition of Intellectual Property.
“PCAOB” means the Public Company Accounting Oversight Board.
“PCAOB Financials” has the meaning set forth in Section 5.16(a).
“Permits” means any approvals, authorizations, waivers, consents, clearances, licenses, registrations, permits or certificates of a Governmental Entity.
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“Permitted Liens” means (a) mechanic’s, materialmen’s, carriers’, repairers’ and other similar statutory Liens arising or incurred in the ordinary course of business, (b) statutory Liens for Taxes not yet due and payable as of the Closing Date or which are being contested in good faith by appropriate proceedings and for which sufficient reserves have been established on the Financial Statements in accordance with GAAP, (c) encumbrances and restrictions of record on real property (including easements, covenants, conditions, rights of way and similar restrictions) that do not or would not prohibit or materially interfere with any of the Group Companies’ use or occupancy of such real property or the operation of the business of the Group Companies, (d) zoning, building codes and other land use Laws regulating the use or occupancy of real property or the activities conducted thereon which are imposed by any Governmental Entity having jurisdiction over such real property and which are not violated by the use or occupancy of such real property or the operation of the businesses of the Group Companies and do not prohibit or materially interfere with any of the Group Companies’ use or occupancy of such real property or the operation of the business of the Group Companies, (e) non-exclusive licenses of Intellectual Property granted in the ordinary course of business pursuant to a (i) Standard Form or (ii) license agreement that does not materially deviate from the allocation of Intellectual Property rights in the Standard Form, (f) other than with respect to Intellectual Property, Liens which would not be or reasonably be expected to be material to the Group Companies, taken as a whole, (g) Liens described on Section 1.1(d) of the Company Schedules (including Liens arising in the ordinary course of business under any Indebtedness), (h) other than with respect to Intellectual Property, any right, interest, Lien or right of a lessor or sublessor under any lease or other similar agreement or in the property being leased and (i) Liens on equity or debt securities resulting from applicable federal, state, provincial and other securities Laws.
“Person” means an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, trust, joint venture, association or other similar entity, whether or not a legal entity.
“Personal Data” means all data or information that constitutes “personal information,” “personally identifiable information,” “protected health information,” “personal data” or other equivalent term under applicable Data Privacy and Security Requirements.
“PIPE Financing” has the meaning set forth in the recitals to this Agreement.
“PIPE Financing Amount” means an amount that is not less than $200,000,000.00 and not more than $225,000,000.00 in the aggregate.
“PIPE Investors” has the meaning set forth in the recitals to this Agreement.
“PPP” means the “Paycheck Protection Program” as defined in Sections 1102 and 1106 of the CARES Act.
“PPP Escrow and Consent Agreement” means a PPP Escrow and Consent Agreement to be entered into by the PPP Lender and the Company, on customary terms that are reasonably acceptable to the PPP Lender, the Company and Rotor, pursuant to which, on the Closing Date, Rotor would deposit an amount equal to the then outstanding principal amount of the PPP Loans subject to a pending loan forgiveness application in an account designated by the PPP Lender in writing prior to the Closing.
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“PPP Escrow Fund” has the meaning set forth in Section 2.4.
“PPP Lender” means Bank of America, N.A..
“PPP Loans” means the Company’s Paycheck Protection Program loans under the CARES Act in the principal amount of $4,393,742 evidenced by that certain promissory note payable to the PPP Lender, dated April 20, 2020 and that certain promissory note payable to the PPP Lender, dated March 3, 2021.
“Pre-Closing Financing” means any debt or equity financing provided to the Company, in one or more series of transactions, which may be consummated after the date that is three (3) months after the date hereof and prior to the Closing, with gross proceeds not to exceed $50,000,000 in the aggregate from all such transactions, in each case, with the consent of Rotor (such consent not to be unreasonably withheld, conditioned or delayed); provided that any equity securities issued as part of the Pre-Closing Financing will convert into shares of Company Common Stock immediately prior to and in connection with the Closing.
“Pre-Closing Financing Shares” means the number of shares of Rotor Common Stock equal to (a) the aggregate gross proceeds received by the Company from any Pre-Closing Financings consummated prior to the Closing and in the form of equity securities (including, for clarity, debt that will convert into equity securities of the Company prior to or upon the consummation of the Closing), divided by (b) $10.00, which number, for the avoidance of doubt, shall not exceed 5,000,000 shares.
“Pre-Closing Holder Related Party” means (a) any officer, director, partner, member, or manager of any Group Company, or any Immediate Family Member of any such Person known to the Company, (b) any direct or (to the knowledge of the Company) indirect holder of Equity Securities of any Group Company, including any Pre-Closing Holder, or any immediate family member of any such equityholder who is the record or (to the knowledge of the Company) beneficial owner of Equity Securities representing, or exercisable for or convertible into, more than 2% of the outstanding shares of any class of equity of a Group Company, or (c) any Affiliate of any Group Company known to the Company, or any immediate family member of any such Person known to the Company.
“Pre-Closing Holder Related Party Transactions” has the meaning set forth in Section 3.19.
“Pre-Closing Holders” means all Persons who hold one or more Company Common Shares, Company Preferred Stock, Company Restricted Stock Awards, Company Restricted Stock Unit Awards, Company Options or Company Warrants immediately prior to the Effective Time.
“Pre-Closing Rotor Holders” means the holders of Rotor Shares at any time prior to the Closing.
“Proceeding” means any lawsuit, litigation, action, audit, demand, examination, hearing, claim, charge, complaint, audit, investigation, inquiry, proceeding, suit or arbitration (in each case, whether civil, criminal or administrative and whether public or private) pending by or before or otherwise involving any Governmental Entity or arbitrator.
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“Process” (or “Processing” or “Processes”) means the collection, use, storage, processing, recording, distribution, transfer, exchange, import, export, protection (including security measures), disposal, de-identification, sanitization, cleansing, sale or disclosure of data (whether electronically or in any other form or medium).
“Prospectus” has the meaning set forth in Section 8.18.
“Proxy Statement” has the meaning set forth in the recitals to this Agreement.
“Public Stockholders” has the meaning set forth in Section 8.18.
“Real Property Leases” means all leases, sub-leases, licenses or other agreements, in each case, pursuant to which any Group Company leases or sub-leases any real property.
“Registration Rights Agreement” has the meaning set forth in the recitals to this Agreement.
“Representatives” means, with respect to any Person, such Person’s Affiliates and its and such Affiliates’ respective directors, officers, employees, members, managers, partners, owners, accountants, consultants, advisors, attorneys, agents and other representatives.
“Required Company Shareholder Approval” means the approval of the Merger Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby (including the Merger) by the holders of at least the number of shares of Company Common Stock then outstanding following the consummation of the Company Preferred Conversion required pursuant to the Act, the Company’s Governing Documents and any other Contract to which the Company is a party or otherwise bound.
“Requisite Threshold” means the holders of a majority of the Company Preferred Stock outstanding as of immediately prior to the delivery of the Conversion Written Consent to the Company (voting as a single class and on an as-converted basis), which majority of the Company Preferred Stock shall include the holders of at least a majority of the Series B Preferred Stock then outstanding and the holders of at least a majority of the Series C Preferred Stock then outstanding.
“Rotor” has the meaning set forth in the introductory paragraph to this Agreement.
“Rotor Board” has the meaning set forth in Section 5.17(a).
“Rotor Class A Shares” means, at all times prior to the Effective Time, Rotor’s Class A common stock, par value $0.0001 per share.
“Rotor Class B Shares” means, at all times prior to the Effective Time, Rotor’s Class B common stock, par value $0.0001 per share.
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“Rotor Common Shares” means, at or at all times immediately following the Effective Time, the shares of common stock of Rotor.
“Rotor D&O Persons” has the meaning set forth in Section 5.5(a)
“Rotor Financial Statements” means all of the financial statements of Rotor included in the Rotor SEC Reports.
“Rotor Fundamental Representations” means the representations and warranties set forth in Sections 4.1 (Organization and Qualification), 4.2 (Authority), 4.3(i) and (iii) (No Violations), 4.4 (Brokers) and 4.7(a) (Capitalization of the Rotor Parties).
“Rotor Material Adverse Effect” means any Effect that, individually or in the aggregate with any Effect, has had or would reasonably be expected to have a material adverse effect on the ability of a Rotor Party to timely consummate the transactions contemplated by this Agreement or any Ancillary Document.
“Rotor Option” has the meaning set forth in Section 2.2(b)(i).
“Rotor Parties” means, collectively, Rotor and Merger Sub.
“Rotor Preferred Shares” means Rotor’s preferred stock, par value $0.0001 per share.
“Rotor Proposal” has the meaning set forth in Section 5.8(b).
“Rotor Schedules” means the disclosure schedules to this Agreement delivered to the Company by Rotor on the date hereof.
“Rotor SEC Reports” has the meaning set forth in Section 4.8.
“Rotor Shares” means, collectively, the Rotor Class A Shares, the Rotor Class B Shares and the Rotor Preferred Shares.
“Rotor Stockholder Approval” means the approval of each Transaction Proposal, at the Rotor Stockholders Meeting where a quorum is present, by the affirmative vote of holders of at least a majority of the votes cast by the Pre-Closing Rotor Holders present in person or represented by proxy at the Rotor Stockholders Meeting and entitled to vote on such matter.
“Rotor Stockholder Redemption” means the right of the holders of Rotor Class A Shares to redeem all or a portion of their Rotor Class A Shares (in connection with the transactions contemplated by this Agreement or otherwise) as set forth in the Governing Documents of Rotor.
“Rotor Stockholders Meeting” has the meaning set forth in Section 5.10.
“Rotor Tail Policy” has the meaning set forth in Section 5.5(d).
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“Rotor Transaction Expenses” means, as of any determination time, without duplication, the aggregate amount payable by the Rotor Parties, and to the extent required to be reimbursed by Rotor pursuant to any Contract made available to the Company prior to the date hereof, the Sponsor or any of their respective Affiliates for (a) commitment fees, commissions, or other out-of-pocket fees, costs and expenses relating to the PIPE Financing and/or Alternative PIPE Financing and/or any other third-party financing pursuant to Section 5.7(b) (including any backstop commitment or debt financing), (b) the deferred underwriting fees in the amount of $9,660,000 in connection with Rotor’s initial public offering, (c) out-of-pocket fees, expenses or commissions payable to any financial advisor, consultant, broker or finder in connection with the evaluation or arrangement of any PIPE Financing and/or Alternative PIPE Financing, (d) the Rotor Tail Policy, (e) the filing fee to be paid pursuant to the HSR Act, (f) any filing fees to be paid in connection with the Proxy Statement, and (g) out-of-pocket fees, commissions, costs and expenses (whether or not invoiced) incurred by or on behalf of Rotor or the Special Committee of its board of directors in connection with the negotiation, preparation, execution and performance of this Agreement or any Ancillary Document and the consummation of the transactions contemplated hereby and thereby, in each case, as of such determination time, including any such out-of-pocket fees or expenses in respect of outside legal counsel, accountants, advisors, investment bankers or consultants engaged by Rotor or the Special Committee of its board of directors in connection with the transactions contemplated hereby. For the avoidance of doubt, Rotor Transaction Expenses shall not include any Rotor Class B Shares, the Rotor Warrants or any Company Expenses.
“Rotor Units” means one (1) share of Rotor Class A Shares and one-half (1/2) of one (1) Rotor Warrant.
“Rotor Warrants” means each warrant to purchase one (1) Rotor Class A Share at a price of $11.50 per share, subject to adjustment, as described in the Rotor SEC Reports.
“Sanctions and Export Control Laws” means any Law in any part of the world related to (a) import and export controls, including the U.S. Export Administration Regulations, (b) economic sanctions, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, the European Union, any European Union Member State, the United Nations, and Her Majesty’s Treasury of the United Kingdom, or (c) anti-boycott measures.
“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002, as amended.
“Schedules” means, collectively, the Company Schedules and the Rotor Schedules.
“SEC” means the U.S. Securities and Exchange Commission.
“Second Level Trading Price Consideration” means, if, at any time during the period beginning on the first anniversary of the Closing Date and ending on the fifth anniversary of the Closing Date, the closing share price of a Rotor Common Share is equal to or exceeds Twenty Dollars ($20.00) for twenty (20) trading days in any thirty (30) consecutive trading day period (the “Second Trading Price Threshold”), 14,062,500 Rotor Common Shares.
“Second Trading Price Threshold” has the meaning set forth in the definition of “Second Level Trading Price Consideration.”
“Securities Act” means the U.S. Securities Act of 1933, as amended.
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“Securities Law” means Federal Securities Law and other applicable foreign and domestic securities or similar Laws.
“Security Incident” means any cyber or security incident that has had or would reasonably be expected to have a material impact on the security, confidentiality, integrity or availability of a Company IT System, (including any Personal Data or other confidential information processed thereby or contained therein), any Trade Secret or any confidential Business Data, including an occurrence that materially jeopardizes the confidentiality, integrity or availability of Personal Data or that requires notification to any person or Governmental Entity under applicable Data Privacy and Security Requirements.
“Signing Filing” has the meaning set forth in Section 5.4(b).
“Signing Press Release” has the meaning set forth in Section 5.4(b).
“Software” shall mean any and all: (a) computer programs, including any and all software implementations of algorithms, applications, utilities, development tools, models, embedded systems and methodologies, whether in source code, object code or executable code; (b) related data; (c) work product used in the design, planning, organization and development of any of the foregoing, and (d) all documentation related to any of the foregoing.
“Sponsor” means Rotor Sponsor LLC, a Delaware limited liability company.
“Standard Form” means a standard form of non-exclusive license granted by any Group Company to any Person in connection with the sale or licensing of any Company Products.
“Stock Exchange” means the NYSE or the Nasdaq.
“Subscription Agreements” has the meaning set forth in the recitals to this Agreement.
“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, or other legal 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 such Person or one or more of the other Subsidiaries of such Person or a combination thereof, or (b) if a limited liability company, partnership, association, or other business entity (other than a corporation), a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of such Person or a combination thereof and for this purpose, a Person or Persons own a majority ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be a, or control any, managing director or general partner of such business entity (other than a corporation). The term “Subsidiary” shall include all Subsidiaries of such Subsidiary.
“Surviving Corporation” has the meaning set forth in Section 2.1(a).
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“Tax” means any (a) federal, state, local or non-United States income, gross receipts, franchise, estimated, alternative minimum, sales, use, transfer, value added, excise, stamp, customs, duties, ad valorem, real property, personal property (tangible and intangible), capital stock, social security, unemployment, payroll, wage, employment, severance, occupation, registration, environmental, communication, mortgage, profits, license, lease, service, goods and services, withholding, premium, turnover, windfall profits or other taxes, charges, duties, fees, levies or other governmental charges of any kind in the nature of a tax, whether computed on a separate or combined, unitary or consolidated basis or in any other manner, together with any interest, deficiencies, penalties, additions to tax, or additional amounts imposed by any Governmental Entity with respect thereto, whether disputed or not or (b) liability in respect of an amount described in clause (a) payable as a result of having been a member of an Affiliated Group or as a result of successor or transferee liability, or by contract (including any tax allocation, tax receivable, tax sharing, or tax indemnification agreement other than any such agreement entered into in the ordinary course the primary purpose of which is not related to taxes).
“Tax Authority” means any Governmental Entity responsible for the imposition, collection or administration of Taxes or Tax Returns.
“Tax Proceeding” means any Tax audit, examination, claim, proceeding or investigation with respect to material Taxes.
“Tax Return” means returns, information returns, statements, declarations, claims for refund, schedules, attachments and reports relating to Taxes required filed or to be filed with any Governmental Entity (and any amendments thereto).
“Termination Date” has the meaning set forth in Section 7.1(d).
“Total Merger Consideration” means, collectively, the Closing Merger Consideration and the Contingent Merger Consideration, if any.
“Trade Secrets” has the meaning set forth in the definition of Intellectual Property.
“Trading Price Threshold” means each of the First Trading Price Threshold and the Second Trading Price Threshold.
“Transaction Proposals” has the meaning set forth in Section 5.10(a).
“Transfer” means any direct or indirect sale, transfer, gift, assignment, pledge, encumbrance or other disposition of any interest (whether with or without consideration and whether voluntary, involuntary or by operation of Law).
“Trust Account” has the meaning set forth in Section 8.18.
“Trust Agreement” has the meaning set forth in Section 4.9.
“Trustee” has the meaning set forth in Section 4.9.
“Unpaid Transaction Expenses” has the meaning set forth in Section 8.6.
“Waived 280G Benefits” has the meaning set forth in Section 5.19.
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“Waiver Agreement” has the meaning set forth in the recitals to this Agreement.
“WARN” means the Worker Adjustment Retraining and Notification Act of 1988 as amended, as well as analogous applicable foreign, state or local Laws.
“Warrant Exercise Notices” has the meaning set forth in the recitals to this Agreement.
Article
2
PURCHASE AND SALE
Section 2.1 Merger; Closing.
(a) Upon the terms and subject to the conditions set forth in this Agreement, Rotor, Merger Sub and the Company (Merger Sub and the Company sometimes being referred to herein as the “Constituent Corporations”) shall cause Merger Sub to be merged with and into the Company, with the Company being the surviving corporation (the “Merger”). The Merger shall be consummated as of the Effective Time in accordance with this Agreement, the DGCL and the Act, and evidenced by (a) a Certificate of Merger in substantially the form attached as Exhibit E-1 (with such modifications, amendments or supplements thereto as may be required to comply with the DGCL, the “Certificate of Merger”) filed with the Secretary of State of the State of Delaware, in such form as is required by, and executed by the Company and Merger Sub in accordance with, the relevant provisions of the DGCL and mutually agreed by the Parties and (b) Articles of Merger in substantially the form attached as Exhibit E-2, together with the short form merger agreement attached thereto (with such modifications, amendments or supplements thereto as may be required to comply with the Act, the “Articles of Merger”) filed with the Utah Division of Corporations and Commercial Code, in such form as is required by, and executed by the Company and Merger Sub in accordance with, the relevant provisions of the Act and mutually agreed by the Parties. Upon consummation of the Merger, the separate corporate existence of Merger Sub shall cease and the Company, as the surviving corporation of the Merger (hereinafter referred to for the periods at and after the Effective Time as the “Surviving Corporation”), shall continue its corporate existence under the Act, as a wholly owned subsidiary of Rotor.
(b) At and after the Effective Time, the Surviving Corporation shall thereupon and thereafter possess all of the assets, properties rights, privileges, powers and franchises, of a public as well as a private nature, of the Constituent Corporations, and shall become subject to all the debts, liabilities, restrictions, disabilities, obligations and duties of each of the Constituent Corporations in accordance with the applicable provisions of the Act.
(c) In accordance with the terms and subject to the conditions of this Agreement, the closing of the Merger (the “Closing”) shall take place at 10:00 a.m., Central Time (i) at the offices of Gibson, Dunn & Crutcher LLP, 1050 Connecticut Avenue, N.W., Washington, DC 20036 or (ii) by electronic exchange of executed documents, on the date which is as promptly as practicable, but in no event later than three (3) Business Days after the first date on which all conditions set forth in Article 6 shall have been satisfied or duly waived (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or due waiver thereof) or such other time and place as Rotor and the Company may mutually agree. The date on which the Closing actually occurs is referred to in this Agreement as the “Closing Date.” On the Closing Date, Rotor and the Company shall cause (a) the Certificate of Merger to be executed and duly submitted for filing with the Secretary of State of the State of Delaware, as provided in Section 252 of the DGCL and (b) the Articles of Merger to be executed and duly submitted for filing with the Utah Division of Corporations and Commercial Code as provided in Section 16-10a-1107 of the Act. The Merger shall become effective upon the later of the time at which (A) the Articles of Merger are filed with the Utah Division of Corporations and Commercial Code and (B) the Certificate of Merger is filed with the Secretary of State of the State of Delaware, or at such later date or time as may be agreed by the Company and Rotor in writing and specified in the Articles of Merger in accordance with the Act and the Certificate of Merger in accordance with the DGCL (the effective time of the Merger being hereinafter referred to as the “Effective Time”).
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(d) From and after the Effective Time, the Governing Documents in the form attached to the Articles of Merger shall be the Governing Documents of the Surviving Corporation, in each case, until thereafter changed or amended as provided therein or by applicable Law.
(e) From and after the Effective Time, until successors are duly elected or appointed in accordance with applicable Law, (i) the initial directors of the Surviving Corporation shall be the individuals selected in accordance with Section 5.17 and (ii) the officers of the Company at the Effective Time shall be the officers of the Surviving Corporation.
Section 2.2 Effect of the Merger; Allocation of Total Merger Consideration.
(a) Treatment of Outstanding Company Common Shares.
(i) Company Common Shares. 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 Company Common Stock (a “Company Common Share”) that is issued and outstanding immediately prior to the Effective Time (for the avoidance of doubt, after giving effect to the Company Preferred Conversion, the Company Warrant Exercise and the Pre-Closing Financing (if any), and other than Dissenting Shares), and shares of Company Stock, if any, held in the treasury of the Company, which treasury shares shall be canceled for no consideration as part of the Merger (and shall not constitute “Company Common Shares” hereunder) shall be canceled and converted into and become: (i) the right to receive the number of Rotor Common Shares equal to the Exchange Ratio, rounded down to the nearest whole share, plus (ii) the contingent right to receive the Contingent Merger Consideration following the Closing in accordance with Section 2.6.
(ii) Restricted Stock. At the Effective Time, by virtue of the Merger and without any action on the part of any Party or any other Person, each Company Restricted Stock Award that is issued and outstanding immediately prior to the Effective Time shall be assumed by Rotor and converted into an award (an “Adjusted Restricted Stock Award”) that shall entitle the holder thereof to (i) the right to receive the number of Rotor Common Shares equal to the Exchange Ratio, plus (ii) the contingent right to receive the Contingent Merger Consideration following the Closing in accordance with Section 2.6. Except as otherwise provided in this Section 2.2(a)(ii), each Adjusted Restricted Stock Award shall continue to be subject to terms and conditions consistent with the Company Equity Plan and the applicable Company Restricted Stock Award agreement, as in effect immediately prior to the Effective Time, including as to risk of forfeiture or other service-based conditions applicable thereunder.
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(b) Treatment of Outstanding Company Options and Company Restricted Stock Unit Awards.
(i) Company Options. As of the Effective Time, each Company Option, whether vested or unvested, that is outstanding immediately prior to the Effective Time shall, by virtue of the occurrence of the Effective Time and without any action on the part of the Company, Rotor or the Pre-Closing Holder thereof, be assumed and converted into an option (a “Rotor Option”) with respect to a number of Rotor Common Shares equal to the number of Company Common Shares subject to such Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio, and rounded down to the nearest whole share, as set forth on the Allocation Schedule, and at an exercise price per Rotor Common Share equal to the exercise price per Company Common Share subject to such Company Option divided by the Exchange Ratio, and rounded up to the nearest whole cent, as set forth on the Allocation Schedule; provided that the exercise price and the number of Rotor Common Shares subject to the Rotor Option shall be determined in a manner consistent with the requirements of Section 409A of the Code. Except as otherwise provided in this Section 2.2(b)(i), each Rotor Option shall continue to be subject to terms and conditions (including as to vesting and exercisability terms) consistent with the Company Equity Plan and the applicable Company Option award agreement and such other terms and conditions applicable to the corresponding former Company Option, in all cases, as in effect immediately prior to the Effective Time.
(ii) Restricted Stock Units. As of the Effective Time, each Company Restricted Stock Unit Award that is outstanding immediately prior to the Effective Time shall be converted into the right to receive restricted stock units based on Rotor Common Shares (each, an “Adjusted Restricted Stock Unit Award”) with substantially the same terms and conditions as were applicable to such Company Restricted Stock Unit Award immediately prior to the Effective Time (including with respect to vesting and termination-related provisions and dividend equivalents, as applicable), except that (A) such Adjusted Restricted Stock Unit Award shall relate to such number of Rotor Common Shares as is equal to the product of (x) the number of shares of Company Common Stock subject to such Company Restricted Stock Unit Award immediately prior to the Effective Time, multiplied by (y) the Exchange Ratio, with any fractional shares rounded down to the nearest whole share, as set forth on the Allocation Schedule and (B) with respect to any Adjusted Restricted Stock Unit Award that is vested and unsettled as of immediately prior to the Effective Time, such vested Adjusted Restricted Stock Unit Award will settle on or around the date that is six (6) months following the Closing Date.
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(c) Certain Actions. The Company shall take all necessary actions to effect the treatment of Company Options, Company Restricted Stock Awards and Company Restricted Stock Unit Awards pursuant to Section 2.2(b) in accordance with the Company Equity Plan and the applicable award agreements and to ensure that no Rotor Option may be exercised prior to the effective date of an applicable Form S-8 (or other applicable form, including Form S-1 or Form S-3) of Rotor. Prior to the Effective Time, the Company Board (or appropriate committee thereof) shall pass resolutions to provide for the treatment of the Company Options, Company Restricted Stock Awards and Company Restricted Stock Unit Awards, as contemplated by Section 2.2(b) and terminate the Company Equity Plan with respect to the grant of any new awards thereunder. As promptly as practicable following the Effective Time, Rotor shall file with the SEC an effective registration statement on Form S-8 (or other applicable form) with respect to the shares underlying the Company Options and the Company Restricted Stock Unit Awards, and shall use its reasonable best efforts to maintain the effectiveness of such registration statement for so long as such Company Options and Company Restricted Stock Unit Awards remain outstanding.
(d) Fractional Shares; Aggregating and Rounding. Notwithstanding anything in this Agreement to the contrary, no certificate or scrip representing fractional Rotor Common Shares shall be issued pursuant to this Section 2.2, and such fractional share interests shall not entitle the owner thereof to vote or to any other rights of a stockholder of Rotor. For purposes of calculating the aggregate amount of Rotor Common Shares issuable to each Pre-Closing Holder, all Company Common Shares that are issued and outstanding (for the avoidance of doubt, after giving effect to the Company Preferred Conversion, the Company Warrant Exercise and the Pre-Closing Financing (if any)) and are held by such Pre-Closing Holder immediately prior to the Effective Time shall be aggregated amongst themselves, and the aggregate number of Company Common Shares held by such holder shall be rounded down to the nearest whole share.
(e) Adjustment to Total Merger Consideration. The Total Merger Consideration and the Exchange Ratio shall be adjusted appropriately to reflect the effect of any stock split, reverse stock split, stock dividend (including any dividend or other distribution of securities convertible into Rotor Common Shares), reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to the number of Rotor Common Shares outstanding after the date hereof and prior to the Effective Time or the time the applicable Contingent Merger Consideration is delivered to the Pre-Closing Holders, if any, so as to provide the Pre-Closing Holders with the same economic effect as contemplated by this Agreement prior to such event and as so adjusted shall, from and after the date of such event, be the Total Merger Consideration.
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(f) Allocation Schedule. The Company acknowledges and agrees that (i) the Closing Merger Consideration is being allocated among the Pre-Closing Holders, and the Contingent Merger Consideration is being allocated among the holders of Company Common Shares as of immediately prior to the Closing (including, for the avoidance of doubt, the holders of Company Restricted Stock Awards), in each case pursuant to the schedule set forth on Section 2.2(f) of the Company Schedules (the “Allocation Schedule”) and delivered by the Company to Rotor at least three (3) Business Days prior to the anticipated Closing Date and such allocation (i) is and will be in accordance with the Governing Documents of the Company, the Company Shareholder Agreements and applicable Law, (ii) does and will set forth (A) the mailing addresses and email addresses, for each Pre-Closing Holder, (B) the number and class of Equity Securities owned by each Pre-Closing Holder, (C) the portion of the Closing Merger Consideration and the Contingent Merger Consideration that would be allocated to each Pre-Closing Holder (assuming, for such purpose, that the Contingent Merger Consideration is fully earned), (D) with respect to each Pre-Closing Holder of Company Options, the number of Rotor Common Shares subject to, and the exercise price per Rotor Common Share of, each Rotor Option, (E) with respect to each Pre-Closing Holder of Company Restricted Stock Awards, the number of Rotor Common Shares subject to each Adjusted Restricted Stock Award, and (F) with respect to each Pre-Closing Holder of Company Restricted Stock Unit Awards, the number of Rotor Common Shares subject to each Adjusted Restricted Stock Unit Award, and (iii) is and will otherwise be accurate in all respects (except for de minimis inaccuracies that are not material). Notwithstanding anything in this Agreement to the contrary, upon delivery, payment and issuance of the Closing Merger Consideration on the Closing Date in accordance with the Allocation Schedule, Rotor and its respective Affiliates shall be deemed to have satisfied all obligations with respect to the payment of consideration under this Agreement (other than with respect to the Contingent Merger Consideration, if any, which shall be payable in accordance with Section 2.6), and none of them shall have (I) any further obligations to the Company, any Pre-Closing Holder or any other Person with respect to the payment of any consideration under this Agreement (other than with respect to the Contingent Merger Consideration, if any, which shall be payable in accordance with Section 2.6), or (II) any Liability with respect to the allocation of the consideration under this Agreement, and the Company hereby irrevocably waives and releases Rotor and its Affiliates (and, on and after the Closing, the Surviving Corporation and its Affiliates) from all claims arising from or related to such Allocation Schedule and the allocation of the Total Merger Consideration, as the case may be, among each Pre-Closing Holder as set forth in such Allocation Schedule.
(g) Notwithstanding any provision of this Agreement to the contrary, any shares of Company Stock that, as of the Effective Time, (i) are held by a holder exercising such holder’s right to dissent (a “Dissenting Stockholder”) or (ii) are otherwise eligible to elect the right to dissent (collectively, the “Dissenting Shares”), in each case in accordance with Part 13 of the Act, shall not be converted into the right to receive the portion of Total Merger Consideration applicable to such Dissenting Shares in accordance with the Allocation Schedule and the terms of this Agreement; provided that any such amounts that would otherwise be payable in respect of such Dissenting Shares shall remain the property of Rotor. From and after the Effective Time, Dissenting Stockholders shall be entitled only to such rights as may be granted to them under Part 13 of the Act and shall not be entitled to exercise any of the voting rights or other rights of a stockholder of the Surviving Corporation. Notwithstanding the foregoing, if any Dissenting Stockholder effectively withdraws or loses such appraisal rights (through failure to perfect such appraisal rights or otherwise), then that Dissenting Stockholder’s shares (i) shall no longer be deemed to be Dissenting Shares and (ii) shall be treated as if they had been converted automatically at the Effective Time into the right to receive the portion of Total Merger Consideration applicable to such Dissenting Shares in accordance with the Allocation Schedule in accordance with Section 2.3(b). Each Dissenting Stockholder who becomes entitled to payment for his, her or its Dissenting Shares pursuant to Part 13 the Act shall receive payment thereof from the Exchange Agent in accordance with Part 13 of the Act. For the avoidance of doubt, for purposes of determining the Allocation Schedule and the other related definitions and terms that are affected by the total number of Company Stock outstanding immediately prior to the Effective Time, any and all Dissenting Shares shall be included in all such determinations as if such Dissenting Shares were participating in the Merger and were entitled to receive the applicable payments under this Agreement. The Company shall give Rotor prompt notice of any written demands for appraisal of any shares of Company Stock, attempted withdrawals of such demands and any other instruments served pursuant to Part 13 the Act and received by the Company relating to stockholders’ rights of appraisal in accordance with the provisions of Part 13 of the Act, and Rotor shall have the opportunity to participate in all negotiations and proceedings with respect to all such demands. The Company shall not, except with the prior written consent of Rotor, make any payment with respect to, settle or offer or agree to settle any such demands. Any portion of the Total Merger Consideration made available to the Exchange Agent pursuant to Section 2.3(a) to pay for Dissenting Shares shall be returned to Rotor upon demand.
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Section 2.3 Payment of Closing Merger Consideration; Other Closing Date Payments.
(a) Deposit with Exchange Agent. Immediately prior to the Effective Time, Rotor shall deposit with Rotor’s transfer agent (or an affiliate of such transfer agent, or such other exchange agent as may be mutually selected by Rotor and the Company, the “Exchange Agent”) the number of Rotor Common Shares equal to the Closing Merger Consideration.
(b) Exchange Agent Notification. No less than five (5) Business Days prior to the Closing Date, the Company and Rotor shall provide the Exchange Agent with a mutually acceptable form of notice to be distributed to each holder of Company Common Shares as of immediately prior to the Closing that (i) describes that, as of the Effective Time, such holder shall be entitled to receive the applicable portion of the Closing Merger Consideration in accordance with the Allocation Schedule on the Closing Date following the Effective Time, (ii) explains that the Exchange Agent will credit to such holder’s account at the Exchange Agent the applicable portion of the Closing Merger Consideration and (iii) provides details for how such holders can manage their account online through the Exchange Agent. Any portion of the Contingent Merger Consideration, if any, to which the Pre-Closing Holders may become entitled shall become payable at the times and subject to the conditions specified herein.
(c) No Further Transfers. At the Effective Time, the stock transfer books of the Company shall be closed and there shall be no further registration of transfers of any Company Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, any Company Stock is presented to the Surviving Corporation for any reason, they shall be cancelled and exchanged as provided in this Section 2.3.
Section 2.4 Withholding. Notwithstanding any other provision in this Agreement to the contrary, Rotor, the Company, and the Exchange Agent shall be entitled to deduct and withhold from any cash, stock consideration or other amounts otherwise to be paid or payable in connection with the transactions contemplated in this Agreement to any Person such amounts that Rotor, the Company or the Exchange Agent are required to deduct and withhold with respect thereto under the Code or any provision of applicable Law. To the extent that amounts so deducted and withheld are duly deposited with the appropriate Governmental Entity, such deducted and withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made.
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Section 2.5 Payment of Contingent Merger Consideration.
(a) Within ten (10) Business Days after the date on which any Trading Price Threshold is achieved, Rotor shall issue to each holder of Company Earnout Shares as of immediately prior to the Closing a number of Rotor Common Shares equal to (i) the number of Company Earnout Shares held by such holder as of immediately prior to the Effective Time, multiplied by (ii)(A) the applicable Contingent Merger Consideration divided by (B) the aggregate amount of Company Earnout Shares, in each case in accordance with the Allocation Schedule (and, for clarity, the number of Rotor Common Shares to be issued to any such holder shall be rounded in accordance with Section 2.2(d)). For the avoidance of doubt, each of the First Level Trading Price Consideration and the Second Level Trading Price Consideration shall only be payable once to each Pre-Closing Holder.
(b) Unless and until the Contingent Merger Consideration is issued in accordance with this Section 2.5, (i) the right to receive any Contingent Merger Consideration is not transferable except by operation of Law relating to descent and distribution, divorce and community property, shall not be evidenced by any certificate, and does not constitute an equity or ownership interest in Rotor, and (ii) the holders of the Company Common Shares as of immediately prior to the Closing shall not have any rights as a stockholder of Rotor solely as a result of such holders’ right to receive any Contingent Merger Consideration hereunder.
(c) From and after the Closing, at all times any Contingent Merger Consideration remains subject to a Trading Price Threshold, Rotor will keep available for issuance a sufficient number of unissued Rotor Common Shares to permit Rotor to satisfy its issuance obligations under this Section 2.5 and will take all actions reasonably necessary to increase the authorized number of Rotor Common Shares if at any time there would be insufficient unissued Rotor Common Shares to permit such reservation.
Section 2.6 PPP Loans; PPP Escrow. On or prior to the Closing Date, the Company shall have arranged for, at its election, one (or multiple) of the following to occur: (i) all or any portion of the PPP Loans to be forgiven by the SBA, (ii) all or any portion of the PPP Loans to be paid off as of the Closing Date, and/or (iii) the Company and the PPP Lender to have entered into the PPP Escrow and Consent Agreement. In the event that the Company arranges for all or any portion of the PPP Loans to be paid off as of the Closing Date pursuant to clause (ii) of the preceding sentence, upon at least five (5) days’ prior written notice from the Company, Rotor shall deposit on the Closing Date an amount equal to the then unforgiven and unpaid outstanding principal amount of the PPP Loans to an account designated by the PPP Lender in writing prior to the Closing. In the event that the Company and the PPP Lender enter into the PPP Escrow and Consent Agreement pursuant to clause (iii) of the first sentence of this Section 2.6, (A) upon at least five (5) days’ prior written notice from the Company, Rotor shall deposit on the Closing Date an amount equal to the then unforgiven and unpaid outstanding principal amount of the PPP Loans subject to a pending forgiveness application in an account designated by the PPP Lender in writing prior to the Closing (the “PPP Escrow Fund”), and (B) the PPP Lender shall thereafter hold and disburse the PPP Escrow Fund in accordance with the PPP Escrow and Consent Agreement.
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Article 3
REPRESENTATIONS AND WARRANTIES RELATING
TO THE GROUP COMPANIES
Except as set forth in the Company Schedules (but subject to the terms of Section 8.8), the Company hereby represents and warrants to the Rotor Parties, in each case, as of the date hereof and as of the Closing Date, as follows:
Section 3.1 Organization and Qualification.
(a) Each Group Company is a corporation, limited liability company or other applicable business entity duly organized or formed, as applicable, validly existing and in good standing (or the equivalent thereof, if applicable, in each case, with respect to the jurisdictions that recognize the concept of good standing or any equivalent thereof) under the Laws of its jurisdiction of formation or organization (as applicable), except where the failure to be in good standing (or the equivalent thereof) would not have a Company Material Adverse Effect. Each Group Company is duly qualified or licensed to transact business in each jurisdiction in which the property and assets 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 duly qualified or licensed and in good standing would not have a Company Material Adverse Effect.
(b) Each Group Company has the requisite corporate, limited liability company or other applicable business entity power and authority to own, lease and operate its properties and to carry on its businesses as presently conducted, except where the failure to have such power or authority would not be material to the Group Companies taken as a whole. True, correct and complete copies of the Governing Documents of each Group Company and the Company Shareholder Agreements have been provided to Rotor, in each case, as amended and in effect as of the date hereof. The Governing Documents of each Group Company and the Company Shareholder Agreements are in full force and effect and none of the Group Companies, or, to the Company’s knowledge, any other party thereto, are in breach or violation of any provision set forth in their respective Governing Documents or the Company Shareholder Agreements.
Section 3.2 Capitalization of the Group Companies.
(a) Section 3.2(a) of the Company Schedules sets forth, as of the date hereof, a true, correct and complete statement of (i) the number and class or series (as applicable) of all of the Equity Securities of the Company issued and outstanding, (ii) the identity of the Persons that are the record owners thereof and (iii) with respect to any Equity Rights, (1) the date of grant, (2) the exercise price (where applicable), (3) any applicable vesting schedule and expiration date, (4) the type of Equity Right (including whether each Company Option is intended to be an “incentive stock option” within the meaning of Section 422 of the Code), and (5) whether any Company Option is or was eligible to be early exercised.
(b) Except for the Equity Rights set forth on Section 3.2(b) of the Company Schedules (which such Equity Rights shall, for the avoidance of doubt, be subject to the transactions contemplated by Section 2.2) or as is set forth in Company’s Governing Documents or the Company Shareholder Agreements, as of the date hereof, the Company has no outstanding (x) convertible debt, equity appreciation, phantom equity, or profit participation rights, or (y) options, restricted stock, phantom stock, warrants, purchase rights, subscription rights, conversion rights, exchange rights, calls, puts, rights of first refusal or first offer or other Contracts that would require the Company to issue, sell or otherwise cause to become outstanding or to acquire, repurchase or redeem any Equity Securities or securities convertible into or exchangeable for Equity Securities of the Company (collectively, “Equity Rights”).
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(c) All of the Equity Securities of the Company have been duly authorized and validly issued and are fully paid and, if applicable, non-assessable. The Equity Securities of the Company (A) were not issued in violation of the Governing Documents of the Company or the Company Shareholder Agreements or any other Contract to which the Company or any of its Subsidiaries is party or bound, (B) are not subject to any purchase option, call option, right of first refusal or first offer, preemptive right, subscription right or any similar right of any Person granted pursuant to a Contract to which the Company or any of its Subsidiaries are a party or bound or, to the Company’s knowledge, any other Contract, and were not issued in violation of any preemptive rights, call option, right of first refusal or first offer, subscription rights, transfer restrictions or similar rights of any Person granted pursuant to a Contract to which the Company or any of its Subsidiaries are a party or bound or, to the Company’s knowledge, any other Contract, (C) have been, in connection with their initial sale, offered, sold and issued (as applicable) in compliance in all material respects with applicable Law, including Securities Laws, and (D) to the knowledge of the Company, are free and clear of all Liens (other than transfer restrictions under applicable Securities Law).
(d) (i) Each Company Option has an exercise price at least equal to the fair market value of a Company Common Share on a date no earlier than the date of the corporate action authorizing the grant, (ii) no Company Option has had its exercise date or grant date “back-dated” or materially delayed, and (iii) all Company Options have been issued under the Company Equity Plan in compliance in all material respects with the Company Equity Plan and all applicable Laws and properly accounted for in all material respects in accordance with the Accounting Principles.
(e) Except for the Company’s Governing Documents and the Company Shareholder Agreements, there are no voting trusts, proxies, or other Contracts to which the Company or any of its Subsidiaries are a party or bound or, to the Company’s knowledge, under any other Contract, with respect to the voting or transfer of the Company’s Equity Securities. The Equity Securities set forth on the Allocation Schedule will, as of immediately prior to the Closing, constitute all of the issued and outstanding Equity Securities of the Company.
(f) As of the date hereof, all of the outstanding Equity Securities of each Subsidiary of the Company are owned directly by the Company or another Subsidiary of the Company, free and clear of all Liens (other than transfer restrictions under applicable Securities Law or Permitted Liens), and are set forth on Section 3.2(f) of the Company Schedules opposite the name of each Subsidiary of the Company. There are no Equity Rights that would require the Company or any of its Subsidiaries to issue, sell or otherwise cause to become outstanding or to acquire, repurchase or redeem any Equity Securities or securities convertible into or exchangeable for Equity Securities of the Company’s Subsidiaries. There are no voting trusts, proxies or other Contracts with respect to the voting or transfer of any Equity Securities of any Subsidiaries of the Company.
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(g) As of the date hereof, none of the Group Companies owns or holds (of record, beneficially or otherwise), directly or indirectly, any Equity Securities in or debt of any other Person or the right to acquire any such Equity Security or debt, and none of the Group Companies are a partner or member of any partnership, limited liability company or joint venture.
(h) Section 3.2(g) of the Company Schedules sets forth a list of all Indebtedness of the Group Companies as of the date hereof, along with any indebtedness for borrowed money pursuant to the CARES Act, including the principal amount of such Indebtedness or indebtedness, the outstanding balance as of the date of this Agreement, and the debtor and the issuer thereof.
Section 3.3 Authority. The Company has the requisite corporate, limited liability company or other similar power and authority to execute and deliver this Agreement and each of the Ancillary Documents to which it is or will be a party, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby, subject to obtaining the Required Company Shareholder Approval. The execution and delivery of this Agreement, the Ancillary Documents to which the Company is or will be a party and the consummation of the transactions contemplated hereby and thereby have been (or, in the case of any Ancillary Document entered into after the date of this Agreement, will be upon execution thereof) duly authorized by all necessary corporate and shareholder (or other similar) action on the part of the Company, subject to obtaining the Required Company Shareholder Approval. This Agreement and each Ancillary Document to which the Company is or will be a party has been or will be upon execution thereof, as applicable, duly and validly executed and delivered by the Company and constitutes or will constitute, upon execution and delivery thereof, as applicable, a valid, legal and binding agreement of the Company (assuming that this Agreement and the Ancillary Documents to which the Company is or will be a party are or will be upon execution thereof, as applicable, duly authorized, executed and delivered by the other Persons party hereto and thereto), enforceable against the Company in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting generally the enforcement of creditors’ rights and subject to general principles of equity).
Section 3.4 Financial Statements; No Undisclosed Liabilities.
(a) Attached hereto as Section 3.4(a) of the Company Schedules are true, correct and complete copies of the following financial statements (such financial statements, the “Financial Statements”):
(i) audited consolidated balance sheet of the Group Companies as of December 31, 2019, and the related audited consolidated statement of operations, consolidated statement of stockholders’ equity and consolidated statement of cash for the fiscal year then ended (the “Audited Financials”);
(ii) unaudited consolidated balance sheet of the Group Companies as of December 31, 2020 and the income statement and statement of cash flows for the twelve (12)-month period then ended; and
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(iii) unaudited consolidated balance sheets of the Group Companies as of January 31, 2021 (the “Latest Balance Sheet”) and the related unaudited consolidated statements of income and cash flows of the Group Companies for the one (1)-month period then ended.
(b) The Financial Statements (i) have been prepared from, and reflect in all material respects, the books and records of the Group Companies, (ii) have been prepared in accordance with the Accounting Principles applied on a consistent basis throughout the periods covered thereby, except as may be indicated in the notes thereto and subject, in the case of unaudited Financial Statements, to the absence of footnotes and normal year-end adjustments, none of which are material to the Group Companies, taken as a whole, and (iii) fairly present, in all material respects, the consolidated financial position of the Group Companies as of the dates thereof and their consolidated results of operations for the periods then ended, subject, in the case of unaudited Financial Statements, to the absence of footnotes and normal year-end adjustments.
(c) Except (i) as set forth on the Latest Balance Sheet (including the notes, if any, thereto), (ii) for Liabilities incurred in the ordinary course of business since the date of the Latest Balance Sheet (none of which is a Liability for breach of contract, breach of warranty, tort, infringement, misappropriation or violation of Law), (iii) for Liabilities incurred in connection with the negotiation, preparation or execution of this Agreement or any Ancillary Documents, the performance of their respective covenants and agreements in this Agreement or any Ancillary Document or the consummation of the transactions contemplated hereby or thereby, (iv) for Liabilities disclosed in Section 3.4(c) of the Company Schedules, (v) for Liabilities that would not be required to be set forth on a balance sheet prepared in accordance with the Accounting Principles; provided, that such Liabilities are not material, individually or in the aggregate, to the Group Companies, taken as a whole, or (vi) for Liabilities that are not material to the Group Companies, taken as a whole, no Group Company has any Liabilities. No Group Company is a party to any “off-balance sheet arrangement” (as defined in Item 303(a) of Regulation S-K promulgated by the SEC).
(d) Each Group Company has established and maintains systems of internal accounting controls that are designed to provide, in all material respects, reasonable assurance that (i) all transactions are executed in accordance with management’s authorization and (ii) all transactions are recorded as necessary to permit preparation of proper and accurate financial statements in accordance with applicable accounting standards and to maintain accountability for the Group Companies’ assets. Since December 31, 2017, no Group Company has received any written complaint, allegation, assertion or claim that there is (i) “significant deficiency” in the internal controls over financial reporting of the Group Companies, (ii) a “material weakness” in the internal controls over financial reporting of the Group Companies or (iii) fraud, whether or not material, that involves management or other employees of the Group Companies who have a significant role in the internal controls over financial reporting of the Group Companies.
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Section 3.5 Consents and Requisite Governmental Approvals; No Violations. Assuming the truth and accuracy of the representations and warranties set forth in Section 4.3 (and assuming all Consents referred to in such sections (or required to be disclosed in the corresponding sections of the Rotor Schedules) are made or obtained prior to the Closing), no Consent of any Governmental Entity is necessary in connection with the execution, delivery or performance by the Company of this Agreement and the Ancillary Documents to which the Company is or will be party or bound or the consummation of the transactions contemplated by this Agreement or the Ancillary Documents, except for (a) compliance with and filings under the HSR Act, (b) compliance with and filings set forth on Section 3.5 of the Company Schedules, (c) compliance with and filings under any applicable Securities Laws, including the Proxy Statement, (d) the Required Company Shareholder Approval or (e) those the failure of which to obtain or make would not have a Company Material Adverse Effect. Neither the execution, delivery and performance by the Company of this Agreement nor the Ancillary Documents to which the Company is or will be a party nor the consummation of the transactions contemplated by hereby and thereby will, directly or indirectly (with or without due notice or lapse of time or both) (i) conflict with or result in any breach of any provision of any Group Company’s Governing Documents, (ii) result in a violation or breach of, or constitute a default or give rise to any right of termination, Consent, cancelation, amendment, modification, suspension, revocation or acceleration under, any of the terms, conditions or provisions of, or the loss of any benefits under (A) any Material Contract, (B) any Group Company Permits or (C) any Data Privacy and Security Requirement, (iii) violate, or constitute breach under, in each case, in any material respect, any Order or applicable Law to which any Group Company or any of its properties or assets are bound, or (iv) result in the creation of any Lien upon any of the assets or properties (other than any Permitted Liens) or Equity Securities of any Group Company, except in the case of clause (ii) and (iv) above, as would not have a Company Material Adverse Effect.
Section 3.6 Permits. The Group Companies hold all material Permits necessary or required for the lawful conduct of their respective businesses or necessary or required to own, lease or operate any of the properties or assets of the Group Companies (collectively, the “Group Company Permits”). Each Group Company Permit is valid and in full force and effect either pursuant to its terms or by operation of law. Each Group Company is, and since December 31, 2017 has been, in compliance in all material respects with the terms of all Group Company Permits held by such Group Company. To the Company’s knowledge, no event, circumstance, or state of facts has occurred which (with or without due notice or lapse of time or both) would reasonably be expected to result in the failure of a Group Company to be in compliance in all material respects with the terms of any Group Company Permit.
Section 3.7 Material Contracts.
(a) Section 3.7(a) of the Company Schedules sets forth a list of Contracts (other than (i) Ordinary Course Contracts and (ii) a Company Plan listed on Section 3.11(a) of the Company Schedules) that have not expired or been terminated as of the date of this Agreement to which a Group Company is, as of the date of this Agreement, a party or by which it or its assets or properties are bound (each Contract required to be set forth on Section 3.7(a) of the Company Schedules, the “Material Contracts”) that is:
(i) any Contract relating to the components of Indebtedness of the Group Companies set forth in clauses (a) through (h), of the definition thereof;
(ii) any material equity joint venture, partnership, or similar Contract;
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(iii) any Contract or group of Contracts with a common counterparty, or among counterparties sharing the same ultimate parent company, with consideration paid or payable to or by any one or more Group Companies of more than $250,000, in the aggregate, over any rolling twelve (12)-month period since January 1, 2019 (other than (A) any employee offer letter or employment agreement, any Employee Benefit Plan, or any consulting agreement with an independent contractor who is a natural person or (B) purchase or sale agreements entered into in the ordinary course of business);
(iv) any Contract or group of Contracts with a common counterparty, or among counterparties sharing the same ultimate parent company, with a remaining term of more than twenty-four (24) months and that creates an obligation or a right of the Company or any Group Company to be paid or make payments of more than $250,000, as forecasted, over any rolling twelve (12)-month period starting January 1, 2019;
(v) any Contract for the disposition of any material portion of the assets or business of any Group Company or for the acquisition by any Group Company of the assets or business of any other Person (other than purchases of inventory or services in the ordinary course of business) under which the Company or any of its Subsidiaries has any material continuing obligations, including with respect to an “earn-out,” contingent purchase price or other contingent or deferred payment obligation;
(vi) any Government Contract;
(vii) any Contract required to be disclosed on Section 3.19 of the Company Schedules;
(viii) any settlement, conciliation or similar Contract relating to a material Proceeding of a Group Company that have been entered into on or after December 31, 2018 and (1) contemplate payment by any Group Company of any amount in excess of $100,000 or (2) were brought by an equityholder or Affiliate of a Group Company;
(ix) any Contract that materially limits, or purports to materially limit, the ability of any Group Company to compete in any line of business or with any person or entity or in any geographic area or during any period of time, excluding customary confidentiality agreements and agreements that contain customary confidentiality clauses (including any customary provisions against soliciting for employment or engagement any employees of service providers);
(x) any Contract that results in any person or entity holding a power of attorney from any Group Company that relates to the Group Companies or their respective business;
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(xi) any Contract under which any Group Company has agreed to purchase goods or services from a vendor, supplier or other person on a preferred supplier or “most favored supplier” basis;
(xii) any Inbound License;
(xiii) any IP License which involves the license or grant of rights by any Group Company to a third party of Company Owned Intellectual Property or Contract that includes an assignment or transfer of material Intellectual Property from any Group Company;
(xiv) any Contract for the development (A) by or on behalf of any Group Company of Intellectual Property that is distributed with or in any Company Product or otherwise material to the Company Owned Intellectual Property or Business (other than Contracts (i) with any employee on a standard form of agreement entered into in the ordinary course of business and (ii) any consultant on a standard form of agreement entered into in the ordinary course of business under which such consultant is bound by confidentiality obligations and effectively assigns all right, title and interest in and to any developed Intellectual Property to a Group Company), and (B) any material Intellectual Property for any Person by a Group Company;
(xv) pursuant to which any Group Company leases, subleases, occupies or otherwise uses any real property, including in each case where any Group Company is the lessor or sublessor;
(xvi) any Contract relating to the purchase of manufacturing, engineering or design services that involve more than $250,000, other than those Contracts and agreements under which no further services are remaining to be performed;
(xvii) any Contract relating to Indebtedness of any Group Company;
(xviii) any Contract relating to the advancement to or loaning any other Person any amount or Contract under which any Person would be deemed to owe Indebtedness to any Group Company, other than advances to employees, directors, officers or independent contractors of any Group Company for travel and other expenses incurred in the ordinary course of business;
(xix) any Contract providing for payment or acceleration of benefits or any transaction bonuses in connection with the transactions contemplated by this Agreement;
(xx) any Contract that is a guaranty (or similar obligations, such as “makewell agreements”) of any obligation for any Indebtedness of another Person other guaranty of obligations of another Person;
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(xxi) any Contract that provides for the indemnification by any Group Company of any Person outside the ordinary course of business or the assumption of any Tax, environmental or other liability of any Person;
(xxii) any Contract for any foreign sales agent or other agent conducting sales activities outside the United States;
(xxiii) any collective bargaining agreement or other Contract with a labor union, works council, or other labor organization; and
(xxiv) any employment, severance, retention, change of control, separation or individual consulting Contract with any current or former director, manager, officer, individual service provider or employee of a Group Company (A) providing for total annual cash compensation in excess of $200,000, (B) that would result in material Liability to any Group Company if terminated or (C) that requires prior notice of termination of thirty (30) days or longer.
(b) Except in each case as would not be material to the Group Companies, taken as a whole, each Material Contract is in full force and effect and is a valid, legal and binding obligation of the applicable Group Company, enforceable in accordance with its terms against such Group Company and, to the Company’s knowledge, each other party thereto (subject to applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting generally the enforcement of creditors’ rights and subject to general principles of equity). Except in each case as would not be material to the Group Companies, taken as a whole, there is no material breach or default by any Group Company or, to the Company’s knowledge, any third party under any Material Contract, and, to the Company’s knowledge, (A) no event has occurred which (with or without notice or lapse of time or both) would constitute a material breach or default or would permit termination of, or a material modification or acceleration thereof by any party to such Material Contract, and (B) no party to a Material Contract has claimed a force majeure (or similar excuse in performance due to COVID-19) with respect thereto. Except in each case as would not be material to the Group Companies, taken as a whole, since December 31, 2018 through the date hereof, no Group Company has received notice of (i) any material breach or default under any Material Contract or (ii) the intention of any third party under any Material Contract (including any Governmental Entity) to cancel, terminate or modify in any material respect the terms of any such Material Contract, or accelerate the obligations of any Group Company thereunder. True, correct and complete copies of all Material Contracts as in effect as of the date hereof have been made available to Rotor.
Section 3.8 Absence of Changes. During the period beginning on January 31, 2021 and ending on the date of this Agreement, (a) no Company Material Adverse Effect has occurred, and (b) except as expressly required by this Agreement, any Ancillary Document or in connection with the transactions contemplated hereby and thereby, (i) each Group Company has conducted its business in the ordinary course and (ii) no Group Company has taken any action that, if taken during the period from the date of this Agreement until the Closing, would require the consent of Rotor pursuant to Section 5.1(b).
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Section 3.9 Litigation. There is (and since December 31, 2017 there has been) no Proceeding pending or, to the Company’s knowledge, threatened against or involving (a) any Group Company, (b) any of their respective properties or assets, (c) any of their respective managers, officers, directors or employees (in their capacities as such), except as would not reasonably be expected to be, individually or in the aggregate, material to the Group Companies, taken as a whole. Neither the Group Companies is subject to any outstanding Order that is, or would reasonably be expected to be, material to the Group Companies. There are no material Proceedings by a Group Company pending, or which a Group Company has commenced preparations to initiate, against any other Person.
Section 3.10 Compliance with Applicable Law. To the knowledge of the Company, each Group Company is (and since December 31, 2017 has been) in compliance in all material respects with all applicable Laws applicable to it or its business, operations or assets or properties. No Group Company has, since December 31, 2017 through the date hereof, received any notice or communication from any Governmental Entity regarding any actual, alleged, or potential violation in any material respect of, or a failure to comply in any material respect with, any applicable Laws. Since December 31, 2017, no Group Company has conducted any internal investigation with respect to any actual, potential or alleged material violation of applicable Law by any of its Representatives, individual independent contractors or other service providers or concerning any actual or alleged fraud.
Section 3.11 Employee Plans.
(a) Section 3.11(a) of the Company Schedules sets forth a true, correct and complete list of each material Company Plan. With respect to each Company Plan, the Group Companies have made available to Rotor copies of the following documents, to the extent applicable: (i) the most recent determination or opinion letter issued by the Internal Revenue Service with respect to each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code; (ii) the current plan and trust documents, and all material amendments thereto (and for any unwritten plan, a summary of the material terms); and (iii) any material, non-routine correspondence with any Governmental Entity.
(b) No Group Company or ERISA Affiliate maintains, sponsors, participates in, contributes to or has any obligation to contribute to or has any Liability with respect to or under: (i) a Multiemployer Plan; (ii) a “defined benefit plan” (as defined in Section 3(35) of ERISA, whether or not subject to ERISA) or a plan that is or was subject to Title IV of ERISA or Section 412 or 430 of the Code; (iii) a “multiple employer plan” within the meaning of Section of 413(c) of the Code or Section 210 of ERISA; or (iv) a “multiple employer welfare arrangement” as defined in Section 3(40) of ERISA. No Company Plan provides and no Group Company has any Liabilities to provide any retiree, post-employment or post-termination health or life insurance or other welfare-type benefits to any Person other than health continuation coverage pursuant to COBRA or similar Law and for which the recipient pays the full cost of coverage. No Group Company has any Liabilities by reason of at any time being considered a single employer under Section 414 of the Code with any other Person other than another Group Company.
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(c) Each Company Plan that is intended to be qualified under Section 401(a) of the Code has timely received a favorable determination or opinion or advisory letter from the Internal Revenue Service on which it can rely and to the Company’s knowledge, no events have occurred or circumstances exist that would reasonably be expected to adversely affect such qualified status. None of the Group Companies has incurred (whether or not assessed), or is reasonably expected to incur or to be subject to, any penalty or Tax under Section 4980H, 4980B, 4980D, 6721 or 6722 of the Code.
(d) There are no pending, or to the Company’s knowledge, threatened, Proceedings with respect to any Company Plan (other than routine and undisputed claims for benefits). Each Company Plan (and each related trust, insurance Contract, or fund) has been established, maintained, funded and administered in all material respects in accordance with its terms and in compliance in all material respects with the applicable requirements of ERISA, the Code, and other applicable Laws. To the Company’s knowledge, there have been no “prohibited transactions” within the meaning of Section 4975 of the Code or Sections 406 or 407 of ERISA and not otherwise exempt under Section 408 of ERISA and no breaches of fiduciary duty (as determined under ERISA) with respect to any Company Plan. With respect to each Company Plan, all contributions (including all employer contributions and employee salary reduction contributions), distributions, reimbursements and premium payments that are due have been timely made in accordance with the terms of the Company Plan, and in compliance in all material respects with the requirements of applicable Law, and, to the extent not yet due, have been properly accrued in accordance with GAAP.
(e) The execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement would not (alone or in combination with any other event) (i) result in any payment or benefit becoming due to or result in the forgiveness of any indebtedness of any current or former director, manager, officer, employee, individual independent contractor or other service providers of any of the Group Companies, (ii) increase the amount or value of any compensation or benefits payable to any current or former director, manager, officer, employee, individual independent contractor or other service providers of any of the Group Companies, or (iii) result in the acceleration of the time of payment or vesting, or trigger any payment or funding of any compensation or benefits to any current or former director, manager, officer, employee, individual independent contractor or other service providers of any of the Group Companies.
(f) No amount that would be received (whether in cash or property or the vesting of property) by any “disqualified individual” of any of the Group Companies under any Employee Benefit Plan or otherwise in connection with the consummation of the transactions contemplated by this Agreement (alone or in combination with any other event) would not, separately or in the aggregate, be nondeductible under Section 280G of the Code or subject to an excise tax under Section 4999 of the Code.
(g) Each Company Plan that is a “non-qualified deferred compensation plan” (as such term is defined in Section 409A(d)(1) of the Code), has been maintained in form and operation in compliance in all material respects with the requirements of Section 409A of the Code and applicable guidance issued thereunder and no amount under any such Employee Benefit Plan is or has been subject to the interest and additional Tax set forth under Section 409A(a)(1)(B) of the Code.
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(h) The Group Companies have no current or contingent obligation to make a “gross-up” or similar payment in respect of any taxes that may become payable under Section 4999 or 409A of the Code.
(i) With respect to each Company Plan that is subject to the applicable Law of a jurisdiction other than the United States (whether or not United States Law also applies) or primarily for the benefit of employees, directors, consultants or individual independent contractors of the Company or any of its Subsidiaries who reside or work primarily outside of the United States (each a “Foreign Plan”): (i) each Foreign Plan required to be registered or intended to meet certain regulatory or requirements for favorable tax treatment has been timely and properly registered and has been maintained in good standing with the applicable regulatory authorities and requirements; (ii) no Foreign Plan is a defined benefit plan (as defined in ERISA, whether or not subject to ERISA), seniority premium, termination indemnity, provident fund, gratuity or similar plan or arrangement or has any unfunded or underfunded liabilities; and (iii) all Foreign Plans that are required to be funded are fully funded, and adequate reserves have been established with respect to any Foreign Plan that is not required to be funded.
Section 3.12 Environmental Matters.
(a) The Group Companies are, and at all times since December 31, 2017 have been, operating in compliance in all material respects with all Environmental Laws, which includes obtaining, maintaining and complying with all Permits required in connection with the Business under Environmental Laws, except in each case as would not be material to the Group Companies, taken as a whole.
(b) No Group Company has received any written notice, report, Order, directive or communication from any Governmental Entity or any other Person regarding any actual, alleged, or potential violation in any respect of, or a failure to comply in any respect with, or Liability arising under, any Environmental Laws, except in each case as would not be material to the Group Companies, taken as a whole.
(c) There is (and since December 31, 2017 there has been) no Proceeding pending or, to the Company’s knowledge, threatened in writing against any Group Company or that otherwise pertains to the Business pursuant to Environmental Laws, except in each case as would not be material to the Group Companies, taken as a whole.
(d) There has been no manufacture, sale, distribution, release, treatment, storage, disposal, arrangement for disposal, transport or handling of, contamination by, or exposure of any Person to, any Hazardous Substances, in each case that has resulted or would result in Liability under Environmental Laws for any Group Company, except in each case as would not be material to the Group Companies, taken as a whole.
(e) The Group Companies have not assumed, undertaken, provided an indemnity with respect to, or otherwise become subject to any Liability of any other Person under Environmental Law.
(f) The Group Companies have made available to Rotor copies of all environmental reports, assessments and audits and all other material environmental, health, and safety documents pertaining to the current and former properties and operations of the Group Companies that are within the Group Companies’ possession or reasonable control.
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Section 3.13 Intellectual Property.
(a) Section 3.13(a) of the Company Schedules sets forth a true, correct and complete list of all (i) Company Registered Intellectual Property and (ii) material unregistered Marks, Copyrights or Software owned or purported to be owned by any Group Company. The Company Registered Intellectual Property is valid, subsisting and enforceable. A Group Company exclusively owns and possesses all right, title and interest in and to the Company Owned Intellectual Property, free and clear of all Liens or obligations to others (other than Permitted Liens). None of the Company Registered Intellectual Property (i) has lapsed, expired or been abandoned or (ii) is or was the subject of any opposition, interference, cancellation, validity challenge or other proceeding (other than routine office actions) before any Governmental Entity.
(b) A Group Company exclusively owns and possesses all right, title and interest in and to, or has a valid and enforceable and sufficient written license to, all Intellectual Property that is used in or necessary for the operation of the Business (“Inbound Licenses”), free and clear of all Liens or obligations to others (other than Permitted Liens) (together with the Company Owned Intellectual Property the “Business Intellectual Property”), which Business Intellectual Property will, immediately after the Closing, be owned by, licensed to or available for use by the Group Companies on terms and conditions the same in all material respects to those immediately prior to the Closing. No Group Company has granted any exclusive licenses or covenants not to sue with respect to any Company Owned Intellectual Property (including any Company Product) to any other Person. The Group Companies have performed all of their obligations under each IP License and Standard Forms, and each IP License is currently in full force and effect with respect to the Group Companies. To the Company’s knowledge, no third Person is in default of any IP License or Standard Form.
(c) All Persons who independently or jointly have materially contributed to or otherwise participated in the authorship, invention, conception, creation, improvement, modification or development of any Company Owned Intellectual Property or Company Products for or on behalf of, or under the supervision of, any Group Company have executed and delivered to the Group Company a valid and enforceable written contract providing for (i) the maintenance, protection and non-disclosure by such Person of all Trade Secrets of all Group Companies and (ii) the assignment by such Person (by way of a present grant of assignment) to a Group Company, all Intellectual Property authored, invented, created, improved, modified or developed by such Person in the course of their employment or other engagement with such Group Company. Each Group Company has taken reasonable steps to safeguard and maintain the secrecy of any Trade Secrets owned or used by each Group Company. To the Company’s knowledge, there has been no violation or unauthorized access to or disclosure of any Trade Secrets of or in the possession each Group Company, or of any written obligations with respect to such, and to the Company’s knowledge, no Person is in material breach of any contract referenced in this Section 3.13.
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(d) (i) The operation of the Business as conducted by the Group Companies, including the design, development, manufacturing, reproduction, use, marketing, offer for sale, sale, importation, exportation, distribution, support or maintenance of Company Products, does not infringe, dilute misappropriate or violate, and has not since December 31, 2014, infringed, diluted, misappropriated, or violated any Intellectual Property of any other Person, (ii) there is not, and there has not been since December 31, 2014, any Proceeding or other claim pending or threatened in writing, or sent or received in writing (including unsolicited offers, demands, or requests to license or cease and desist letters) by or against any Group Company with respect to any Intellectual Property (including any infringement, dilution, misappropriation, violation, enforceability, use (including any assertion of misuse), ownership, scope, licensing, or validity thereof), Data Privacy and Security Requirements, Security Incident, or Personal Data, and (iii) to the Company’s knowledge, no Person is infringing, diluting, misappropriating, or violating any Company Owned Intellectual Property.
(e) The Group Companies possess all Software source code and other material documentation and materials necessary to compile, operate and support the Company Products and no Group Company has disclosed, delivered, licensed or otherwise made available, and no Group Company has a duty or obligation (whether present, contingent or otherwise) to disclose, deliver, license or otherwise make available, any source code for any Company Products or otherwise included in the Company Owned Intellectual Property to any Person, and no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time or both) will, or would reasonably be expected to, result in the delivery, license, or disclosure of any such source code to any Person who is not, as of the date the event occurs or circumstance or condition comes into existence, a current employee or contractor of a Group Company subject to confidentiality obligations with respect thereto. The Company Products (other than products under development) operate substantially in accordance with the applicable Group Company’s documentation. There are, and for the past three (3) years have been, no defects, technical concerns or problems in any of the Company Products (other than products under development) that would prevent the same from performing substantially in accordance with the applicable Group Company’s documentation, except those which have been remediated.
(f) Each Group Company is in compliance in all material respects with all obligations under any Contract pursuant to which such Group Company has obtained the right to use any third party Software, including Open Source Software, and in particular the Group Companies have purchased a sufficient number of seat licenses or other required permissions or use rights for the Company IT Systems.
(g) Section 3.13(g) of the Company Schedules sets forth a list of all Open Source Software that has been used in, incorporated into, integrated or bundled with any Company Products, and for each such item of Open Source Software: (i) the name and version number of the applicable license; (ii) the distributor or website from which the Open Source Software was obtained; and (iii) the manner in which such Open Source Software is used in, incorporated into, integrated or bundled with any Company Products. The Group Companies do not use and have not used any Open Source Software or any modification or derivative thereof (A) in a manner that would grant or purport to grant to any Person any rights to or immunities under any of the Company Owned Intellectual Property, or (B) under any license requiring any Group Company to disclose or distribute any source code to any of the Company Products or otherwise included in the Company Owned Intellectual Property, to license or provide any such source code for the purpose of making derivative works, or to make available for redistribution to any Person any such source code at no or minimal charge.
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Section 3.14 Labor Matters.
(a) Since December 31, 2017, (i) none of the Group Companies (A) has or has had any material Liability for any arrears of wages, salaries, premiums, commissions, bonuses, fees or other compensation for services, or any penalty or other sums for failure to comply with any of the foregoing, and (B) has or has had any material Liability for any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Entity with respect to unemployment compensation benefits, social security, social insurances or obligations for any employees of any Group Company (other than routine payments to be made in the ordinary course of business); and (ii) the Group Companies have withheld all amounts required by applicable Law or by agreement to be withheld from wages, salaries, and other payments to employees of each Group Company.
(b) Since December 31, 2018, there has been no “mass layoff” or “plant closing” as defined by WARN related to any Group Company, and the Group Companies have not incurred any material Liability under WARN nor will they incur any material Liability under WARN as a result of the transactions contemplated by this Agreement. The Group Companies have not otherwise experienced any employment-related Liability with respect to COVID-19 that has been, or would reasonably be expected to be, material to the Group Companies taken as a whole.
(c) There are no material Proceedings pending or, to the Company’s knowledge, threatened against any Group Company by or on behalf of any current or former director, manager, officer, employee, individual independent contractor or other service providers or government or administrative authority, including any claims relating to actual or alleged harassment, discrimination, or retaliation, or similar tortious conduct, breach of contract, wrongful termination, defamation, intentional or negligent infliction of emotional distress, interference with contract or interference with actual or prospective economic disadvantage, salary differences, and social security contributions and taxes. No Group Company is bound by any material consent decree with, or citation by, any Governmental Entity relating to any employment practices.
(d) The Group Companies have promptly and thoroughly investigated all material, credible allegations of sexual harassment, or other discrimination or retaliation of which any the Group Companies were made aware. With respect to each such material allegation with potential merit, the Group Companies have taken prompt corrective action that is reasonably calculated to prevent further improper action. The Group Companies do not reasonably expect any material Liabilities with respect to any such allegations.
(e) Since December 31, 2017, (i) the Group Companies have complied in all material respects with all applicable Laws respecting labor, employment and employment practices, and (ii) no Group Company has been a party to or bound by any collective bargaining agreements or other Contracts with any labor organization, works council, labor union or other employee representative (collectively, “CBA”). Since December 31, 2017, there has been no actual or, to the Company’s knowledge, threatened unfair labor practice charges, material grievances, arbitrations, strikes, lockouts, work stoppages, slowdowns, picketing, handbilling or other material labor disputes against or affecting any Group Company. To the Company’s knowledge, since December 31, 2017, there have been no labor organizing activities with respect to any employees of any Group Company.
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(f) To the Company’s knowledge, no current or former employee or independent contractor of any Group Company is in material violation of any term of any employment agreement, nondisclosure agreement, common law nondisclosure obligation, fiduciary duty, noncompetition agreement, restrictive covenant or other obligation: (i) owed to any Group Company; or (ii) owed to any third party with respect to such person’s right to be employed or engaged by the applicable Group Company.
Section 3.15 Insurance. All material insurance policies of each Group Company (including fire, liability, workers’ compensation, property, cyber, casualty and other forms of insurance owned or held by any Group Company) are in full force and effect, all premiums due and payable thereon as of the date hereof have been paid in full as of the date hereof, and no claim by any Group Company is pending under any such policies as to which coverage has been denied or disputed, or rights reserved to do so, by the underwriters thereof. No Group Company is in material breach or default under the terms of any such insurance policy (including any such breach or default with respect to the giving of notice of claims) and, to the Company’s knowledge, no event has occurred which (with or without notice or the lapse of time or both) would constitute a material breach or material default. No written or, to the Company’s knowledge, oral notice of pending material premium increase, cancelation, termination or non-renewal has been received by any Group Company with respect to any such policy.
Section 3.16 Tax Matters.
(a) Each Group Company has prepared and timely filed all income and other material Tax Returns required to have been filed by it, all such Tax Returns are true, correct and complete in all material respects and prepared in compliance in all material respects with all applicable Law, and each Group Company has timely paid all income and other material Taxes required to have been paid by it regardless of whether or not shown on any such Tax Return.
(b) Each Group Company has timely withheld and paid to the appropriate Tax Authority all material amounts required to have been withheld and paid in connection with amounts paid or owing to any employee, individual independent contractor, other service providers, equity interest holder, or other third party and has otherwise complied in all material respects with all applicable Laws relating to such withholding, collection and payment of Taxes.
(c) No Group Company is currently the subject of a Tax Proceeding, and no Tax Proceeding with respect to any Group Company has been threatened in writing or, to the knowledge of the Company, is pending. No Group Company has been informed in writing of any deficiency, proposed adjustment, or assessment, in each case with respect to material Taxes, that has not been fully paid or finally resolved. All material deficiencies for Taxes asserted or assessed in writing against any Group Company have been fully and timely (taking into account applicable extensions) paid, settled or withdrawn, and, no such deficiency has been threatened or proposed in writing against any Group Company.
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(d) The amount of Taxes (including withholding Taxes) deferred by the Group Companies pursuant to Section 2302 of the CARES Act, Internal Revenue Service Notice 2020-65 or any related or similar order or declaration from any Governmental Entity (including without limitation the Presidential Memorandum, dated August 8, 2020, issued by the President of the United States), does not exceed the amount set forth in Section 3.16 of the Company Schedules more than a de minimis amount.
(e) No Group Company has consented to extend or waive the time in which any Tax may be assessed or collected by any Tax Authority, other than any such extensions or waivers that are no longer in effect or that were extensions of time to file Tax Returns obtained in the ordinary course of business. No Group Company is the beneficiary of any extension of time (other than an automatic extension of time not requiring the consent of the applicable Governmental Entity) within which to file any Tax Return not previously filed.
(f) No “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Law), private letter rulings, technical advice memoranda or similar agreements or rulings have been requested, entered into or issued by any Tax Authority with respect to a Group Company which agreement or ruling would be effective after the Closing Date.
(g) No Group Company is or has been a party to any “listed transaction” as defined in Section 6707A(c)(2) of the Code and Treasury Regulations Section 1.6011-4(b)(2).
(h) There are no Liens for Taxes on any assets of the Group Companies other than Permitted Liens.
(i) During the two (2)-year period ending on the date of this Agreement, no Group Company (or any predecessor thereof) was a distributing corporation or a controlled corporation in a transaction purported or intended to be governed by Section 355 of the Code.
(j) No Group Company (i) has been a member of an Affiliated Group (other than an Affiliated Group the common parent of which was a Group Company) or (ii) has any Liability for the Taxes of any Person (other than a Group Company) under Section 1.1502-6 of the Treasury Regulations (or any similar provision of state, local or non-U.S. Law), as a transferee or successor, by Contract (other than a Contract the principal purpose of which is not related to Taxes), or otherwise by operation of applicable Law.
(k) No written claims have ever been made by any Tax Authority in a jurisdiction where a Group Company does not file Tax Returns that such Group Company is or may be subject to taxation by that jurisdiction, which claims have not expired or been resolved or withdrawn.
(l) No Group Company is a party to any Tax allocation, Tax sharing, Tax receivable or Tax indemnity or similar agreements (other than commercial agreements entered into in the ordinary course of business that are not primarily related to Taxes), and no Group Company is a party to any joint venture, partnership or other arrangement that is treated as a partnership for U.S. federal income Tax purposes.
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(m) No Group Company has taken, has agreed to take, or intends to take, in each case, any action that would reasonably be expected to prevent or impede the transactions contemplated by this Agreement from qualifying for the Intended Tax Treatment. To the knowledge of the Group Companies, no facts or circumstances exist that would reasonably be expected to prevent or impede the transactions contemplated by this Agreement from qualifying for the Intended Tax Treatment.
Section 3.17 Brokers. Section 3.17 of the Company Schedules sets forth a true, correct and complete list of (a) all broker’s, finder’s, financial advisor’s, investment banker’s fees or commissions or similar payments payable to any broker, finder, financial advisor or investment banker in connection with the transactions contemplated by this Agreement or any Ancillary Document based upon arrangements made by or on behalf of any Group Company or their respective Affiliates, (b) all amounts due and payable to any Persons described in clause (a) in connection with, or as a result of, directly or indirectly, the execution, negotiation or delivery of this Agreement or any Ancillary Document, the performance of the covenants or obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby and (c) each Contract pursuant to which such amounts are due and payable. The Company has provided to Rotor true, complete, and correct copies of each Contract listed on Section 3.17 of the Company Schedules.
Section 3.18 Real and Personal Property.
(a) Owned Real Property. No Group Company owns any real property.
(b) Leased Real Property. Section 3.18(b) of the Company Schedules sets forth a true, correct and complete list (including street addresses) of all real property leased by any of the Group Companies (the “Leased Real Property”) and all Real Property Leases pursuant to which any Group Company is a tenant or landlord as of the date of this Agreement. The Company has delivered to Rotor a true and complete copy of each such Real Property Lease. Except in each case as would not be, or would not be reasonably expected to be, individually or in the aggregate, material to the Group Companies, taken as a whole, each Real Property Lease is in full force and effect and is a valid, legal and binding obligation of the applicable Group Company, enforceable in accordance with its terms against such Group Company and, to the Company’s knowledge, each other party thereto (subject to applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting generally the enforcement of creditors’ rights and subject to general principles of equity). Except in each case as would not be, or would not be reasonably expected to be, individually or in the aggregate, material to the Group Companies, taken as a whole, there is no material breach or default by any Group Company or, to the Company’s knowledge, any third party under any Real Property Lease, and, to the Company’s knowledge, no event has occurred which (with or without notice or lapse of time or both) would constitute a material breach or default or would permit termination of, or a modification or acceleration thereof by any party to such Real Property Leases. No Group Company has subleased, licensed or otherwise granted any Person the right to use or occupy such Leased Real Property or any portion thereof. To the Company’s knowledge, there are no disputes with respect to any Real Property Lease.
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(c) Personal Property. Each Group Company has good, marketable and indefeasible title to, or a valid leasehold interest in or license or right to use, all of the assets and properties of the Group Companies reflected in the Latest Balance Sheet or thereafter acquired by the Group Companies, except for assets disposed of in the ordinary course of business or as would not have, or would not have a Company Material Adverse Effect. The tangible assets and properties of the Group Companies are in good operating condition in all material respects (normal wear and tear excepted) and are fit, in all material respects, for use in the ordinary course of business, and no uninsurable damage has, since the date of the Latest Balance Sheet, occurred with respect to such assets and properties, except in each case as would not have a Company Material Adverse Effect.
Section 3.19 Transactions with Affiliates. Section 3.19 of the Company Schedules sets forth all Contracts between any Group Company, on the one hand, and any Pre-Closing Holder Related Party, on the other hand (all such Contracts set forth on Section 3.19 of the Company Disclosure Schedule, “Pre-Closing Holder Related Party Transactions”), other than: (a) any Contract with respect to a Pre-Closing Holder Related Party’s employment or services with any Group Company (including with respect to benefit plans and other ordinary course compensation), (b) any Ancillary Document and (c) any Contract entered into after the date hereof that are either permitted pursuant to Section 5.1(b) or entered into in accordance with Section 5.1(b). To the knowledge of the Company, there are no Contracts relating to any Group Company between (A) any officer, director, partner, member or manager of any Group Company, or any Affiliate of the foregoing, on the one hand, and (B) any direct or indirect equityholder of the Company or an Affiliate thereof, on the other hand. To the knowledge of the Company, no Pre-Closing Holder Related Party has been a party to any transaction with any Group Company since December 31, 2018, that would be required to be disclosed pursuant to Item 404 of Regulation S-K if the Company were a registrant described therein. To the knowledge of the Company, no Pre-Closing Holder Related Party (A) owns any interest in any asset used in the Business or in any competitor of the Business, or (B) owes any amount to, or is owed any amount by, any Group Company (other than ordinary course compensation, employee benefits, employee or director ordinary course expense reimbursement or otherwise or as set forth on Section 3.19 of the Company Schedules or transactions entered into after the date hereof that are permitted pursuant to Section 5.1(b) or entered into in accordance with Section 5.1(b)).
Section 3.20 Material Customers and Suppliers. Section 3.20 of the Company Schedules sets forth as of the date of this Agreement (i) the top ten (10) customers of the Company for the year ended December 31, 2020 (based upon aggregate consideration paid to the Company for goods or services rendered during such period) (collectively, the “Material Customers”), and (ii) the top ten (10) suppliers and unaffiliated contractors or subcontractors of the Group Companies for the year ended December 31, 2020 (based upon the aggregate consideration paid by the Group Companies for goods or services rendered during such period) (collectively, the “Material Suppliers”). To the knowledge of the Company, no Material Customer or Material Supplier intends to discontinue or materially alter its relationship with the Company, and the Company has not received any written (or, to the knowledge of the Company, oral) notice of any such intent.
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Section 3.21 Data Privacy and Security Requirements.
(a) The Group Companies are and, since December 31, 2018, have been in compliance in all material respects with all Data Privacy and Security Requirements. There have been no material security incidents since December 31, 2018 with respect to any Company IT Systems, Business Data, or Company Products or otherwise related to the Business. No Group Company has since December 31, 2018 received any notice from any Person, been required to give any notice to any Person, or been subject to any Proceeding, in each case with respect to any security incident or otherwise with respect to any breach or purported breach of any Data Privacy and Security Requirements by any Group Company. The Group Companies have implemented and maintain commercially reasonable security, disaster recovery and business continuity plans, procedures and facilities and have employed commercially reasonable efforts to protect the confidentiality, integrity and security of the Company IT Systems. The Group Companies take and have at all times taken commercially reasonable steps to prevent the introduction of any virus, worm, Trojan horse or similar disabling code or program (“Malicious Code”) or any computer code designed to disrupt, disable or harm in any manner the operation of any software or hardware, either automatically, with the passage of time or upon command, or otherwise that would prevent the same from performing substantially in accordance with their user specifications or functionality descriptions (collectively, “Contaminants”) into the Company IT Systems. The Company IT Systems are sufficient in capacity, functionality and operation for the operation of the Business. Since December 31, 2018, there has not been any failure with respect to any of the Company IT Systems that has not been remedied or replaced in all material respects.
(b) The Group Companies have implemented commercially reasonable safeguards designed to prevent unauthorized use or disclosure of confidential data and Personal Information in their possession and control. Except as would not be material to the Group Companies, taken as a whole, the Group Companies have rights necessary to Process Personal Information in the conduct of the Business as currently conducted.
(c) The Group Companies have all contractual rights necessary to process Business Data in the conduct of the Business as currently conducted.
(d) No Group Company is in material breach of any agreement pursuant to which a Group Company licenses, acquires, or purchases any material data.
Section 3.22 Compliance with International Trade & Anti-Corruption Laws.
(a) Neither the Group Companies, nor, to the Company’s knowledge, any of their Representatives or any other Persons in each case to the extent acting for or on behalf of any of the Group Companies is or has been, since December 31, 2017, (i) a Person named on any Sanctions and Export Control Laws-related list of designated Persons maintained by a Governmental Entity; (ii) located, organized or resident in a country or territory which is itself the subject of or target of any Sanctions and Export Control Laws; (iii) an entity owned, directly or indirectly, individually or in the aggregate, fifty percent or more by one or more Persons described in clauses (i) or (ii); (iv) otherwise engaging in dealings with or for the benefit of any Person described in clauses (i) – (iii) or any country or territory which is or has, since December 31, 2017, been the subject of or target of any Sanctions and Export Control Laws (at the time of this Agreement, the Crimea region of Ukraine, Cuba, Iran, North Korea, Venezuela, Sudan and Syria); or (v) otherwise in violation of Sanctions and Export Control Laws.
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(b) Neither the Group Companies nor, to the Company’s knowledge, any of their Representatives or any other Persons in each case to the extent acting for or on behalf of any of the Group Companies has (i) made, offered, promised, paid or received any unlawful bribes, kickbacks or other similar payments to or from any Person, (ii) made or paid any contributions, directly or indirectly, to a domestic or foreign political party or candidate, or (iii) otherwise made, offered, received, authorized, promised or paid any improper payment under any Anti-Corruption Laws.
(c) There have not been since December 31, 2017, any Proceedings, filings, disclosures, Orders, inquiries or governmental investigations alleging any such violations of Anti-Corruption Laws or Sanctions and Export Control Laws by the Group Companies or any of their Representatives or, to the Company’s knowledge, any other Persons in each case to the extent acting for or on behalf of any of the Group Companies, and, to the Company’s knowledge, no such Proceedings, filings, disclosures, Orders, inquiries or governmental investigations have been threatened or are pending and there are no circumstances likely to give rise to any such Proceedings, filings, disclosures, Orders, inquiries or governmental investigations.
Section 3.23 Information Supplied. None of the information supplied or to be supplied by the Group Companies expressly for inclusion or incorporation by reference: (a) in the Proxy Statement when it is mailed to stockholders of Rotor, and in the case of any amendment thereto or any Other Required Filing, at the time of such amendment or such Other Required Filing, 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; or (b) in the current report on Form 8-K filed after the Closing will contain any false or misleading statement in light of the circumstances under which they were made. Notwithstanding the foregoing, none of the Group Companies makes any representation, warranty or covenant with respect to any information supplied by or on behalf of the Rotor Parties or its Affiliates.
Section 3.24 Indebtedness; PPP Loans.
(a) Other than any Contract listed on Section 3.7(a)(xvii) of the Company Schedules, none of the Group Companies is party to a Contract for Indebtedness. The Company has provided to Rotor true, correct and complete copies of all definitive documents, applications and supporting materials provided to the lender or any Governmental Entity in connection with the application or receipt of the PPP Loans, including any amendments and corrections thereto.
(b) All material representations and certifications made by the Company to the PPP Lender or any Governmental Entity in connection with the PPP Loans were accurate, true and correct in all material respects when made. The Company Group has complied in all material respects with the terms and conditions of the PPP and, without limiting the foregoing, the Group Companies utilized the proceeds of the PPP Loans solely for permitted purposes under the PPP.
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Section 3.25 Government Contracts
(a) Section 3.7(a)(vi) of the Company Schedules sets forth a list, as of the date of this Agreement, of each Government Contract to which any Group Company is a party. The Company has made available to Rotor each of the Government Contracts listed on Section 3.7(a)(vi) of the Company Schedules (including all related task orders and delivery orders) and each outstanding Government Bid which has not been accepted or rejected since January 1, 2021.
(b) With respect to each such Government Contract and Government Bid referenced in Section 3.25(a), or for each Government Contract for which final payment has been received by any Group Company in the past three (3) years, (i) all representations and certifications applicable to such Government Contracts and associated bids or proposals were accurate in all material respects when made and have been updated as legally required; (ii) each Group Company has complied in all material respects with all terms and conditions of such Government Contract; and (iii) the Company complied in all material respects with all requirements of applicable Law.
(c) No Group Company has credible evidence (i) that a Principal, Employee, Agent, or Subcontractor (as such terms are defined in FAR 52.203-13(a)) of the Company has committed a violation of federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code or a violation of the civil False Claims Act; or (ii) of any significant overpayment(s) on any Government Contracts, and the Company has not conducted, and is not currently conducting, an investigation to determine whether credible evidence exists of such a violation or overpayment. During the last three (3) years, no Group Company has conducted or initiated any internal investigation or made a voluntary disclosure to any Governmental Entity with respect to any alleged material irregularity, misstatement or omission arising under or relating to a Government Contract or Government Bid that would reasonably be expected to give rise to (A) liability under the federal False Claims Act, (B) a claim for price adjustment under 41 U.S.C. chapter 35, Truthful Cost or Pricing Data, or (C) any request for a reduction in the price of any Government Contract.
(d) All invoices submitted by any Group Company with respect to Government Contracts were accurate in all material respects, and any required adjustments have been promptly credited and reported to the applicable customer and recorded in the financial records of the relevant Group Company.
(e) The Company qualifies as a “small business” pursuant to the Small Business Innovation Research program eligibility requirements. No Group Company has represented itself as a small disadvantaged business, a woman-owned small business, a veteran owned small business, a service disabled veteran owned small business, a HUBZone small business, or a Section 8(a) business in connection with any Government Bid or Government Contract, nor claimed nor been awarded a Government Contract because of such status or other preferred bidder status.
(f) Neither a Group Company nor any of its respective Principals (as that term is defined by 48 C.F.R. § 2.101), nor to the knowledge of the Company, any employee of any Group Company, has been suspended, debarred, or otherwise excluded from contracting with a Governmental Entity or been notified in writing of any proposed suspension, debarment or exclusion or received any show cause notice from a suspending, debarring or excluding official.
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(g) In the last three (3) years, no Group Company entity has received or been provided written (nor to the Company’s knowledge, any oral) cure notice, show cause notice, notice of investigation or audit by a Governmental Entity (other than routine audits). Neither any Governmental Entity nor any prime contractor, subcontractor or other Person or entity has notified any Group Company, in writing, or, to the Knowledge of the Company, orally, that the Company has breached or violated in any material respect any Law, certification, representation, clause, provision or requirement pertaining to any Government Contract. To the knowledge of the Company, there are no facts that would reasonably be expected to lead to the institution of an investigation or audit of any Group Company by a Governmental Entity related to performance of any Government Contract to which any Group Company is or has been a party (other than routine audits). No Company Group entity has received any written notice or, to the Company’s knowledge, oral notice of termination for convenience or default of any Government Contract, in whole or in part and, to the Company’s knowledge, no such termination has been threatened.
(h) In the last three (3) years, there have been (i) no outstanding material claims, contract disputes, or requests for equitable adjustment against any Group Company by any Governmental Entity or by any prime contractor, higher or lower tier subcontractor, vendor or other third party arising under or relating to any Government Contract and (ii) no outstanding material disputes between any Group Company on the one hand, and a Governmental Entity on the other hand, under the Contract Disputes Act or between any Group Company on the one hand, and any prime contractor, higher or lower tier subcontractor, vendor or other third party on the other hand, arising under or relating to any such Government Contract or Government Bid.
(i) In the last three (3) years, no costs incurred by any Group Company in excess of $250,000 have been formally disallowed as a result of a written finding or determination by a Governmental Entity, and no Governmental Entity has withheld or setoff or attempted to withhold or setoff, an amount in excess of $250,000 otherwise due or payable to the Company under any Government Contract.
Section 3.26 Investigation; No Other Representations.
(a) The Company, on its own behalf and on behalf of its Representatives, acknowledges, represents, warrants and agrees that (i) it has conducted its own independent review and analysis of, and, based thereon, has formed an independent judgment concerning, the business, assets, condition, operations and prospects of the Rotor Parties and (ii) it has been furnished with or given access to such documents and information about the Rotor Parties and their respective businesses and operations as it and its Representatives have deemed necessary to enable it to make an informed decision with respect to the execution, delivery and performance of this Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby.
(b) In entering into this Agreement and the Ancillary Documents to which it is a party, the Company has relied solely on its own investigation and analysis and the representations and warranties expressly set forth in Article 4 and in the Ancillary Documents to which it is a party and no other representations or warranties of any Rotor Party or any other Person, either express or implied, and the Company, on its own behalf and on behalf of its Representatives, acknowledges, represents, warrants and agrees that, except for the representations and warranties expressly set forth in Article 4 and in the Ancillary Documents to which it is a party, no Rotor Party or any other Person makes or has made any representation or warranty, either express or implied, in connection with or related to this Agreement, the Ancillary Documents or the transactions contemplated hereby or thereby.
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Section 3.27 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES. NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE ROTOR PARTIES OR ANY OF THEIR RESPECTIVE REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL DATA), EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS Article 3 OR THE ANCILLARY DOCUMENTS, NONE OF THE COMPANY OR ANY OTHER PERSON MAKES, AND THE COMPANY EXPRESSLY DISCLAIMS (ON HIS, HER OR ITS OWN BEHALF AND ON BEHALF OF HIS, HER OR ITS RESPECTIVE REPRESENTATIVES) ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO THE CONDITION, VALUE OR QUALITY OF THE COMPANY STOCK OR BUSINESSES OR ASSETS OF ANY OF THE GROUP COMPANIES, AND THE COMPANY SPECIFICALLY DISCLAIMS, EXCEPT AS EXPRESSLY SET FORTH IN THIS Article 3, ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THEIR ASSETS, ANY PART THEREOF, THE WORKMANSHIP THEREOF, AND THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT. EACH OF THE ROTOR PARTIES SHALL RELY SOLELY ON ITS OWN EXAMINATION AND INVESTIGATION THEREOF AND THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS Article 3 AND THE ANCILLARY DOCUMENTS.
Article
4
REPRESENTATIONS AND WARRANTIES RELATING TO THE ROTOR PARTIES
Except as set forth (a) subject to Section 8.8, on the Rotor Schedules or (b) in any Rotor SEC Reports publicly available prior to the date hereof (but excluding any disclosures in any “risk factors” section that do not constitute statements of fact, disclosures in any forward-looking statements disclaimers and other disclosures that are generally cautionary, predictive or forward-looking in nature) (it being understood, however, that nothing disclosed in any Rotor SEC Report will qualify or be deemed to qualify the Rotor Fundamental Representations), each Rotor Party hereby represents and warrants on behalf of itself to the Company as of the date hereof and as of the Closing Date, as follows:
Section 4.1 Organization and Qualification. Such Rotor Party is a corporation, limited liability company or other business entity duly organized or formed, as applicable, validly existing and in good standing (or the equivalent thereof, if applicable, in each case, with respect to the jurisdictions that recognize the concept of good standing or any equivalent thereof) under the Laws of its jurisdiction of formation or organization (as applicable), except where the failure to be in good standing (or the equivalent thereof) would not have a Rotor Material Adverse Effect.
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Section 4.2 Authority. Such Rotor Party has the requisite corporate, limited liability company or other similar power and authority to execute and deliver this Agreement, each of the Ancillary Documents to which such Rotor Party is or will be a party, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. Subject to the receipt of the Rotor Stockholder Approval and the Merger Sub Sole Stockholder Approval, the execution and delivery of this Agreement, the Ancillary Documents to which such Rotor Party is or will be a party and the consummation of the transactions contemplated hereby and thereby have been (or, in the case of any Ancillary Document entered into after the date of this Agreement, will be upon execution thereof) duly authorized by all necessary corporate action on the part of such Rotor Party. This Agreement has been and each Ancillary Document to which such Rotor Party is or will be a party has been or will be upon execution thereof, duly and validly executed and delivered by such Rotor Party and constitutes or will constitute, upon execution thereof, as applicable, a valid, legal and binding agreement of such Rotor Party (assuming this Agreement has been and the Ancillary Documents to which such Rotor Party is or will be a party are or will be upon execution thereof, as applicable, duly authorized, executed and delivered by the other Persons party hereto or thereto, as applicable), enforceable against such Rotor Party in accordance with their terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium or other Laws affecting generally the enforcement of creditors’ rights and subject to general principles of equity).
Section 4.3 Consents and Requisite Government Approvals; No Violations. Assuming the truth and accuracy of the representations and warranties set forth in Section 3.5 (and assuming all Consents referred to in such sections (or required to be disclosed in the corresponding sections of the Company Schedules) are made or obtained), no Consent of any Governmental Entity is necessary in connection with the execution, delivery or performance of this Agreement or the Ancillary Documents to which such Rotor Party is or will be a party or bound, or the consummation by such Rotor Party of the transactions contemplated hereby and thereby, except for (a) compliance with and filings under the HSR Act, (b) compliance with and filings under any applicable Securities Laws, including the Proxy Statement, (c) the Rotor Stockholder Approval, or (d) those the failure of which to obtain or make would not have a Rotor Material Adverse Effect. Neither the execution, delivery and performance by such Rotor Party of this Agreement nor the Ancillary Documents to which such Rotor Party is or will be a party nor the consummation by such Rotor Party of the transactions contemplated hereby and thereby will, directly or indirectly (with or without due notice or lapse of time or both) (i) conflict with or result in any breach of any provision of the Governing Documents of such Rotor Party, (ii) result in a violation or breach of, or constitute a default or give rise to any right of termination, Consent, cancelation, amendment, modification, suspension, revocation or acceleration under, any of the terms, conditions or provisions of, or the loss of any benefits under, any Contract to which such Rotor Party is a party or by which any such Rotor Party or any of its properties or assets are bound, (iii) violate, or constitute a breach under, any Order or applicable Law to which any such Rotor Party or any of its properties or assets are bound or (iv) result in the creation of any Lien upon any of the assets or properties (other than any Permitted Liens) of such Rotor Party, except in the case of clauses (ii) though (iv) above, as would not have a Rotor Material Adverse Effect.
Section 4.4 Brokers. Section 4.4 of the Rotor Schedules sets forth a true, correct and complete list of (a) all broker’s, finder’s, financial advisor’s, investment banker’s fees or commissions or similar payments payable to any broker, finder, financial advisor or investment banker in connection with the transactions contemplated by this Agreement or any Ancillary Document based upon arrangements made by or on behalf of the Rotor Parties or any of their respective Affiliates for which any Rotor Party or Group Company may become liable, (b) all amounts due and payable to any Persons described in clause (a) in connection with, or as a result of, directly or indirectly, the execution, negotiation or delivery of this Agreement or any Ancillary Document, the performance of the covenants or obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby and (c) each Contract pursuant to which such amounts are due and payable. Rotor has provided to the Company true, complete and correct copies of each Contract listed on Section 4.4 of the Rotor Schedules.
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Section 4.5 Financing. Attached hereto as Exhibit F is a true, correct and complete copy of the form of Subscription Agreement, dated as of the date hereof, pursuant to which, and on the terms and subject to the conditions therein, the PIPE Investors have agreed to provide the PIPE Financing to Rotor in connection with the transactions contemplated by this Agreement. Each Subscription Agreement is a legal, valid, and binding agreement of Rotor and, to the knowledge of Rotor, the other parties thereto. As of the date hereof, each commitment of PIPE Financing is in full force and effect, and no commitment of PIPE Financing has been withdrawn, rescinded, or terminated. As of the date hereof, Rotor is not in material breach of any of the terms or conditions in the Subscription Agreements nor has any PIPE Investor party thereto notified Rotor of its own material breach of any of the terms or conditions under any Subscription Agreement. As of the date hereof, no event has occurred which, with or without notice, lapse of time or both, would constitute a material breach by Rotor of the terms or conditions in the Subscription Agreements. There are no conditions precedent or contingencies to the obligations of the parties under any Subscription Agreement to fund the PIPE Financing Amount, other than as set forth in the Subscription Agreements. There are no other agreements, side letters or arrangements between Rotor and any PIPE Investor relating to any Subscription Agreement that would adversely affect the obligation of the PIPE Investors to contribute to Rotor the applicable portion of the PIPE Financing set forth in the Subscription Agreements, and, as of the date hereof, Rotor does not know of any facts or circumstances that would reasonably be expected to result in any of the conditions set forth in any Subscription Agreement not being satisfied, or the PIPE Financing not being available to Rotor, immediately following the Closing.
Section 4.6 Information Supplied. None of the information supplied or to be supplied by or on behalf of such Rotor Party expressly for inclusion or incorporation by reference: (a) in the Proxy Statement, at the time it is mailed to the Pre-Closing Rotor Holders, and in the case of any amendment thereto or any Other Required Filing, at the time of such amendment or any Other Required Filing is made, 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; or (b) in the current report on Form 8-K filed after the Closing will contain any false or misleading statement in light of the circumstances under which they were made. Notwithstanding the foregoing, such Rotor Party makes no representation, warranty or covenant with respect to any information supplied by or on behalf of the Company or its Affiliates.
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Section 4.7 Capitalization of the Rotor Parties.
(a) Section 4.7(a) of the Rotor Schedules sets forth as of the date hereof a true, correct, and complete statement of the number and class or series (as applicable) of the issued and outstanding Equity Securities of Rotor. All outstanding Rotor Equity Securities have been duly authorized and validly issued and are fully paid and non-assessable. Such Equity Securities (i) were not issued in violation of the Governing Documents of Rotor and (ii) are not subject to any preemptive rights, call option, right of first refusal, subscription rights, transfer restrictions or similar rights of any Person (other than transfer restrictions under applicable Securities Law or under the Governing Documents of Rotor) and were not issued in violation of any preemptive rights, call option, right of first refusal, subscription rights, transfer restrictions or similar rights of any Person. Except for this Agreement, the Ancillary Documents, as set forth in Rotor’s Governing Documents (including the Rotor Stockholder Redemption) and the transactions contemplated hereby and thereby, there are no outstanding (A) equity appreciation, phantom equity, profit participation rights, or (B) options, restricted stock, phantom stock, warrants, purchase rights, subscription rights, conversion rights, exchange rights, calls, puts, rights of first refusal or first offer or other Contracts that would require Rotor to issue, sell or otherwise cause to become outstanding or to acquire, repurchase or redeem any Equity Securities or securities convertible into or exchangeable for Equity Securities of Rotor, and, except as expressly contemplated by this Agreement the Ancillary Documents, and Rotor’s Governing Documents there is no obligation of Rotor, to issue, sell or otherwise cause to become outstanding or to acquire, repurchase or redeem any Equity Securities. There are no Equity Securities issued by or to which Rotor is a party containing anti-dilution or similar provisions that will be triggered by the consummation of the transactions contemplated by this Agreement or the Ancillary Documents, in each case, that have not been or will not be waived on or prior to the Effective Time.
(b) As of the date hereof, Rotor has no Subsidiaries other than Merger Sub and does not own, directly or indirectly, any Equity Securities in any Person other than Merger Sub.
Section 4.8 SEC Filings. Rotor has timely filed or furnished all statements, prospectuses, registration statements, forms, reports and documents required to be filed or furnished by it prior to the date of this Agreement with the SEC pursuant to Federal Securities Laws since its incorporation (collectively, and together with any exhibits and schedules thereto and other information incorporated therein, and as they have been supplemented, modified or amended since the time of filing, the “Rotor SEC Reports”), and, as of the Closing, will have filed or furnished all other statements, prospectuses, registration statements, forms, reports and other documents required to be filed or furnished by it subsequent to the date of this Agreement with the SEC pursuant to Federal Securities Laws through the Closing (collectively, and together with any exhibits and schedules thereto and other information incorporated therein, and as they have been supplemented, modified or amended since the time of filing, but excluding the Proxy Statement, the “Additional Rotor SEC Reports”). Each of the Rotor SEC Reports, as of their respective dates of filing, and as of the date of any amendment or filing that superseded the initial filing, complied, and each of the Additional Rotor SEC Reports, as of their respective dates of filing, and as of the date of any amendment or filing that superseded the initial filing, will comply, in all material respects with the applicable requirements of the Federal Securities Laws (including the Sarbanes-Oxley Act and any rules and regulations promulgated thereunder) applicable to the Rotor SEC Reports or the Additional Rotor SEC Reports. As of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received from the SEC with respect to the Rotor SEC Reports. The Rotor SEC Reports did not at the time they were filed with the SEC (except to the extent that information contained in any Rotor SEC Report has been superseded by a later timely filed Rotor SEC Report) 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 the light of the circumstances under which they were made, not misleading.
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Section 4.9 Trust Account. The funds held in the Trust Account are invested in U.S. government securities or money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act and held in trust pursuant to that certain Investment Management Trust Agreement, dated January 14, 2021, by and between Rotor and Continental Stock Transfer & Trust Company, as trustee (the “Trustee”) (the “Trust Agreement”). There are no separate agreements, 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 Rotor SEC Reports to be inaccurate in any material respect or, to Rotor’s knowledge, that would entitle any Person to any portion of the funds in the Trust Account (other than (a) in respect of deferred underwriting commissions or Taxes, (b) Pre-Closing Rotor Holders who shall have elected to redeem their Rotor Class A Shares pursuant to the Governing Documents of Rotor or (c) if Rotor fails to complete a business combination as contemplated by a Business Combination Proposal within the allotted time period and liquidates the Trust Account, subject to the terms of the Trust Agreement, Rotor (in limited amounts to permit Rotor to pay the expenses of the Trust Account’s liquidation and dissolution) and then Rotor’s public stockholders). Prior to the Closing, none of the funds held in the Trust Account are permitted to be released, except in the circumstances described in the Governing Documents of Rotor and the Trust Agreement. The Trust Agreement is valid, binding and in full force and effect and enforceable in accordance with its terms and has not been amended or modified. As of the date hereof, the Trust Account consists of no less than $276,000,000. Prior to the Closing, none of the funds held in the Trust Account may be released except for the matters described in the second sentence of Section 8.18.
Section 4.10 Absence of Changes. Since its inception and ending on the date of this Agreement, (a) no Rotor Material Adverse Effect has occurred, and (b) except as expressly required by this Agreement, any Ancillary Document or in connection with the transactions contemplated hereby and thereby, (i) the Rotor Parties have conducted their business in the ordinary course and (ii) no Rotor Party has taken any action that, if taken during the period from the date of this Agreement until the Closing, would require the consent of the Company pursuant to Section 5.13.
Section 4.11 Litigation. There is (and since its incorporation there has been) no Proceeding pending or, to Rotor’s knowledge, threatened against or involving (a) any Rotor Party, (b) any of its respective properties or assets, or (c) any of its respective managers, officers, directors or employees (in their capacities as such), except as would not have a Rotor Material Adverse Effect. No Rotor Party is subject to any outstanding Order that is, or would reasonably be expected to be, material to the Rotor Parties. There are no material Proceedings by a Rotor Party pending, or which a Rotor Party has commenced preparations to initiate, against any other Person.
Section 4.12 Compliance with Applicable Law. Each Rotor Party is (and since its incorporation or formation, as applicable, has been) in compliance with all applicable Laws, except as would not have a Rotor Material Adverse Effect.
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Section 4.13 Internal Controls; Listing; Financial Statements.
(a) Except as not required in reliance on exemptions from various reporting requirements by virtue of Rotor’s status as an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, or “smaller reporting company” within the meaning of the Exchange Act, since its incorporation, (i) Rotor has established and maintained a system of internal controls over financial reporting (as defined in Rule 13a-15 and Rule 15d-15 under the Exchange Act) sufficient to provide reasonable assurance regarding the reliability of Rotor’s financial reporting and the preparation of Rotor’s financial statements for external purposes in accordance with GAAP and (ii) Rotor has established and maintained disclosure controls and procedures (as defined in Rule 13a-15 and Rule 15d-15 under the Exchange Act) designed to ensure that material information relating to Rotor is made known to Rotor’s principal executive officer and principal financial officer by others within Rotor.
(b) Rotor has not taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.
(c) Rotor is in compliance in all material respects with all applicable listing and corporate governance rules and regulations of NYSE. The Rotor Class A Shares are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on NYSE under the symbol “ROT”, the Rotor Warrants are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on NYSE under the symbol “ROT.WS” and the Rotor Units are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on NYSE under the symbol “ROT.U”. There is no material Proceeding pending or, to the knowledge of Rotor, threatened against Rotor by NYSE or the SEC with respect to any intention by such entity to deregister Rotor Class A Shares, the Rotor Warrants or the Rotor Units or prohibit or terminate the listing of Rotor Class A Shares, the Rotor Warrants or the Rotor Units on NYSE. Neither Rotor nor any of its Affiliates has taken any action that is designed to terminate the registration of Rotor Class A Shares under the Exchange Act.
(d) The Rotor SEC Reports contain true, correct, and complete copies of the applicable Rotor Financial Statements. The Rotor Financial Statements (i) fairly present in all material respects the financial position of Rotor as at the respective dates thereof, and the results of its operations, stockholders’ equity and cash flows for the respective periods then ended (subject, in the case of any unaudited interim financial statements, to normal year-end audit adjustments (none of which is expected to be material) and the absence of footnotes), (ii) were prepared in conformity with GAAP applied on a consistent basis during the periods involved (except, in the case of any audited financial statements, as may be indicated in the notes thereto and subject, in the case of any unaudited financial statements, to normal year-end audit adjustments (none of which is expected to be material) and the absence of footnotes), (iii) in the case of the audited Rotor Financial Statements, were audited in accordance with the standards of the PCAOB and (iv) comply in all material respects with the applicable accounting requirements and with the rules and regulations of the SEC, the Exchange Act and the Securities Act in effect as of the respective dates thereof (including Regulation S-X or Regulation S-K, as applicable).
(e) Since its incorporation, Rotor has not received any written notification of any (a) “significant deficiency” in the internal controls over financial reporting of Rotor, (b) “material weakness” in the internal controls over financial reporting of Rotor or (c) fraud, whether or not material, that involves management or other employees of Rotor who have a significant role in the internal controls over financial reporting of Rotor.
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Section 4.14 No Undisclosed Liabilities. Except for Liabilities (a) set forth in Section 4.13 of the Rotor Schedules, (b) incurred in connection with the negotiation, preparation or execution of this Agreement or any Ancillary Documents, the performance of its covenants and agreements in this Agreement or any Ancillary Document or the consummation of the transactions contemplated hereby or thereby, (c) set forth or disclosed in the Rotor Financial Statements included in the Rotor SEC Reports, (d) that have arisen since the date of the most recent balance sheet included in the Rotor SEC Reports in the ordinary course of business (none of which is a Liability for breach of contract, breach of warranty, tort, infringement, misappropriation or violation of Law), (e) incurred in accordance with Section 5.5(d) or as expressly permitted by Section 5.13, (f) that would not be required to be set forth on a balance sheet prepared in accordance with GAAP; provided, that such Liabilities are not material, individually or in the aggregate, to Rotor or (g) that are not and would not reasonably be expected to be, individually or in the aggregate, material to Rotor, Rotor has no Liabilities.
Section 4.15 Tax Matters.
(a) Rotor has prepared and timely filed all income and other material Tax Returns required to have been filed by it, all such Tax Returns are true, correct and complete in all material respects and prepared in compliance in all material respects with all applicable Law, and Rotor has timely paid all income and other material Taxes required to have been paid by it regardless of whether or not shown on any such Tax Return.
(b) Rotor has timely withheld and paid to the appropriate Tax Authority all material amounts required to have been withheld and paid in connection with amounts paid or owing to any employee, individual independent contractor, other service providers, equity interest holder, or other third party and has otherwise complied in all material respects with all applicable Laws relating to such withholding, collection and payment of Taxes.
(c) Rotor is not currently the subject of a Tax Proceeding, and no Tax Proceeding with respect to Rotor has been threatened in writing or, to the knowledge of Rotor, is pending. Rotor has not been informed in writing of any deficiency, proposed adjustment, or assessment, in each case with respect to material Taxes, that has not been fully paid or finally resolved. All material deficiencies for Taxes asserted or assessed in writing against Rotor have been fully and timely (taking into account applicable extensions) paid, settled or withdrawn, and no such deficiency has been threatened or proposed in writing against Rotor.
(d) Rotor has not consented to extend or waive the time in which any Tax may be assessed or collected by any Tax Authority, other than any such extensions or waivers that are no longer in effect or that were extensions of time to file Tax Returns obtained in the ordinary course of business. Rotor is not the beneficiary of any extension of time (other than an automatic extension of time not requiring the consent of the applicable Governmental Entity) within which to file any Tax Return not previously filed.
(e) No “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. income Law), private letter rulings, technical advice memoranda or similar agreements or rulings have been requested, entered into or issued by any Tax Authority with respect to Rotor which agreement or ruling would be effective after the Closing Date.
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(f) Rotor is not and has not been a party to any “listed transaction” as defined in Section 6707A(c)(2) of the Code and Treasury Regulations Section 1.6011-4(b)(2).
(g) There are no Liens for Taxes on any assets of Rotor other than Permitted Liens.
(h) During the two (2)-year period ending on the date of this Agreement, no Rotor Party (or any predecessor thereof) was a distributing corporation or a controlled corporation in a transaction purported or intended to be governed by Section 355 of the Code.
(i) Rotor (i) has not been a member of an Affiliated Group (other than an Affiliated Group the common parent of which was Rotor) and (ii) does not have any Liability for the Taxes of any Person under Section 1.1502-6 of the Treasury Regulations (or any similar provision of state, local or non-U.S. Law) as a transferee or successor, by Contract (other than a Contract the principal purpose of which is not related to Taxes), or otherwise by operation of applicable Law.
(j) No written claims have ever been made by any Tax Authority in a jurisdiction where Rotor does not file Tax Returns that Rotor is or may be subject to taxation by that jurisdiction, which claims have not expired or been resolved or withdrawn.
(k) Rotor is not a party to any Tax allocation, Tax sharing, Tax receivable or Tax indemnity or similar agreements (other than commercial agreements entered into in the ordinary course of business that are not primarily related to Taxes), and Rotor is not a party to any joint venture, partnership or other arrangement that is treated as a partnership for U.S. federal income Tax purposes.
(l) No Rotor Party has taken, has agreed to take, or intends to take, in each case, any action that would reasonably be expected to prevent or impede the transactions contemplated by this Agreement from qualifying for the Intended Tax Treatment. To the knowledge of the Rotor Parties, no facts or circumstances exist that would reasonably be expected to prevent or impede the transactions contemplated by this Agreement from qualifying for the Intended Tax Treatment.
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Section 4.16 Employees. Other than any officers as described in the Rotor SEC Reports, Rotor and Merger Sub have never employed any employees. Other than amounts due as set forth in the Rotor SEC Reports or for reimbursement of any out-of-pocket expenses incurred by Rotor’s officers and directors in connection with activities on Rotor’s behalf in an aggregate amount not in excess of the amount of cash held by Rotor outside of the Trust Account and other than any continuing indemnification obligations with respect to its directors and officers pursuant to Rotor’s form of indemnification agreement filed with the Rotor SEC Reports publicly available prior to the date hereof, Rotor has no unsatisfied material liability with respect to any employee, officer or director. Rotor and Merger Sub have never and do not currently maintain, sponsor, contribute to or have any direct liability under any employee benefit plan (as defined in Section 3(3) of ERISA), nonqualified deferred compensation plan subject to Section 409A of the Code, bonus, stock option, stock purchase, restricted stock, incentive, deferred compensation, retiree medical or life insurance, supplemental retirement, severance, change in control, fringe benefit, sick pay and vacation plans or arrangements or other employee benefit plans, programs or arrangements. Neither the execution and delivery of this Agreement nor the other Ancillary Documents nor the consummation of the transactions contemplated by this Agreement will (i) result in any payment by any Rotor Party or any Group Company (including severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due to any director, officer or employee of Rotor, or (ii) result in the acceleration of the time of payment or vesting of any such benefits. The transactions contemplated by this Agreement shall not be the direct or indirect cause of any amount paid or payable by the Rotor, Merger Sub or any affiliate being classified as an “excess parachute payment” under Section 280G of the Code or the imposition of any additional Tax under Section 409A(a)(1)(B) of the Code. There is no contract, agreement, plan or arrangement to which Rotor or Merger Sub is a party which requires payment by any party of a Tax gross-up or Tax reimbursement payment to any person.
Section 4.17 Opinion of Financial Advisor. The Special Committee has received an opinion of Houlihan Lokey Capital, Inc. to the effect that, as of the date of thereof and subject to the assumptions, qualifications, limitations and other matters set forth therein, the Base Merger Consideration to be paid by Rotor in the Merger is fair, from a financial point of view, to Rotor.
Section 4.18 Rotor Transaction Expenses. Rotor’s good faith estimate of the anticipated Rotor Transaction Expenses as of the Closing are set forth on Section 4.18 of the Rotor Schedules.
Section 4.19 No Prior Operations of Merger Sub. Merger Sub was formed solely for the purpose of engaging in the transactions contemplated by this Agreement and has not engaged in any business activities or conducted any operations or incurred any obligation or liability, other than those incident to its existence or as contemplated by this Agreement.
Section 4.20 Not Foreign Person. Rotor hereby represents that (a) it is not a “foreign person,” as defined in Section 721 of the U.S. Defense Production Act of 1950, as amended, including any implementing regulations thereof (the “DPA”) and (b) it does not permit any foreign person affiliated with Rotor, whether affiliated as a limited partner or otherwise, to obtain any of the following with respect to the Company: (i) control (as defined in the DPA) of the Company, including the power to determine, direct or decide any important matters for the Company; (ii) access to any material nonpublic technical information (as defined in the DPA) in the possession of the Company (which shall not include financial information about the Company), including access to any information not already in the public domain that is necessary to design, fabricate, develop, test, produce, or manufacture Company products, including processes, techniques, or methods; (iii) membership or observer rights on the Company Board or the right to nominate an individual to a position on the Company Board; or (iv) any involvement (other than through voting of shares) in substantive decision-making of the Company regarding (x) the use, development, acquisition or release of any Company “critical technology” (as defined in the DPA); (y) the use, development, acquisition, safekeeping, or release of “sensitive personal data” (as defined in the DPA) of U.S. citizens maintained or collected by the Company, or (z) the management, operation, manufacture, or supply of “covered investment critical infrastructure” (as defined in the DPA).
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Section 4.21 Investigation; No Other Representations.
(a) Such Rotor Party, on its own behalf and on behalf of its Representatives, acknowledges, represents, warrants and agrees that (i) it has conducted its own independent review and analysis of, and, based thereon, has formed an independent judgment concerning, the business, assets, condition, operations and prospects of the Group Companies (including the Business) and (ii) it has been provided with certain documents and information about the Group Companies and their respective businesses and operations as it and its Representatives have deemed necessary to enable it to make an informed decision with respect to the execution, delivery and performance of this Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby.
(b) In entering into this Agreement and the Ancillary Documents to which it is a party, such Rotor Party has relied solely on its own investigation and analysis and the representations and warranties expressly set forth in Article 3 and the Ancillary Documents to which it is a party and no other representations or warranties of the Company or any other Person, either express or implied, and such Rotor Party, on its own behalf and on behalf of its Representatives, acknowledges, represents, warrants and agrees that, except for the representations and warranties expressly set forth in Article 3 and in the Ancillary Documents to which it is a party, none of the Company or any other Person makes or has made any representation or warranty, either express or implied, in connection with or related to this Agreement, the Ancillary Documents or the transactions contemplated hereby or thereby.
Section 4.22 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES. NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE COMPANY OR ITS REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL DATA), EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS Article 4 AND THE ANCILLARY DOCUMENTS, NO ROTOR PARTY OR ANY OTHER PERSON MAKES, AND EACH ROTOR PARTY EXPRESSLY DISCLAIMS (ON ITS OWN BEHALF AND ON BEHALF OF ITS REPRESENTATIVES) ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO THE CONDITION, VALUE OR QUALITY OF THE EQUITY SECURITIES, BUSINESSES OR ASSETS OF ANY ROTOR PARTY, AND THE COMPANY SHALL RELY SOLELY ON ITS OWN EXAMINATION AND INVESTIGATION THEREOF AND THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS Article 4 AND THE ANCILLARY DOCUMENTS.
Article
5
COVENANTS
Section 5.1 Conduct of Business of the Group Companies.
(a) From and after the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms, the Company shall, and the Company shall cause its Subsidiaries to, except (i) as required by or expressly permitted by this Agreement or any Ancillary Document (including the Pre-Closing Financing), (ii) as required by applicable Law (including any Pandemic Response Law), (iii) for any commercially reasonable actions taken (or not taken) by a Group Company to mitigate the risk on any of the Group Companies of COVID-19, (iv) as set forth on Section 5.1 of the Company Schedules or (v) as consented to in writing by Rotor, (A) operate the business of the Group Companies in the ordinary course of business; provided that any action taken, or omitted to be taken, that is required by applicable Law shall be deemed to be in the ordinary course of business and (B) use commercially reasonable efforts to maintain and preserve intact the business organization, assets, properties, goodwill and relationships with the officers, employees, suppliers, partners, customers and other material business relations of the Group Companies.
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(b) Without limiting the generality of the foregoing, from and after the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms, the Company shall, and the Company shall cause its Subsidiaries to, except as (i) required by or expressly permitted by this Agreement or any Ancillary Document (including the Pre-Closing Financing), (ii) as required by applicable Law (including any Pandemic Response Law), (iii) for any commercially reasonable actions taken (or not taken) by a Group Company to mitigate the risk on any of the Group Companies of COVID-19, (iv) as set forth on Section 5.1 of the Company Schedules or as consented to in writing by Rotor (such consent, other than in the case of Sections 5.1(b)(i), (ii), (iii), (x), (xiii), (xiv), (xvi) and (xvii) to the extent related to the immediately foregoing matters, not to be unreasonably withheld, conditioned or delayed), not do any of the following:
(i) declare, set aside, make or pay a dividend on, or make any other distribution or payment in respect of, any Group Company’s Equity Securities, or repurchase, redeem, or otherwise acquire, any outstanding Equity Securities of any Group Company, other than any redemptions of outstanding Equity Securities of any Group Company held by an employee thereof in connection with his or her termination of employment, but solely to the extent such redemption is contemplated pursuant to the terms of such individual’s employment agreement or award agreement(s) issued under a Company Equity Plan;
(ii) (A) merge, consolidate, combine or amalgamate any Group Company with any Person or (B) purchase or otherwise acquire (whether by merging or consolidating with, purchasing any Equity Security in or a substantial portion of the assets of, or by any other manner) any business or any corporation, partnership, association or other business entity or organization or division thereof;
(iii) adopt any amendments, supplements, restatements or modifications to or otherwise terminate any Group Company’s Governing Documents or the Company Shareholder Agreements;
(iv) (A) sell, assign, abandon, let lapse, lease, license or otherwise dispose of any material assets or properties of the Group Companies (including any Company Owned Intellectual Property), other than non-exclusive licenses granted to customers to use a Company Product in the ordinary course of business pursuant to a Standard Form or license agreement that does not materially deviate from the allocation of Intellectual Property rights in the Standard Form, or inventory or obsolete equipment in the ordinary course of business or (B) create, subject or incur any Lien on any material assets or properties of the Group Companies (other than Permitted Liens), or (C) disclose any material Trade Secrets of the Group Companies (other than pursuant to a written confidentiality agreement entered into in the ordinary course of business with reasonable protections of such Trade Secrets and other confidential information) or any Software source code;
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(v) (A) transfer, issue, sell, grant or otherwise directly or indirectly dispose of, or subject to a Lien (other than Permitted Liens with respect to Subsidiaries of the Company), (1) any Equity Securities of any Group Company or (2) any options, warrants, rights of conversion or other rights, agreements, arrangements or commitments obligating any Group Company to issue, deliver or sell any Equity Securities of any Group Company (except, in each case, (x) as a result of the exercise or conversion of or as otherwise granted in connection with any Equity Rights outstanding as of the date hereof, (y) with respect to any Pre-Closing Financing or (z) as may be permitted by clause (B) of Section 5.1(b)(viii)) or (B) adjust, split, combine or reclassify any Equity Securities of any Group Company or other rights exercisable therefor or convertible into;
(vi) incur, create or assume any Indebtedness for borrowed money (including any loan pursuant to the provisions of the CARES Act), except pursuant to the proposed facilities set forth in Section 5.1(b)(vi) of the Company Schedules;
(vii) with respect to a Group Company, make any loans, advances or capital contributions to, or guarantees for the benefit of, or any equity or other investments in, any Person, other than any capital contributions by a Group Company in another wholly owned Group Company in the ordinary course of business and the reimbursement of expenses of employees in the ordinary course of business;
(viii) (A) except as required under the terms of any Employee Benefit Plan of the Group Companies that is set forth on Section 3.11(a) of the Company Schedules, adopt or enter into any Company Plan or any benefit or compensation plan, policy, program or Contract that would be a Company Plan if in effect as of the date hereof (other than offer letters entered into with new hire employees) or (B) change compensation or benefits, except for (x) at any time prior to the filing of the final Proxy Statement, changes in the Company’s reasonable discretion or (y) at any time after the filing of the final Proxy Statement, changes in the Company’s reasonable discretion that would not reasonably be expected to require a supplement to the final Proxy Statement under applicable Federal Securities Laws;
(ix) make, change or revoke any material election concerning Taxes, adopt or change any accounting method concerning Taxes, change any Tax accounting period, amend any material Tax Return, enter into any material Tax closing agreement, settle or surrender any material Tax Proceeding, fail to pay any material Tax when due (including any material estimated Tax payments), fail to timely file (taking into account valid extensions) any material Tax Return required to be filed, file any material Tax Return in a manner that materially differs from past practice, enter into any Tax sharing, Tax allocation, Tax receivable, Tax indemnity agreement or other similar agreement (other than commercial agreements entered into in the ordinary course of business that are not primarily related to Taxes), or surrender any right to claim any refund of a material amount of Taxes;
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(x) take any action or knowingly fail to take any action where such action or failure to act would reasonably be expected to prevent or impede the Intended Tax Treatment;
(xi) change any member of the Group Companies’ methods of accounting or accounting practices, except as required by GAAP;
(xii) enter into any settlement, conciliation or similar Contract, in each case, that (a) would be material to the Group Companies, taken as a whole, or (b) involves any criminal misconduct or any admission or wrongdoing by any Group Company, or (c) that is brought by or on behalf of any Pre-Closing Holder;
(xiii) authorize, recommend, propose or announce an intention to adopt, or otherwise effect, a plan of complete or partial liquidation, dissolution, restructuring, recapitalization, reorganization or similar transaction involving any of the Group Companies;
(xiv) with respect to any Group Company, enter into, conduct, engage in or otherwise operate any new line of business, change its operating policies in any material respect or discontinue or make any material change to the business of the Group Companies;
(xv) change any insurance policy or plan of a Group Company in effect as of the date hereof or allow such policy or plan to lapse, in each case without using commercially reasonable efforts to obtain a reasonable replacement thereof;
(xvi) enter into, amend, waive or terminate (other than terminations in accordance with their terms or as contemplated by Section 5.11) any Pre-Closing Holder Related Party Transactions;
(xvii) terminate or amend in a manner that is materially adverse to the Group Companies any Material Contract (excluding, for the avoidance of doubt, any expiration of any Material Contract pursuant to its terms or any amendment in connection with an action that would be permitted by clause (B) of Section 5.1(b)(viii)); and
(xviii) enter into any Contract to take, or cause to be taken, any of the actions set forth in this Section 5.1.
Notwithstanding anything in this Section 5.1 or this Agreement to the contrary, nothing set forth in this Agreement shall give Rotor, directly or indirectly, the right to control or direct the operations of the Group Companies prior to the Closing.
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Section 5.2 Efforts to Consummate.
(a) Subject to the terms and conditions herein provided, including clause (b) below, each of the Parties shall use its reasonable best efforts to take, or cause to be taken, all action and to do, or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement (including the satisfaction, but not waiver, of the closing conditions set forth in Article 6 and, in the case of any Ancillary Document to which such Party will be a party to upon the execution thereof, the execution and delivery of such Ancillary Document). Without limiting the generality of the foregoing, each Party shall use reasonable best efforts to obtain consents of all Governmental Entities necessary to consummate the transactions contemplated by this Agreement and the Ancillary Documents, including taking all actions that are required by any Governmental Entity in connection with the filing pursuant to the HSR Act to expeditiously consummate the transactions contemplated by this Agreement, unless such action, individually or together with all other actions, would have a Company Material Adverse Effect. Without the prior written consent of all Parties, no Party shall be permitted to take (or commit to take) any action if such action, individually or together with all other actions taken by the Parties, would have a Company Material Adverse Effect. Nothing in this Section 5.2 obligates any Affiliate of Sponsor to agree to (1) sell, license or otherwise dispose of, or hold separate and agree to sell, license or otherwise dispose of, any entities, assets or facilities of such Affiliate, (2) terminate, amend or assign existing relationships and contractual rights or obligations, (3) amend, assign or terminate existing licenses or other agreements, or (4) enter into new licenses or other agreements.
(b) Each Party shall (i) make, or cause to be made, an appropriate filing or take, or cause to be taken, any required actions, as applicable, pursuant to the HSR Act with respect to the transactions contemplated by this Agreement promptly (and in any event, within ten (10) Business Days) after the date of this Agreement and (ii) respond as promptly as practicable to any requests by any Governmental Entity for additional information and documentary material that may be requested pursuant to the HSR Act. All filing fees in connection with the HSR Act shall be Rotor Transaction Expenses. Each Party shall promptly inform the other Parties of any material communication between such Party and any Governmental Entity regarding any of the transactions contemplated by this Agreement or any Ancillary Document. Without limiting the foregoing, each Party and their respective Affiliates shall not extend any waiting period, review period or comparable period under the HSR Act or enter into any agreement with any Governmental Entity not to consummate the transactions contemplated hereby or by the Ancillary Documents, except with the prior written consent of Rotor and the Company.
(c) From and after the date of this Agreement until the earlier of the Closing or termination of this Agreement in accordance with its terms, the Rotor Parties, on the one hand, and the Company, on the other hand, shall give counsel for the Company (in the case of any Rotor Party) or Rotor and its counsel (in the case of the Company), a reasonable opportunity to review in advance (subject to appropriate redactions for confidentiality and attorney-client privilege concerns), and consider in good faith the views of the other in connection with, any proposed written communication to any Governmental Entity relating to the transactions contemplated by this Agreement or any Ancillary Document. Each of the Parties agrees not to participate in any substantive meeting or discussion, either in person or by telephone with any Governmental Entity in connection with the transactions contemplated by this Agreement unless it consults with, in the case of any Rotor Party, the Company, or, in the case of the Company, Rotor, in advance and, to the extent reasonably practicable and not prohibited by such Governmental Entity, gives, in the case of any Rotor Party, the Company, or, in the case of the Company, Rotor, the opportunity to attend and participate in such meeting or discussion (which, at the request of Rotor, will be limited to outside antitrust counsel only).
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(d) In furtherance of, and without limiting the Parties’ obligations pursuant to, Section 5.2(a), the Company shall use commercially reasonable efforts to obtain, prior to the Closing, written consents, in form and substance reasonably acceptable to Rotor, from each of the counterparties to the agreements set forth on Section 5.2(d) of the Company Schedules; provided that nothing herein shall require a Party or any of its respective Affiliates to expend money, commence any Proceeding or offer or grant any accommodation (financial or otherwise) to any third party. All costs incurred in connection with obtaining such consents shall be Company Expenses.
(e) Notwithstanding anything to the contrary in the Agreement, in the event that this Section 5.2 conflicts with any other covenant or agreement in this Article 5 that is intended to specifically address any subject matter, then such other covenant or agreement shall govern and control solely to the extent of such conflict.
Section 5.3 Access to Information. From and after the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms, upon reasonable notice, the Company shall provide, or cause to be provided, to Rotor and its Representatives during normal business hours reasonable access to all of the employees, properties, Contracts, and books and records of the Group Companies (in a manner so as to not interfere with the normal business operations of the Group Companies); provided that such access may be limited by the Group Companies in response to COVID-19 to the extent reasonably necessary (1) to protect the health and safety of such Group Companies’ Representatives or (2) in order to comply with any applicable Pandemic Response Law (provided that, in case of each of (1) and (2), the Company shall, and shall cause the other Group Companies to, use commercially reasonable efforts to provide (x) such access as can be provided (or otherwise convey such information regarding the applicable matter as can be conveyed) or (y) such information, in a manner without risking the health and safety of such Persons or violating such Pandemic Response Laws). All of such information shall be treated as “Confidential Information” (or the applicable equivalent term) pursuant to the terms of the Confidentiality Agreement, the provisions of which are by this reference hereby incorporated herein. Notwithstanding the foregoing, none of the Group Companies shall be required to disclose to Rotor or any of its Representatives any information (i) if and to the extent doing so (A) would violate any applicable Law, (B) is likely, as reasonably determined upon the advice of outside legal counsel, to result in the loss of the ability to successfully assert any attorney-client or work product privilege (provided that, in case of each of (A) and (B), the Company shall, and shall cause the other Group Companies to, use reasonable best efforts to provide (x) such access as can be provided (or otherwise convey such information regarding the applicable matter as can be conveyed) or (y) such information in a manner without violating such privilege, Contract or Law), (ii) if any Group Company, on the one hand, and Rotor or any of its Representatives, on the other hand, are adverse parties in a litigation and such information is reasonably pertinent thereto; provided that the Company shall, in the case of clause (i) or (ii), provide prompt written notice of the withholding of access or information on any such basis, or (iii) that is a Trade Secret. The Parties hereby acknowledge and agree that the Confidentiality Agreement shall be automatically terminated effective as of the Closing without any further action by any Party or any other Person.
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Section 5.4 Public Announcements.
(a) Subject to Section 5.4(b), Section 5.9 and Section 5.10, none of the Parties nor any of their respective Representatives shall issue any press releases or make any public announcements with respect to this Agreement or the transactions contemplated hereby without the prior written consent of the Company and Rotor, prior to the Closing; provided, however, that each Party may make any such announcement or other communication (i) if such announcement or other communication is required by applicable Law or the rules of any stock exchange, in which case the disclosing Party shall, to the extent permitted by applicable Law, first allow the Company, if the disclosing party is a Rotor Party, or Rotor, if the disclosing party is the Company (prior to the Closing), to review such announcement or communication and the opportunity to comment thereon and the disclosing Party shall consider such comments in good faith, (ii) to the extent such announcements or other communications contain only information previously disclosed in a public statement, press release or other communication previously approved in accordance with this Section 5.4, and (iii) to Governmental Entities in connection with any Consents required to be made under this Agreement or in connection with the transactions contemplated hereby. Notwithstanding anything to the contrary in this Section 5.4 or otherwise in this Agreement, the Parties agree that the Sponsor, Rotor and their respective Representatives may provide general information about the subject matter of this Agreement and the transactions contemplated hereby to any direct or indirect current or prospective investor (including in connection with the PIPE Financing) or in connection with normal fund raising or related marketing or informational or reporting activities. Furthermore, between the date hereof and the Closing Date, the Company shall not, and each shall cause its Subsidiaries not to, make any broad-based announcements or disclosures regarding the transactions contemplated hereby or any Ancillary Document to any of their respective employees, customers, suppliers or other business relationships without the prior written consent of Rotor (not to be unreasonably withheld, delayed or conditioned).
(b) The initial press release concerning this Agreement and the transactions contemplated hereby shall be a joint press release in the form agreed by the Company and Rotor prior to the execution of this Agreement and such initial press release (the “Signing Press Release”) shall be released as promptly as practicable after the execution of this Agreement (but in any event within four (4) Business Days thereafter). Promptly after the execution of this Agreement (but in any event within four (4) Business Days thereafter), Rotor 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 Securities Laws, which the Company shall have the opportunity to review and comment upon prior to filing and Rotor shall consider such comments in good faith. The Company, Rotor and the Sponsor shall mutually agree upon (such agreement not to be unreasonably withheld, conditioned or delayed by any of them) and, as promptly as practicable after the Closing (but in any event within four (4) Business Days thereafter), issue a press release announcing the consummation of the transactions contemplated by this Agreement (the “Closing Press Release”). Promptly after the Closing (but in any event within four (4) Business Days after the Closing), Rotor 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 Securities Laws, which the Sponsor shall have the opportunity to review and comment upon prior to filing and Rotor shall consider in good faith such comments. In connection with the preparation of the Signing Press Release, the Signing Filing, the Closing Press Release or the Closing Filing, each Party shall, upon written request by any other Party, furnish such other Party with all information concerning itself, its directors, officers and equityholders, and such other matters as may be reasonably necessary for such press release or filing.
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(c) Without limiting the foregoing, from and after the date of this Agreement until the earlier of the Closing Date or the termination of this Agreement in accordance with its terms, the Company shall maintain, and shall cause its Affiliates who are in possession of any material non-public information, written or oral, it or they may have to the extent regarding Rotor or any of its Affiliates, including this Agreement and its terms and conditions (“Rotor Confidential Information”), to maintain such Rotor Confidential Information, in confidence, and such information shall not be disclosed or used by the Company or its Affiliates for any purpose without Rotor’s prior written consent, unless such information is: (i) otherwise publicly available through no breach by the Company or its Affiliates of this Section 5.4(c), (ii) required to be disclosed by applicable Law or the rules of any stock exchange, in which case the disclosing Party shall, to the extent permitted by applicable Law, notify Rotor in advance of such disclosure, or (iii) disclosed or used in connection with any Proceeding to enforce the rights of the Company or its Affiliates under this Agreement or any Ancillary Document.
Section 5.5 Indemnification; Directors’ and Officers’ Insurance.
(a) From and after the Effective Time, Rotor agrees that it shall indemnify and hold harmless each present and former director and officer of the (x) Group Companies (in each case, solely to the extent acting in their capacity as such and to the extent such activities are related to the Business) (the “Company D&O Persons”) and (y) Rotor and each of its Subsidiaries (in each case, solely to the extent acting in their capacity as such and to the extent such activities are related to the business of Rotor and its Subsidiaries) (the “Rotor D&O Persons” together with the Company D&O Persons, the “D&O Persons”) against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any Proceeding, whether civil, criminal, administrative or investigative, arising out of or pertaining to matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent that the Company, Rotor or their respective Subsidiaries, as the case may be, would have been permitted under applicable Law and its respective certificate of incorporation, certificate of formation, bylaws, limited liability company agreement or other organizational documents in effect on the date of this Agreement to indemnify such D&O Persons (including the advancing of expenses as incurred to the fullest extent permitted under applicable Law and its respective certificate of incorporation, certificate of formation, bylaws, limited liability company agreement or other organizational documents in effect on the date of this Agreement). Without limiting the foregoing, Rotor agrees that (i) all rights to indemnification or exculpation now existing in favor of the D&O Persons, as provided in a Group Company’s or Rotor’s or any of Rotor’s Subsidiaries’ Governing Documents, as applicable, or otherwise in effect as of the date of this Agreement and set forth on Section 5.5(a) of the Company Schedules, in either case, solely with respect to any matters occurring on or prior to the Closing, shall survive the transactions contemplated by this Agreement and shall continue in full force and effect from and after the Closing for a period of six (6) years, and (ii) Rotor, its Subsidiaries and the Group Companies will perform and discharge all obligations to provide such indemnity and exculpation during such six (6)-year period. To the maximum extent permitted by applicable Law, during such six (6)-year period, Rotor shall, and shall cause its Subsidiaries and the Group Companies to advance expenses in connection with such indemnification as provided in Rotor’s, Rotor’s Subsidiaries or such Group Company’s Governing Documents or other applicable agreements. The indemnification and liability limitation or exculpation provisions of Rotor’s, Rotor’s Subsidiaries’ or the Group Companies’ Governing Documents shall not, during such six (6)-year period, be amended, repealed or otherwise modified after the Closing in any manner that would materially and adversely affect the rights thereunder of individuals who, as of the Closing or at any time prior to the Closing, were D&O Persons to be so indemnified, have their liability limited or be exculpated with respect to any matters occurring prior to Closing and relating to the fact that such D&O Person was a director or officer of any Group Company, Rotor or any Subsidiary of Rotor prior to the Closing, unless such amendment, repeal or other modification is required by applicable Law.
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(b) Neither Rotor nor any Group Company shall have any obligation under this Section 5.5 to any D&O Person when and if a court of competent jurisdiction shall ultimately determine (and such determination shall have become final and non-appealable) that the indemnification of such D&O Person in the manner contemplated hereby is prohibited by applicable Law.
(c) The Company shall purchase, at or prior to the Closing, and Rotor shall cause the Group Companies to maintain in effect for a period of six (6) years after the Closing Date, without lapses in coverage, a “tail” policy or policies providing directors’ and officers’ liability insurance coverage for the benefit of those Persons who are currently covered by any comparable insurance policies of the Group Companies as of the date hereof (the “Company D&O Tail Policy”). Such Company D&O Tail Policies shall provide coverage on terms (with respect to coverage and amount) that are substantially the same as (and no less favorable in the aggregate to the insured than) the coverage provided under the Group Companies’ directors’ and officers’ liability insurance policies as of the date hereof; provided that the Group Companies shall not pay a premium for a Company D&O Tail Policy in excess of 300% of the most recent annual premium paid by the Group Companies, as applicable, prior to the date of this Agreement and, in such event, the Group Companies shall purchase the maximum coverage available for 300% of the most recent annual premium paid by the Group Companies prior to the date of this Agreement.
(d) Prior to the Effective Time, Rotor shall purchase a prepaid “tail” policy (a “Rotor Tail Policy”) with respect to directors’ and officers’ liability insurance coverage for the benefit of those Persons who are currently covered by any comparable insurance policies of Rotor’s as of the date hereof, which Rotor Tail Policy shall be on the same or substantially similar terms agreed to for such tail policy by Rotor in connection with its initial public offering; provided that Rotor shall not pay a premium for a Rotor Tail Policy in excess of 300% of the most recent annual premium paid by Rotor prior to the date of this Agreement and, in such event, Rotor shall purchase the maximum coverage available for 300% of the most recent annual premium paid by Rotor prior to the date of this Agreement.
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(e) If Rotor, any Group Company or any of their respective successors or assigns (i) shall merge or consolidate with or merge into any other corporation or entity and shall not be the surviving or continuing corporation or entity of such consolidation or merger or (ii) shall transfer all or substantially all of their respective properties and assets as an entity in one or a series of related transactions to any Person, then in each such case, proper provisions shall be made so that the successors or assigns of Rotor or such Group Company shall assume all of the obligations set forth in this Section 5.5.
(f) The D&O Persons entitled to the indemnification, liability limitation, exculpation and insurance set forth in this Section 5.5 are intended to be third-party beneficiaries of this Section 5.5. This Section 5.5 shall survive the consummation of the transactions contemplated by this Agreement and shall be binding on all successors and assigns of Rotor and the Group Companies.
Section 5.6 Tax Matters.
(a) Tax Treatment.
(i) Each of the Parties intend that the Merger shall constitute a transaction that qualifies as a “reorganization” within the meaning of Section 368(a) of the Code (the “Intended Tax Treatment”). Each Party (A) shall, and shall cause its respective Affiliates to, use reasonable best efforts to ensure the Merger qualifies for the Intended Tax Treatment, and shall file all Tax Returns consistent with, and take no position inconsistent with (whether in Tax Returns, Tax Proceedings, or otherwise) such treatment unless required to do so pursuant to a “determination” within the meaning of Section 1313(a) of the Code and (B) shall not take any action, or knowingly fail to take any action, which action or failure to act prevents or impedes, or would reasonably be expected to prevent or impede, the Intended Tax Treatment.
(ii) The Rotor Parties and the Company hereby adopt this Agreement as a “plan of reorganization” for the purposes of Section 368 of the Code and Treasury Regulations Sections 1.368-2(g) and 1.368-3(a).
(b) FIRPTA Certificate. Rotor hereby requests, and the Company shall deliver to Rotor prior to the Closing, (i) a certificate pursuant to Treasury Regulations Sections 1.1445-2(c)(3) and 1.897-2(h), dated not more than thirty (30) days prior to the Closing Date and signed by an executive officer of the Company, certifying that the equity interests in the Company are not “United States real property interests” (as defined in Section 897(c)(1) of the Code), (ii) a copy of the notification provided to the Internal Revenue Service regarding such certificate, in accordance with the provisions of Treasury Regulations Section 1.897-2(h)(2), and (iii) a duly executed IRS Form W-9 from the Company, in each case in form and substance reasonably acceptable to Rotor.
(c) Tax Matters Cooperation. Each of the Parties shall (and shall cause their respective Affiliates to) cooperate fully, as and to the extent reasonably requested by another Party, in connection with the filing of relevant Tax Returns, and any Tax Proceeding. Such cooperation shall include the retention and (upon the other Party’s request) the provision (with the right to make copies) of records and information reasonably relevant to any Tax Proceeding or audit, making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Parties shall retain copies of all Tax Returns, schedules, workpapers, records and other documents in their possession relating to Tax matters with respect to the Group Companies relating to any taxable periods (or portions thereof) before the Closing Date until sixty (60) days after the expiration of the applicable statute of limitations with respect to such Tax matters and shall not dispose of such items until it offers the items to the other Party.
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Section 5.7 Financing.
(a) Rotor shall use its reasonable best efforts to obtain the PIPE Financing (and the Company shall reasonably cooperate with Rotor in connection thereto) on a timely basis on the terms and conditions described in the Subscription Agreements, including using its reasonable best efforts to (i) comply with its respective obligations under the Subscription Agreements, (ii) maintain in effect the Subscription Agreements in accordance with the terms and conditions thereof, (iii) satisfy on a timely basis all conditions and covenants applicable to Rotor set forth in the applicable Subscription Agreements within its control, and (iv) consummate the PIPE Financing when required pursuant to this Agreement. Rotor shall give the Company prompt written notice upon having actual knowledge of any breach or default by any party to any of the Subscription Agreements or any termination (or purported termination) of any of the Subscription Agreements. Other than as set forth in this Section 5.7(a) or Section 5.7(b), Rotor shall not, without the prior written consent of the Company, amend, modify, supplement or waive any of the conditions or contingencies to funding set forth in the Subscription Agreements or any other provision of, or remedies under, the Subscription Agreements (except as otherwise permitted hereunder), in each case to the extent such amendment, modification, supplement or waiver would reasonably be expected to have the effect of adversely affecting in any respect the ability of Rotor to timely consummate the transactions contemplated by this Agreement, including by reducing the aggregate amount of the PIPE Financing contemplated in the Subscription Agreements such that the Aggregate Rotor Transaction Proceeds would not be sufficient to satisfy the condition set forth in Section 6.1(h).
(b) If all or any portion of the PIPE Financing becomes unavailable, (i) Rotor shall promptly use its reasonable best efforts to promptly obtain the PIPE Financing or such portion of the PIPE Financing from alternative sources in an amount, when added to any portion of the PIPE Financing that is available, equal to the PIPE Financing Amount (any alternative source(s) of financing, “Alternative PIPE Financing”) and (ii) in the event that Rotor is able to obtain any Alternative PIPE Financing, Rotor shall use its reasonable best efforts to enter into a new subscription agreement (each, an “Alternative Subscription Agreement”) that provides for the subscription and purchase of Rotor Class A Shares containing terms and conditions not less favorable from the standpoint of Rotor and the Affiliates of Rotor party thereto than those in the Subscription Agreements entered into as of the date hereof (as determined in the reasonable good faith judgment of Rotor). In such event, the term “PIPE Financing” as used in this Agreement shall be deemed to include any Alternative PIPE Financing, the term “Subscription Agreements” as used in this Agreement shall be deemed to include any Alternative Subscription Agreement and the term “PIPE Investor” as used in this Agreement shall be deemed to include any Person that is subscribing for Rotor Class A Shares under any Alternative Subscription Agreement. For the avoidance of doubt, if all or any portion of the PIPE Financing or Alternative PIPE Financing becomes unavailable, Rotor may utilize deposits, proceeds or any other amounts from the Trust Account and, to the extent reasonably acceptable to the Company, any additional third-party financing to satisfy its financing obligations hereunder (including to satisfy the Minimum Cash Condition).
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Section 5.8 Exclusive Dealing.
(a) From the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms and conditions, the Company shall not, and shall cause its Representatives and Subsidiaries not to: (i) accept, initiate, respond to, encourage, entertain, solicit, negotiate, provide information with respect to or discuss other offers for the direct or indirect sale, merger, transfer, IPO, debt or equity refinancing or recapitalization of the Company or any or all of its Subsidiaries, or any of the securities, business, properties or assets of the Company or any or all of its Subsidiaries, or other offers that would require the Company to abandon the transactions contemplated hereby (each such transaction prohibited by this sentence, an “Acquisition Proposal,” provided that, for the avoidance of doubt, none of the Pre-Closing Financing (if any), this Agreement nor any of the Ancillary Documents or any of the transactions contemplated hereby or thereby shall constitute an “Acquisition Proposal” for the purposes of this Section 5.8(a) or otherwise); (ii) furnish or disclose any non-public information to any Person in connection with, or that would reasonably be expected to lead to, an Acquisition Proposal; (iii) enter into any Contract regarding an Acquisition Proposal; (iv) prepare or take any steps in connection with a public offering of any Equity Securities of any Group Company (or any successor to or parent company of any Group Company); or (v) otherwise cooperate in any way with, or assist or participate in, or facilitate or encourage any effort or attempt by any Person to do or seek to do any of the foregoing or seek to circumvent this Section 5.8(a) or further an Acquisition Proposal. The Company agrees to (A) notify Rotor promptly upon receipt (and in any event within forty-eight (48) hours after receipt) of any request for non-public information of, or an Acquisition Proposal for, it or any of its Subsidiaries, and to describe the material terms and conditions of any such request or Acquisition Proposal in reasonable detail (including the identity of the Persons making such Acquisition Proposal), (B) keep Rotor fully informed on a current basis of any modifications to such request, offer or information and (C) not (and shall cause its Subsidiaries and their respective Representatives not to) conduct any further discussions with, provide any information to, or enter into negotiations with such Persons. The Company shall immediately cease and cause to be terminated any discussions or negotiations with any Persons (other than Rotor and its Representatives) that may be ongoing with respect to an Acquisition Proposal, terminate any such Person’s and such Person’s Representative’s access to any electronic data room. The Company shall not release any third party from, or waive, amend or modify any standstill or confidentiality provision with respect to an Acquisition Proposal in any agreement to which it or any Pre-Closing Holder is a party, and shall promptly following the date hereof send a written request (email being sufficient) to any Person to whom the Company or any of its Representatives provided confidential information of a Group Company in connection with an Acquisition Proposal, which written request shall instruct such Person to return or confirm (in writing, email being sufficient) destruction of all such confidential information.
(b) From the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms, the Rotor Parties shall not, and each of them shall cause their Representatives not to on behalf of the Rotor Parties, directly or indirectly: (i) accept, initiate, respond to, knowingly encourage, solicit, negotiate, provide information with respect to or discuss other offers with respect to any merger, capital stock exchange, asset acquisition, stock purchase, reorganization, recapitalization or similar business combination with any Person other than the Company and its Representatives (each, a “Rotor Proposal”), (ii) issue or execute any Contract, indication of interest, memorandum of understanding, letter of intent, or any other similar agreement with respect to a Rotor Proposal, or (iii) commence, continue or otherwise participate in any discussions or negotiations regarding, or cooperate in any way in connection with a Rotor Proposal. Notwithstanding the foregoing, Rotor’s Affiliates (including Affiliates of Sponsor) shall not be restricted in any way with respect to the pursuit by such Affiliates of any transaction not related to Rotor.
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Section 5.9 Preparation of Proxy Statement. As promptly as reasonably practicable after the date hereof, Rotor shall, with the assistance of the Company pursuant to this Section 5.9, prepare and, following delivery of the PCAOB Financials to Rotor pursuant to Section 5.16(a), file with the SEC, the Proxy Statement (it being understood that the Proxy Statement shall include a proxy statement which will be used for the purpose of soliciting proxies from the stockholders of Rotor at the Rotor Stockholders Meeting to adopt and approve the Transaction Proposals and other matters reasonably related to the Transaction Proposals, all in accordance with and as required by Rotor’s Governing Documents and applicable Law, including any applicable Federal Securities Laws) in which Rotor shall (a) provide the stockholders of Rotor with the opportunity to redeem the Rotor Class A Shares pursuant to a Rotor Stockholder Redemption, and (b) solicit proxies from the stockholders of Rotor to vote at the Rotor Stockholders Meeting in favor of the Transaction Proposals, each in accordance with and as required by Rotor’s Governing Documents, applicable Federal Securities Laws. The Proxy Statement will comply as to form and substance with the applicable requirements of the Securities Act and the Exchange Act and the rules and regulations thereunder. The Company and its counsel shall be given a reasonable opportunity to review, comment on and approve in writing each of the preliminary and final Proxy Statement and any amendment or supplement thereto prior to its filing with the SEC (to which comments reasonable and good faith consideration shall be given by Rotor). Rotor shall not file any such documents with the SEC (including in response to any comments from the SEC with respect thereto) without the prior written consent (email being sufficient) of the Company (such consent not to be unreasonably withheld, conditioned or delayed). Rotor shall use its reasonable best efforts, with the assistance of the other Parties hereto, to promptly respond to any comments, requests to amend or requests for additional information with respect to the Proxy Statement by the SEC. Each of Rotor and the Company shall promptly furnish to the other all information concerning such Party, its Affiliates and its Representatives that may be required or reasonably requested in connection with any action contemplated by this Section 5.9 or for inclusion in any other statement, filing, notice or application made by or on behalf of Rotor to the SEC or applicable Stock Exchange in connection with the transactions contemplated by this Agreement and the Ancillary Documents (the “Other Required Filings”). Each of Rotor and the Company shall promptly correct any information provided by it for use in the Proxy Statement (and other related materials) if and to the extent that such information is determined to have become false or misleading in any material respect or as otherwise required by applicable Laws. Rotor shall amend or supplement the Proxy Statement and cause the Proxy Statement, as so amended or supplemented, to be filed with the SEC and to be disseminated to Rotor’s stockholders, in each case as and to the extent required by applicable Laws and subject to the terms and conditions of this Agreement and Rotor’s Governing Documents. The Parties will notify each other promptly of the receipt of any comments, whether written or oral, from the SEC and of any request by the SEC for amendments or supplements to the Proxy Statement or any Other Required Filing, or for additional information, and will supply each other with copies of all correspondence between it or any of its Representatives, on the one hand, and the SEC, on the other hand, with respect to such filings. Without limiting the generality of the foregoing, (1) the Rotor Parties shall not, and shall cause their respective Representatives not to, have or participate in any substantive meetings or other substantive discussions with any Governmental Entity regarding the matters contemplated by this Section 5.9 without first consulting with the Company and providing the Company the opportunity to participate in such meetings or discussion and (2) the Company shall not, and shall cause its Representatives not to, have or participate in any substantive meetings or other substantive discussions with any Governmental Entity regarding the matters contemplated by this Section 5.9 without first consulting with Rotor and providing Rotor the opportunity to participate in such meetings or discussions. Each of the Parties hereto shall use reasonable best efforts to ensure that none of the information related to it or any its Representatives, supplied by or on its behalf for inclusion in the Proxy Statement or any Other Required Filing will, at the time the Proxy Statement is filed with the SEC, at each time at which it is amended, or at the time it is mailed to Rotor’s stockholders, as applicable, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading.
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Section 5.10 Rotor Party Approvals.
(a) As promptly as practicable after the final Proxy Statement is mailed to Rotor’s stockholders and, in any event within thirty (30) days of the mailing of the Proxy Statement to Rotor’s stockholders, Rotor shall (i) duly give notice of and (ii) duly convene and hold a meeting of its stockholders (the “Rotor Stockholders Meeting”), in each case in accordance with the Governing Documents of Rotor, applicable Law and the applicable Federal Securities Laws, for the purposes of obtaining the Rotor Stockholder Approval and the Equity Plan Approval and, if applicable, any approvals related thereto and providing its stockholders with the opportunity to elect to effect a Rotor Stockholder Redemption. Rotor shall, through its board of directors acting upon recommendation of the Special Committee, recommend to its stockholders the (A) adoption and approval of this Agreement and the transactions contemplated hereby and include such recommendation in the Proxy Statement (the “Business Combination Proposal”); (B) approval of the Merger; (C) approval of the issuance of the Rotor Common Shares constituting the Total Merger Consideration pursuant to Article 2; (D) adoption and approval of the equity incentive plan and employee stock purchase plan in the forms attached hereto as Exhibit G-1 and Exhibit G-2, respectively (“New Incentive Plans”); (E) adoption and approval of amendments to the Governing Documents of Rotor in substantially the form attached as Exhibit H hereto; (F) the appointment of the directors to the Rotor Board in accordance with Section 5.17(b) and the designation of the classes of such appointees to the Rotor Board; (G) adoption and approval of any other proposals as either the SEC or applicable Stock Exchange (or the respective staff members thereof) may indicate are necessary in its comments to the Proxy Statement or in correspondence related thereto, and of any other proposals reasonably agreed by Rotor and the Company as necessary or appropriate in connection with the consummation of the transactions contemplated by this Agreement and the Ancillary Documents; and (H) the adjournment of the Rotor Stockholders Meeting, if necessary, to permit further solicitation of proxies because there are not sufficient votes to approve and adopt any of the foregoing (such proposals in (A) through (H) together, the “Transaction Proposals”); provided that Rotor may postpone or adjourn the Rotor Stockholders Meeting (x) to solicit additional proxies for the purpose of obtaining the Rotor Stockholder Approval and the Equity Plan Approval, (y) for the absence of a quorum or (z) to allow reasonable additional time for the filing or mailing of any supplemental or amended disclosures that Rotor has determined based on advice of outside legal counsel is reasonably likely to be required under applicable Law and for such supplemental or amended disclosure to be disseminated and reviewed by stockholders of Rotor prior to the Rotor Stockholders Meeting; provided, further, that the board of directors of Rotor, acting upon recommendation of the Special Committee, may change, withdraw, withhold, qualify or modify its recommendation (a “Change in Recommendation”) if it determines in good faith, after consultation with its outside legal counsel and/or financial advisors and based on recommendation of the Special Committee, that an Intervening Event has occurred and that, as a result thereof, a failure to make a Change in Recommendation would reasonably be expected to be inconsistent with the fiduciary duties of the board of directors of Rotor under applicable Law. Rotor agrees that its obligation to establish a record date for, duly call, give notice of, convene and hold the Rotor Stockholders Meeting for the purpose of seeking approval of the Transaction Proposals shall not be affected by any intervening event or circumstance, including an Intervening Event, and Rotor agrees to establish a record date for, duly call, give notice of, convene and hold the Rotor Stockholders Meeting and submit for the approval of its stockholders the Transaction Proposals, in each case in accordance with this Agreement, regardless of any intervening event or circumstance, including an Intervening Event. Notwithstanding anything to the contrary in this Agreement, Rotor will not be required to convene and hold the Rotor Stockholders Meeting at any time prior to the 20th Business Day following the mailing of the Proxy Statement to Rotor’s stockholders.
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(b) As promptly as practicable after the final Proxy Statement is mailed to Rotor’s stockholders and, in any event within five (5) days of the mailing of the Proxy Statement to Rotor’s stockholders, Rotor shall take all actions necessary under applicable law to obtain, and then deliver as promptly as practicable thereafter to the Company, the Merger Sub Sole Stockholder Approval by irrevocable written consent pursuant to Section 228(a) and 252(c) of the DGCL and the Merger Sub’s Governing Documents.
Section 5.11 Pre-Closing Holder Related Party Transactions. The Company shall (and shall cause the Group Companies to) take all reasonable best efforts to terminate (in form and substance reasonably satisfactory to Rotor) at or prior to the Closing all Pre-Closing Holder Related Party Transactions set forth on Section 5.11 of the Company Schedules, with no further Liability or other obligations to the Group Companies or any of their respective Affiliates (including, after the Closing, Rotor) with respect thereto.
Section 5.12 No Trading. The Company acknowledges and agrees that it is aware, and that the Company’s Representatives are aware or, upon receipt of any material nonpublic information will be advised, of the restrictions imposed by Federal Securities 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 purchase or sell any securities of Rotor (other than engaging in the transactions described herein), communicate such information to any third party, take any other action with respect to Rotor in violation of such Laws, or cause or encourage any third party to do any of the foregoing.
Section 5.13 Conduct of Business of Rotor. From and after the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms, Rotor shall, and shall cause its Subsidiaries to, as applicable, (x) keep current and timely file all of its public filings with the SEC and otherwise comply in all material respects with applicable Securities Laws and shall use its commercially reasonable efforts to maintain the listing of the Rotor Common Shares and the Rotor Warrants on NYSE and (y) except as expressly contemplated by this Agreement or any Ancillary Document, as required by applicable Law, as set forth on Section 5.13 of the Rotor Schedules, pursuant to any PIPE Financing and/or Alternative PIPE Financing pursuant to the terms and conditions thereof and, if applicable, Section 5.7(b), or as consented to in writing by the Company (such consent not to be unreasonably withheld, conditioned or delayed), not do any of the following:
(a) adopt any amendments, supplements, restatements or modifications to the Trust Agreement or the Governing Documents of Rotor or any of its Subsidiaries;
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(b) declare, set aside, make or pay a dividend on, or make any other distribution or payment in respect of, any Equity Securities of Rotor or any of its Subsidiaries, or repurchase, redeem, or otherwise acquire, or offer to repurchase, redeem or otherwise acquire, any outstanding Equity Securities of Rotor or any of its Affiliates, other than, for the avoidance of doubt, for the Rotor Stockholder Redemption;
(c) incur, create or assume any Indebtedness for borrowed money, other than up to $1,500,000 in non-interest bearing working capital loans that do not have any prepayment or repayment premiums, penalties, breakage or similar costs if it were to be prepaid or repaid in full;
(d) make any loans or advances to, or capital contributions in, any other Person, other than to, or in, Rotor or any of its Subsidiaries;
(e) issue any Equity Securities of Rotor or any of its Subsidiaries or grant any additional options, warrants or stock appreciation rights with respect to Equity Securities of the forgoing of any of Rotor or any of its wholly owned Subsidiaries;
(f) enter into, renew, modify or revise any Contract with an Affiliate of Rotor without the prior written consent of the Special Committee, other than in connection with any non-interest bearing working capital loans that would be permitted by Section 5.13(c);
(g) engage in any new line of business or engage in any commercial activities (other than to consummate the transactions contemplated hereby);
(h) authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution;
(i) take any action that would reasonably be expected to significantly delay or impair (A) the timely filing of any of its public filings with the SEC (giving effect to any permitted extensions), (B) its compliance in all material respects with applicable securities Laws or (C) the listing of the Rotor Common Shares on NYSE; or
(j) enter into any Contract to take, or cause to be taken, any of the actions set forth in this Section 5.13.
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Section 5.14 Trust Account. Upon satisfaction or, to the extent permitted by applicable Law, waiver of the conditions set forth in Article 6 and provision of notice thereof to the Trustee, (a) at the Closing, Rotor shall (i) cause the documents, opinions and notices required to be delivered to the Trustee pursuant to the Trust Agreement to be so delivered, and (ii) use reasonable best efforts to cause the Trustee to (x) pay as and when due all amounts, if any, payable to the Public Stockholders pursuant to the Rotor Stockholder Redemption, (y) pay the amounts due to the underwriters of Rotor’s initial public offering for their deferred underwriting commissions as set forth in the Trust Agreement and (z) immediately thereafter, pay all remaining amounts then available in the Trust Account to Rotor in accordance with the Trust Agreement, and (b) thereafter, the Trust Account shall terminate, except as otherwise provided therein.
Section 5.15 Merger Written Consent.
(a) Immediately following the execution of this Agreement, the Company shall take all actions necessary to obtain, and then deliver as promptly as practicable thereafter, an irrevocable written consent from Pre-Closing Holders substantially in the form attached as Exhibit I, who, collectively, constitute a Requisite Threshold, that approves this Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby (including the Merger) pursuant to the Act and the Company’s Governing Documents and the Company Shareholder Agreements (the “Merger Written Consent”). The Company shall take all actions necessary pursuant to the Company’s Governing Documents and the Company Shareholder Agreements to provide all required notices to the Pre-Closing Holders entitled thereto in connection with obtaining such Merger Written Consent, including notice of the Company Preferred Conversion pursuant to the Conversion Written Consent. Upon receipt of the Merger Written Consent, the Company shall promptly deliver a copy thereof to Rotor.
(b) As promptly as practicable after the final Proxy Statement is mailed to Rotor’s stockholders, and in any event within five (5) Business Days of the mailing of the Proxy Statement, the Company shall cause to be delivered to each Pre-Closing Holder a notice, which shall include copies of this Agreement, the Proxy Statement, the proposed form of Merger Written Consent, and, as applicable, the Registration Rights Agreement and the Lock-Up Agreement (“Company Stockholder Package”), stating (i) that the Board of Directors recommends that each holder of Company Stock approve the Merger by execution of the Merger Written Consent and (ii) the timeline for returning executed copies of the documents included as part of the Company Stockholder Package. The Company shall use commercially reasonable efforts to obtain from each holder of Company Stock executed copies of the Company Stockholder Package, including the Lock-Up Agreement, at or prior to the Closing.
Section 5.16 PCAOB Financials.
(a) The Company shall use reasonable best efforts to deliver to Rotor, as promptly as practicable after the date hereof, the Audited Financials, audited in accordance with the standards of the PCAOB and containing an unqualified report of the Company’s auditors (the “PCAOB Financials”). All costs incurred in connection with preparing and obtaining the PCAOB Financials shall be Company Expenses.
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(b) The Company shall (and shall cause each Group Company to) use reasonable best efforts (i) to assist Rotor and its Representatives, upon advance written notice, during normal business hours and in a manner such as to not unreasonably interfere with the normal operation of the applicable Group Company, in causing to be prepared in a timely manner any other financial information or statements (including customary pro forma financial statements) that is reasonably required to be included in the Proxy Statement and any other filings to be made by Rotor with the SEC in connection with the transactions contemplated by this Agreement and the Ancillary Documents and (ii) to obtain the consents of the Company’s auditors with respect thereto as may be required by applicable Law.
(c) From and after the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms, the Company shall deliver to Rotor unaudited consolidated balance sheets and related statements of income and cash flows of the Company and its Subsidiaries for the fiscal month following the date hereof and for each fiscal month and quarter thereafter, with respect to monthly financial statements, within fifteen (15) days following the end of each such month and with respect to quarterly financial statements, within thirty (30) days following the end of each such fiscal quarter (as applicable).
Section 5.17 Post-Closing Directors and Officers.
(a) The Parties shall take all such action within its power as may be necessary or appropriate such that effective as of the Closing: (i) the Governing Documents of Rotor are substantially in the form attached as Exhibit H; (ii) the initial members of the board of directors of Rotor (the “Rotor Board”) immediately after the Closing shall be (A) no less than five (5) but no greater than seven (7) members to be selected by the Company (and, for clarity, with the number of such members to be determined by the Company in its sole discretion) and (B) two (2) members to be selected by the Special Committee on behalf of Rotor; and (iii) the initial members of the compensation committee, audit committee and nominating committee of the Rotor Board shall be mutually determined by the Parties.
(b) The Persons selected by the respective Parties in accordance with Section 5.17(a)(ii) shall be the directors of the Rotor Board. Rotor and the Company may replace their respective Rotor Board nominees with any individual prior to the filing of the final Proxy Statement with the SEC by written notice to the other party, identifying such replacement individual.
(c) The officers of the Company as of immediately prior to the Closing (or such other Persons as the Parties may mutually agree) shall be the officers of Rotor immediately after the Closing, with each such individual holding the title he or she currently holds.
(d) Prior to the Effective Time, the Parties shall take all action necessary to effectuate the provisions of this Section 5.17.
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Section 5.18 Certain Other Covenants. From and after the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with its terms, the Parties shall promptly notify the other Parties hereto after becoming aware of (a) any breach of any covenant of such Party set forth herein or in any Ancillary Document, or (b) any event or circumstance that would reasonably be expected to (1) with respect to the Company, be a Company Material Adverse Effect or, with respect to Rotor, be a Rotor Material Adverse Effect or (2) otherwise cause or result in any of the conditions set forth in Article 6 not being satisfied or the satisfaction of those conditions being materially delayed. Without in any way limiting the generality of the foregoing, the Parties shall (i) promptly inform the other Parties in the event any Proceeding is brought (1) with respect to any Group Company, against such Group Company by or on behalf of any Pre-Closing Holder or any Pre-Closing Holder provides notice to a Group Company that it is or may be in violation or breach of any of their respective Governing Documents or the Company Shareholder Agreements, or (2) with respect to Rotor, against a Rotor Party by or on behalf of any holder of Equity Securities in Rotor or any holder of Equity Securities in Rotor provides notice to a Rotor Party that it is or may be in violation or breach of any of their respective Governing Documents or any Contract to which they are bound, and (ii) keep the other Parties reasonably apprised of the status of any pending material Proceedings and promptly deliver copies to the other Parties of all material pleadings, motions and other documents relating thereto upon filing or delivering such pleadings, motions or other documents, or in the event such Party is the recipient of such pleadings, motions or other documents, promptly following such receipt; provided, however, that such Party may not deliver such documents if prohibited by Law or if delivery would, as reasonably determined upon the advice of outside legal counsel, result in the loss of the ability to successfully assert any attorney-client or work product privilege (provided that, in each case, such Party shall, and shall cause its Subsidiaries to, use reasonable best efforts to provide (1) such materials as can be provided (or otherwise convey such information regarding the applicable matter as can be conveyed) and (2) such other information, in a manner without violating such privilege or Law). 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.
Section 5.19 Section 280G. If and to the extent Rotor and the Company agree in good faith that the transactions contemplated by this Agreement constitute a “change in control event” within the meaning of Section 280G of the Code, the Company shall (a) prior to the Closing Date, solicit and use reasonable best efforts to obtain from each “disqualified individual” (within the meaning of Section 280G(c) of the Code) who would receive or retain any payment or benefits that would constitute a “parachute payment” (within the meaning of Section 280G(b)(2)(A) of the Code) a waiver of such disqualified individual’s rights to some or all of such payments or benefits (the “Waived 280G Benefits”) so that no payments and/or benefits shall be deemed to be “excess parachute payments” (within the meaning of Section 280G(b)(1) of the Code) and (b) prior to the Closing Date submit to a Company shareholder vote (along with adequate disclosure satisfying the requirements of Section 280G(b)(5)(B)(ii) of the Code and any regulations promulgated thereunder) the right of any such “disqualified individual” to receive the Waived 280G Benefits. Prior to soliciting such waivers and approval materials, the Company shall provide drafts of the calculations, waivers and approval materials to Rotor for its review and comment no later than five (5) Business Days prior to soliciting such waivers and soliciting such approval, and the Company shall consider in good faith any comments provided by Rotor. If any of the Waived 280G Benefits fail to be approved in accordance with the requirements of Section 280G(b)(5)(B) of the Code as contemplated above, such Waived 280G Benefits shall not be made or provided. Prior to the Closing, the Company shall deliver to Rotor evidence reasonably acceptable to Rotor that a vote of the Company shareholders was solicited in accordance with the foregoing provisions of this Section 5.19 and that either (i) the requisite number of votes of the Company shareholders was obtained with respect to the Waived 280G Benefits (the “280G Approval”) or (ii) the 280G Approval was not obtained, and, as a consequence, the Waived 280G Benefits shall not be retained or provided.
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Section 5.20 Employee Matters.
(a) The Company shall use commercially reasonable efforts to cause certain executives of the Company as identified by the Company in consultation with Rotor to enter into new employment agreements (each, an “Employment Agreement”) with the Company or Rotor, to be effective as of the Closing Date, with such employment agreements to be in form and substance reasonably satisfactory to the Company and Rotor.
(b) Rotor shall, or shall cause the Surviving Corporation and each of its subsidiaries, as applicable, to provide the employees of the Company who remain employed immediately after the Effective Time (the “Continuing Employees”) credit for purposes of eligibility to participate, vesting and determining the level of benefits, as applicable, under any employee benefit plan, program or arrangement established or maintained by the Surviving Corporation or any of its subsidiaries (including, without limitation, any employee benefit plan as defined in Section 3(3) of ERISA and any vacation or other paid time-off program or policy) for service accrued or deemed accrued prior to the Effective Time with the Company; provided, however, that such crediting of service shall not operate to duplicate any benefit or the funding of any such benefit. In addition, Rotor shall use commercially reasonable efforts to (i) cause to be waived any eligibility waiting periods, any evidence of insurability requirements and the application of any pre-existing condition limitations under each of the employee benefit plans established or maintained by the Surviving Corporation or any of its subsidiaries that cover the Continuing Employees or their dependents, and (ii) cause any eligible expenses incurred by any Continuing Employee and his or her covered dependents, during the portion of the plan year in which the Closing occurs, under those health and welfare benefit plans in which such Continuing Employee currently participates to be taken into account under those health and welfare benefit plans in which such Continuing Employee participates subsequent to the Closing Date for purposes of satisfying all deductible, coinsurance, and maximum out-of-pocket requirements applicable to such Continuing Employee and his or her covered dependents for the applicable plan year.
(c) Following the Closing, Surviving Corporation will honor all accrued but unused vacation and other paid time off of the Continuing Employees that existed immediately prior to the Closing in accordance with Company policy as in effect immediately prior to the Closing.
(d) The provisions of this Section 5.20 are solely for the benefit of the parties to the Agreement, and nothing contained in this Agreement, express or implied, shall confer upon any Continuing Employee or legal representative or beneficiary or dependent thereof, or any other person, any rights or remedies of any nature or kind whatsoever under or by reason of this Agreement, whether as a third-party beneficiary or otherwise, including, without limitation, any right to employment or continued employment for any specified period, or level of compensation or benefits. Nothing contained in this Agreement, express or implied, shall constitute an amendment or modification of any employee benefit plan of the Company or shall require the Company, Rotor, the Surviving Corporation and each of its subsidiaries to continue any Company Plan or other employee benefit arrangements, or prevent their amendment, modification or termination.
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Section 5.21 Section 16 Matters. Prior to the Effective Time, Rotor shall take all such steps as may be reasonably required (to the extent permitted under applicable Law) to cause any acquisitions of shares of Rotor Common Shares (including, in each case, securities deliverable upon exercise, vesting or settlement of any derivative securities) resulting from the transactions contemplated hereby by each individual who may become subject to the reporting requirements of Section 16(a) of the Exchange Act in connection with the transactions contemplated hereby to be exempt under Rule 16b-3 promulgated under the Exchange Act.
Section 5.22 Listing. Rotor will use its commercially reasonable efforts to cause the Rotor Class A Shares issued in connection with the transactions contemplated by this Agreement to be approved for listing on a Stock Exchange (to be selected by the Company and Rotor as promptly as practicable following the date hereof). During the period from the date of this Agreement until the Closing, Rotor shall use its commercially reasonable efforts to keep the Rotor Units, Rotor Class A Shares and Rotor Warrants listed for trading on the NYSE.
Article
6
CONDITIONS TO CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
Section 6.1 Conditions to the Obligations of the Parties. The obligations of the Parties to consummate the transactions contemplated by this Agreement are subject to the satisfaction or, if permitted by applicable Law, waiver by the Party for whose benefit such condition exists of the following conditions:
(a) any applicable waiting period under the HSR Act relating to the transactions contemplated by this Agreement and the Ancillary Documents, shall have expired or been terminated;
(b) no Order or Law issued by any court of competent jurisdiction or other Governmental Entity or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement and the Ancillary Documents shall be in effect;
(c) the Rotor Class A Shares to be issued pursuant to this Agreement shall be listed on an applicable Stock Exchange (to be selected by the Company and Rotor as promptly as practicable following the date hereof) upon the Closing, subject to any compliance extension or ability to remedy non-compliance, in each case as permitted by such Stock Exchange continued listing rules;
(d) the Rotor Stockholder Approval shall have been obtained and remain in full force and effect;
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(e) the Required Company Shareholder Approval shall have been obtained and remain in full force and effect;
(f) the Merger Sub Sole Stockholder Approval shall have been obtained and remain in full force and effect; and
(g) Rotor shall have at least $5,000,001 of net tangible assets following the exercise of Rotor Stockholder Redemption in accordance with the Rotor Governing Documents.
Section 6.2 Other Conditions to the Obligations of the Rotor Parties. The obligations of the Rotor Parties to consummate the transactions contemplated by this Agreement are subject to the satisfaction or, if permitted by applicable Law, waiver by Rotor (on behalf of itself and the other Rotor Parties), upon recommendation of the Special Committee, of the following further conditions:
(a) (i) each of the Company Fundamental Representations (other than the representations and warranties set forth in Section 3.1(a)) shall be true and correct (without giving effect to any limitation as to “materiality” or “Company Material Adverse Effect” or any similar limitation set forth therein) in all material respects as of the date hereof and as of the Closing Date as though made on and as of the Closing Date, except to the extent that any such representation and warranty is made on and as of an earlier date, in which case such representation and warranty shall be true and correct in all material respects as of such earlier date, (ii) each of the representations and warranties set forth in Section 3.1(a) and clause (a) of Section 3.8 shall be true and correct in all respects as of the date hereof and as of the Closing Date as though made on and as of the Closing Date, and (iii) each of the other representations and warranties of the Company set forth in Article 3 shall be true and correct (without giving effect to any limitation as to “materiality” or “Company Material Adverse Effect” or any similar limitation set forth therein) in all respects as of the date hereof and as of the Closing Date as though made on and as of the Closing Date, (A) except to the extent that any such representation and warranty is made on and as of an earlier date, in which case the same shall be true and correct in all respects as of such earlier date (subject to, for the avoidance of doubt, clause (B) of this Section 6.2(d)(iii)), and (B) except where the failure of such representations and warranties to be true and correct, taken as a whole, would not have a Company Material Adverse Effect;
(b) the Company shall have performed and complied in all material respects with the covenants and agreements required to be performed or complied with by the Company under this Agreement (including the Company Schedules) and each of the Ancillary Documents at or prior to the Closing;
(c) since the date of this Agreement, no Company Material Adverse Effect shall have occurred which is continuing and uncured;
(d) at or prior to the Closing, the Company shall have delivered, or caused to be delivered, to Rotor the following documents:
(i) certificates duly executed by an authorized officer of the Company, dated as of the Closing Date, to the effect that the conditions specified in Section 6.2(a) and Section 6.2(b) are satisfied, in each case, in form and substance reasonably satisfactory to Rotor;
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(ii) applicable good standing certificates (or similar documents applicable for such jurisdictions) for the Company and each of its Subsidiaries certified as of a date no later than fifteen (15) days prior to the Closing Date from the proper Governmental Entity of its jurisdiction of organization;
(iii) a copy of the Exchange Agent Agreement, duly executed by the Company and the Exchange Agent;
(e) the Merger Written Consent shall have been obtained and remain in full force and effect;
(f) the Conversion Written Consent shall have been obtained and remain in full force and effect;
(g) Rotor shall have received Employment Agreements, in each case effective as of the Closing and in a reasonable and customary form, between certain executives of the Company set forth on Schedule 6.2(g), and Rotor, each such Employment Agreement duly executed by the employee parties thereto;
(h) the Company Warrants Exercise shall have occurred as contemplated by the Warrant Exercise Notices (other than as a result of any breach or nonfulfillment of any obligation on the part of the holder of any Company Warrants).
Section 6.3 Other Conditions to the Obligations of the Company. The obligations of the Company to consummate the transactions contemplated by this Agreement are subject to the satisfaction or, if permitted by applicable Law, waiver by the Company of the following further conditions:
(a) (i) the Rotor Fundamental Representations (other than the representations and warranties set forth in Section 4.1(a)) shall be true and correct (without giving effect to any limitation as to “materiality” or “Rotor Material Adverse Effect” or any similar limitations set forth therein) in all material respects as of the date hereof and as of the Closing Date as though made on and as of the Closing Date, except to the extent that any such representation and warranty is made on and as of an earlier date, in which case such representation and warranty shall be true and correct in all material respects as of such earlier date, (ii) each of the representations and warranties set forth in Section 4.1(a) shall be true and correct in all respects as of the date hereof and as of the Closing Date as though made on and as of the Closing Date and (iii) the representations and warranties set forth in Article 4 (other than the Rotor Fundamental Representations), without giving effect to any limitation as to “materiality” or “Rotor Material Adverse Effect” or any similar limitations set forth therein, shall be true and correct in all respects as of the date hereof and as of the Closing Date as though made on and as of the Closing Date, (A) except to the extent that any such representation and warranty is made on and as of an earlier date, in which case the same shall be true and correct in all respects as of such earlier date (subject to, for the avoidance of doubt, clause (B) of this Section 6.3(a)(iii)), and (B) except where the failure of such representations and warranties to be true and correct, taken as a whole, would not have a Rotor Material Adverse Effect;
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(b) the Rotor Parties shall have performed and complied in all material respects with the covenants and agreements required to be performed or complied with by them under this Agreement and each of the Ancillary Documents at or prior to the Closing;
(c) there shall not have occurred any amendment or modification to the Waiver Agreement, other than as consented to in writing by the Company after the date hereof;
(d) at or prior to the Closing, Rotor shall have delivered, or caused to be delivered, the following documents to the Company:
(i) a certificate duly executed by an authorized officer of Rotor, dated as of the Closing Date, to the effect that the conditions specified in Section 6.3(a) and Section 6.3(b) are satisfied, in each case, in form and substance reasonably satisfactory to the Company;
(ii) a copy of the Exchange Agent Agreement, duly executed by Rotor, the Sponsor and the Exchange Agent;
(iii) the Amended and Restated Charter of Rotor in the form included in Exhibit H (or with such changes as may be reasonably approved by the Company and Rotor) shall have been filed with the Secretary of State of Delaware;
(iv) a copy of the Registration Rights Agreement, duly executed by Rotor and the Sponsor; and
(v) written resignations of all directors of Rotor as of immediately prior to the Closing other than those persons identified as continuing directors in accordance with Section 5.17, duly executed by such directors and effective as of the Effective Time; and
(e) the Aggregate Rotor Transaction Proceeds shall be greater than or equal to $200,000,000 (the “Minimum Cash Condition”).
Section 6.4 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 6 to be satisfied if such failure was caused by the failure of such Party or its Affiliates (or with respect to the Company, any Group Company’s) failure to comply with or perform any of its covenants or obligations set forth in this Agreement.
Article
7
TERMINATION
Section 7.1 Termination. This Agreement may be terminated and the transactions contemplated by this Agreement may be abandoned at any time prior to the Closing:
(a) by mutual written consent of Rotor and the Company;
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(b) by Rotor, if any of the representations or warranties set forth in Article 3 shall not be true and correct or if the Company has failed to perform any covenant or agreement on the part of the Company set forth in this Agreement or any Ancillary Document (including an obligation to consummate the Closing) such that the condition to Closing set forth in either Section 6.2(a) or Section 6.2(b) would not be satisfied and the breach or breaches causing such representations or warranties not to be true and correct, or the failures to perform any covenant or agreement, as applicable, is (or are) not cured or cannot be cured within the earlier of (i) thirty (30) days after written notice thereof is delivered to the Company, and (ii) the Termination Date; provided, however, that no Rotor Party is then in breach of this Agreement so as to prevent the condition to Closing set forth in either Section 6.3(a) or Section 6.3(b) from being satisfied;
(c) by the Company, if any of the representations or warranties set forth in Article 4 shall not be true and correct or if any Rotor Party has failed to perform any covenant or agreement on the part of such applicable Rotor Party set forth in this Agreement or any Ancillary Document (including an obligation to consummate the Closing) such that the condition to Closing set forth in either Section 6.3(a) or Section 6.3(b) would not be satisfied and the breach or breaches causing such representations or warranties not to be true and correct, or the failures to perform any covenant or agreement, as applicable, is (or are) not cured or cannot be cured within the earlier of (i) thirty (30) days after written notice thereof is delivered to Rotor and (ii) the Termination Date; provided, however, that the Company is not then in breach of this Agreement so as to prevent the condition to Closing set forth in Section 6.2(a) or Section 6.2(b) from being satisfied;
(d) by either Rotor or the Company, if the transactions contemplated by this Agreement shall not have been consummated on or prior to the date that is six (6) months after the date hereof (as extended pursuant to this Section 7.1(d), the “Termination Date”); provided that (i) the right to terminate this Agreement pursuant to this Section 7.1(d) shall not be available to Rotor if any Rotor Party’s breach of any of its covenants or obligations under this Agreement shall have proximately caused the failure to consummate the transactions contemplated by this Agreement on or before the Termination Date, (ii) the right to terminate this Agreement pursuant to this Section 7.1(d) shall not be available to the Company if the Company’s breach of any of its covenants or obligations under this Agreement shall have proximately caused the failure to consummate the transactions contemplated by this Agreement on or before the Termination Date and (iii) the right to terminate this Agreement pursuant to this Section 7.1(d) shall not be available to any Party against whom a Proceeding is brought by another Party hereto for specific performance or injunctive or other forms of equitable relief in connection herewith in accordance with Section 8.17 (which prohibition on such Party’s right to terminate this Agreement shall be applicable solely during, and shall continue throughout the pendency of such Proceeding); provided, further, that the Termination Date shall be automatically extended on a day-for-day basis for each day of any delay to the applicable waiting or review periods, or any extension thereof (but in any case, to no later than the date that is seven (7) months after the date hereof), by any Governmental Entity or applicable Stock Exchange (including any specific request from any Governmental Entity or applicable Stock Exchange to delay filings or for additional time to review the transactions contemplated hereby) that would, or would reasonably be expected to, have the effect of delaying, impeding, hindering or preventing the review of the transactions contemplated hereby and/or issuance of clearance or approval from such Governmental Entity to the extent required to satisfy the condition set forth in Section 6.1(b);
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(e) by either Rotor or the Company, if any Governmental Entity shall have issued an Order or taken any other action permanently enjoining, restraining or otherwise prohibiting the transactions contemplated by this Agreement or any Ancillary Document and such Order or other action shall have become final and nonappealable;
(f) by either Rotor or the Company if the Rotor Stockholders Meeting has been held (including any adjournment or postponement thereof), has concluded, Rotor’s stockholders have duly voted, and the Rotor Stockholder Approval was not obtained;
(g) by Rotor if the Conversion Written Consent is, at any time, no longer valid or is otherwise revoked or rescinded and no longer effective to approve the Company Preferred Conversion;
(h) by the Company if a Change in Recommendation shall have occurred, provided that in the case of this clause (h), the Company exercises its termination right within ten (10) Business Days after such Change in Recommendation;
(i) by Rotor if (i) the Merger Written Consent referred to in Section 5.15(a) is not received by Rotor within twenty four (24) hours after the execution of this Agreement (provided that Rotor’s right to terminate this Agreement pursuant to this Section 7.1(i)(i) shall expire at the time that the Merger Written Consent referred to in Section 5.15(a) is received by Rotor) or, (ii) thereafter, such Merger Written Consent is, at any time, no longer valid or is otherwise revoked or rescinded and no longer effective to approve the Merger; or
(j) by Rotor if the Company shall have failed to deliver the PCAOB Financials to Rotor on or prior to 5:00 pm Eastern Time on April 15, 2021.
Section 7.2 Effect of Termination. In the event of the termination of this Agreement pursuant to Section 7.1, this entire Agreement shall forthwith become void (and there shall be no Liability or obligation on the part of the Parties and their respective Representatives) with the exception of (a) this Section 7.2, Article 8 and Article 1 (to the extent related to the foregoing), each of which shall survive such termination and remain valid and binding obligations of the Parties and (b) the Confidentiality Agreement, which shall survive such termination and remain a valid and binding obligation of the Parties thereto in accordance with its terms. Notwithstanding the foregoing, the termination of this Agreement pursuant to Section 7.1 shall not affect any Liability on the part of any Party for (i) a willful and material breach of any covenant or agreement set forth in this Agreement prior to such termination or (ii) Fraud. Without limiting the foregoing, and except as provided in this Section 7.2 (including clause (i) and (ii) of the immediately preceding sentence, but subject to Section 8.18), and subject to the right to seek injunctions, specific performance or other equitable relief in accordance with Section 8.17, the Parties’ sole right prior to the Closing with respect to any breach of any representation, warranty, covenant or other agreement contained in this Agreement by another Party or with respect to the transactions contemplated by this Agreement shall be the right, if applicable, to terminate this Agreement pursuant to this Article 7.
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Article
8
MISCELLANEOUS
Section 8.1 Survival. None of the representations, warranties, covenants and agreements set forth in this Agreement shall survive the Closing, except for those covenants and agreements set forth in this Agreement that by their respective terms contemplate performance after the Closing.
Section 8.2 Entire Agreement; Assignment. This Agreement (together with the Ancillary Documents) constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter hereof. This Agreement may not be assigned by any Party (whether by operation of Law or otherwise) without the prior written consent of Rotor and the Company. Any attempted assignment of this Agreement not in accordance with the terms of this Section 8.2 shall be void, ab initio.
Section 8.3 Amendment. This Agreement may be amended or modified only by a written agreement executed and delivered by duly authorized officers of Rotor and the Company; provided that in the case of obtaining Rotor’s approval, prior to the Closing, of any amendments that would affect in any material respect the Closing Merger Consideration, the Contingent Merger Consideration or the Governing Documents of Rotor attached as Exhibit H hereto, the Special Committee shall first approve such amendments in writing. This Agreement may not be modified or amended except as provided in the immediately preceding sentence and any purported amendment by any Party or Parties effected in a manner which does not comply with this Section 8.3 shall be void, ab initio.
Section 8.4 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given) when delivered in person, when delivered by e-mail (having obtained electronic delivery confirmation thereof), or when sent by registered or certified mail (postage prepaid, return receipt requested) (upon receipt thereof) to the other Parties as follows:
| (a) | If to any Rotor Party, prior to the Closing, to: |
c/o Rotor Acquisition Corp.
405 Lexington Avenue
New York, New York 10174
| Attn: | Amy Salerno |
| E-mail: | info@rotoracquisition.com |
with copies (which shall not constitute notice) to:
Gibson, Dunn & Crutcher
LLP
1050 Connecticut Avenue, N.W.
Washington, DC 20036-5306
| Attention: | Mark Director |
| Evan | D’Amico |
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| Email: | MDirector@gibsondunn.com |
EDAmico@gibsondun.com
and
Milbank LLP
55 Hudson Yards
New York, NY 10001
| Attention: | Scott Golenbock |
Iliana Ongun
| Email: | sgolenbock@milbank.com |
iongun@milbank.com
| (b) | If to the Company, to: |
Sarcos Corp.
360 Wakara Way
Salt Lake City, Utah 84108
| Attention: | Ben Wolff |
Julie Wolff
| E-mail: | b.wolff@sarcos.com |
j.wolff@sarcos.com
with a copy (which shall not constitute notice) to:
Wilson Sonsini Goodrich &
Rosati
633 West Fifth Street, Suite 1550
Los Angeles, CA 90071
| Attention: | Kathy H. Ku |
| Email: | kku@wsgr.com |
and with a copy (which shall not constitute notice) to:
Wilson Sonsini Goodrich &
Rosati
701 Fifth Avenue, Suite 5100
Seattle, WA 98104-7036
| Attention: | Patrick Schultheis |
| Michael Nordtvedt |
| Matt Squires |
| Email: | pschultheis@wsgr.com |
| mnordtvedt@wsgr.com |
| msquires@wsgr.com |
or to such other address as the Party to whom notice is given may have previously furnished to the others in writing in the manner set forth above.
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Section 8.5 Governing Law. This Agreement and all related Proceedings shall be governed by and construed in accordance with the internal Laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Law of any jurisdiction other than the State of Delaware.
Section 8.6 Fees and Expenses. Except as otherwise set forth in this Agreement, all fees and expenses incurred in connection with this Agreement, the Ancillary Documents and the transactions contemplated hereby and thereby, including the fees and disbursements of a Party’s Representatives, shall be paid by the Party incurring such fees or expenses; provided that, for the avoidance of doubt, (a) if this Agreement is terminated in accordance with its terms, the Company shall pay, or cause to be paid, all Company Expenses and Rotor shall pay, or cause to be paid, all Rotor Transaction Expenses, and (b) if the Closing occurs, then Rotor shall pay, or cause to be paid, (i) all accrued and unpaid Rotor Transaction Expenses and (ii) all accrued and unpaid Company Expenses and (collectively, “Unpaid Transaction Expenses”) as set forth on a written statement to be delivered to Rotor by or on behalf of the Company not less than two (2) Business Days prior to the Closing Date, which shall include the respective amounts and wire transfer instructions for the payment thereof, together with corresponding invoices for the foregoing; provided that any Unpaid Transaction Expenses due to current or former employees, independent contractors, officers, or directors of the Company or any of its Subsidiaries shall be paid to the Company for further payment to such employee, independent contractor, officer or director through the Company’s payroll.
Section 8.7 Construction; Interpretation. The term “this Agreement” means this Agreement and Plan of Merger together with the Schedules and Exhibits hereto, as the same may from time to time be amended, modified, supplemented or restated in accordance with the terms hereof. The headings set forth in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. No Party, nor its respective counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions hereof, and all provisions of this Agreement shall be construed according to their fair meaning and not strictly for or against any Party. Unless otherwise indicated to the contrary herein by the context or use thereof: (a) the words, “herein,” “hereto,” “hereof” and words of similar import refer to this Agreement as a whole, including the Schedules and Exhibits, and not to any particular section, subsection, paragraph, subparagraph or clause set forth in this Agreement; (b) masculine gender shall also include the feminine and neutral genders, and vice versa; (c) words importing the singular shall also include the plural, and vice versa; (d) the words “include,” “includes” or “including” shall be deemed to be followed by the words “without limitation”; (e) references to “$” or “dollar” or “US$” shall be references to United States dollars; (f) the word “or” is disjunctive but not necessarily exclusive; (g) the words “writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form; (h) the word “day” means calendar day unless Business Day is expressly specified; (i) the word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”; (j) all references to Articles, Sections, Exhibits or Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement; (k) the words “provided” or “made available” or words of similar import (regardless of whether capitalized or not) shall mean, when used with reference to documents or other materials required to be provided or made available to Rotor, any documents or other materials posted to the electronic data room located at https://datasite.com, as of 5:00 p.m., Eastern Time, or otherwise provided by e-mail from counsel to the Company, on the one hand, to counsel to Rotor or the Special Committee, on the other hand, in either case, at least two (2) Business Days prior to the date hereof; (l) all references to any Law will be to such Law as amended, supplemented or otherwise modified from time to time; (m) whenever the words “in the ordinary course of business,” “in the ordinary course” or words of similar import are used in this Agreement, they shall be deemed to be followed by the words “consistent with its past practice” and shall be construed to mean in the ordinary and usual course of normal day-to-day operations of the business of such Person consistent with its past practice; and (n) all references to any Contract are to that Contract as amended or modified from time to time in accordance with the terms thereof (subject to any restrictions on amendments or modifications set forth in this Agreement). If any action under this Agreement is required to be done or taken on a day that is not a Business Day, then such action shall be required to be done or taken not on such day but on the first succeeding Business Day thereafter. 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.
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Section 8.8 Exhibits and Schedules. All Exhibits and Schedules, or documents expressly incorporated into this Agreement, are hereby incorporated into this Agreement and are hereby made a part hereof as if set out in full in this Agreement. The Schedules shall be arranged in sections and subsections corresponding to the numbered and lettered sections and subsections set forth in this Agreement. Any item disclosed in the Company Schedules or in the Rotor Schedules corresponding to any section or subsection of Article 3 (in the case of the Company Schedules) or Article 4 (in the case of the Rotor Schedules) shall be deemed to have been disclosed with respect to every other section and subsection of Article 3 (in the case of the Company Schedules) or Article 4 (in the case of the Rotor Schedules), as applicable, where the relevance of such disclosure to such other section or subsection is reasonably apparent on the face of the disclosure. The information and disclosures set forth in the Schedules that correspond to the section or subsections of Article 3 or 4 may not be limited to matters required to be disclosed in the Schedules, and any such additional information or disclosure is for informational purposes only and does not necessarily include other matters of a similar nature. The specification of any dollar amount in the representations, warranties or covenants set forth in this Agreement or the inclusion of any specific item in any Schedule is not intended to imply that such amounts, or higher or lower amounts or the items so included or other items, are or are not material or are within or outside of the ordinary course of business or consistent with past practice, and no Party shall use the fact of the setting of such amounts or the inclusion of any such item in any dispute or controversy as to whether any obligation, items or matter not described herein or included in a Schedule is or is not material for purposes of this Agreement. Any description of any agreement, document, instrument, plan, arrangement or other item set forth on the Company Schedules or the Rotor Schedules is a summary only and is qualified in its entirety by the terms of such agreement, document, instrument, plan, arrangement or item. The information contained in this Agreement, in the Company Schedules or Rotor Schedules and exhibits hereto is disclosed solely for purposes of this Agreement, and no information contained herein or therein will be deemed to be an admission by any party hereto to any third party of any matter whatsoever, including any violation of Law or breach of contract.
Section 8.9 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each Party and its successors and permitted assigns and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement, except for (a) from and after the Effective Time, the provisions of Article 2 (which shall be for the benefit of the Pre-Closing Holders to the extent necessary for such holders to receive the Total Merger Consideration due to such holders thereunder pursuant to the Allocation Schedule), (b) the provisions of Section 5.5 (which shall be for the benefit of the D&O Persons), (c) Section 8.13 (which shall be for the benefit of all Nonparty Affiliates) and (d) Section 5.4, Section 8.4 and Section 8.13 and (e) this Section 8.9 (which shall be for the benefit of any Person described in clause (a) through (d), inclusive, with respect to any matters for which such Person is referenced in this Section 8.9).
Section 8.10 Severability. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable Law, but if any term or other provision of this Agreement is held to be invalid, illegal or unenforceable under applicable Law, all other provisions of this Agreement shall remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision of this Agreement is invalid, illegal or unenforceable under applicable Law, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
Section 8.11 Counterparts; Electronic Signatures. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. The words “execution,” “signed,” “signature,” and words of like import in this Agreement or in any other certificate, agreement or document related to this Agreement or the other Ancillary Documents shall include images of manually executed signatures transmitted by facsimile or other electronic format (including, “pdf,” “tif” or “jpg”) and other electronic signatures (including, DocuSign and AdobeSign). The use of electronic signatures and electronic records (including, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the Delaware Uniform Electronic Transactions Act and any other applicable law. Minor variations in the form of the signature page, including footers from earlier versions of this Agreement or any such other document, shall be disregarded in determining the party’s intent or the effectiveness of such signature.
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Section 8.12 Knowledge of Company; Knowledge of Rotor. For all purposes of this Agreement, the phrases “to the Company’s knowledge,” “known by the Company,” and “known to the Company” and any derivations thereof shall mean as of the applicable date, the actual knowledge of the individuals set forth on Section 8.12(a) of the Company Schedules, assuming reasonable due inquiry and investigation. For all purposes of this Agreement, the phrase “to Rotor’s knowledge” and “to the knowledge of Rotor” and any derivations thereof shall mean as of the applicable date, the actual knowledge of the individuals set forth on Section 8.12(b) of the Rotor Schedules, assuming reasonable due inquiry and investigation. For the avoidance of doubt, none of the individuals set forth on Section 8.12(a) of the Company Schedules or Section 8.12(b) of the Rotor Schedules shall have any personal Liability or obligations regarding such knowledge.
Section 8.13 No Recourse. Notwithstanding anything to the contrary set forth herein, except in the case of Fraud, all Proceedings, Liabilities and causes of action (whether in contract or in tort, in Law or in equity or granted by statute) that may be based upon, be in respect of, arise under, out or by reason of, be connected with or relate in any manner to this Agreement, or the negotiation, execution or performance of this Agreement (including any representation or warranty made in this Agreement) or any transactions contemplated by this Agreement, may be made against only (and such representations and warranties are those solely of) the Persons that are expressly identified herein as Parties and their respective successors and permitted assigns. Notwithstanding anything to the contrary set forth herein, except in the case of Fraud, no Person who is not a Party, including any current, former or future director, officer, founder, employee, consultant, incorporator, member, partner, manager, shareholder, Affiliate, agent, attorney, representative, successor or assignee of, and any financial advisor to, any Party, or any current, former or future director, officer, employee, consultant, incorporator, member, partner, manager, shareholder, Affiliate, agent, attorney, representative, successor or assignee of, and any financial advisor to, any of the foregoing, and in the case of Rotor, the Sponsor (or any successor or assignee thereof) (each in their capacity as such, a “Nonparty Affiliate”), shall have any Liability (whether in contract or in tort, in Law or in equity, or granted by statute) for any Proceedings, Liabilities or causes of action arising under, out or by reason of, in connection with, or related in any manner to this Agreement or based on, in respect of, or by reason of this Agreement or its negotiation, execution, performance or breach or any transactions contemplated by this Agreement, and, to the maximum extent permitted by Law, each Party hereby waives and releases all such Proceedings, Liabilities and causes of action against any such Nonparty Affiliates.
Section 8.14 Extension; Waiver. The Company may, prior to the Closing, (a) extend the time for the performance of any of the obligations or other acts of any Rotor Party set forth herein, (b) waive any inaccuracies in the representations and warranties of any Rotor Party set forth herein, or (c) waive compliance by any Rotor Party with any of the agreements or conditions set forth herein. Rotor may, prior to the Closing, (i) extend the time for the performance of any of the obligations or other acts of the Company set forth herein, (ii) waive any inaccuracies in the representations and warranties of the Company set forth herein, or (iii) waive compliance by the Company with any of the agreements or conditions set forth herein. Any agreement on the part of any Party to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such Party. 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.
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Section 8.15 Waiver of Jury Trial. THE PARTIES EACH HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR UNDER ANY ANCILLARY DOCUMENT OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES IN RESPECT OF THIS AGREEMENT OR ANY ANCILLARY DOCUMENT OR ANY OF THE TRANSACTIONS RELATED HERETO OR THERETO OR ANY FINANCING IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING IN RESPECT OF ANY ACTION AGAINST ANY FINANCING SOURCE (IF ANY), IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. THE PARTIES EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
Section 8.16 Jurisdiction. Any 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 subject matter jurisdiction, the Superior Court of the State of Delaware), or, if it has or can acquire jurisdiction, in the United States District Court for the District of Delaware, and each of the parties irrevocably submits to the exclusive jurisdiction of each such court in any such Proceeding, waives any objection it may now or hereafter have to personal jurisdiction, venue or to convenience of forum, agrees that all claims in respect of the Proceeding shall be heard and determined only in any such court, and agrees not to bring any 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 Proceeding brought pursuant to this Section 8.16.
Section 8.17 Remedies. Except as otherwise expressly provided herein, any and all remedies provided herein will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by Law or equity upon such Party, and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy. The failure on the part of any Party to exercise, and no delay in exercising, any right, power, or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power, or remedy by such Party preclude any other or further exercise thereof or the exercise of any other right, power, or remedy. The Parties agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the Parties do not perform their respective obligations under the provisions of this Agreement (including failing to take such actions as are required of them hereunder to consummate the transactions contemplated by this Agreement) in accordance with their specific terms or otherwise breach such provisions. It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in each case without posting a bond or undertaking and without proof of damages and this being in addition to any other remedy to which they are entitled at Law or in equity. Each of the Parties agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief when expressly available pursuant to the terms of this Agreement on the basis that the other parties have an adequate remedy at Law or an award of specific performance is not an appropriate remedy for any reason at Law or equity.
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Section 8.18 Trust Account Waiver. Reference is made to the final prospectus of Rotor, filed with the Securities and Exchange Commission (File No. 333-251521) (the “Prospectus”), and dated as of January 14, 2021. The Company represents and warrants that it has read the Prospectus and understands that Rotor has established a trust account containing the proceeds of its initial public offering (the “IPO”) and from certain private placements occurring simultaneously with the IPO (collectively, with interest accrued from time to time thereon, the “Trust Account”) initially in an approximate amount of $276 million for the benefit of Rotor’s public stockholders (the “Public Stockholders”) and certain parties (including the underwriters of the IPO) and that, except with respect to interest earned on the funds held in the Trust Account that may be released to Rotor to pay its taxes, if any, Rotor may disburse monies from the Trust Account only: (i) to the Public Stockholders in the event they elect to redeem Rotor Class A Shares in connection with the consummation of Rotor’s initial business combination (as such term is used in the Prospectus) (the “Business Combination”) or in connection with an amendment to Rotor’s certificate of incorporation, (ii) to the Public Stockholders if Rotor fails to consummate a Business Combination within eighteen (18) months from the closing of the IPO, or (iii) to Rotor after or concurrently with the consummation of a Business Combination. For and in consideration of Rotor entering into this Agreement, the receipt and sufficiency of which is hereby acknowledged, the Company hereby 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 monies in the Trust Account (or distributions therefrom other than distributions to Rotor), or make any claim against, the Trust Account, with respect to claims arising out of this Agreement, 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 as the “Claims”). The Company hereby irrevocably waives any Claims it may have against the Trust Account (including any distributions therefrom other than distributions to Rotor) now or in the future as a result of, or arising out of, this Agreement and will not seek recourse against the Trust Account (including any distributions therefrom other than distributions to Rotor) for Claims arising out of this Agreement or the transactions contemplated hereby; provided, however, that the foregoing waiver will not limit or prohibit the Company from pursuing a claim against Rotor (or any successor entity) or any other person for legal relief against monies or other assets of Rotor (or any successor entity) held outside of the Trust Account or for specific performance or other equitable relief in connection with this Agreement to the extent permitted hereunder.
* * * * *
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement and Plan of Merger to be duly executed on its behalf as of the day and year first above written.
| ROTOR ACQUISITION CORP. | ||
| By: | /s/ Amy Salerno | |
| Name: | Amy Salerno | |
| Title: | Chief Financial Officer | |
| ROTOR MERGER SUB CORP. | ||
| By: | /s/ Amy Salerno | |
| Name: | Amy Salerno | |
| Title: | Director | |
Signature page to Agreement and Plan of Merger
| SARCOS CORP. | ||
| By: | /s/ Ben Wolff | |
| Name: | Ben Wolff | |
| Title: | CEO | |
Signature page to Agreement and Plan of Merger
Exhibit 10.1
LOCK-UP AGREEMENT
THIS LOCK-UP AGREEMENT (this “Agreement”) is made and entered into as of April 5, 2021 by and among (i) Rotor Acquisition Corp., a Delaware corporation (together with its successors, “Rotor”), (ii) Sarcos Corp., a Utah corporation (“Sarcos”), and (iii) the undersigned (“Holder”). Any capitalized term used but not defined in this Agreement will have the meaning ascribed to such term in the Merger Agreement (as defined below).
WHEREAS, Rotor, Rotor Merger Sub Corp., a Delaware corporation and a direct wholly-owned subsidiary of Rotor (“Merger Sub”), and Sarcos have entered into that certain Agreement and Plan of Merger, as of the date first set forth above (as amended from time to time in accordance with the terms thereof, the “Merger Agreement”), pursuant to which, among other matters, upon the consummation of the transactions contemplated thereby (the “Closing”), Merger Sub will merge with and into Sarcos, with Sarcos continuing as the surviving entity and a wholly-owned subsidiary of Rotor (the “Merger”), and as a result of which all of the issued and outstanding capital stock of Sarcos immediately prior to the Closing shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, in exchange for the right to receive newly issued Rotor Common Shares, all upon the terms and subject to the conditions set forth in the Merger Agreement and in accordance with the applicable provisions of the DGCL and the Act;
WHEREAS, as of the date hereof, Holder is a holder of equity securities or right to purchase or otherwise acquire equity securities of Sarcos in such amounts and classes or series as set forth underneath Holder’s name on the signature page hereto; and
WHEREAS, pursuant to, and in order to encourage the relevant parties to consummate the transactions contemplated by the Merger Agreement, [[INSERT FOR CURRENT EMPLOYEES:] for the amount of $10.00 in cash,] and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto desire to enter into this Agreement, pursuant to which the Restricted Securities (as defined below) shall become subject to limitations on disposition as set forth herein.
NOW, THEREFORE, in consideration of the premises set forth above, which are incorporated in this Agreement as if fully set forth below, and intending to be legally bound hereby, the parties hereby agree as follows:
1. Definitions. The terms defined in this Section 1 shall, for all purposes of this Agreement, have the respective meanings set forth below:
(a) “Liquidity Event” shall mean the date after the Closing on which Rotor completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of Rotor’s stockholders having the right to exchange their equity holdings in Rotor for cash, securities or other property.
(b) “Permitted Transferee” shall mean any Person to whom the Holder is permitted to transfer Restricted Securities prior to the expiration of the Lock-Up Period pursuant to Section 2(a).
(c) “Restricted Securities” shall mean with respect to Holder and its respective Permitted Transferees, (i) the Rotor Common Shares to be received by Holder as Closing Merger Consideration in respect of the Sarcos Common Stock, Sarcos Preferred Stock, or Sarcos RSAs, if any, set forth on Holder’s signature page hereto, together with any securities paid as dividends or distributions with respect to such securities, (ii) the Rotor Common Shares to be subject to the Sarcos Options, Sarcos RSUs, and Sarcos Warrants, if any, set forth on Holder’s signature page hereto, upon and following their assumption by Rotor pursuant to the terms of the Merger Agreement, and (iii) any securities paid as dividends or distributions with respect to the foregoing securities or into which such securities are exchanged or converted.
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(d) “Sarcos Common Stock” shall mean shares of Class A common stock or Class B common stock issued by Sarcos to Holder, as set forth on Holder’s signature page hereto.
(e) “Sarcos Options” shall mean options issued by Sarcos to Holder for the purchase of Class A common stock of Sarcos, as set forth on Holder’s signature page hereto.
(f) “Sarcos Preferred Stock” shall mean shares of Series A preferred stock, Series B preferred stock, or Series C preferred stock issued by Sarcos to Holder, as set forth on Holder’s signature page hereto.
(g) “Sarcos RSAs” shall mean any awards of restricted shares of Class A common stock of Sarcos, as set forth on Holder’s signature page hereto.
(h) “Sarcos RSUs” shall mean any restricted stock units issued by Sarcos to Holder for shares of Class A common stock of Sarcos, as set forth on Holder’s signature page hereto.
(i) “Sarcos Warrants” shall mean any warrants issued by Sarcos to Holder exercisable for shares of Class A common stock of Sarcos as set forth on Holder’s signature page hereto.
(j) “Transfer” or “Transferred” shall mean (i) the sale, exchange or transfer or assignment of, offer to sell, contract or agreement to sell, hypothecate, pledge, hedge, grant of any option, right or warrant to purchase or otherwise dispose of or agreement to dispose of, or entry into any transaction that is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise), directly or indirectly, including through the filing (or participation in the filing) of a registration statement (other than any registration statement on Form S-8) with the SEC in respect of, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder with respect to, any security, (ii) the entry into any swap or other arrangement that transfers to another Person, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (iii) the public announcement of any intention to effect any transaction, including the filing of a registration statement (other than any registration statement on Form S-8), specified in clause (i) or (ii).
2. Lock-up Provisions.
(a) Subject to Section 2(b), Holder agrees that it shall not Transfer any Restricted Securities beginning on the Closing Date and ending on:
i. If the Restricted Securities are received by Holder as Closing Merger Consideration from the exchange or conversion of Sarcos Preferred Stock or Sarcos Warrants, then fifty percent (50%) of such Restricted Securities may be Transferred beginning at the earlier to occur of (i) the close of business on the one hundred and twentieth (120th) day after the Closing, provided that the average closing price of the Rotor Common Shares as reported on the [Stock Exchange] exceeds $13.00 for twenty (20) trading days in any thirty (30) consecutive trading day period prior to such Transfer and (ii) the close of business on the six (6) month anniversary of the Closing. The remaining fifty percent (50%) of such Restricted Securities may be Transferred beginning on the close of business on the one (1) year anniversary of the Closing Date.
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ii. If the Restricted Securities are received by Holder as Closing Merger Consideration from the exchange or conversion of Sarcos Common Stock, Sarcos Options, Sarcos RSUs, Sarcos RSAs (or any of them), then twenty percent (20%) of the such Restricted Securities may be Transferred beginning at the earlier to occur of (w) the close of business on the one hundred and twentieth (120th) day after the Closing, provided that the average closing price of the Rotor Common Shares as reported on the [Stock Exchange] exceeds $13.00 for twenty (20) trading days in any thirty (30) consecutive trading day period prior to such Transfer and (x) the close of business on the one hundred and eightieth (180th) day after the Closing. The remaining eighty percent (80%) of the such Restricted Securities may be Transferred beginning upon the earlier to occur of (x) such time as the Company or any of its subsidiaries have delivered to one or more customers at least twenty (20) Guardian® XO® and/or Guardian® XT commercial units to customers of the Constituent Corporations (but in no event prior to the close of business on the one (1) year anniversary of the Closing and (y) the close of business on the two (2) year anniversary of the Closing Date.
(in the case of (i) and (ii), such period with respect to Holder’s applicable Restricted Securities, the “Lock-Up Period”).
(b) Notwithstanding the provisions set forth in Section 2(a), one hundred percent (100%) of the Restricted Securities may be Transferred in connection with or following the occurrence of a Liquidity Event, and Holder or its Permitted Transferees may Transfer the Restricted Securities during the Lock-Up Period: (A) in the case that Holder is an individual, by gift to the spouse, domestic partner, parent, sibling, child or grandchild of such Holder or any other natural person with whom such Holder has a relationship by blood, marriage or adoption not more remote than first cousin, to an estate planning vehicle or to a trust, the beneficiary of which is a member of the individual’s immediate family, or to a charitable organization; (B) in the case that Holder is an individual, by virtue of laws of descent and distribution upon death of Holder; (C) in the case that Holder is an individual, pursuant to a qualified domestic relations order, divorce settlement, divorce decree or separation agreement; (D) to a nominee or custodian of a person to whom a Transfer would be permitted under clauses (A) through (C) above; (E) to any members, partners, beneficial owners or shareholders of Holder or any Affiliates of Holder; (F) by virtue of applicable law or Holder’s organizational documents upon liquidation or dissolution of Holder; (G) to Rotor in connection with the repurchase of such Holder’s shares in connection with the termination of Holder’s employment with Rotor or its subsidiaries pursuant to contractual agreements with Rotor; (H) to satisfy tax withholding obligations in connection with the exercise of options to purchase Rotor Common Shares or the vesting and/or settlement of Rotor restricted stock or stock-based awards (including options and awards assumed by Rotor or otherwise issued in exchange for Sarcos Options, Sarcos RSUs or Sarcos RSAs); (I) in payment on a “net exercise” or “cashless” basis of the exercise or purchase price with respect to the exercise of options to purchase shares of Rotor Common Shares (including options assumed by Rotor); or (J) in connection with any court order or order from a Governmental Entity requiring the sale of such Restricted Securities; provided, however, that in the case of clauses (A) through (F) such transferee must enter into a written agreement with Rotor, in substantially the same form of this Agreement, stating that the transferee is receiving and holding the Restricted Securities subject to the provisions of this Agreement and shall be deemed to be a Holder for purposes of this Agreement, and there shall be no further Transfer of such Restricted Securities except in accordance with this Agreement; provided, further, for the avoidance of doubt, a Holder shall not be limited in filing (or participation in the filing) of a registration statement with the SEC in respect of any restricted stock or stock-based awards the Transfer of which is or may be necessary to satisfy tax withholding obligations in connection with the vesting and/or settlement of such restricted stock or stock-based awards.
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(c) If any Transfer is made or attempted contrary to the provisions of this Agreement, such purported Transfer shall be null and void ab initio, and Rotor shall refuse to recognize any such purported transferee of the Restricted Securities as one of its equity holders for any purpose.
(d) During the Lock-up Period, Holder agrees and consents to the entry of stop transfer instructions with Rotor’s transfer agent and registrar against the transfer of Restricted Securities held by Holder, except in compliance with the foregoing restrictions, and further agrees that stop transfer orders shall be placed against the Restricted Securities and each certificate or book entry position statement evidencing any Restricted Securities shall be stamped or otherwise imprinted with a legend in substantially the following form, in addition to any other applicable legends:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH IN A LOCK-UP AGREEMENT, DATED AS OF APRIL 5, 2021, BY AND AMONG THE ISSUER OF SUCH SECURITIES (THE “ISSUER”), THE ISSUER’S SECURITY HOLDER NAMED THEREIN AND CERTAIN OTHER PARTIES NAMED THEREIN, AS AMENDED. A COPY OF SUCH LOCK-UP AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”
(e) For the avoidance of any doubt, (i) if and to the extent Holder’s Restricted Securities include issued and outstanding shares of Rotor Common Shares, Holder shall retain all of its rights as a stockholder of Rotor during the Lock-up Period, including the right to vote any Restricted Securities that such Holder is entitled to vote, and to receive any dividends and distributions in respect of any Restricted Securities, and (ii) the restrictions contained in Section 2(a) shall not apply to any Rotor Common Shares or other securities of Rotor acquired by Holder in open market transactions or in any public or private capital raising transactions of Rotor or otherwise to any Rotor Common Shares (or other securities of Rotor) other than the Restricted Securities.
3. Miscellaneous.
(a) Termination of Merger Agreement. Notwithstanding anything to the contrary contained herein, in the event that the Merger Agreement is terminated in accordance with its terms prior to the Closing, this Agreement and all rights and obligations of the parties hereunder shall automatically terminate and be of no further force or effect.
(b) Binding Effect; Assignment. Holder hereby represents and warrants that Holder has full power, capacity and authority to enter into this Agreement. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. This Agreement and all obligations of Holder are personal to Holder and may not be transferred or delegated by Holder at any time without the prior written consent of Rotor and Sarcos. Each of Rotor and Sarcos may freely assign any or all of its rights under this Agreement, in whole or in part, to any successor entity (whether by merger, consolidation, equity sale, asset sale or otherwise) without obtaining the consent or approval of Holder.
(c) Third Parties. Nothing contained in this Agreement or in any instrument or document executed by any party in connection with the transactions contemplated hereby shall create any rights in, or be deemed to have been executed for the benefit of, any person or entity that is not a party hereto or thereto or a successor or permitted assign of such a party; provided, that Rotor Sponsor, LLC, a Delaware limited liability company (“Sponsor”), shall be an express third party beneficiary of this Agreement and shall have the right to enforce the terms of this Agreement directly against Holder as if Sponsor were an original party hereto.
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(d) Governing Law; Jurisdiction; Waiver of Jury Trial; Remedies. This Agreement and all related Proceedings shall be governed by and construed in accordance with the internal Laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Law of any jurisdiction other than the State of Delaware. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. EACH PARTY HERETO HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES HERETO MAY FILE A COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. The parties hereto expressly incorporate by reference Section 8.16 (Jurisdiction) of the Merger Agreement and, subject to Section 3(j) hereof, Section 8.17 (Remedies) of the Merger Agreement to apply to this Agreement, mutatis mutandis, with references to the Merger Agreement therein deemed to reference this Agreement and references to the “Parties” thereunder deemed to reference the parties hereto.
(e) Severability. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable Law, but if any term or other provision of this Agreement is held to be invalid, illegal or unenforceable under applicable Law, all other provisions of this Agreement shall remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party hereto. Upon such determination that any term or other provision of this Agreement is invalid, illegal or unenforceable under applicable Law, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
(f) Construction; Interpretation. The headings set forth in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. Unless otherwise indicated to the contrary herein by the context or use thereof: (a) the words, “herein,” “hereto,” “hereof” and words of similar import refer to this Agreement as a whole, and not to any particular section, subsection, paragraph, subparagraph or clause set forth in this Agreement; (b) masculine gender shall also include the feminine and neutral genders, and vice versa; (c) words importing the singular shall also include the plural, and vice versa; (d) the words “include,” “includes” or “including” shall be deemed to be followed by the words “without limitation”; (e) references to “$” or “dollar” or “US$” shall be references to United States dollars; (f) the word “or” is disjunctive but not necessarily exclusive; (g) the words “writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form; (h) the word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”; (i) all references to Articles or Sections are to Articles or Sections of this Agreement; and (j) all references to any Law will be to such Law as amended, supplemented or otherwise modified from time to time. The parties hereto 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.
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(g) Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given) when delivered in person, when delivered by e-mail (having obtained electronic delivery confirmation thereof), or when sent by registered or certified mail (postage prepaid, return receipt requested) (upon receipt thereof) to the other parties hereto as follows:
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If to Rotor prior to the Closing, to:
Rotor Acquisition Corp. 405 Lexington Avenue New York, New York 10174 E-mail: info@rotoracquisition.com |
With a copy (which will not constitute notice) to:
Gibson, Dunn & Crutcher LLP 200 Park Avenue New York, New York 10166-0193 Attention: Mark Director Evan D’Amico Email: mdirector@gibsondunn.com edamico@gibsondunn.com
|
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If to Sarcos prior to the Closing, to:
Sarcos Corp. Salt Lake City, Utah 84108 |
With a copy (which shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati, P.C. 701 Fifth Avenue, Suite 5100 Seattle, WA 98104 Attention: Patrick J. Schultheis, Esq. Email: PSchultheis@wsgr.com |
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If to Rotor or Sarcos after the Closing, to:
Sarcos Corp. Salt Lake City, Utah 84108
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With a copy (which shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati, P.C. 701 Fifth Avenue, Suite 5100 Seattle, WA 98104 Attention: Patrick J. Schultheis, Esq. Email: PSchultheis@wsgr.com |
| If to Holder, to: the address set forth below Holder’s name on the signature page to this Agreement. | |
(h) Amendments and Waivers. This Agreement may be amended or modified only with the written consent of Rotor, Sarcos and Holder. The observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the party against whom enforcement of such waiver is sought. No failure or delay by a party in exercising any right hereunder shall operate as a waiver thereof. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.
(i) Authorization on Behalf of Rotor. In the event that Holder or Holder’s Affiliate serves as a director, officer, employee or other authorized agent of Rotor or any of its current or future Affiliates, Holder and/or Holder’s Affiliate, as applicable, shall have no authority, express or implied, to act or make any determination on behalf of Rotor or any of its current or future Affiliates in connection with this Agreement to which Holder is party or any dispute or Proceeding with respect hereto.
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(j) Specific Performance. Holder acknowledges that its obligations under this Agreement are unique, recognizes and affirms that in the event of a breach of this Agreement by Holder, money damages will be inadequate and Rotor and Sarcos will have no adequate remedy at law, and agrees that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by Holder in accordance with their specific terms or were otherwise breached. Accordingly, each of Rotor and Sarcos (or Sponsor on their behalf) shall be entitled to an injunction or restraining order to prevent breaches of this Agreement by Holder and to enforce specifically the terms and provisions hereof, without the requirement to post any bond or other security or to prove that money damages would be inadequate, this being in addition to any other right or remedy to which such party may be entitled under this Agreement, at law or in equity.
(k) Entire Agreement. This Agreement constitutes the full and entire understanding and agreement among the parties hereto with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled; provided that, for the avoidance of doubt, the foregoing shall not affect the rights and obligations of the parties, if any, under the Merger Agreement or any Ancillary Documents. Notwithstanding the foregoing, nothing in this Agreement shall limit any of the rights or remedies of Rotor and Sarcos or any of the obligations of Holder under any other agreement between Holder and Rotor or Sarcos or any certificate or instrument executed by Holder in favor of Rotor or Sarcos, and nothing in any other agreement, certificate or instrument shall limit any of the rights or remedies of Rotor or Sarcos or any of the obligations of Holder under this Agreement.
(l) Further Assurances. From time to time, at another party’s written request and without further consideration (but at the requesting party’s reasonable cost and expense), each party shall execute and deliver such additional documents and take all such further action as may be reasonably necessary to consummate the transactions contemplated by this Agreement.
(m) Counterparts; Electronic Signatures. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. The words “execution,” “signed,” “signature,” and words of like import in this Agreement or in any other certificate, agreement or document related to this Agreement shall include images of manually executed signatures transmitted by facsimile or other electronic format (including, “pdf”, “tif” or “jpg”) and other electronic signatures (including DocuSign and AdobeSign). The use of electronic signatures and electronic records (including, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the Delaware Uniform Electronic Transactions Act and any other applicable law. Minor variations in the form of the signature page, including footers from earlier versions of this Agreement or any such other document shall be disregarded in determining the parties’ intent or the effectiveness of such signature.
* * * * *
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IN WITNESS WHEREOF, each of the parties has caused this Lock-up Agreement to be duly executed on its behalf as of the day and year first above written.
| Rotor Acquisition Corp. | ||
| By: | ||
| Name: | ||
| Title: | ||
| Sarcos Corp. | ||
| By: | ||
| Name: | ||
| Title: | ||
Signature page to Lock-up Agreement
IN WITNESS WHEREOF, each of the parties has caused this Lock-up Agreement to be duly executed on its behalf as of the day and year first above written.
Holder:
Name of Holder: ______________________________
| By: | ||
| Name: | ||
| Title: |
Number and Type of Sarcos Securities:
[Sarcos Class A Common Stock:]
[Sarcos Class B Common Stock:] ______________________________________________
[Sarcos Preferred Stock:]
[Sarcos Warrants:] _________________________________________________________
[Sarcos Options (Vested and Unvested):]
[Sarcos Restricted Stock Units:]
[Sarcos Restricted Stock Awards:]
Address for Notice:
Address:
Facsimile No.:
Telephone No.:
Email: :
Signature page to Lock-Up Agreement
Exhibit 10.2
LOCK-UP AGREEMENT
THIS LOCK-UP AGREEMENT (this “Agreement”) is made and entered into as of April 5, 2021 by and among (i) Rotor Acquisition Corp., a Delaware corporation (together with its successors, “Rotor”), (ii) Sarcos Corp., a Utah corporation (“Sarcos”), and (iii) the undersigned (“Holder”). Any capitalized term used but not defined in this Agreement will have the meaning ascribed to such term in the Merger Agreement (as defined below).
WHEREAS, Rotor, Rotor Merger Sub Corp., a Delaware corporation and a direct wholly-owned subsidiary of Rotor (“Merger Sub”), and Sarcos have entered into that certain Agreement and Plan of Merger, as of the date first set forth above (as amended from time to time in accordance with the terms thereof, the “Merger Agreement”), pursuant to which, among other matters, upon the consummation of the transactions contemplated thereby (the “Closing”), Merger Sub will merge with and into Sarcos, with Sarcos continuing as the surviving entity and a wholly-owned subsidiary of Rotor (the “Merger”), and as a result of which all of the issued and outstanding capital stock of Sarcos immediately prior to the Closing shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, in exchange for the right to receive newly issued Rotor Common Shares, all upon the terms and subject to the conditions set forth in the Merger Agreement and in accordance with the applicable provisions of the DGCL and the Act;
WHEREAS, as of the date hereof, Holder is a holder of equity securities or right to purchase or otherwise acquire equity securities of Sarcos in such amounts and classes or series as set forth underneath Holder’s name on the signature page hereto; and
WHEREAS, pursuant to, and in order to encourage the relevant parties to consummate the transactions contemplated by the Merger Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto desire to enter into this Agreement, pursuant to which the Restricted Securities (as defined below) shall become subject to limitations on disposition as set forth herein.
NOW, THEREFORE, in consideration of the premises set forth above, which are incorporated in this Agreement as if fully set forth below, and intending to be legally bound hereby, the parties hereby agree as follows:
1. Definitions. The terms defined in this Section 1 shall, for all purposes of this Agreement, have the respective meanings set forth below:
(a) “Liquidity Event” shall mean the date after the Closing on which Rotor completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of Rotor’s stockholders having the right to exchange their equity holdings in Rotor for cash, securities or other property.
(b) “Permitted Transferee” shall mean any Person to whom the Holder is permitted to transfer Restricted Securities prior to the expiration of the Lock-Up Period pursuant to Section 2(a).
(c) “Restricted Securities” shall mean with respect to Holder and its Permitted Transferees, (i) the Rotor Common Shares to be distributed to Holder by Sponsor following the Closing (other than Rotor Common Shares acquired in the public market), (ii) the Rotor Common Shares to be received by Holder as Closing Merger Consideration in respect of the Sarcos Common Stock, Sarcos Preferred Stock, and Sarcos Warrants, if any, set forth on Holder’s signature page hereto, upon and following their assumption by Rotor pursuant to the terms of the Merger Agreement, and (iii) any securities paid as dividends or distributions with respect to the foregoing securities or into which such securities are exchanged or converted.
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(d) “Sarcos Common Stock” shall mean shares of Class A common stock or Class B common stock issued by Sarcos to Holder, as set forth on Holder’s signature page hereto.
(e) “Sarcos Preferred Stock” shall mean shares of Series A preferred stock, Series B preferred stock, or Series C preferred stock issued by Sarcos to Holder, as set forth on Holder’s signature page hereto.
(f) “Sarcos Warrants” shall mean any warrants issued by Sarcos to Holder exercisable for shares of Class A common stock of Sarcos as set forth on Holder’s signature page hereto.
(g) “Transfer” or “Transferred” shall mean (i) the sale, exchange or transfer or assignment of, offer to sell, contract or agreement to sell, hypothecate, pledge, hedge, grant of any option, right or warrant to purchase or otherwise dispose of or agreement to dispose of, or entry into any transaction that is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise), directly or indirectly, including through the filing (or participation in the filing) of a registration statement (other than any registration statement on Form S-8) with the SEC in respect of, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder with respect to, any security, (ii) the entry into any swap or other arrangement that transfers to another Person, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (iii) the public announcement of any intention to effect any transaction, including the filing of a registration statement (other than any registration statement on Form S-8), specified in clause (i) or (ii).
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2. Lock-up Provisions.
(a) Subject to Section 2(b), Holder agrees that it shall not Transfer any Restricted Securities beginning on the Closing Date and ending on the close of business on the one (1) year anniversary of the Closing Date (such period with respect to Holder’s applicable Restricted Securities, the “Lock-Up Period”).
(b) Notwithstanding the provisions set forth in Section 2(a), one hundred percent (100%) of the Restricted Securities may be Transferred in connection with or following the occurrence of a Liquidity Event, and Holder or its Permitted Transferees may Transfer the Restricted Securities during the Lock-Up Period: (A) in the case that Holder is an individual, by gift to the spouse, domestic partner, parent, sibling, child or grandchild of such Holder or any other natural person with whom such Holder has a relationship by blood, marriage or adoption not more remote than first cousin, to an estate planning vehicle or to a trust, the beneficiary of which is a member of the individual’s immediate family, or to a charitable organization; (B) in the case that Holder is an individual, by virtue of laws of descent and distribution upon death of Holder; (C) in the case that Holder is an individual, pursuant to a qualified domestic relations order, divorce settlement, divorce decree or separation agreement; (D) to a nominee or custodian of a person to whom a Transfer would be permitted under clauses (A) through (C) above; (E) to any members, partners, beneficial owners or shareholders of Holder or any Affiliates of Holder; (F) by virtue of applicable law or Holder’s organizational documents upon liquidation or dissolution of Holder; or (G) in connection with any court order or order from a Governmental Entity requiring the sale of such Restricted Securities; provided, however, that in the case of clauses (A) through (F) such transferee must enter into a written agreement with Rotor, in substantially the same form of this Agreement, stating that the transferee is receiving and holding the Restricted Securities subject to the provisions of this Agreement and shall be deemed to be a Holder for purposes of this Agreement, and there shall be no further Transfer of such Restricted Securities except in accordance with this Agreement.
(c) If any Transfer is made or attempted contrary to the provisions of this Agreement, such purported Transfer shall be null and void ab initio, and Rotor shall refuse to recognize any such purported transferee of the Restricted Securities as one of its equity holders for any purpose.
(d) During the Lock-up Period, Holder agrees and consents to the entry of stop transfer instructions with Rotor’s transfer agent and registrar against the transfer of Restricted Securities held by Holder, except in compliance with the foregoing restrictions, and further agrees that stop transfer orders shall be placed against the Restricted Securities and each certificate or book entry position statement evidencing any Restricted Securities shall be stamped or otherwise imprinted with a legend in substantially the following form, in addition to any other applicable legends:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH IN A LOCK-UP AGREEMENT, DATED AS OF APRIL 5, 2021, BY AND AMONG THE ISSUER OF SUCH SECURITIES (THE “ISSUER”), THE ISSUER’S SECURITY HOLDER NAMED THEREIN AND CERTAIN OTHER PARTIES NAMED THEREIN, AS AMENDED. A COPY OF SUCH LOCK-UP AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE ISSUER TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”
(e) For the avoidance of any doubt, (i) if and to the extent Holder’s Restricted Securities include issued and outstanding shares of Rotor Common Shares, Holder shall retain all of its rights as a stockholder of Rotor during the Lock-up Period, including the right to vote any Restricted Securities that such Holder is entitled to vote, and to receive any dividends and distributions in respect of any Restricted Securities, and (ii) the restrictions contained in Section 2(a) shall not apply to any Rotor Common Shares or other securities of Rotor acquired by Holder in open market transactions or in any public or private capital raising transactions of Rotor or otherwise to any Rotor Common Shares (or other securities of Rotor) other than the Restricted Securities.
3. Waiver of Preemptive Rights. Holder hereby agrees that the execution and delivery of this Agreement will constitute an irrevocable waiver of all of its rights under Section 4 of the Amended and Restated Investors’ Rights Agreement, dated as of January 31, 2020, by and among Sarcos and certain investors party thereto (as amended, the “Investors’ Rights Agreement”) with respect to any issuance and sale by Sarcos of any New Securities (as defined in the Investors’ Rights Agreement), including the waiver of (i) the right to purchase any New Securities and (ii) the 30-day notice requirement set forth therein (the “Waiver”), and agrees that he, she or it will not purchase any New Securities issued and sold by Sarcos at any time prior to the Closing. Holder acknowledges and agrees that the Waiver is a valid and binding obligation of Holder, and is enforceable in accordance with its terms. Holder agrees that he, she or it shall execute and deliver such additional documents and take such additional action as may be necessary or desirable to effectuate the provisions and purposes of the Waiver.
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4. Miscellaneous.
(a) Termination of Merger Agreement. Notwithstanding anything to the contrary contained herein, in the event that the Merger Agreement is terminated in accordance with its terms prior to the Closing, this Agreement and all rights and obligations of the parties hereunder shall automatically terminate and be of no further force or effect.
(b) Binding Effect; Assignment. Holder hereby represents and warrants that Holder has full power, capacity and authority to enter into this Agreement. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. This Agreement and all obligations of Holder are personal to Holder and may not be transferred or delegated by Holder at any time without the prior written consent of Rotor and Sarcos. Each of Rotor and Sarcos may freely assign any or all of its rights under this Agreement, in whole or in part, to any successor entity (whether by merger, consolidation, equity sale, asset sale or otherwise) without obtaining the consent or approval of Holder.
(c) Third Parties. Nothing contained in this Agreement or in any instrument or document executed by any party in connection with the transactions contemplated hereby shall create any rights in, or be deemed to have been executed for the benefit of, any person or entity that is not a party hereto or thereto or a successor or permitted assign of such a party; provided, that Rotor Sponsor, LLC, a Delaware limited liability company (“Sponsor”), shall be an express third party beneficiary of this Agreement and shall have the right to enforce the terms of this Agreement directly against Holder as if Sponsor were an original party hereto.
(d) Governing Law; Jurisdiction; Waiver of Jury Trial; Remedies. This Agreement and all related Proceedings shall be governed by and construed in accordance with the internal Laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Law of any jurisdiction other than the State of Delaware. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. EACH PARTY HERETO HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES HERETO MAY FILE A COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. The parties hereto expressly incorporate by reference Section 8.16 (Jurisdiction) of the Merger Agreement and, subject to Section 4(j) hereof, Section 8.17 (Remedies) of the Merger Agreement to apply to this Agreement, mutatis mutandis, with references to the Merger Agreement therein deemed to reference this Agreement and references to the “Parties” thereunder deemed to reference the parties hereto.
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(e) Severability. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable Law, but if any term or other provision of this Agreement is held to be invalid, illegal or unenforceable under applicable Law, all other provisions of this Agreement shall remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party hereto. Upon such determination that any term or other provision of this Agreement is invalid, illegal or unenforceable under applicable Law, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
(f) Construction; Interpretation. The headings set forth in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. Unless otherwise indicated to the contrary herein by the context or use thereof: (a) the words, “herein,” “hereto,” “hereof” and words of similar import refer to this Agreement as a whole, and not to any particular section, subsection, paragraph, subparagraph or clause set forth in this Agreement; (b) masculine gender shall also include the feminine and neutral genders, and vice versa; (c) words importing the singular shall also include the plural, and vice versa; (d) the words “include,” “includes” or “including” shall be deemed to be followed by the words “without limitation”; (e) references to “$” or “dollar” or “US$” shall be references to United States dollars; (f) the word “or” is disjunctive but not necessarily exclusive; (g) the words “writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form; (h) the word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”; (i) all references to Articles or Sections are to Articles or Sections of this Agreement; and (j) all references to any Law will be to such Law as amended, supplemented or otherwise modified from time to time. The parties hereto 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.
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(g) Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given) when delivered in person, when delivered by e-mail (having obtained electronic delivery confirmation thereof), or when sent by registered or certified mail (postage prepaid, return receipt requested) (upon receipt thereof) to the other parties hereto as follows:
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If to Rotor prior to the Closing, to:
Rotor Acquisition Corp. 405 Lexington Avenue New York, New York 10174 E-mail: info@rotoracquisition.com |
With a copy (which will not constitute notice) to:
Gibson, Dunn & Crutcher LLP 200 Park Avenue New York, New York 10166-0193 Attention: Mark Director Evan D’Amico Email: mdirector@gibsondunn.com edamico@gibsondunn.com
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If to Sarcos prior to the Closing, to:
Sarcos Corp. Salt Lake City, Utah 84108 |
With a copy (which shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati, P.C. 701 Fifth Avenue, Suite 5100 Seattle, WA 98104 Attention: Patrick J. Schultheis, Esq. Email: PSchultheis@wsgr.com |
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If to Rotor or Sarcos after the Closing, to:
Sarcos Corp. Salt Lake City, Utah 84108
|
With a copy (which shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati, P.C. 701 Fifth Avenue, Suite 5100 Seattle, WA 98104 Attention: Patrick J. Schultheis, Esq. Email: PSchultheis@wsgr.com |
| If to Holder, to: the address set forth below Holder’s name on the signature page to this Agreement. | |
(h) Amendments and Waivers. This Agreement may be amended or modified only with the written consent of Rotor, Sarcos and Holder. The observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the party against whom enforcement of such waiver is sought. No failure or delay by a party in exercising any right hereunder shall operate as a waiver thereof. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.
(i) Authorization on Behalf of Rotor. In the event that Holder or Holder’s Affiliate serves as a director, officer, employee or other authorized agent of Rotor or any of its current or future Affiliates, Holder and/or Holder’s Affiliate, as applicable, shall have no authority, express or implied, to act or make any determination on behalf of Rotor or any of its current or future Affiliates in connection with this Agreement to which Holder is party or any dispute or Proceeding with respect hereto.
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(j) Specific Performance. Holder acknowledges that its obligations under this Agreement are unique, recognizes and affirms that in the event of a breach of this Agreement by Holder, money damages will be inadequate and Rotor and Sarcos will have no adequate remedy at law, and agrees that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by Holder in accordance with their specific terms or were otherwise breached. Accordingly, each of Rotor and Sarcos (or Sponsor on their behalf) shall be entitled to an injunction or restraining order to prevent breaches of this Agreement by Holder and to enforce specifically the terms and provisions hereof, without the requirement to post any bond or other security or to prove that money damages would be inadequate, this being in addition to any other right or remedy to which such party may be entitled under this Agreement, at law or in equity.
(k) Entire Agreement. This Agreement constitutes the full and entire understanding and agreement among the parties hereto with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled; provided that, for the avoidance of doubt, the foregoing shall not affect the rights and obligations of the parties, if any, under the Merger Agreement or any Ancillary Documents. Notwithstanding the foregoing, nothing in this Agreement shall limit any of the rights or remedies of Rotor and Sarcos or any of the obligations of Holder under any other agreement between Holder and Rotor or Sarcos or any certificate or instrument executed by Holder in favor of Rotor or Sarcos, and nothing in any other agreement, certificate or instrument shall limit any of the rights or remedies of Rotor or Sarcos or any of the obligations of Holder under this Agreement.
(l) Further Assurances. From time to time, at another party’s written request and without further consideration (but at the requesting party’s reasonable cost and expense), each party shall execute and deliver such additional documents and take all such further action as may be reasonably necessary to consummate the transactions contemplated by this Agreement.
(m) Counterparts; Electronic Signatures. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. The words “execution,” “signed,” “signature,” and words of like import in this Agreement or in any other certificate, agreement or document related to this Agreement shall include images of manually executed signatures transmitted by facsimile or other electronic format (including, “pdf”, “tif” or “jpg”) and other electronic signatures (including DocuSign and AdobeSign). The use of electronic signatures and electronic records (including, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the Delaware Uniform Electronic Transactions Act and any other applicable law. Minor variations in the form of the signature page, including footers from earlier versions of this Agreement or any such other document shall be disregarded in determining the parties’ intent or the effectiveness of such signature.
* * * * *
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IN WITNESS WHEREOF, each of the parties has caused this Lock-up Agreement to be duly executed on its behalf as of the day and year first above written.
| Rotor Acquisition Corp. | ||
| By: | ||
| Name: | ||
| Title: | ||
| Sarcos Corp. | ||
| By: | ||
| Name: | ||
| Title: | ||
Signature page to Lock-up Agreement
IN WITNESS WHEREOF, each of the parties has caused this Lock-up Agreement to be duly executed on its behalf as of the day and year first above written.
| Holder: | ||
| Name of Holder: | ||
| By: | ||
| Name: | ||
| Title: |
| Number and Type of Securities: | ||
| Sarcos Class A Common Stock: | ||
| Sarcos Preferred Stock: | ||
| Sarcos Warrants: | ||
| Address for Notice: | ||
| Address: | ||
| Facsimile No.: | ||
| Telephone No.: | ||
| Email: | : | |
Signature page to Lock-Up Agreement
Exhibit 10.3
SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT (this “Subscription Agreement”) is entered into this 5th day of April, 2021, by and among Rotor Acquisition Corp., a Delaware corporation (the “Issuer”), and the undersigned (“Subscriber”).
WHEREAS, substantially concurrently with the execution and delivery of this Subscription Agreement, the Issuer is entering into that certain Agreement and Plan of Merger, dated as of the date of this Subscription Agreement (as may be amended or supplemented from time to time, the “Transaction Agreement”), among the Issuer, Rotor Merger Sub Corp., a Delaware corporation and a direct wholly-owned subsidiary of the Issuer (“Merger Sub”) and Sarcos Corp., a Utah corporation (“Sarcos”), whereby, among other things, Merger Sub will merge with and into Sarcos, with Sarcos continuing as the surviving entity and a wholly-owned subsidiary of the Issuer, on the terms and subject to the conditions set forth therein (the “Transaction”);
WHEREAS, in connection with the Transaction, on the terms and subject to the conditions set forth in this Subscription Agreement, Subscriber desires to subscribe for and purchase from the Issuer the number of shares of the Issuer’s Class A common stock, par value $0.0001 per share (the “Class A Shares”), set forth on the signature page hereto (the “Acquired Shares”) for a purchase price of $10.00 per share (the “Share Purchase Price” and the aggregate purchase price set forth on the signature page hereto for the Acquired Shares, the “Purchase Price”), and the Issuer desires to issue and sell to Subscriber the Acquired Shares in consideration of the payment of the Purchase Price by or on behalf of Subscriber to the Issuer at the Closing (as defined herein); and
WHEREAS, in connection with the Transaction, certain institutional “accredited investors” (as such term is defined in Rule 501 under the Securities Act of 1933, as amended (the “Securities Act”)) or “qualified institutional buyers” (as defined in Rule 144A promulgated under the Securities Act) other than the Subscriber (each, an “Other Subscriber”), have entered into subscription agreements with the Issuer substantially similar to this Subscription Agreement, pursuant to which such Other Subscribers have agreed to subscribe for and purchase, and the Issuer has agreed to issue and sell to such Other Subscribers, on the Closing Date (as defined herein), Class A Shares at the Share Purchase Price (the “Other Subscription Agreements”).
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. Subject to the terms and conditions hereof, Subscriber hereby subscribes for and agrees to purchase, and the Issuer hereby agrees to issue and sell to Subscriber, upon the payment of the Purchase Price, the Acquired Shares (such subscription and issuance, the “Subscription”).
2. Closing.
a. Subject to the satisfaction or waiver of the conditions set forth in Sections 2(c) and 2(d), the closing of the Subscription contemplated hereby (the “Closing”) shall occur on the date of, and at a time immediately prior to or substantially concurrently with, the closing of the Transaction (such date, the “Closing Date”) and is contingent upon the subsequent occurrence of the closing of the Transaction. Not less than five (5) business days prior to the anticipated Closing Date, the Issuer shall provide written notice to Subscriber (the “Closing Notice”) of the anticipated Closing Date specifying (i) the anticipated Closing Date and (ii) the wire instructions for delivery of the Purchase Price to the Issuer.
b. Subject to the satisfaction or waiver of the conditions set forth in Sections 2(c) and 2(d) (other than those conditions that by their nature are to be satisfied at the closing of the Transaction pursuant to the Transaction Agreement, but without affecting the requirement that such conditions be satisfied or waived at the closing of the Transaction):
(i) At least one (1) business day prior to the anticipated Closing Date specified in the Closing Notice, or such other time agreed to between the Issuer and the Subscriber (or as soon as practicable after Subscriber receives from the Issuer or its transfer agent evidence of the issuance of the Acquired Shares on the Closing Date from the transfer agent), Subscriber shall deliver to the Issuer the Purchase Price for the Acquired Shares by wire transfer of U.S. dollars in immediately available funds to the account specified by the Issuer in the Closing Notice; and
(ii) On the Closing Date the Issuer shall deliver to Subscriber the Acquired Shares against and upon payment by the Subscriber in book entry form, free and clear of any liens or other restrictions whatsoever (other than those arising under state or federal securities laws), in the name of Subscriber (or its nominee in accordance with its delivery instructions) or to a custodian designated by Subscriber, as applicable. Each book entry for the Acquired Shares shall contain a legend in substantially the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. THE HOLDER WILL NOTIFY ANY SUBSEQUENT PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE.
c. The Issuer’s obligation to effect the Closing shall be subject to the satisfaction on the Closing Date, or, to the extent permitted by applicable law, the waiver by the Issuer, of each of the following conditions:
(i) all representations and warranties of Subscriber contained in this Subscription Agreement shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality or Subscriber Material Adverse Effect (as defined herein), which representations and warranties shall be true and correct in all respects) at and as of the Closing Date, and consummation of the Closing shall constitute a reaffirmation by Subscriber of each of the representations, warranties and agreements of each such party contained in this Subscription Agreement as of the Closing Date (other than those representations and warranties expressly made as of an earlier date, which shall be true and correct in all material respects as of such earlier date);
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(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, except where the failure of such performance, satisfaction or compliance would not or would not be reasonably likely to prevent, materially delay, or materially impair the ability of Subscriber to consummate the Closing;
(iii) no 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 consummation of the Subscription illegal or otherwise preventing or prohibiting consummation of the Subscription, and no governmental authority shall have instituted or threatened in writing a proceeding seeking to impose any such prevention or prohibition; and
(iv) all conditions precedent to the Issuer’s obligation to effect the Transaction set forth in the Transaction Agreement shall have been satisfied or waived (other than those conditions that (x) 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, or (y) will be satisfied by the Closing and the closing of the transactions contemplated by the Other Subscription Agreements).
d. Subscriber’s obligation to effect the Closing shall be subject to the satisfaction on the Closing Date, or, to the extent permitted by applicable law, the waiver by Subscriber, of each of the following conditions:
(i) all representations and warranties of the Issuer contained in this Subscription Agreement shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality or Material Adverse Effect (as defined herein), which representations and warranties shall be true and correct in all respects) at and as of the Closing Date, and consummation of the Closing shall constitute a reaffirmation by Issuer of each of the representations, warranties and agreements of each such party contained in this Subscription Agreement as of the Closing Date (other than those representations and warranties expressly made as of an earlier date, which shall be true and correct in all material respects as of such earlier date);
(ii) no 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 consummation of the Subscription illegal or otherwise preventing or prohibiting consummation of the Subscription, and no governmental authority shall have instituted or threatened in writing a proceeding seeking to impose any such prevention or prohibition;
(iii) 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, except where the failure of such performance, satisfaction or compliance would not or would not be reasonably likely to prevent, materially delay, or materially impair the ability of the Issuer to consummate the Closing;
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(iv) no suspension of the qualification of the Class A Shares for offering or sale or trading in any jurisdiction, and no suspension or removal from listing of the Class A Shares on the Stock Exchange shall have occurred;
(v) the terms of the Transaction Agreement (as the same exists on the date of this Subscription Agreement), including, without limitation, any representation or covenant of the Issuer or Sarcos in the Transaction Agreement relating to the financial position or outstanding indebtedness of the Issuer or Sarcos, shall not have been amended, modified or waived in a manner that would reasonably be expected to materially and adversely affect the economic benefits that Subscriber would reasonably expect to receive under this Subscription Agreement;
(vi) no closing condition, if any, appearing in the Transaction Agreement made available to Subscriber prior to the execution of this Subscription Agreement relating to the Aggregate Rotor Transaction Proceeds (as defined in the Transaction Agreement) as of the Closing shall be waived or amended; and
(vii) all conditions precedent to the closing of the Transaction set forth in the Transaction Agreement, including all necessary approvals of the Issuer’s stockholders and regulatory approvals required by the Transaction Agreement, if any, shall have been satisfied or waived (other than those conditions that (x) 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, or (y) will be satisfied by the Closing and the closing of the transactions contemplated by the Other Subscription Agreements).
e. Prior to or at the Closing, Subscriber shall execute and deliver such additional documents and take such additional actions as the Issuer reasonably may deem to be practical and necessary in order to consummate the Subscription as contemplated by this Subscription Agreement.
f. If the closing of the Transaction does not occur within two (2) business days of the Closing, the Issuer shall promptly (but not later than one (1) business day thereafter) return the Purchase Price to Subscriber in immediately available funds to the account specified by Subscriber, and any book entries shall be deemed cancelled. Notwithstanding such return or cancellation, 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 immediately prior to or substantially concurrently with the consummation of the Transaction.
3. Issuer Representations and Warranties. The Issuer represents and warrants that:
a. The Issuer has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, with corporate power and authority to own, lease and operate its properties and conduct its business as presently conducted and to enter into, deliver and perform its obligations under this Subscription Agreement.
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b. The Acquired Shares have been duly authorized and, when issued and delivered to Subscriber against full payment for the Acquired Shares in accordance with the terms of this Subscription Agreement, the Acquired Shares will be validly issued, fully paid and non-assessable 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 amended as of the Closing Date) and bylaws (as amended as of the Closing Date) or under the laws of the State of Delaware.
c. This Subscription Agreement, the Other Subscription Agreements and the Transaction Agreement (collectively, the “Transaction Documents”) have been duly authorized, executed and delivered by the Issuer and are enforceable against the Issuer in accordance with their respective terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, and (ii) principles of equity, whether considered at law or equity.
d. Assuming the accuracy of Subscriber’s representations and warranties in Section 4, the execution and delivery by the Issuer of the Transaction Documents, and the performance by the Issuer of its obligations under the Transaction Documents, including the issuance and sale of the Acquired Shares and the consummation of the other 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, which would be reasonably expected to have, individually or in the aggregate, a material adverse effect on the business, properties, financial condition, stockholders’ equity or results of operations of the Issuer (a “Material Adverse Effect”) or materially affect the validity of the Acquired Shares or the legal authority of the Issuer to comply in all material respects with the terms of this Subscription Agreement; (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 would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect or materially affect the validity of the Acquired Shares or the legal authority of the Issuer to comply in all material respects with this Subscription Agreement.
e. There are no securities or instruments issued by or to which the Issuer is a party containing anti-dilution or similar provisions that will be triggered by the issuance of (i) the Acquired Shares or (ii) the Class A Shares to be issued pursuant to any Other Subscription Agreement, in each case, that have not been or will not be validly waived on or prior to the Closing Date.
f. The Issuer is not in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of (i) the organizational documents of the Issuer, (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, permit, franchise or license to which the Issuer is now a party or by which the Issuer’s properties or assets are bound, 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, except, in the case of clauses (ii) and (iii), for defaults or violations that have not had and would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect.
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g. Assuming the accuracy of Subscriber’s representations and warranties in Section 4, 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 or other person in connection with the execution, delivery and performance by the Issuer of this Subscription Agreement (including, without limitation, the issuance of the Acquired Shares), other than (i) the filing with the Securities and Exchange Commission (the “Commission”) of the Registration Statement (as defined below), (ii) filings required by applicable state or federal securities laws, (iii) the filings required in accordance with Section 9(n), (iv) those required by the New York Stock Exchange or such other applicable stock exchange on which the Issuer’s Class A Shares are then listed (the “Stock Exchange”), including with respect to obtaining stockholder approval, and (v) the failure of which to obtain would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect or have a material adverse effect on the Issuer’s ability to consummate the transactions contemplated hereby, including the sale and issuance of the Acquired Shares.
h. The authorized capital stock of the Issuer consists of (i) 1,000,000 shares of preferred stock, par value $0.0001 per share (“Preferred Stock”), (ii) 70,000,000 Class A Shares, and (iii) 12,500,000 shares of Class B common stock, par value $0.0001 per share (“Class B Shares”). As of the date hereof and as of immediately prior to the Closing: (1) no shares of Preferred Stock are issued and outstanding, (2) 27,600,000 Class A Shares are issued and outstanding, (3) 6,900,000 Class B Shares are issued and outstanding, (4) 13,800,000 public warrants, each entitling the holder thereof to purchase one Class A Share at an exercise price of $11.50 per Class A Share, and (5) 7,270,000 private placement warrants, each entitling the holder thereof to purchase one Class A Share at an exercise price of $11.50 per Class A Share, are outstanding. All (i) issued and outstanding Class A Shares and Class B Shares have been duly authorized and validly issued, are fully paid and are non-assessable and are not subject to preemptive rights and (ii) outstanding warrants have been duly authorized and validly issued, are fully paid and are not subject to preemptive rights. Except as set forth above and pursuant to the Other Subscription Agreements and the Transaction Agreement, there are no outstanding options, warrants or other rights to subscribe for, purchase or acquire from the Issuer any Class A Shares, Class B Shares, or other equity interests in the Issuer, or securities convertible into or exchangeable or exercisable for such equity interests. As of the date hereof, the Issuer has no subsidiaries (other than Merger Sub) and does not own, directly or indirectly, interests or investments (whether equity or debt) in any person, whether incorporated or unincorporated. There are no stockholder agreements, voting trusts or other agreements or understandings to which the Issuer is a party or by which it is bound relating to the voting of any securities of the Issuer, other than (A) as set forth in the SEC Documents (as defined below) and (B) as contemplated by the Transaction Agreement.
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i. The issued and outstanding Class A Shares are registered pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are listed for trading on the Stock Exchange. There is no suit, action, proceeding or investigation pending or, to the knowledge of the Issuer, threatened against the Issuer by the Stock Exchange or the Commission with respect to any intention by such entity to deregister the Class A Shares or prohibit or terminate the listing of the Class A Shares on the Stock Exchange. The Issuer has taken no action that is designed to terminate the registration of the Class A Shares under the Exchange Act. As of the Closing Date, the Acquired Shares will be approved for listing on the Stock Exchange, subject to official notice of issuance.
j. Assuming the accuracy of Subscriber’s representations and warranties set forth in Section 4, no registration under the Securities Act is required for the offer and sale of the Acquired Shares by the Issuer to Subscriber in the manner contemplated by this Subscription Agreement.
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 of the Securities Act) in connection with any offer or sale of the Acquired Shares.
l. The Issuer has not entered into any side letter or similar agreement with any Other Subscriber or any other investor in connection with such Other Subscriber’s or such other investor’s direct or indirect investment in the Issuer other than (i) the Transaction Agreement, and (ii) the Other Subscription Agreements. The Other Subscription Agreements have not been amended in any material respect following the date of this Subscription Agreement and reflect the same Share Purchase Price and terms that are no more favorable to any such Other Subscriber thereunder than the terms of this Subscription Agreement.
m. The Issuer has made available to Subscriber (including via the Commission’s EDGAR system) a copy of each form, report, statement, schedule, prospectus, proxy, registration statement and other document, if any, filed by the Issuer with the Commission since its initial registration of the Class A Shares (the “SEC Documents”), which SEC Documents, as of their respective filing dates, complied in all material respects with the requirements of the Exchange Act applicable to the SEC Documents and the rules and regulations of the Commission promulgated thereunder applicable to the SEC Documents. None of the SEC Documents filed under the Exchange Act (except to the extent that information contained in any SEC Document has been superseded by a later timely filed SEC Document) contained, when filed or, if amended prior to the date of this Subscription Agreement, as of the date of such amendment with respect to those disclosures that are amended, any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, that, with respect to the proxy statement to be filed by the Issuer with respect to the Transaction or any of its affiliates included in any SEC Document or filed as an exhibit thereto, the representation and warranty in this sentence is made to the Issuer’s knowledge. 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 inception. There are no material outstanding or unresolved comments in comment letters from the Staff of the Commission with respect to any of the SEC Documents.
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n. Except for such matters as have not had and would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect, as of the date hereof, there is no (i) suit, action, proceeding or arbitration before a 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.
o. Except for placement fees payable to Credit Suisse Securities (USA) LLC, Jefferies LLC, and PJT Partners LP in their capacity as placement agents for the offer and sale of the Acquired Shares (in such capacity, the “Placement Agents”), the Issuer has not paid, and is not obligated to pay, any brokerage, finder’s or other commission or similar fee in connection with its issuance and sale of the Acquired Shares, including, for the avoidance of doubt, any fee or commission payable to any stockholder or affiliate of the Issuer.
p. None of the Issuer, its subsidiaries or any of their affiliates, nor any person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the issuance of any of the Acquired Shares under the Securities Act, whether through integration with prior offerings pursuant to Rule 502(a) of the Securities Act or otherwise.
q. The Issuer has not received any written communication from a governmental entity alleging 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, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
r. The Issuer is in compliance with all applicable laws, except where such non-compliance would not reasonably be expected to have a Material Adverse Effect.
4. Subscriber Representations and Warranties. Subscriber represents and warrants that:
a. Subscriber has been duly formed or incorporated and is validly existing in good standing under the laws of its jurisdiction of incorporation or formation, with the requisite entity power and authority to enter into, deliver and perform its obligations under this Subscription Agreement.
b. This Subscription Agreement has been duly authorized, executed and delivered by Subscriber. This Subscription Agreement is enforceable against Subscriber in accordance with its terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, and (ii) principles of equity, whether considered at law or equity.
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c. The execution and delivery by Subscriber of this Subscription Agreement, and the performance by Subscriber of its obligations under this Subscription Agreement, including the purchase of the Acquired Shares and the consummation of the other 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, which would be reasonably likely to have a material adverse effect on the business, properties, financial condition, stockholders’ equity or results of operations of Subscriber, taken as a whole (a “Subscriber Material Adverse Effect”), or materially affect the legal authority of Subscriber to comply in all material respects with the terms of this Subscription Agreement; (ii) 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 Subscriber’s properties that would be reasonably likely to have a Subscriber Material Adverse Effect or materially affect the legal authority of Subscriber to comply in all material respects with this Subscription Agreement.
d. Subscriber (i) is a “qualified institutional buyer” (as defined in Rule 144A promulgated under the Securities Act) or an institutional “accredited investor” (within the meaning of Rule 501(a)(1), (2), (3), (5), (6), (7), (10), (11) or (12) under the Securities Act), in each case, satisfying the applicable requirements set forth on Schedule A, (ii) is acquiring the Acquired Shares only for its own account and not for the account of others, or if Subscriber is subscribing for the Acquired Shares as a fiduciary or agent for one or more investor accounts, each owner of such account is a “qualified institutional buyer” (as defined above) 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 Acquired Shares with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or any other securities laws of the United States or any other jurisdiction. Subscriber has completed Schedule A following the signature page hereto and the information contained therein is accurate and complete. Subscriber is not an entity formed for the specific purpose of acquiring the Acquired Shares, unless Subscriber is a newly formed entity in which all of the equity owners are accredited investors and is an “institutional account” as defined by FINRA Rule 4512(c).
e. Subscriber understands that the Acquired Shares are being offered in a transaction not involving any public offering within the meaning of the Securities Act and that the Acquired Shares have not been registered under the Securities Act or any other securities laws of the United States or any other jurisdiction. Subscriber acknowledges that it is acquiring its entire beneficial ownership interest in the Acquired Shares for Subscriber’s own account for investment purposes only and not with a view to any distribution of the Acquired Shares in any manner that would violate the securities laws of the United States or any other jurisdiction. Subscriber understands that the Acquired Shares may not be resold, Transferred (as defined herein), 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, (ii) to non-U.S. persons pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act, (iii) pursuant to Rule 144 promulgated under the Securities Act, absent a change in law, receipt of regulatory no-action relief or an exemption, provided that all of the applicable conditions thereof have been met, or (iv) pursuant to another applicable exemption from the registration requirements of the Securities Act (including without limitation sales conducted pursuant to Rule 144 promulgated under the Securities Act), and that any certificates or book entry records representing the Acquired Shares shall contain a legend to such effect. Subscriber acknowledges that the Acquired Shares will not immediately be eligible for resale pursuant to Rule 144 promulgated under the Securities Act. Subscriber understands and agrees that the Acquired Shares will be subject to the foregoing transfer restrictions and, as a result of these transfer restrictions, Subscriber may not be able to readily resell the Acquired Shares and may be required to bear the financial risk of an investment in the Acquired Shares for an indefinite period of time. Subscriber understands that it has been advised to consult legal counsel prior to making any offer, resale, pledge or Transfer of any of the Acquired Shares. For purposes of this Subscription Agreement, “Transfer” shall mean any direct or indirect transfer, redemption, disposition or monetization in any manner whatsoever, including, without limitation, through any derivative transactions.
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f. Subscriber understands and agrees that Subscriber is purchasing the Acquired Shares directly from the Issuer. Subscriber further acknowledges that there have been no representations, warranties, covenants and agreements made to Subscriber by the Issuer, Sarcos, the Placement Agents or any of their respective affiliates, or any of their respective subsidiaries, control persons, officers, directors, employees, partners, agents or representatives or any other person or entity, expressly or by implication, other than those representations, warranties, covenants and agreements of the Issuer included in this Subscription Agreement.
g. Subscriber’s acquisition and holding of the Acquired Shares will not constitute or result in a non-exempt prohibited transaction under section 406 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), or any applicable similar law.
h. In making its decision to subscribe for and purchase the Acquired Shares, Subscriber represents that it has relied solely upon its own independent investigation and the Issuer’s representations and warranties in Section 3. Without limiting the generality of the foregoing, Subscriber has not relied on any statements or other information provided by the Issuer, Sarcos, the Placement Agents or any of their respective affiliates, or any of their respective control persons, officers, directors, employees, partners, agents or representatives, concerning the Issuer, Sarcos or the Acquired Shares or the offer and sale of the Acquired Shares or Subscriber’s decision to purchase the Acquired Shares. Subscriber acknowledges and agrees that Subscriber has received such information as Subscriber deems necessary in order to make an investment decision with respect to the Acquired Shares, including with respect to the Issuer and the Transaction. 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 Subscriber’s professional advisor(s), if any, have deemed necessary to make an investment decision with respect to the Acquired Shares.
i. Subscriber became aware of this offering of the Acquired Shares solely by means of direct contact between Subscriber and the Issuer or the Placement Agents, and the Acquired Shares were offered to Subscriber solely by direct contact between Subscriber and the Issuer or the Placement Agents. Subscriber did not become aware of this offering of the Acquired Shares, nor were the Acquired Shares offered to Subscriber, by any other means. Subscriber acknowledges that the Issuer represents and warrants that the Acquired 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.
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j. Subscriber acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Acquired Shares. Subscriber qualifies as a sophisticated institutional investor and has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment, both in general and with regard to transactions in, and investment strategies involving, securities, including Subscriber’s investment in the Acquired Shares, and Subscriber has sought such accounting, legal and tax advice as Subscriber has considered necessary to make an informed investment decision.
k. Subscriber acknowledges and agrees that (a) the Placement Agents are acting solely as placement agents in connection with the Subscription and are not acting as underwriters or in any other capacity and are not and shall not be construed as a fiduciary for Subscriber, the Issuer or any other person or entity in connection with the Subscription, (b) neither the Placement Agents nor any affiliate of any of the Placement Agents (nor any officer, director, employee or representative of any of the Placement Agents or any affiliate thereof) have made, or will make, any representation or warranty, whether express or implied, of any kind or character and have not provided, and will not provide, any advice or recommendation in connection with the Subscription, (c) the Placement Agents will have no responsibility with respect to (i) any representations, warranties or agreements made by any person or entity under or in connection with the Subscription or any of the documents furnished pursuant thereto or in connection therewith, or the execution, legality, validity or enforceability (with respect to any person) thereof, or (ii) the business, affairs, financial condition, operations, properties or prospects of, or any other matter concerning the Issuer or the Subscription, (d) the Placement Agents shall have no liability or obligation (including without limitation, for or with respect to any losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses or disbursements incurred by Subscriber, the Issuer or any other person or entity), whether in contract, tort or otherwise, to Subscriber, or to any person claiming through Subscriber, in respect of the Subscription, (e) the Placement Agents and their affiliates have not made an independent investigation with respect to the Issuer or the Acquired Shares or the accuracy, completeness or adequacy of any information supplied to Subscriber by the Issuer, and (f) the Placement Agents have not prepared a disclosure or offering document in connection with the offer and sale of the Acquired Shares.
l. Alone, or together with any professional advisor(s), Subscriber represents and acknowledges that Subscriber has adequately analyzed and fully considered the risks of an investment in the Acquired Shares and determined that the Acquired 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.
m. Subscriber understands and agrees that no federal or state agency has passed upon or endorsed the merits of the offering of the Acquired Shares or made any findings or determination as to the fairness of an investment in the Acquired Shares.
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n. Subscriber is not (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons, the Executive Order 13599 List, the Foreign Sanctions Evaders List, or the Sectoral Sanctions Identification List, each of which is administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) (collectively “OFAC Lists”), (ii) owned or controlled by, or acting on behalf of, a person, that is named on an OFAC List, (iii) organized, incorporated, established, located, resident or born in, or a citizen, national, or the government, including any political subdivision, agency, or instrumentality thereof, of, Cuba, Iran, North Korea, Sudan, Syria, the Crimea region of Ukraine, or any other country or territory embargoed or subject to substantial trade restrictions by the United States, (iv) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515 or (v) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank. Subscriber represents that, if it is a financial institution subject to the Bank Secrecy Act (31 U.S.C. section 5311 et seq.) (the “BSA”), as amended by the USA PATRIOT Act of 2001 (the “PATRIOT Act”), and its implementing regulations (collectively, the “BSA/PATRIOT Act”), 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 to ensure compliance with OFAC-administered sanctions programs, including for the screening of its investors against the OFAC Lists. 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 Acquired Shares were legally derived.
o. If Subscriber is or is acting on behalf of (i) an employee benefit plan that is subject to Title I of ERISA, (ii) a plan, an individual retirement account or other arrangement that is subject to section 4975 of the Code, (iii) an entity whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement described in clauses (i) and (ii) (each, an “ERISA Plan”), or (iv) 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 clauses (i), (ii) or (iii) 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 (together with the ERISA Plans, the “Plans”), then Subscriber represents and warrants that it has not relied on the Issuer or any of its affiliates (the “Transaction Parties”) for investment advice as the Plan’s fiduciary with respect to its decision to acquire and hold the Acquired Shares, and none of the Transaction Parties shall at any time be relied on as the Plan’s fiduciary with respect to any decision to acquire and hold the Acquired Shares.
p. At the Closing, Subscriber will have sufficient funds to pay the Purchase Price pursuant to Section 2(b)(i).
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5. Additional Subscriber Agreement. Subscriber hereby represents, warrants, covenants and agrees that, during the 30-day period immediately prior to the date hereof and from the date hereof until the Closing Date (or earlier termination of this Subscription Agreement), neither Subscriber nor any person or entity acting on behalf of Subscriber or pursuant to any understanding with Subscriber has or will engage in any Short Sales with respect to securities of the Issuer. 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. Notwithstanding the foregoing, (a) nothing herein shall prohibit entities under common management or that share an investment advisor with Subscriber that have no knowledge of this Subscription Agreement or of Subscriber’s participation in the Transaction (including Subscriber’s controlled affiliates and/or affiliates) from entering into any Short Sales and (b) 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, this Section 5 shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Acquired Shares covered by this Subscription Agreement. The Issuer acknowledges and agrees that, notwithstanding anything herein to the contrary, the Acquired Shares may be pledged by Subscriber in connection with a bona fide margin agreement, provided such pledge shall be (i) pursuant to an available exemption from the registration requirements of the Securities Act or (ii) pursuant to, and in accordance with, a registration statement that is effective under the Securities Act at the time of such pledge, and Subscriber effecting a pledge of Acquired Shares shall not be required to provide the Issuer with any notice thereof; provided, however, that neither the Issuer nor their counsel shall be required to take any action (or refrain from taking any action) in connection with any such pledge, other than providing any such lender of such margin agreement with an acknowledgment that the Acquired Shares are not subject to any contractual prohibition on pledging or lock up, the form of such acknowledgment to be subject to review and comment by the Issuer in all respects.
6. Registration Rights.
a. The Issuer agrees that, within thirty (30) calendar days after the consummation of the Transaction, the Issuer will file with the Commission (at the Issuer’s sole cost and expense) a registration statement registering the resale of the Acquired 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 75th calendar day (or 105th calendar day if the Commission notifies the Issuer that it will “review” the Registration Statement) following the Closing 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 “Effective Date”); provided, however, that the Issuer’s obligations to include the Acquired 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 Acquired Shares as shall be reasonably requested by the Issuer to effect the registration of the Acquired Shares, and Subscriber shall execute such documents in connection with such registration as the Issuer may reasonably request that are customary of a selling stockholder in similar situations, including providing that the Issuer shall be entitled to postpone and suspend the effectiveness or use of the Registration Statement during any customary blackout or similar period or as permitted hereunder, provided that Subscriber shall not in connection with the foregoing be required to execute any lock-up or similar agreement or otherwise be subject to any contractual restriction on the ability to transfer the Acquired Shares. Notwithstanding the foregoing, if the Commission prevents the Issuer from including any or all of the shares proposed to be registered under the Registration Statement due to limitations on the use of Rule 415 of the Securities Act for the resale of the Acquired Shares by the applicable stockholders or otherwise, such Registration Statement shall register for resale such number of Acquired Shares which is equal to the maximum number of Acquired Shares as is permitted by the Commission. In such event, the number of Acquired Shares to be registered for each selling stockholder named in the Registration Statement shall be reduced pro rata among all such selling stockholders and as promptly as practicable after being permitted to register additional Acquired Shares under Rule 415 under the Securities Act, the Issuer shall amend the Registration Statement or file a new Registration Statement to register such Acquired Shares not included in the initial Registration Statement and cause such amendment or Registration Statement to become effective as promptly as practicable. Upon notification by the Commission that the Registration Statement has been declared effective by the Commission, within one (1) business day thereafter, the Issuer shall file the final prospectus under Rule 424 of the Securities Act. The Issuer will provide a draft of the Registration Statement to Subscriber for review at least two (2) business days in advance of filing the Registration Statement. In no event shall Subscriber be identified as a statutory underwriter in the Registration Statement unless requested by the Commission, in which case Subscriber will have the opportunity to withdraw from the Registration Statement upon its prompt written request to the Issuer.
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b. In the case of the registration, qualification, exemption or compliance effected by the Issuer pursuant to this Subscription Agreement, the Issuer shall, upon reasonable request, inform Subscriber as to the status of such registration, qualification, exemption and compliance. At its expense the Issuer shall:
(i) except for such times as the Issuer is permitted hereunder to suspend the use of the prospectus forming part of a Registration Statement, use its commercially reasonable efforts to keep such registration, and 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 earlier of the following: (1) Subscriber ceases to hold any Acquired Shares or (2) the date all Acquired Shares held by Subscriber may be sold without restriction under Rule 144, including without limitation, any volume and manner of sale restrictions which may be applicable to affiliates under Rule 144 promulgated under the Securities Act and without the requirement for the Issuer to be in compliance with the current public information required under Rule 144(c)(1) or Rule 144(i)(2), as applicable, and (3) two years from the Effective Date of the Registration Statement.
(ii) advise Subscriber within three (3) business days:
(1) when a Registration Statement or any amendment thereto has been filed with the Commission and when such Registration Statement or any post-effective amendment thereto has become effective;
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(2) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for such purpose;
(3) of the receipt by the Issuer of any notification with respect to the suspension of the qualification of the Acquired Shares included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and
(4) subject to the provisions in this Subscription Agreement, of the occurrence of any event that requires the making of any changes in the Registration Statement or prospectus so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading.
Notwithstanding anything to the contrary set forth herein, the Issuer shall not, when so advising Subscriber of such events, provide Subscriber with any material, nonpublic information regarding the Issuer other than to the extent that providing notice to Subscriber of the occurrence of the events listed in (1) through (4) above may constitute material, nonpublic information regarding the Issuer;
(iii) use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement as soon as reasonably practicable;
(iv) upon the occurrence of any event contemplated above, 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, 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 Acquired 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;
(v) use its commercially reasonable efforts to cause all Acquired Shares to be listed on each securities exchange or market, if any, on which the Class A Shares issued by the Issuer have been listed;
(vi) use its commercially reasonable efforts to take all other steps necessary to effect the registration of the Acquired Shares contemplated hereby and to enable Subscriber to sell the Acquired Shares under Rule 144; and
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(vii) remove the legend described in Section 2(b)(ii) (or instruct its transfer agent to so remove such legend) from the Acquired Shares if (1) the Registration Statement has become effective under the Securities Act, (2) such Acquired Shares are sold or transferred pursuant to Rule 144 (if the transferor is not an affiliate of the Issuer), or (3) such Acquired Shares are eligible for sale under Rule 144, without the requirement for the Issuer to be in compliance with the current public information required under Rule 144(c)(1) (or Rule 144(i)(2), if applicable) as to such securities and without volume or manner-of-sale restrictions. Each applicable holder agrees to provide the Issuer, its counsel and/or the transfer agent with evidence reasonably requested by it in order to cause the removal of the legend described in Section 2(b)(ii) (the “Representations”). If a legend is no longer required pursuant to the foregoing, the Issuer will, no later than three (3) business days following request by the holder, cause the transfer agent for the Acquired Shares (the “Transfer Agent”) to remove any restrictive legends related to the book entry account holding such Acquired Shares and make a new, unlegended entry for such book entry shares sold or disposed of without restrictive legends, subject to the delivery by an applicable holder to the Issuer or the Transfer Agent (with notice to the Issuer) of a legended certificate or instrument representing Acquired Shares (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer) and the Representations. Certificates for Acquired Shares free from all restrictive legends may be transmitted by the Transfer Agent to the applicable holders by crediting the account of the applicable holder’s prime broker with DTC as directed by such applicable holder. The Issuer shall be responsible for the fees of its Transfer Agent and all DTC fees associated with such issuance.
c. Notwithstanding anything to the contrary in this Subscription Agreement, the Issuer shall be entitled to delay or postpone the effectiveness of the Registration Statement, and from time to time to require Subscriber not to sell under the Registration Statement or to suspend the effectiveness thereof, if 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, however, that the Issuer may not delay or suspend the Registration Statement on more than three (3) occasions or for more than ninety (90) consecutive calendar days, or more than one hundred eighty (180) total calendar days, in each case during any twelve-month period. Upon receipt of any written notice from 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 Acquired Shares under the Registration Statement (excluding, for the avoidance of doubt, sales conducted pursuant to Rule 144) 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 unless otherwise required by law or subpoena. If so directed by the Issuer, Subscriber will deliver to the Issuer or, in Subscriber’s sole discretion destroy, all copies of the prospectus covering the Acquired Shares in Subscriber’s possession; provided, however, that this obligation to deliver or destroy all copies of the prospectus covering the Acquired Shares shall not apply (1) to the extent Subscriber is required to retain a copy of such prospectus (x) in order to comply with applicable legal, regulatory, self-regulatory or professional requirements or (y) in accordance with a bona fide pre- existing document retention policy or (2) to copies stored electronically on archival servers as a result of automatic data back-up.
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d. Subscriber may deliver written notice (an “Opt-Out Notice”) to the Issuer requesting that Subscriber not receive notices from the Issuer otherwise required by Section 6(c); provided, however, 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 (2) 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(d)) and the related suspension period remains in effect, the Issuer will so notify Subscriber, within one (1) business day of Subscriber’s notification to the Issuer, by delivering to Subscriber a copy of such previous notice of Suspension Event, and thereafter will provide Subscriber with the related notice of the conclusion of such Suspension Event immediately upon its availability.
e. 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, advisors 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 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 any 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 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; provided, however, that the Issuer shall not be liable for any Losses to the extent they arise out of or are based upon a violation which occurs (1) in reliance upon and in conformity with written information furnished by Subscriber, (2) in connection with any failure of such person to deliver or cause to be delivered a prospectus made available by the Issuer in a timely manner or (3) in connection with any offers or sales effected by or on behalf of Subscriber in violation of Section 6(c) hereof. 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 Acquired Shares by Subscriber.
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f. Subscriber shall, severally and not jointly with any other person that is a party to the Other Subscription Agreements, indemnify and hold harmless the Issuer, its directors, officers, agents and employees, and each person who controls the Issuer (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), to the fullest extent permitted by applicable law, from and against all Losses, as incurred, (i) arising out of or 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 (ii) arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus, or any form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, with respect to (i) and/or (ii), to the extent, but only to the extent, that such untrue or alleged untrue statements or omissions or alleged omissions are based upon information regarding Subscriber furnished in writing to the Issuer by Subscriber expressly for use therein. In no event shall the liability of Subscriber be greater in amount than the dollar amount of the net proceeds received by Subscriber upon the sale of the Acquired Shares giving rise to such indemnification obligation. 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 Acquired Shares by Subscriber.
g. 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 consent (but such consent shall not be unreasonably withheld). 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 (1) 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 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.
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 earlier to occur of (a) such date and time as the Transaction Agreement is terminated in accordance with the terms therein, (b) upon the mutual written agreement of each of the parties hereto to terminate this Subscription Agreement, (c) if any of the conditions to Closing set forth in Sections 2(c) and 2(d) are not satisfied on or prior to the Closing Date and, as a result thereof, the transactions contemplated by this Subscription Agreement are not consummated at the Closing, or (d) November 5, 2021, if the Closing has not occurred by such date; provided, that nothing herein will relieve any party from liability for any willful breach hereof prior to the time of termination, and each party will be entitled to any remedies at law or in equity to recover out-of-pocket losses, liabilities or damages arising from such breach. The Issuer shall promptly notify in writing Subscriber of the termination of the Transaction Agreement promptly after the termination of such agreement. Upon the termination of this Subscription Agreement in accordance with this Section 7, any Purchase Price paid by the Subscriber to the Issuer in connection herewith shall be promptly returned to the Subscriber without any deduction for or on account of any tax withholding, charges or set-off, whether or not the Transaction shall have been consummated.
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8. Trust Account Waiver. Reference is made to the final prospectus of the Issuer, filed with the Securities and Exchange Commission (File No. 333-251521) (the “Prospectus”), and dated as of January 14, 2021. Subscriber understands that the Issuer has established a trust account containing the proceeds of its initial public offering (the “IPO”) and from certain private placements occurring simultaneously with the IPO (collectively, with interest accrued from time to time thereon, the “Trust Account”) initially in an approximate amount of $276 million for the benefit of the Issuer’s public stockholders (the “Public Stockholders”) and certain parties (including the underwriters of the IPO) and that, except with respect to interest earned on the funds held in the Trust Account that may be released to the Issuer to pay its taxes, if any, the Issuer may disburse monies from the Trust Account only: (i) to the Public Stockholders if they elect to redeem Class A Shares in connection with the consummation of the Issuer’s initial business combination (as such term is used in the Prospectus) (the “Business Combination”) or in connection with an amendment to the Issuer’s certificate of incorporation, (ii) to the Public Stockholders if the Issuer fails to consummate a Business Combination within 18 months from the closing of the IPO, or (iii) to the Issuer after or concurrently with the consummation of a Business Combination. For and in consideration of the Issuer entering into this Agreement, the receipt and sufficiency of which is hereby acknowledged, Subscriber hereby irrevocably waives any right, title, interest or claim of any kind in or to any monies in the Trust Account now or in the future (or distributions therefrom other than distributions to the Issuer) with respect to claims arising out of this Subscription Agreement, regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability, and will not seek recourse against the Trust Account (including any distributions therefrom other than distributions to the Issuer) for such claims arising out of this Subscription Agreement or the transactions contemplated hereby; provided, however, that nothing in this Section 8 shall (i) serve to limit or prohibit the Subscriber’s right to pursue a claim against the Issuer for legal relief against assets held outside the Trust Account (so long as such claim would not affect the Issuer’s ability to fulfill its obligation to effectuate any redemption right with respect to any securities of the Issuer), for specific performance or other equitable relief in connection with this Subscription Agreement to the extent permitted hereunder, (ii) serve to limit or prohibit any claims that the Subscriber may have in the future against the Issuer’s assets or funds that are not held in the Trust Account (including any funds that have been released from the Trust Account and any assets that have been purchased or acquired with any such funds) (so long as such claim would not affect the Issuer’s ability to fulfill its obligation to effectuate any redemption right with respect to any securities of the Issuer) or (iii) be deemed to limit the Subscriber’s right, title, interest or claim to the Trust Account by virtue of the Subscriber’s record or beneficial ownership of Class A Shares acquired by any means other than pursuant to this Subscription Agreement.
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9. Miscellaneous.
a. Each party hereto acknowledges that the other party hereto will rely on the acknowledgments, understandings, agreements, representations and warranties contained in this Subscription Agreement. Prior to the Closing, each party hereto agrees to promptly notify the other party hereto if any of the acknowledgments, understandings, agreements, representations and warranties made by such party as set forth herein are no longer accurate in all material respects. Subscriber further acknowledges and agrees that the Placement Agents may rely on and are third-party beneficiaries of the representations and warranties of Subscriber contained in Section 4.
b. Each of the Issuer and Subscriber is entitled to rely upon this Subscription Agreement and 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 to the extent required by law or by regulatory bodies.
c. Neither this Subscription Agreement nor any rights that may accrue to Subscriber hereunder (other than the Acquired Shares, if any) may be transferred or assigned without the prior written consent of the Issuer; provided that the consent of the Issuer (i) shall not be unreasonably withheld or delayed in connection with a proposed assignment to any fund or account managed by the same investment manager as the Subscriber or an affiliate thereof (each an “Affiliated Entity”) and (ii) shall not be required in connection with a proposed assignment to an Affiliated Entity of equal creditworthiness to Subscriber, subject in each case to such transferee or assignee, as applicable, executing a joinder to this Subscription Agreement (that requires transferee or assignee to make the same representations and warranties as Subscriber in Section 4) or a separate subscription agreement in the same form as this Subscription Agreement, and updating Schedule A hereto. Neither this Subscription Agreement nor any rights that may accrue to the Issuer hereunder or any of the Issuer’s obligations may be transferred or assigned other than pursuant to the Transaction.
d. All the agreements, representations and warranties made by each party hereto in this Subscription Agreement shall survive the Closing.
e. 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 Acquired Shares, and Subscriber shall provide such information as may be reasonably requested, to the extent readily available and to the extent consistent with its internal policies and procedures; provided, that the Issuer agrees to keep any such information provided by Subscriber confidential.
f. The Issuer shall not provide to any “foreign person” (as defined in Section 721 of the U.S. Defense Production Act of 1950, as amended, including any implementing regulations (the “DPA”)), nor shall any Subscriber that is a foreign person seek or obtain, any of the following rights in the Issuer pursuant to this Agreement: (i) access to any “material nonpublic technical information” (as defined in the DPA) in the possession of the Issuer; (ii) membership or observer rights on the board of directors or equivalent governing body of the Issuer or the right to nominate an individual to a position on the board of directors or equivalent governing body of the Issuer; (iii) any involvement, other than through the voting of shares, in the substantive decision-making of the Issuer regarding (x) the use, development, acquisition, or release of any “critical technology” (as defined in the DPA), (y) the use, development, acquisition, safekeeping, or release of “sensitive personal data” (as defined in the DPA) of U.S. citizens maintained or collected by the Issuer, or (z) the management, operation, manufacture, or supply of “covered investment critical infrastructure” (as defined in the DPA); or (iv) “control” of the Issuer (as defined in the DPA).
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g. This Subscription Agreement constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof.
h. 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.
i. 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.
j. This Subscription Agreement may be executed in two (2) or more counterparts (including by electronic means), all of which shall be considered one and the same agreement and shall become effective when signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.
k. Each party shall pay all of its own expenses in connection with this Subscription Agreement and the transactions contemplated herein.
l. Any notice or communication required or permitted hereunder shall be in writing and either delivered personally, emailed or telecopied, sent by overnight mail via a reputable overnight carrier, or sent by certified or registered mail, postage prepaid, and shall be deemed to be given and received (i) when so delivered personally, (ii) upon receipt of an appropriate electronic answerback or confirmation when so delivered by telecopy (to such number specified below or another number or numbers as such person may subsequently designate by notice given hereunder), (iii) when sent, with no mail undeliverable or other rejection notice, if sent by email, or (iv) five (5) business days after the date of mailing to the address below or to such other address or addresses as such person may hereafter designate by notice given hereunder:
(i) if to Subscriber, to such address or addresses set forth on the signature page hereto;
(ii) if to the Issuer, to:
Rotor Acquisition Corp.
405 Lexington Avenue
New York, New York 10174
Attn: Amy Salerno
E-mail: info@rotoracquisition.com
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with a required copy to (which copy shall not constitute notice):
Gibson, Dunn & Crutcher LLP
1050 Connecticut Avenue, N.W.
Washington, DC 20036-5306
Attention: Mark Director; Evan D’Amico
Email: mdirector@gibsondunn.com; edamico@gibsondunn.com
m. This Subscription Agreement, and any claim or cause of action hereunder based upon, arising out of or related to this Subscription Agreement (whether based on law, in equity, in contract, in tort or any other theory) or the negotiation, execution, performance or enforcement of this Subscription Agreement, shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the principles of conflicts of law thereof.
THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, THE SUPREME COURT OF THE STATE OF NEW YORK AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE STATE OF NEW YORK SOLELY IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS SUBSCRIPTION AGREEMENT AND THE DOCUMENTS REFERRED TO IN THIS SUBSCRIPTION AGREEMENT AND IN RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR INTERPRETATION OR ENFORCEMENT HEREOF OR ANY SUCH DOCUMENT THAT IS NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS SUBSCRIPTION AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH ACTION, SUIT OR PROCEEDING SHALL BE HEARD AND DETERMINED BY SUCH A NEW YORK STATE OR FEDERAL COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF SUCH DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH SUCH ACTION, SUIT OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 9(l) OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW SHALL BE VALID AND SUFFICIENT SERVICE THEREOF.
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EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (II) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THE FOREGOING WAIVER; (III) SUCH PARTY MAKES THE FOREGOING WAIVER VOLUNTARILY AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS SUBSCRIPTION AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 9(m).
n. The Issuer shall, by 9:00 a.m., New York City time, on the first (1st) business day immediately following the date 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 all material terms of the transactions contemplated hereby, the Transaction, and any other material, nonpublic information that the Issuer has provided to Subscriber at any time prior to the filing of the Disclosure Document. From and after the issuance of the Disclosure Document, to the Issuer’s knowledge, Subscriber shall not be in possession of any material, nonpublic information received from the Issuer or any of its officers, directors, employees or agents. Notwithstanding anything in this Subscription Agreement to the contrary, the Issuer shall not, without the prior written consent of Subscriber, publicly disclose the name of Subscriber or any of its advisors or affiliates, or include the name of Subscriber or any of its advisors or affiliates (i) in any press release or marketing materials or (ii) in any filing with the Commission or any regulatory agency or trading market, except (A) as required by the federal securities law in connection with the Registration Statement, (B) in the filing of this Subscription Agreement with the Commission and in the related Current Report on Form 8-K in a manner acceptable to the undersigned, or (C) to the extent such disclosure is required by law, at the request of the Staff of the Commission or regulatory agency or under the regulations of the Stock Exchange, in which case the Issuer shall provide Subscriber with prior written notice of such disclosure permitted under this subclause (C).
o. This Subscription Agreement may not be amended, modified, supplemented or waived except by an instrument in writing, signed by each of the parties hereto.
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p. The parties agree that irreparable damage would occur if any provision of this Subscription Agreement were not performed in accordance with the terms hereof or were otherwise breached, and accordingly, that the parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Subscription Agreement, without posting a bond or undertaking and without proof of damages, or to enforce specifically the performance of the terms and provisions of this Subscription Agreement in an appropriate court of competent jurisdiction as set forth in Section 9(m), in addition to any other remedy to which any party is entitled at law, in equity, in contract, in tort or otherwise.
q. The obligations of the Subscriber under this Subscription Agreement are several and not joint with the obligations of any Other Subscriber under the Other Subscription Agreements, and the Subscriber shall not be responsible in any way for the performance of the obligations of any Other Subscriber. The decision of the Subscriber to purchase the Acquired Shares pursuant to this Subscription Agreement has been made by the Subscriber independently of any Other Subscriber and independently of any information, materials, statements opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Issuer, Sarcos or any of their respective subsidiaries which may have been made or given by any Other Subscriber or by any agent or employee of any Other Subscriber, and neither the Subscriber nor any of its agents or employees shall have any liability to any Other Subscriber (or to 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 the Subscriber or any Other Subscriber pursuant hereto or thereto, shall be deemed to constitute the Subscriber and any Other Subscribers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Subscriber and any Other Subscriber are in any way acting in concert or as a “group” (within the meaning of Section 13(d) of the Exchange Act) with respect to such obligations or the transactions contemplated by this Subscription Agreement and the Other Subscription Agreements. The Subscriber acknowledges that no Other Subscriber has acted as agent for the Subscriber in connection with making its investment hereunder and no Other Subscriber will be acting as agent of the Subscriber in connection with monitoring its investment in the Acquired Shares or enforcing its rights under this Subscription Agreement.
[Signature pages follow.]
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IN WITNESS WHEREOF, the Issuer has executed or caused this Subscription Agreement to be executed by its duly authorized representative as of the date first written above.
| ROTOR ACQUISITION CORP. | |||
| By: | |||
| Name: | |||
| Title: | |||
IN WITNESS WHEREOF, the Subscriber has executed or caused this Subscription Agreement to be executed by its duly authorized representative as of the date first written above.
| Name of Subscriber: | State/Country of Formation or Domicile: |
| By: | ||
| Name: | ||
| Title: |
| Name in which Shares are to be registered (if different): | |
| Subscriber EIN: | |
| Business Address-Street: | Mailing Address-Street (if different): |
| City, State, Zip: | City, State, Zip: |
| Attn: ______________________________ | Attn: ______________________________ |
| Telephone No.: | Telephone No.: |
| Facsimile No.: | Facsimile No.: |
| Email address: ________________________ | |
| Number of Shares subscribed for: | |
| Aggregate Subscription Amount: $ | Price Per Share: $10.00 |
You must pay the Aggregate Subscription Amount by wire transfer of United States dollars in immediately available funds to the account specified by the Issuer in the Closing Notice.
[Signature Page to Subscription Agreement]
SCHEDULE A
ELIGIBILITY REPRESENTATIONS OF SUBSCRIBER
This Schedule must be completed by Subscriber and forms a part of the Subscription Agreement to which it is attached. Capitalized terms used and not otherwise defined in this Schedule have the meanings given to them in the Subscription Agreement. Subscriber must check the applicable box in either Part A or Part B below and the applicable box in Part C below.
| A. | QUALIFIED
INSTITUTIONAL BUYER STATUS (Please check the applicable subparagraphs): |
| ☐ | Subscriber is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act (a “QIB”)). |
| ☐ | Subscriber is subscribing for the Acquired Shares as a fiduciary or agent for one or more investor accounts, and each owner of such accounts is a QIB. |
*** OR ***
| B. | INSTITUTIONAL
ACCREDITED INVESTOR STATUS (Please check the applicable subparagraphs): |
Subscriber is an institutional “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) and has checked below the box(es) for the applicable provision under which Subscriber qualifies as such:
| ☐ | Subscriber is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, corporation, Massachusetts or similar business trust, limited liability company or partnership not formed for the specific purpose of acquiring the securities of the Issuer being offered in this offering, with total assets in excess of $5,000,000. |
| ☐ | Subscriber is a “private business development company” as defined in Section 202(a)(22) of the Investment Advisers Act of 1940. |
| ☐ | Subscriber is a “bank” as defined in Section 3(a)(2) of the Securities Act. |
| ☐ | Subscriber is a “savings and loan association” or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity. |
| ☐ | Subscriber is a broker or dealer registered pursuant to Section 15 of the Exchange Act. |
| ☐ | Subscriber is an “insurance company” as defined in Section 2(a)(13) of the Securities Act. |
| ☐ | Subscriber is an investment company registered under the Investment Company Act of 1940. |
Schedule A-1
| ☐ | Subscriber is a “business development company” as defined in Section 2(a)(48) of the Investment Company Act of 1940. |
| ☐ | Subscriber is a “Small Business Investment Company” licensed by the U.S. Small Business Administration under either Section 301(c) or (d) of the Small Business Investment Act of 1958. |
| ☐ | Subscriber is a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, and such plan has total assets in excess of $5,000,000. |
| ☐ | Subscriber is an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act, which is one of the following. |
| ☐ | A bank; |
| ☐ | A savings and loan association; |
| ☐ | A insurance company; or |
| ☐ | A registered investment adviser. |
| ☐ | Subscriber is an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 with total assets in excess of $5,000,000. |
| ☐ | Subscriber is an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 that is a self-directed plan with investment decisions made solely by persons that are accredited investors. |
| ☐ | Subscriber is a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered by the Issuer in this offering, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the Securities Act. |
| ☐ | Subscriber is a natural person whose individual net worth, or joint net worth with that person’s spouse or spousal equivalent, exceeds $1,000,000. For the purposes of calculating joint net worth, joint net worth can be the aggregate net worth of the investor and spouse or spousal equivalent; assets need not be held jointly to be included in the calculation. |
| ☐ | Subscriber is a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse or spousal equivalent in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year. |
Schedule A-2
| ☐ | Subscriber is a natural person holding in good standing one or more professional certifications or designations or credentials from an accredited educational institution that the Commission has designated as qualifying an individual for accredited investor status. |
| ☐ | Subscriber is a natural person who is a “knowledgeable employee,” as defined in rule 3c5(a)(4) under the Investment Company Act of 1940, of the Issuer of the securities being offered or sold where the Issuer would be an investment company, as defined in section 3 of such act, but for the exclusion provided by either section 3(c)(1) or section 3(c)(7) of such act. |
| ☐ | Subscriber is a “family office,” as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 that was not formed for the specific purpose of acquiring the securities of the Issuer being offered in this offering, with total assets in excess of $5,000,000 and whose prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment. |
*** AND ***
| 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.
Schedule A-3
Exhibit 10.4
WAIVER AGREEMENT
This WAIVER AGREEMENT (the “Waiver Agreement”), dated as of April 5, 2021, is entered into by and among Rotor Sponsor LLC, a Delaware limited liability company (“Sponsor”), Rotor Acquisition Corp., a Delaware corporation (“Acquiror”), and certain holders of Class B Common Stock in Acquiror listed in the signature page hereto (“Class B Stockholders”). Capitalized terms used but not defined herein shall have such meanings ascribed to them in the Merger Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, concurrently with the execution of this Waiver Agreement, Acquiror, Sarcos Corp., a Utah corporation, and Rotor Merger Sub Corp., a Delaware corporation and wholly owned subsidiary of Acquiror, will enter into that certain Agreement and Plan of Merger, dated as of the date hereof (the “Merger Agreement”); and
WHEREAS, Sponsor and the Class B Stockholders have agreed to waive certain of their anti-dilution and conversion rights and to forfeit a certain number of Rotor Class B shares and Rotor Warrants.
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
| 1. | Waiver. Immediately prior to, and conditioned upon, the Effective Time, each of Sponsor and the Class B Stockholders shall, automatically and without any further action by itself or Acquiror, irrevocably waive their respective rights under the anti-dilution and conversion provisions of Section B.(2) of the Amended and Restated Certificate of Incorporation of Acquiror, dated as of January 14, 2021 (the “Acquiror Charter”), with respect to each of its Class B Common Stock (as defined in the Acquiror Charter) held as of the date hereof. |
| 2. | Forfeiture. Pursuant to Section 2 of those certain subscription agreements by and among the Acquiror, Sponsor and each of the Class B Stockholders, dated as of January 14, 2021, the Sponsor hereby decides to, and as a result, each of Sponsor and the Class B Stockholders shall, automatically and without any further action by itself or any other person, irrevocably forfeit the number of Rotor Class B Shares and Rotor Warrants set forth opposite such Class B Stockholder’s name under the column labeled “Rotor Class B Shares” and “Rotor Warrants”, respectively, on Schedule I hereto, which number represents such Class B Stockholder’s respective pro rata portion, based on the relative number of Rotor Class B Shares and Rotor Warrants held by each of the Sponsor and the other Class B Stockholders on the date hereof, of the total number of Rotor Class B Shares and Rotor Warrants being forfeited hereunder. |
| 3. | Sponsor and the Class B Stockholders Representations and Warranties. Each of Sponsor and the Class B Stockholders hereby represents and warrants as of the date hereof as follows: |
| (a) | Upon execution of this Waiver Agreement, the waiver provided for in Paragraph 1 herein shall constitute a written consent of the holders of a majority of the Class B Stockholders, duly authorized and executed in accordance with Section B.(2)(ii) of the Acquiror Charter. |
| (b) | Each of Sponsor and the Class B Stockholders understands and acknowledges that Acquiror is entering into the Merger Agreement in reliance upon Sponsor and the Class B Stockholders’ execution and delivery of this Waiver Agreement. |
| 4. | Successors and Assigns. The parties acknowledge and agree that the terms of this Waiver Agreement are binding on and shall inure to the benefit of their respective beneficiaries, heirs, legatees and other statutorily designated representatives. Any attempted transfer or assignment in violation of the terms of this Paragraph 4 shall be null and void, ab initio, provided that Sponsor or the Class B Stockholders may transfer or assign any of its rights hereunder to any single person or entity who is an Affiliate of the applicable Class B Stockholders. |
| 5. | Termination. This Waiver Agreement shall terminate, and have no further force and effect, upon the termination of the Merger Agreement in accordance with its terms prior to the Closing. This Waiver Agreement may be executed in counterparts (including by electronic means), all of which shall be considered one and the same agreement and shall become effective when signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. |
| 6. | Specific Performance. The parties hereto agree that irreparable damage may occur in the event that any of the provisions of this Waiver 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 Waiver Agreement and to enforce specifically the terms and provisions of this Waiver 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. |
| 7. | Amendment. This Waiver 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 Acquiror, the Class B Stockholders and Sponsor. |
| 8. | Severability. If any provision of this Waiver Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Waiver Agreement will remain in full force and effect. Any provision of this Waiver Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable. |
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| 9. | Governing Law. All issues and questions concerning the construction, validity, interpretation and enforceability of this Waiver Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. The parties hereto (i) all agree that any action, proceeding, claim or dispute arising out of, or relating in any way to, this Waiver Agreement shall be brought and enforced in the courts of the State of Delaware or the federal courts located in the State of Delaware, and irrevocably submit to such jurisdiction and venue, which jurisdiction and venue shall be exclusive and (ii) waive any objection to such exclusive jurisdiction and venue or that such courts represent an inconvenient forum. |
| 10. | Waiver of Jury Trial. EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF A PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH 10. |
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Waiver Agreement as of the date first written above.
| SPONSOR: | |
| ROTOR SPONSOR LLC | |
| Name: | |
| Title: |
[Signature Page to Waiver Agreement]
| ACQUIROR: | |
| ROTOR ACQUISITION CORP. | |
| Name: | |
| Title: |
[Signature Page to Waiver Agreement]
| CLASS B STOCKHOLDERS: | |
| RIVERVIEW GROUP LLC | |
| Name: | |
| Title: |
[Signature Page to Waiver Agreement]
| CLASS B STOCKHOLDERS: | |
| [BLACKROCK CLASS B STOCKHOLDERS] | |
| Name: | |
| Title: |
[Signature Page to Waiver Agreement]
SCHEDULE I
| Class B Stockholders | Rotor Class B Shares | Rotor Warrants | ||||||
| Rotor Sponsor LLC | 437,448 | 460,470 | ||||||
| [BlackRock Class B Stockholders] | 28,296 | 30,031 | ||||||
| Riverview Group LLC | 28,296 | 30,031 | ||||||
| Total | 494,040 | 520,532 | ||||||
Exhibit 10.5
Registration Rights Agreement
THIS REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is entered into as of ____________, 2021, by and among Sarcos Technology and Robotics Corp. (f/k/a Rotor Acquisition Corp.), a Delaware corporation (the “Company”), Rotor Sponsor LLC, a Delaware limited liability company (the “Sponsor”), and the other parties listed on the signature page attached hereto (together with any person or entity who hereafter becomes a party pursuant to Section 6.2 of this Agreement, a “Holder” and collectively, the “Holders”). All capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in the Agreement and Plan of Merger, dated as of April 5, 2021, by and among the Company, Rotor Merger Sub Corp., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), and Sarcos Corp., a Utah corporation (“Sarcos”) (as amended or supplemented from time to time in accordance with the terms thereof, the “Merger Agreement”).
WHEREAS, the Company, Merger Sub and Sarcos entered into the Merger Agreement, pursuant to which, among other things, Merger Sub will merge with and into Sarcos (the “Merger”), with Sarcos surviving the Merger as a wholly-owned subsidiary of the Company.
WHEREAS, the Company consummated the private placement of warrants (each, a “Private Placement Warrant,” and collectively, the “Private Placement Warrants”) to purchase 7,270,000 shares of Class A common stock, par value $0.0001 per share, in the Company (the “Rotor Class A Shares”) to the Sponsor and certain other Holders upon the closing of the initial public offering of the Company;
WHEREAS, the Sponsor and certain other Holders hold 6,900,000 shares of Class B common stock, par value $0.0001 per share, in the Company (the “Rotor Class B Shares”), as of the execution and delivery of this Agreement;
WHEREAS, all Rotor Class B Shares will be converted into Rotor Class A Shares upon the consummation of the Merger, and the Rotor Class A Shares will subsequently be designated as the common stock, par value $0.0001 per share, in the Company in connection with the consummation of the Merger (the “Common Stock”);
WHEREAS, the Company and the investors listed as “Company Investors” on Schedule I hereto (together with any direct or indirect transferee of such investors who hereafter becomes a party pursuant to Section 6.2 of this Agreement, collectively, the “Company Investors”) are parties to that certain Registration Rights Agreement, dated as of January 14, 2021 (the “Prior Company Agreement”);
WHEREAS, Sarcos and the investors listed as “Sarcos Investors” on Schedule I hereto (together with any direct or indirect transferee of such investors who hereafter becomes a party pursuant to Section 6.2 of this Agreement, collectively, the “Sarcos Investors” and together with the Company Investors, the “Investors”) are parties to that certain Amended and Restated Investors’ Rights Agreement, dated as of January 31, 2020 (the “Prior Sarcos Agreement”);
WHEREAS, the Company and the Company Investors desire to terminate the Prior Company Agreement in its entirety and to accept the rights created pursuant to this Agreement in lieu of the rights granted to them under the Prior Company Agreement, and the Prior Company Agreement shall be automatically terminated in connection with the consummation of the Merger; and
WHEREAS, Sarcos and the Sarcos Investors desire to terminate the Prior Sarcos Agreement in its entirety and to accept the rights created pursuant to this Agreement in lieu of the rights granted to them under the Prior Sarcos Agreement, and the Prior Sarcos Agreement shall be automatically terminated in connection with the consummation of the Merger.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. The following capitalized terms used herein have the following meanings.
“Addendum Agreement” is defined in Section 6.2.
“Adverse Disclosure” shall mean any public disclosure of material non-public information, which disclosure, in the good faith judgment of the principal executive officer or principal financial officer of the Company, 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 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, and (iii) the Company has a bona fide business purpose for not making such information public.
“affiliate” of any particular person means any other person controlling, controlled by or under common control with such person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a person whether through the ownership of voting securities, its capacity as a sole or managing member or otherwise; provided, that no Investor shall be deemed an affiliate of the Company or any of its subsidiaries for purposes of this Agreement and neither the Company nor any of its subsidiaries shall be deemed an affiliate of any Investor for purposes of this Agreement.
“Agreement” means this Agreement, as amended, restated, supplemented, or otherwise modified from time to time.
“Block Trade” means an offering and/or sale of Registrable Securities by any Holder on a block trade or underwritten basis (whether firm commitment or otherwise) without substantial marketing efforts by the Company, including, without limitation, a same day trade, overnight trade, bought deal or similar transaction.
“Board” means the board of directors of the Company.
“Business Day” means 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; provided, however, that, for purposes of clarity, commercial banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in the City of New York generally are open for use by customers on such date.
“Commission” means the U.S. Securities and Exchange Commission, or any other Federal agency then administering the Securities Act or the Exchange Act.
“Common Stock” means the Common Stock of the Company, $0.0001 par value per share.
“Company” is defined in the preamble to this Agreement.
“Company Investors” is defined in the preamble to this Agreement.
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“Demand Registration” is defined in Section 2.2.1.
“Demand Takedown” is defined in Section 2.1.5(a).
“Demanding Holder” is defined in Section 2.2.1.
“Effectiveness Period” is defined in Section 3.1.3.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.
“Form S-1” means a Registration Statement on Form S-1.
“Form S-3” means a Registration Statement on Form S-3 or any similar short-form registration that may be available at such time.
“Holder” is defined in the preamble to this Agreement. A Person shall cease to be a Holder hereunder at such time as it ceases to hold any Registrable Securities.
“Indemnified Party” is defined in Section 4.3.
“Indemnifying Party” is defined in Section 4.3.
“Holder Indemnified Party” is defined in Section 4.1.
“Investors” is defined in the preamble to this Agreement.
“Maximum Number of Shares” is defined in Section 2.2.4.
“Merger Agreement” is defined in the preamble to this Agreement.
“Merger Sub” is defined in the preamble to this Agreement.
“New Registration Statement” is defined in Section 2.1.4.
“Permitted Transferee” means any person to whom Common Stock has been Transferred and is or has become party to this Agreement pursuant to one of the following types of transfers (irrespective of whether a restriction on Transfer then applies): (i) Transfers of shares of Common Stock to a trust, or other entity formed for estate planning purposes for the primary benefit of the spouse, domestic partner, parent, sibling, child or grandchild of the Holder or any other person with whom the Holder has a relationship by blood, marriage or adoption not more remote than first cousin; (ii) Transfers by will or intestate succession upon the death of the Holder; (iii) the Transfer of shares of Common Stock pursuant to a qualified domestic order, court order or in connection with a divorce settlement; (iv) if the Holder is a corporation, partnership (whether general, limited or otherwise), limited liability company, trust or other business entity, (A) Transfers to another corporation, partnership, limited liability company, trust or other business entity that is an affiliate of the Holder, or (B) distributions of shares of Common Stock to partners, limited liability company members or stockholders of the Holder, including, for the avoidance of doubt, where the Holder is a partnership, to its general partner or a successor partnership or fund, or any other funds managed by such partnership; (v) if the Holder is a trust, Transfers to a trustor or beneficiary of the trust or to the estate of a beneficiary of such trust; (vi) Transfers to the officers or directors of the Company or the Sponsor or their respective affiliates; or (vii) Transfers to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under the foregoing clauses (i) through (vi).
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“Piggy-Back Registration” is defined in Section 2.3.1.
“Prior Company Agreement” is defined in the preamble to this Agreement.
“Prior Sarcos Agreement” is defined in the preamble to this Agreement.
“Private Placement Warrants” is defined in the preamble to this Agreement.
“Pro Rata” is defined in Section 2.2.4.
“Register,” “Registered” and “Registration” mean a registration effected by preparing and filing a registration statement 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.
“Registrable Securities” means (a) the shares of Common Stock issued or issuable upon the conversion of any Rotor Class B Shares, (b) the Private Placement Warrants (including any shares of Common Stock issued or issuable upon the exercise of any such Private Placement Warrants), (c) any outstanding share of Common Stock or any other equity security (including the shares of Common Stock issued or issuable upon the exercise of any other equity security) of the Company held by a Holder as of the Effective Time (including the shares of Common Stock issued pursuant to the transactions contemplated by the Merger Agreement), (d) any equity securities (including the shares of Common Stock issued or issuable upon the exercise of any such equity security) of the Company issuable upon conversion of any working capital loans in an amount up to $1,500,000 made to the Company by a Holder; and (e) any other equity security of the Company or any of its subsidiaries, or any successor, issued or issuable with respect to any such share of Common Stock by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation, spin-off or reorganization; provided, however, that, as to any particular Registrable Securities, such securities shall cease to be Registrable Securities when: (A) a Registration Statement with respect to the sale of such securities 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; (B) such securities shall have been otherwise transferred, new certificates for such securities not bearing a legend (other than legend imposed as a result of the restrictions contemplated by the bylaws of the Company or an applicable lock-up agreement) restricting further transfer shall have been delivered by the Company to the transferee and subsequent public distribution of such securities shall not require registration under the Securities Act; (C) such securities shall have ceased to be outstanding; (D) such securities may be sold without registration pursuant to Section 4(a)(1) of the Securities Act or Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission) (but with no volume or other restrictions or limitations); or (E) such securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or other public securities transaction.
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“Registration Statement” means a registration statement filed by the Company with the Commission in compliance with the Securities Act and the rules and regulations promulgated thereunder for a public offering and sale of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities (other than a registration statement on Form S-4 or Form S-8, or their successors, or any registration statement covering only securities proposed to be issued in exchange for securities or assets of another entity).
“Resale Shelf Registration Statement” is defined in Section 2.1.1.
“Requesting Holder” is defined in Section 2.1.5(a).
“Rotor Class A Shares” is defined in the preamble to this Agreement.
“Rotor Class B Shares” is defined in the preamble to this Agreement.
“Sarcos” is defined in the preamble to this Agreement.
“Sarcos Investors” is defined in the preamble to this Agreement.
“SEC Guidance” is defined in Section 2.1.4.
“Selling Holders” is defined in Section 2.1.5(a)(ii)
“Sponsor” is defined in the preamble to this Agreement.
“Transfer” means to (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, 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, and the rules and regulations of the Commission promulgated thereunder, with respect to any Common Stock, (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 Common Stock, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (iii) publicly announce any intention to effect any transaction, including the filing of a registration statement specified in clause (i) or (ii). Notwithstanding the foregoing, a Transfer shall not be deemed to include any transfer for no consideration if the donee, trustee, heir or other transferee has agreed in writing to be bound by the same terms under this Agreement to the extent and for the duration that such terms remain in effect at the time of the Transfer.
“Underwriter” means 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 Takedown” shall mean an underwritten public offering of Registrable Securities pursuant to the Resale Shelf Registration Statement, as amended or supplemented.
“Underwritten Demand Registration” shall mean an underwritten public offering of Registrable Securities pursuant to a Demand Registration, as amended or supplemented.
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2. REGISTRATION RIGHTS.
2.1 Resale Shelf Registration Rights.
2.1.1 Registration Statement Covering Resale of Registrable Securities. After the Company becomes eligible to use Form S-3 or its successor form (the “S-3 Eligibility Date”) the Company shall prepare and file or cause to be prepared and filed with the Commission, no later than thirty (30) days following the date that the Company receives a request, in writing from (A) the Company Investors who hold a majority in interest of the Registrable Securities held by all Company Investors or (B) Sarcos Investors who hold a majority in interest of the Registrable Securities held by all Sarcos Investors, as the case may be that the Company file, a Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 of the Securities Act registering the resale from time to time by Holders of all of the Registrable Securities then held by or then issuable, including any shares of Common Stock issuable to Holders that are not covered by an effective registration statement on the S-3 Eligibility Date (the “Resale Shelf Registration Statement”). The Resale Shelf Registration Statement shall be on Form S-3 or another appropriate form permitting Registration of such Registrable Securities for resale by such Holders. The Company shall use reasonable best efforts to cause the Resale Shelf Registration Statement to be declared effective as soon as possible after filing, and once effective, to keep the Resale Shelf Registration Statement continuously effective under the Securities Act at all times until the expiration of the Effectiveness Period.
2.1.2 Notification and Distribution of Materials. The Company shall notify the Holders in writing of the effectiveness of the Resale Shelf Registration Statement and shall furnish to them, without charge, such number of copies of the Resale Shelf Registration Statement (including any amendments, supplements and exhibits), the Prospectus contained therein (including each preliminary prospectus and all related amendments and supplements) and any documents incorporated by reference in the Resale Shelf Registration Statement or such other documents as the Holders may reasonably request in order to facilitate the sale of the Registrable Securities in the manner described in the Resale Shelf Registration Statement.
2.1.3 Amendments and Supplements. Subject to the provisions of Section 2.1.1 above, the Company shall promptly prepare and file with the Commission from time to time such amendments and supplements to the Resale Shelf Registration Statement and Prospectus used in connection therewith as may be necessary to keep the Resale Shelf Registration Statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all the Registrable Securities during the Effectiveness Period.
2.1.4 Notwithstanding the registration obligations set forth in this Section 2.1, in the event the Commission informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly (i) inform each of the holders thereof and use its commercially reasonable efforts to file amendments to the Resale Shelf Registration Statement as required by the Commission and/or (ii) withdraw the Resale Shelf Registration Statement and file a new registration statement (a “New Registration Statement”), in either case covering the maximum number of Registrable Securities permitted to be registered by the Commission, on Form S-3 or such other form available to register for resale the Registrable Securities as a secondary offering; provided, however, that prior to filing such amendment or New Registration Statement, the Company shall be obligated to use its commercially reasonable efforts to advocate with the Commission for the registration of all of the Registrable Securities in accordance with any publicly-available written or oral guidance, comments, requirements or requests of the Commission staff (the “SEC Guidance”), including without limitation, the Manual of Publicly Available Telephone Interpretations D.29. Notwithstanding any other provision of this Agreement, if any SEC Guidance sets forth a limitation of the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the Commission for the registration of all or a greater number of Registrable Securities), unless otherwise directed in writing by a holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced on a pro rata basis based on the total number of Registrable Securities held by the Holders, subject to a determination by the Commission that certain Holders must be reduced first based on the number of Registrable Securities held by such Holders. In the event the Company amends the Resale Shelf Registration Statement or files a New Registration Statement, as the case may be, under clauses (i) or (ii) above, the Company will use its commercially reasonable efforts to file with the Commission, as promptly as allowed by the Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-3 or such other form available to register for resale those Registrable Securities that were not registered for resale on the Resale Shelf Registration Statement, as amended, or the New Registration Statement.
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2.1.5 Notice of Certain Events. The Company shall promptly notify the Holders in writing of any request by the Commission for any amendment or supplement to, or additional information in connection with, the Resale Shelf Registration Statement required to be prepared and filed hereunder (or Prospectus relating thereto). The Company shall promptly notify each Holder in writing of the filing of the Resale Shelf Registration Statement or any Prospectus, amendment or supplement related thereto or any post-effective amendment to the Resale Shelf Registration Statement and the effectiveness of any post-effective amendment.
(a) If the Company shall receive a request from the holders of Registrable Securities with an estimated market value of at least $25 million (the requesting holder(s) shall be referred to herein as the “Requesting Holder”) that the Company effect the Underwritten Takedown of all or any portion of the Requesting Holder’s Registrable Securities, and specifying the intended method of disposition thereof, then the Company shall promptly give notice of such requested Underwritten Takedown (each such request shall be referred to herein as a “Demand Takedown”) at least five (5) Business Days prior to the anticipated filing date of the prospectus or supplement relating to such Demand Takedown to the other Holders and thereupon shall use its reasonable best efforts to effect, as expeditiously as possible, the offering in such Underwritten Takedown of:
(i) subject to the restrictions set forth in Section 2.2.4, all Registrable Securities for which the Requesting Holder has requested such offering under Section 2.1.5(a), and
(ii) subject to the restrictions set forth in Section 2.2.4, all other Registrable Securities that any holders of Registrable Securities (all such holders, together with the Requesting Holder, the “Selling Holders”) have requested the Company to offer by request received by the Company within three (3) Business Days after such holders receive the Company’s notice of the Demand Takedown, all to the extent necessary to permit the disposition (in accordance with the intended methods thereof as aforesaid) of the Registrable Securities so to be offered.
(b) Promptly after the expiration of the three-Business Day-period referred to in Section 2.1.5(a)(ii), the Company will notify all Selling Holders of the identities of the other Selling Holders and the number of shares of Registrable Securities requested to be included therein.
(c) The Company shall only be required to effectuate: (i) no more than one Underwritten Takedown in any ninety-day period; (i) no more than two Underwritten Takedowns in any twelve-month period; (iii) no more than two Underwritten Takedowns in respect of all Registrable Securities held by the Company Investors; and (iv) no more than two Underwritten Takedowns in respect of all Registrable Securities held by the Sarcos Investors, after giving effect to Section 2.2.1.
(d) If the managing underwriter in an Underwritten Takedown advises the Company and the Requesting Holder that, in its view, the number of shares of Registrable Securities requested to be included in such underwritten offering exceeds the largest number of shares that can be sold without having an adverse effect on such offering, including the price at which such shares can be sold, the shares included in such Underwritten Takedown will be reduced by the Registrable Securities held by the Selling Holders (applied on a pro rata basis based on the total number of Registrable Securities held by such Holders, subject to a determination by the Commission that certain Holders must be reduced first based on the number of Registrable Securities held by such Holders).
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2.1.6 Selection of Underwriters. The initiating Selling Holders shall have the right to select an Underwriter or Underwriters in connection with such Underwritten Takedown, which Underwriter or Underwriters shall be reasonably acceptable to the Company. In connection with an Underwritten Takedown, the Company shall enter into customary agreements (including an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of the Registrable Securities in such Underwritten Takedown, including, if necessary, the engagement of a “qualified independent underwriter” in connection with the qualification of the underwriting arrangements with the Financial Industry Regulatory Authority, Inc.
2.1.7 Registrations effected pursuant to this Section 2.1 shall not be counted as Demand Registrations effected pursuant to Section 2.2.
2.1.8 Block Trades. If a Demanding Holder wishes to consummate a Block Trade (on either a Commission registered or non-registered basis), then notwithstanding the time periods and piggyback rights otherwise provided herein, such Demanding Holder shall, if it would like the assistance of the Company, endeavor to give the Company sufficient advance notice in order to prepare the appropriate documentation for such transaction. Such Demanding Holder, if requesting a Commission registered underwritten Block Trade, (1) shall give the Company written notice of the transaction and the anticipated launch date of the transaction at least five (5) Business Days prior to the anticipated launch date of the transaction, (2) the Company shall be required to only notify the other Demanding Holders of the transaction and none of the other Holders, (3) the other Demanding Holders shall have one (1) Business Day prior to the launch of the transaction to determine if they wish to participate in the Block Trade, and (4) the Company shall include in the Block Trade only shares held by the Demanding Holders. Any Registration effected pursuant to this Section 2.1.8 shall not be counted as Demand Registrations effected pursuant to Section 2.2 but shall be deemed an Underwritten Takedown and within the cap on Underwritten Takedowns provided in Section 2.1.5(c).
(a) The Demanding Holder in a Block Trade shall have the right to select the Underwriters for such Block Trade (which shall consist of one or more reputable nationally recognized investment banks).
2.2 Demand Registration.
2.2.1 Request for Registration. At any time and from time to time after the expiration of a lock-up to which such shares are subject, if any, (i) the Company Investors who hold a majority in interest of the Registrable Securities held by all Company Investors or (ii) Sarcos Investors who hold a majority in interest of the Registrable Securities held by all Sarcos Investors, as the case may be may make a written demand for Registration under the Securities Act of all or any portion of their Registrable Securities on Form S-1 or any similar long-form Registration Statement or, if then available, on Form S-3. Each registration requested pursuant to this Section 2.2.1 is referred to herein as a “Demand Registration.” Any demand for a Demand Registration shall specify the number of shares of Registrable Securities proposed to be sold and the intended method(s) of distribution thereof. The Company will notify all Holders that are holders of Registrable Securities of the demand, and each such holder of Registrable Securities who wishes to include all or a portion of such holder’s Registrable Securities in the Demand Registration (each such holder including shares of Registrable Securities in such registration, a “Demanding Holder”) shall so notify the Company within ten (10) days after the receipt by the holder of the notice from the Company. Upon any such request, the Demanding Holders shall be entitled to have their Registrable Securities included in the Demand Registration, subject to Section 2.2.4 and the provisos set forth in Section 3.1.1. The Company shall not be obligated to effect: (a) more than one (1) Demand Registration during any six-month period; (b) any Demand Registration at any time there is an effective Resale Shelf Registration Statement on file with the Commission pursuant to Section 2.1; (c) more than two Underwritten Demand Registrations in respect of all Registrable Securities held by the Company Investors, each of which will also count as an Underwritten Takedown of the Company Investors under Section 2.1.5(c)(iii); or (d) more than two Underwritten Demand Registrations in respect of all Registrable Securities held by the Sarcos Investors, each of which will also count as an Underwritten Takedown of the Sarcos Investors under Section 2.1.5(c)(iv).
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2.2.2 Effective Registration. A Registration will not count as a Demand Registration unless and until (i) the Registration Statement filed with the Commission with respect to such Demand Registration has been declared effective by the Commission and (ii) the Company has complied with all of its obligations under this Agreement with respect thereto; provided, however, that if, after such Registration Statement has been declared effective, the offering of Registrable Securities pursuant to a Demand Registration is interfered with by any stop order or injunction of the Commission or any other governmental agency or court, the Registration Statement with respect to such Demand Registration will be deemed not to have been declared effective, unless and until, (i) such stop order or injunction is removed, rescinded or otherwise terminated, and (ii) a majority-in-interest of the Demanding Holders thereafter elect to continue the offering; provided, further, that the Company shall not be obligated to file a second Registration Statement until a Registration Statement that has been filed is counted as a Demand Registration or is terminated.
2.2.3 Underwritten Offering. If the Demanding Holders so elect and such holders so advise the Company as part of their written demand for a Demand Registration, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of an underwritten offering with an estimated market value of at least $25 million. In such event, the right of any holder to include its Registrable Securities in such registration shall be conditioned upon such holder’s participation in such underwriting and the inclusion of such holder’s Registrable Securities in the underwriting to the extent provided herein. All Demanding Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected for such underwriting by the holders initiating the Demand Registration, and subject to the approval of the Company.
2.2.4 Reduction of Offering. If the managing Underwriter or Underwriters for a Demand Registration that is to be an underwritten offering advises the Company and the Demanding Holders in writing that the dollar amount or number of shares of Registrable Securities which the Demanding Holders desire to sell, taken together with all other Common Stock or other securities which the Company desires to sell and the Common Stock, if any, as to which registration has been requested pursuant to written contractual piggy-back registration rights held by other stockholders of the Company who desire to sell, exceeds the maximum dollar amount or maximum number of shares that can be sold in such 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 shares, as applicable, the “Maximum Number of Shares”), then the Company shall include in such registration: (i) first, the Registrable Securities as to which Demand Registration has been requested by the Demanding Holders (pro rata in accordance with the number of shares that each such person has requested be included in such registration, regardless of the number of shares held by each such person (such proportion is referred to herein as “Pro Rata”)) that can be sold without exceeding the Maximum Number of Shares; (ii) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (i), the Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (iii) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (i) and (ii), the Common Stock or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons, as to which “piggy-back” registration has been requested by the holders thereof, Pro Rata, that can be sold without exceeding the Maximum Number of Shares.
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2.2.5 Withdrawal. If a majority-in-interest of the Demanding Holders disapprove of the terms of any underwriting or are not entitled to include all of their Registrable Securities in any offering, such majority-in-interest of the Demanding Holders may elect to withdraw from such offering by giving written notice to the Company and the Underwriter or Underwriters of their request to withdraw prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Demand Registration. If the majority-in-interest of the Demanding Holders withdraws from a proposed offering relating to a Demand Registration, then either the Demanding Holders shall reimburse the Company for the costs associated with the withdrawn registration (in which case such registration shall not count as a Demand Registration provided for in Section 2.1) or the withdrawn registration shall count as a Demand Registration provided for in Section 2.1.
2.3 Piggy-Back Registration.
2.3.1 Piggy-Back Rights. If the Company proposes to file a Registration Statement under the Securities Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or for stockholders of the Company for their account (or by the Company and by stockholders of the Company including, without limitation, pursuant to Section 2.1), other than a Registration Statement (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 stockholders, (iii) for an offering of debt that is convertible into equity securities of the Company, (iv) filed on Form S-4 related to any merger, acquisition or business combination, (v) for a dividend reinvestment plan or (vi) filed in connection with a Block Trade by one or more holders of Registrable Securities in accordance with Section 2.1.8, then the Company shall (x) give written notice of such proposed filing to the holders of Registrable Securities as soon as practicable but in no event less than seven (7) days before the anticipated filing date, which notice shall 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, of the offering, and (y) offer to the holders of Registrable Securities in such notice the opportunity to register the sale of such number of shares of Registrable Securities as such holders may request in writing within five (5) days following receipt of such notice (a “Piggy-Back Registration”). The Company shall cause such Registrable Securities to be included in such Piggy-Back Registration and shall use its reasonable efforts to cause the managing Underwriter or Underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All holders of Registrable Securities proposing to distribute their securities through a Piggy-Back Registration that involves an Underwriter or Underwriters shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected for such Piggy-Back Registration.
2.3.2 Reduction of Offering. If the managing Underwriter or Underwriters for a Piggy-Back Registration that is to be an underwritten offering advises the Company and the holders of Registrable Securities in writing that the dollar amount or number of Common Stock which the Company desires to sell, taken together with Common Stock, if any, as to which registration has been demanded pursuant to written contractual arrangements with persons other than the holders of Registrable Securities hereunder and the Registrable Securities as to which registration has been requested under this Section 2.3, exceeds the Maximum Number of Shares, then the Company shall include in any such registration:
(a) If the Registration is undertaken for the Company’s account: (A) first, the Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; and (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the Common Stock or other securities, if any, comprised of Registrable Securities, as to which registration has been requested pursuant to the terms hereof, that can be sold without exceeding the Maximum Number of Shares, Pro Rata; and (C) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A) and (B), the Common Stock or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual piggy-back registration rights with such persons and that can be sold without exceeding the Maximum Number of Shares; and
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(b) If the registration is a “demand” registration undertaken at the demand of persons other than either the holders of Registrable Securities, (A) first, the Common Stock or other securities for the account of the demanding persons that can be sold without exceeding the Maximum Number of Shares; (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (C) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A) and (B), the Common Stock or other securities, if any, comprised of Registrable Securities, Pro Rata, as to which registration has been requested pursuant to the terms hereof, that can be sold without exceeding the Maximum Number of Shares; and (D) fourth, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A), (B) and (C), the Common Stock or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons, that can be sold without exceeding the Maximum Number of Shares.
2.3.3 Withdrawal. Any holder of Registrable Securities may elect to withdraw such holder’s request for inclusion of Registrable Securities in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness of the Registration Statement. The Company (whether on its own determination or as the result of a withdrawal by persons making a demand pursuant to written contractual obligations) may withdraw a Registration Statement at any time prior to the effectiveness of such Registration Statement. Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the holders of Registrable Securities in connection with such Piggy-Back Registration as provided in Section 3.3.
2.3.4 Unlimited Piggy-Back Rights. For purposes of clarity, any Registration effected pursuant to Section 2.3 hereof shall not be counted as a Registration pursuant to a Demand Registration effected under Section 2.2 hereof, and there shall be no limit on the number of Piggy-Back Registrations.
3. REGISTRATION PROCEDURES.
3.1 Filings; Information. Whenever the Company is required to effect the registration of any Registrable Securities pursuant to Section 2 or an underwritten Block Trade, the Company shall use its reasonable best efforts to effect the registration and sale of such Registrable Securities in accordance with the intended method(s) of distribution thereof as expeditiously as practicable, and in connection with any such request:
3.1.1 Filing Registration Statement. The Company shall use its reasonable best efforts to, as expeditiously as possible after receipt of a request for a Demand Registration pursuant to Section 2.2, prepare and file with the Commission a Registration Statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of all Registrable Securities to be registered thereunder in accordance with the intended method(s) of distribution thereof, and shall use its reasonable best efforts to cause such Registration Statement to become effective and use its reasonable best efforts to keep it effective for the Effectiveness Period; provided, however, that the Company shall have the right to defer any Demand Registration for up to ninety (90) days, and any Piggy-Back Registration for such period as may be applicable to deferment of any Demand Registration to which such Piggy-Back Registration relates, in each case if the Company shall furnish to the holders a certificate signed by the Chief Executive Officer or Chairman of the Company stating that, in the good faith judgment of the Board, it would be materially detrimental to the Company and its stockholders for such Registration Statement to be effected at such time; provided, however, the Company shall have the right to defer such filing on not more than three (3) occasions or for more than ninety (90) consecutive calendar days, or more than one hundred eighty (180) total calendar days, in each case during any twelve-month period.
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3.1.2 Copies. The Company shall, prior to filing a Registration Statement or prospectus, or any amendment or supplement thereto, furnish without charge to 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 holders of Registrable Securities included in such registration or legal counsel for any such holders may request in order to facilitate the disposition of the Registrable Securities owned by such holders.
3.1.3 Amendments and Supplements. The Company shall prepare and file with the Commission such amendments, including post-effective amendments, and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and in compliance with the provisions of the Securities Act until all Registrable Securities and other securities covered by such Registration Statement have been disposed of in accordance with the intended method(s) of distribution set forth in such Registration Statement or such securities have been withdrawn (the “Effectiveness Period”).
3.1.4 Notification. After the filing of a Registration Statement, the Company shall promptly, and in no event more than two (2) Business Days after such filing, notify the holders of Registrable Securities included in such Registration Statement of such filing, and shall further notify such holders promptly and confirm such advice in writing in all events within three (3) Business Days of the occurrence of any of the following: (i) when such Registration Statement becomes effective; (ii) when any post-effective amendment to such Registration Statement becomes effective; (iii) the issuance or threatened issuance by the Commission of any stop order (and the Company shall take all actions required to prevent the entry of such stop order or to remove it if entered); and (iv) any request by the Commission for any amendment or supplement to such Registration Statement or any prospectus relating thereto or for additional information or of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of the securities covered by such Registration Statement, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and promptly make available to the holders of Registrable Securities included in such Registration Statement any such supplement or amendment; except that before filing with the Commission a Registration Statement or prospectus or any amendment or supplement thereto, including documents incorporated by reference, the Company shall furnish to the holders of Registrable Securities included in such Registration Statement and to the legal counsel for any such holders, copies of all such documents proposed to be filed sufficiently in advance of filing to provide such holders and legal counsel with a reasonable opportunity to review such documents and comment thereon.
3.1.5 Securities Laws Compliance. The Company shall use its reasonable best 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 reasonably request 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 but for this paragraph or subject itself to taxation in any such jurisdiction.
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3.1.6 Agreements for Disposition. The Company shall enter into customary agreements (including, if applicable, an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities. The representations, warranties and covenants of the Company in any underwriting agreement which are made to or for the benefit of any Underwriters, to the extent applicable, shall also be made to and for the benefit of the holders of Registrable Securities included in such registration statement, and the representations, warranties and covenants of the holders of Registrable Securities included in such registration statement in any underwriting agreement which are made to or for the benefit of any Underwriters, to the extent applicable, shall also be made to and for the benefit of the Company.
3.1.7 Comfort Letter. The Company shall obtain a “cold comfort” letter from the Company’s independent registered public accountants in the event of an underwritten offering, in customary form and covering such matters of the type customarily covered by “cold comfort” letters as the managing Underwriter may reasonably request, and reasonably satisfactory to a majority-in-interest of the participating holders.
3.1.8 Opinions. On the date the Registrable Securities are delivered for sale pursuant to any Registration, the Company shall obtain an opinion, dated such date, of one (1) counsel representing the Company for the purposes of such Registration, addressed to the holders, 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 holders, placement agent, sales agent, or Underwriter may reasonably request and as are customarily included in such opinions, and reasonably satisfactory to a majority in interest of the participating holders.
3.1.9 Cooperation. The principal executive officer of the Company, the principal financial officer of the Company, the principal accounting officer of the Company and all other officers and members of the management of the Company shall cooperate fully in any offering of Registrable Securities hereunder, which cooperation shall include, without limitation, the preparation of the Registration Statement with respect to such offering and all other offering materials and related documents, and participation in meetings with Underwriters, attorneys, accountants and potential investors.
3.1.10 Records. Upon execution of confidentiality agreements, the Company shall make available for inspection by the holders of Registrable Securities included in such Registration Statement, any Underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other professional retained by any holder of Registrable Securities included in such Registration Statement or any Underwriter, all financial and other records, pertinent corporate documents and properties of the Company, as shall be necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors and employees to supply all information requested by any of them in connection with such Registration Statement.
3.1.11 Earnings Statement. The Company shall comply with all applicable rules and regulations of the Commission and the Securities Act, and make available to its stockholders, as soon as practicable, an earnings statement covering a period of twelve (12) months, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.
3.1.12 Listing. The Company shall use its reasonable best efforts to cause all Registrable Securities included in any Registration Statement to be listed on such exchanges or otherwise designated for trading in the same manner as similar securities issued by the Company are then listed or designated.
3.1.13 Market Stand-Off. In connection with any underwritten offering of equity securities of the Company (other than a Block Trade) in which a Holder participates, such Holder 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 ninety (90)-day period (or such shorter time agreed to by the managing Underwriters) beginning on the date of pricing of such offering, except as expressly permitted by such lock-up agreement or in the event the managing Underwriters otherwise agree by written consent. Each 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 such Holders); provided, that such agreement shall not be materially more restrictive than any similar agreement entered into by the directors and executive officers of the Company participating in such underwritten offering; provided, further, that such agreement shall provide that any early release of any Holder from the provisions of the terms of such agreement shall be on a pro rata basis among all Holders.
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3.2 Obligation to Suspend Distribution; Adverse Disclosure. Upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3.1.4(iv), or, upon any suspension by the Company, pursuant to a written insider trading compliance program adopted by the Board, of the ability of all “insiders” covered by such program to transact in the Company’s securities because of the existence of material non-public information, each holder of Registrable Securities included in any registration shall immediately discontinue disposition of such Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such holder receives the supplemented or amended prospectus contemplated by Section 3.1.4(iv) or the restriction on the ability of “insiders” to transact in the Company’s securities is removed, as applicable, and, if so directed by the Company, each such holder will deliver to the Company all copies, other than permanent file copies then in such holder’s possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice. If the filing, initial effectiveness or continued use of a Registration Statement in respect of any Registration at any time would require the Company to make an Adverse Disclosure or would require the inclusion in such Registration the statement of financial statements that are unavailable to the Company for reasons beyond the Company’s control, the Company may, upon giving prompt written notice of such action to the Holders, delay the filing or initial effectiveness of, or suspend use of, such Registration Statement for the shortest period of time, but in no event more than sixty (60) days, determined in good faith by the Company to be necessary for such purpose. In the event the Company exercises its rights under the preceding sentence, 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. The Company shall promptly notify the Holders of the expiration of any period during which it exercised its rights under this Section 3.2.
3.3 Registration Expenses. Except as set forth in Section 2.2.5, the Company shall bear all costs and expenses incurred in connection with the Resale Shelf Registration Statement pursuant to Section 2.1, any Demand Registration pursuant to Section 2.1, any Demand Takedown pursuant to Section 2.1.5(a)(i), any Piggy-Back Registration pursuant to Section 2.3, and any registration on Form S-3 effected pursuant to Section 2.3, and all expenses incurred in performing or complying with its other obligations under this Agreement, whether or not the Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees; (ii) fees and expenses of compliance with securities or “blue sky” laws (including fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities); (iii) printing expenses; (iv) the Company’s internal expenses (including, without limitation, all salaries and expenses of its officers and employees); (v) the fees and expenses incurred in connection with the listing of the Registrable Securities as required by Section 3.1.12; (vi) Financial Industry Regulatory Authority fees; (vii) fees and disbursements of counsel for the Company and fees and expenses for independent certified public accountants retained by the Company; (viii) the fees and expenses of any special experts retained by the Company in connection with such registration and (ix) the fees and expenses of one legal counsel selected by the holders of a majority-in-interest of the Registrable Securities included in such registration. The Company shall have no obligation to pay any underwriting discounts, selling commissions or stock transfer taxes attributable to the Registrable Securities being sold by the holders thereof, which underwriting discounts, selling commissions or stock transfer taxes shall be borne by such holders. Additionally, in an underwritten offering, all selling stockholders and the Company shall bear the expenses of the Underwriter pro rata in proportion to the respective amount of shares each is selling in such offering.
3.4 Information. The holders of Registrable Securities shall promptly provide such information as may reasonably be requested by the Company, or the managing Underwriter, if any, in connection with the preparation of any Registration Statement, including amendments and supplements thereto, in order to effect the registration of any Registrable Securities under the Securities Act and in connection with the Company’s obligation to comply with Federal and applicable state securities laws.
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4. INDEMNIFICATION AND CONTRIBUTION.
4.1 Indemnification by the Company. The Company agrees to indemnify and hold harmless each Holder and, and each of their respective officers, employees, Affiliates, directors, partners, members, attorneys and agents, and each person, if any, who controls a Holder and each other holder of Registrable Securities (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) (each, an “Holder Indemnified Party”), from and against any expenses, losses, judgments, claims, damages or liabilities, whether joint or several, arising out of or based upon any untrue statement (or allegedly untrue statement) of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained in the Registration Statement, or any amendment or supplement to such Registration Statement, or arising out of or based upon any omission (or alleged omission) to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act or any rule or regulation promulgated thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration; and the Company shall promptly reimburse the Holder Indemnified Party for any legal and any other expenses reasonably incurred by such Holder Indemnified Party in connection with investigating and defending any such expense, loss, judgment, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such expense, loss, claim, damage or liability arises out of or is based upon any untrue statement or allegedly untrue statement or omission or alleged omission made in such Registration Statement, preliminary prospectus, final prospectus, or summary prospectus, or any such amendment or supplement, in reliance upon and in conformity with information furnished to the Company, in writing, by such selling Holder expressly for use therein, or is based on any selling Holder’s violation of the federal securities laws (including Regulation M) or failure to sell the Registrable Securities in accordance with the plan of distribution contained in the prospectus.
4.2 Indemnification by Holders of Registrable Securities. Each selling holder of Registrable Securities will, in the event that any registration is being effected under the Securities Act pursuant to this Agreement of any Registrable Securities held by such selling holder, indemnify and hold harmless the Company, each of its directors and officers, and each other selling holder and each other person, if any, who controls another selling holder within the meaning of the Securities Act, against any losses, claims, judgments, damages or liabilities, whether joint or several, insofar as such losses, claims, judgments, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or allegedly untrue statement of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained in the Registration Statement, or any amendment or supplement to the Registration Statement, or arise out of or are based upon any omission or the alleged omission to state a material fact required to be stated therein or necessary to make the statement therein not misleading, if the statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company by such selling holder expressly for use therein, or is based on any selling holder’s violation of the federal securities laws (including Regulation M) or failure to sell the Registrable Securities in accordance with the plan of distribution contained in the prospectus, and shall reimburse the Company, its directors and officers, and each other selling holder or controlling person for any legal or other expenses reasonably incurred by any of them in connection with investigation or defending any such loss, claim, damage, liability or action. Each selling holder’s indemnification obligations hereunder shall be several and not joint and shall be limited to the amount of any net proceeds actually received by such selling holder.
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4.3 Conduct of Indemnification Proceedings. Promptly after receipt by any person of any notice of any loss, claim, damage or liability or any action in respect of which indemnity may be sought pursuant to Sections 4.1 or 4.2, such person (the “Indemnified Party”) shall, if a claim in respect thereof is to be made against any other person for indemnification hereunder, notify such other person (the “Indemnifying Party”) in writing of the loss, claim, judgment, damage, liability or action; provided, however, that the failure by the Indemnified Party to notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability which the Indemnifying Party may have to such Indemnified Party hereunder, except and solely to the extent the Indemnifying Party is actually prejudiced by such failure. If the Indemnified Party is seeking indemnification with respect to any claim or action brought against the Indemnified Party, then the Indemnifying Party shall be entitled to participate in such claim or action, and, to the extent that it wishes, jointly with all other Indemnifying Parties, to assume control of the defense thereof with counsel satisfactory to the Indemnified Party. After notice from the Indemnifying Party to the Indemnified Party of its election to assume control of the defense of such claim or action, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that in any action in which both the Indemnified Party and the Indemnifying Party are named as defendants, the Indemnified Party shall have the right to employ separate counsel (but no more than one such separate counsel, which counsel is reasonably acceptable to the Indemnifying Party) to represent the Indemnified Party and its controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Indemnified Party against the Indemnifying Party, with the fees and expenses of such counsel to be paid by such Indemnifying Party if, based upon the written opinion of counsel of such Indemnified Party, representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, consent to entry of judgment or effect any settlement of any claim or pending or threatened proceeding in respect of which the Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such judgment or settlement includes an unconditional release of such Indemnified Party from all liability arising out of such claim or proceeding.
4.4 Contribution.
4.4.1 If the indemnification provided for in the foregoing Sections 4.1, 4.2 and 4.3 is unavailable to any Indemnified Party in respect of any loss, claim, damage, liability or action referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the Indemnified Parties and the Indemnifying Parties in connection with the actions or omissions which resulted in such loss, claim, damage, liability or action, as well as any other relevant equitable considerations. The relative fault of any Indemnified Party and any Indemnifying Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such Indemnified Party or such Indemnifying Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
4.4.2 The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4.4 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 the immediately preceding Section 4.4.1.
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4.4.3 The amount paid or payable by an Indemnified Party as a result of any loss, claim, damage, liability or action referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 4.4, no holder of Registrable Securities shall be required to contribute any amount in excess of the dollar amount of the net proceeds (after payment of any underwriting fees, discounts, commissions or taxes) actually received by such holder from the sale of Registrable Securities which gave rise to such contribution obligation. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
5. UNDERWRITING AND DISTRIBUTION.
5.1 Rule 144. The Company covenants that it shall file any reports required to be filed by it under the Securities Act and the Exchange Act and shall take such further action as the holders of Registrable Securities may reasonably request, all to the extent required from time to time to enable such holders to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act, as such Rules may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission.
6. MISCELLANEOUS.
6.1 Other Registration Rights and Arrangements. The Company represents and warrants that no person, other than a holder of the Registrable Securities, has any right to require the Company to register any of the Company’s capital stock for sale or to include the Company’s capital stock in any registration filed by the Company for the sale of shares for its own account or for the account of any other person, other than the Subscription Agreements. The Company and the Company Investors hereby terminate the Prior Company Agreement, which shall be of no further force and effect and is hereby superseded and replaced in its entirety by this Agreement. To the extent that the Prior Sarcos Agreement does not terminate in accordance with its terms in connection with the Merger, Sarcos and the Sarcos Investors hereby terminate the Prior Sarcos Agreement effective upon consummation of the Merger, and agree that upon consummation of the Merger, the Prior Sarcos Agreement shall be of no further force and effect and is hereby superseded and replaced in its entirety by this Agreement.
6.2 Assignment; No Third Party Beneficiaries. Except as otherwise provided in this Section 6.2, this Agreement and the rights, duties and obligations of the Company, Holders or the Sponsor hereunder may not be assigned or delegated by the Company, Holders or the Sponsor in whole or in part. This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties hereto and their respective successors and assigns and the holders of Registrable Securities and their respective successors and permitted assigns. This Agreement is not intended to confer any rights or benefits on any persons that are not party hereto other than as expressly set forth in Section 4 and this Section 6.2. The rights, duties and obligations of a holder of Registrable Securities under this Agreement may be transferred by such a holder to a Permitted Transferee who acquires or holds Registrable Securities; provided, however, that (a) such transferee has executed and delivered to the Company a properly completed agreement to be bound by the terms of this Agreement substantially in form attached hereto as Exhibit A (the “Addendum Agreement”), (b) the transferor shall have delivered to the Company no later than ten (10) days following the date of the transfer, written notification of such transfer setting forth the name of the transferor, the name and address of the transferee, and the number of Registrable Securities so transferred and (c) after any such transfer, the transferee holds the lesser of (A) [the equivalent in Common Stock after the Merger of 500,000 Registrable Securities as defined in the Prior Sarcos Agreement] shares of Registrable Securities (as presently constituted and subject to subsequent adjustments for stock splits, stock dividends, reverse stock splits and the like) or (B) all of the transferring Holder’s Registerable Securities. The execution of an Addendum Agreement shall constitute a permitted amendment of this Agreement. For the avoidance of doubt, if the securities that a holder wishes to transfer would not be Registrable Securities if held by such transferee, the transferee shall not be entitled to sign the Addendum Agreement or become a party hereto.
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6.3 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 or modification 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.
6.4 Term.
6.4.1 Sections 3 through 5 of this Agreement (including with respect to any defined term as used therein, whether or not such defined term is defined therein) shall terminate upon the earlier of (i) the seventh anniversary of the date of this Agreement and (ii) the date as of which (A) all of the Registrable Securities have been sold pursuant to a Registration Statement (but in no event prior to the applicable period referred to in Section 4(a)(3) of the Securities Act and Rule 174 thereunder (or any successor rule promulgated thereafter by the Commission)) or (B) the holders of all Registrable Securities are permitted to sell the Registrable Securities under Rule 144 (or any similar provision) under the Securities Act without limitation on the amount of securities sold or the manner of sale; provided further that with respect to any Holder, such Holder will have no rights under this Agreement and all obligations of the Company to such Holder under this Agreement shall terminate upon the earliest date such Holder is permitted to sell the Registrable Securities under Rule 144 (or any similar provision) under the Securities Act without limitation on the amount of securities sold or the manner of sale.
6.4.2 Notwithstanding anything herein to the contrary, the provisions of Sections 4 and 6 (including with respect to any defined term as used therein, whether or not such defined term is defined therein) shall survive, and remain in full force and effect following, any termination of this Agreement.
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6.5 Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed given (a) when delivered personally by hand (with written confirmation of receipt by other than automatic means, whether electronic or otherwise), (b) when sent by email (with no automated reply, such as an out-of-office notification, no mail undeliverable notification or other rejection notice) or (c) one (1) Business Day following the day sent by an internationally recognized overnight courier (with written confirmation of receipt), in each case, at the following addresses or e-mail addresses (or to such other address or e-mail address as a party may have specified by notice given to the other party pursuant to this provision):
If to the Company:
Sarcos Technology and Robotics Corp. (f/k/a Rotor Acquisition Corp.)
[____]
[____]
Attention: [____]
E-mail: [____]
with a copy (which shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati
701 Fifth Avenue #5100
Seattle, WA 98104
Attn: Patrick Schultheis; Michael Nordtvedt; Matt Squires
If to the Sponsor:
Rotor Sponsor LLC
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
with a copy (which shall not constitute notice) to:
Gibson, Dunn & Crutcher LLP
1050 Connecticut Avenue, N.W.
Washington, DC 20036-5306
Attn: Mark Director; Evan D’Amico
If to a Holder, to the address set forth under such Holder’s signature to this Agreement or to such Holder’s address as found in the Company’s books and records.
6.6 Severability. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible that is valid and enforceable.
6.7 Counterparts. This Agreement may be executed in two or more counterparts (any of which may be delivered by electronic transmission), each of which shall constitute an original, and all of which taken together shall constitute one and the same instrument.
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6.8 Entire Agreement. This Agreement (including all agreements entered into pursuant hereto and all certificates and instruments delivered pursuant hereto and thereto) constitutes the full and entire understanding and agreement of the parties with respect to the subject matter hereof and supersede all prior and contemporaneous agreements, representations, understandings, negotiations and discussions between the parties, whether oral or written, including without limitation the Prior Company Agreement and the Prior Sarcos Agreement.
6.9 Governing Law; Jurisdiction. This Agreement, and all claims or causes of action (whether in contract, tort or otherwise) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement) shall be governed by and construed in accordance with the law of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws. Each of the parties hereto hereby irrevocably and unconditionally (a) submits, for itself and its property, to the exclusive jurisdiction of the Delaware Court of Chancery (or, only if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, the Delaware Superior Court or the United States District Court for the District of Delaware), and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement), or for recognition or enforcement of any judgment, and agrees that all claims in respect of any such action or proceeding shall be heard and determined in such Delaware Court of Chancery (or, only if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, the Delaware Superior Court or the United States District Court for the District of Delaware), (b) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement) in the Delaware Court of Chancery or in the Delaware Superior Court or the United States District Court for the District of Delaware, (c) waives, to the fullest extent permitted by Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court and (d) agrees that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each of the parties hereto agrees that service of process, summons, notice or document by registered mail addressed to it in accordance with Section 6.5 shall be effective service of process for any suit, action or proceeding brought in any such court.
6.10 TRIAL BY JURY. THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, EXECUTION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY AND THAT ANY ACTION OR PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be executed and delivered by their duly authorized representatives as of the date first written above.
| SARCOS TECHNOLOGY AND ROBOTICS CORP. (f/k/a Rotor Acquisition Corp.) | ||
| By: | ||
| Name: | ||
| Title: | ||
| HOLDERS: | |
| ROTOR SPONSOR LLC | ||
| By: | ||
| Name: | ||
| Title: | ||
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
EXHIBIT A
Addendum Agreement
This Addendum Agreement (“Addendum Agreement”) is executed on [●], 20[●], by the undersigned (the “New Holder”) pursuant to the terms of that certain Registration Rights Agreement dated as of [●], 2021 (the “Agreement”), by and among the Company, Sponsor and the Holders identified therein, as such Agreement may be amended, supplemented or otherwise modified from time to time. Capitalized terms used but not defined in this Addendum Agreement shall have the respective meanings ascribed to such terms in the Agreement. By the execution of this Addendum Agreement, the New Holder agrees as follows:
1. Acknowledgment. New Holder acknowledges that New Holder is acquiring certain Common Stock of the Company (the “Shares”) as a transferee of such Shares from a party in such party’s capacity as a holder of Registrable Securities under the Agreement, and after such transfer, New Holder shall be considered an “Investor” and a holder of Registrable Securities for all purposes under the Agreement.
2. Agreement. New Holder hereby (a) agrees that the Shares shall be bound by and subject to the terms of the Agreement and (b) adopts the Agreement with the same force and effect as if the New Holder were originally a party thereto.
3. Notice. Any notice required or permitted by the Agreement shall be given to New Holder at the address or facsimile number listed below New Holder’s signature below.
| NEW HOLDER: | ACCEPTED AND AGREED | |||
| Print Name: | SARCOS TECHNOLOGY AND ROBOTICS CORP. (f/k/a Rotor Acquisition Corp.) | |||
| By: | By: | |||
SCHEDULE I
[Sarcos Investors]
[Company Investors]
Exhibit 99.1
Sarcos Robotics to Merge with Rotor Acquisition Corp.
Sarcos Robotics, a leader in highly dexterous mobile industrial robotic systems, develops robotic systems to enable the workforce of the future with solutions that enhance productivity, reduce occupational injuries, and equalize employment opportunities for the jobs around the world that do not lend themselves to automation
Merger expected to provide the company with up to $496 million of proceeds before expenses to fund business plans, facilitate potential bolt-on acquisitions, and enhance capabilities
$220 million PIPE with participation from funds and accounts managed by BlackRock, Millennium Management LLC, Palantir Technologies Inc., Caterpillar Venture Capital Inc., Schlumberger, Michael F. Price, JAWS Estates Capital, LLC, Sarcos Chairman and CEO Ben Wolff, and founders of Rotor Acquisition Corp.
Combined company to be named Sarcos Technologies and Robotics Corporation and expected to trade on Nasdaq under the new ticker symbol “STRC” with transaction anticipated to close in Q3 2021
SALT LAKE CITY and NEW YORK, April 6, 2021 – Sarcos Robotics (“Sarcos” or the “Company”), a leader in the development of robots that augment humans to enhance productivity and safety, today announced that it will become publicly listed through a merger transaction with Rotor Acquisition Corp. (NYSE: ROT.U, ROT, and ROT WS) (“Rotor”), a publicly-traded special purpose acquisition company. Upon closing, the combined company’s common stock is expected to trade on Nasdaq under the ticker symbol STRC. The transaction represents an enterprise value of $1.3 billion for the combined company, plus a potential earnout of an additional $281 million based on the combined company's future share trading price.
About Sarcos
Sarcos is developing mobile, highly dexterous robotic systems designed for dynamic or unstructured environments. With a focus on augmenting humans for non-repetitive tasks where human decision making is essential, Sarcos’ robotic solutions are designed to enhance individual productivity, making physically demanding jobs safer and more accessible to more people, alleviating skilled worker shortages, and reducing the economic and social impact of occupational injuries, while also equalizing job opportunities for tasks that previously required significant strength and stamina.
Leveraging more than thirty years of development efforts and its robust patent portfolio, Sarcos expects to commercially release its Guardian® XO® full-body wearable industrial exoskeleton robot in mid-2022, followed later in the year by its Guardian® XT™ highly dexterous force feedback industrial teleoperated robot. The Guardian® XO® and Guardian® XT™ robots are expected to join the Company’s highly versatile multi-purpose inspection robot in its commercial lineup, with the aim of delivering a full suite of robots capable of performing physically demanding work that requires human-like skill, dexterity, and range of motion.
With end-market product applications including the aerospace, automotive, logistics, defense, maritime, oil and gas, power and utilities, construction, and manufacturing industries, Sarcos is well-positioned to capture market share in the massive traditional labor markets, representing a total addressable market in U.S. industrial sectors alone of approximately $147 billion. Sarcos plans to expand its product availability globally and recently announced a memorandum of understanding to introduce its products to the Middle East and Africa.
Sarcos intends to deploy its robot fleet primarily through a Robotics as-a-Service (RaaS) solution, which it expects will accelerate the adoption of its products by offering a scalable source of labor augmentation to support its customers. The Company has strong engagement and support from key strategic partners and potential customers, including several Fortune 100 companies.
Management Comments
“Sarcos is building advanced mobile industrial robotic solutions that will advance the future of the workforce,” said Ben Wolff, Chairman and Chief Executive Officer of Sarcos. “We have a strong foundation and a clear road map to launch our next-generation highly dexterous mobile industrial robotic systems that are intended to increase productivity, save lives, and reduce injuries. Our transaction with Rotor accelerates our access to resources that will facilitate our broad product launch and enable us to execute potential bolt-on acquisitions to fortify our platform and enhance our capabilities. Rotor brings significant experience in the industrial and consumer sectors and a shared vision for the future of robotics and the workforce.”
Mr. Wolff continued, “This transaction and the opportunities we believe it will create are a result of the efforts of our team. Moving forward, our team and their dedication to innovation will continue to be the ultimate drivers of our success. We want to thank our customers and business partners for their support as we enter this new chapter for Sarcos.”
Stefan M. Selig, Chairman of Rotor, said, “We launched Rotor Acquisition Corp. with the goal of identifying and partnering with companies that are leveraging technology and innovation to disrupt ‘old-economy’ businesses in large and growing markets. Sarcos fits these criteria perfectly, and we are excited to partner with them and create value by building out the Sarcos platform and bringing the Company’s robotics technology to the global workforce.”
“In January of last year, we were proud to announce our partnership with Sarcos Robotics to bring its cutting-edge products to our frontline teams. It was remarkable to have Sarcos’ Guardian XO industrial exoskeleton join me on stage at the 2020 Consumer Electronics Show for its first public demonstration,” remarked Ed Bastian, Chief Executive Officer of Delta Air Lines. “Delta’s employees are the key ingredient to our success, and we are committed to reducing on-the-job injuries as well as fostering workforce diversity and improving worker longevity for a healthier and safer team. My enthusiasm for Sarcos’ potential has only grown since then as we continue to work closely with Sarcos to turn our everyday heroes into superheroes, making their jobs safer and easier than ever.”
Bolstering Financial Position to Accelerate Growth
Upon completion of the transaction, Sarcos expects to have up to $496 million in cash, before expenses and assuming no Rotor shareholder redemptions, to fund growth initiatives and enhance shareholder value, including:
| ● | Completing the commercialization and launch of its Guardian XO and XT products; |
| ● | Ramping up production to drive scale and growth; |
| ● | Increasing its capabilities through bolt-on acquisitions; and |
| ● | Developing the Company’s AI platform to enhance the value proposition of its core products. |
Transaction Overview
The transaction has been unanimously approved by the Boards of Directors of both Sarcos and Rotor. Rotor’s Board of Directors acted upon the unanimous recommendation of a Special Committee of independent and disinterested directors of Rotor. The Special Committee has obtained a fairness opinion from an independent financial advisor engaged by the Special Committee. The transaction is expected to close in the third quarter of 2021, subject to the satisfaction of customary closing conditions, including regulatory approval, the approval of Rotor’s stockholders and a minimum cash balance comprised of funds in trust and proceeds from the PIPE of not less than $200 million.
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At the closing and as a result of the transaction, it is expected that the combined company will have up to $496 million in cash, prior to payment of transaction expenses, including approximately $276 million of cash held in Rotor’s trust account from its initial public offering (assuming no shareholder redemptions) and approximately $220 million from a committed PIPE investment, at $10.00 per share. Key PIPE investors include funds and accounts managed by BlackRock, Millennium Management LLC, Palantir Technologies Inc., Caterpillar Venture Capital Inc., Schlumberger, Michael F. Price, JAWS Estates Capital, LLC, Sarcos Chairman and CEO, Ben Wolff, and founders of Rotor Acquisition Corp. Sarcos’ existing shareholders will exchange 100 percent of their equity of Sarcos for 120 million shares of common stock of Rotor to own approximately 68 percent of the outstanding shares of the combined company at closing. They also will be entitled to receive up to an additional 28.1 million common shares, subject to the trading price of the combined company’s common stock reaching certain levels in the future, as specified in the merger agreement.
Additional information about the proposed transaction, including a copy of the merger agreement and investor presentation, will be provided in a Current Report on Form 8-K to be filed by Rotor today with the Securities and Exchange Commission (“SEC”) and available at www.sec.gov.
Advisors
Jefferies and PJT Partners are acting as financial advisors to Sarcos and Wilson Sonsini Goodrich & Rosati, Professional Corporation is acting as its legal counsel. Gibson, Dunn & Crutcher LLP is acting as legal counsel, and Credit Suisse is acting as sole financial and capital markets advisor to Rotor Acquisition. Credit Suisse, Jeffries, and PJT Partners are acting as joint placement agents with respect to the private placement. Milbank LLP is acting as legal counsel to the Special Committee of Rotor’s Board of Directors, and Houlihan Lokey is acting as financial advisor to the Special Committee.
Conference Call Information
Sarcos and Rotor will host a joint investor conference call to discuss the transaction and review the investor presentation today, April 6, 2021, at 8:30 AM ET. A live webcast of the conference call and associated presentation materials will be accessible at www.sarcos.com/ir.
The companies encourage those who intend to listen via phone to pre-register for the conference call using the following link: https://dpregister.com/sreg/10154304/e636ff9580. Callers who pre-register will be given a conference passcode and unique PIN to gain immediate access to the call and bypass the live operator. Participants may pre-register at any time, including up to and after the call start time.
Those without internet access or unable to pre-register may dial in by dialing 1-866-777-2509 in the United States or 1-412-317-5413 internationally.
A replay of the conference call will be available shortly after the completion of the conference call and can be accessed at Sarcos’ website.
About Sarcos Robotics
Sarcos Robotics is a leader in industrial robotic systems that augment human performance by combining human intelligence, instinct, and judgment with the strength, endurance, and precision of machines to enhance employee safety and productivity. Leveraging more than 30 years of research and development, Sarcos’ mobile robotic systems, including the Guardian® S, Guardian® GT, and Guardian® XO®, are revolutionizing the future of work wherever physically demanding work is done. Sarcos is based in Salt Lake City, Utah, and backed by Caterpillar Venture Capital Inc., Delta Air Lines, GE Ventures, Microsoft, and Schlumberger. For more information, please visit www.sarcos.com.
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About Rotor Acquisition Corp.
With approximately 100 years of combined experience in investing and managing capital across markets and industries, structuring transactions, and building businesses and led by Chief Executive Officer Brian Finn, Chairman of the Board Stefan M. Selig, and Director John D. Howard, Rotor Acquisition Corp. is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with potential target companies with certain industry and business characteristics within the areas of disruptive consumer and industrial technologies. For more information, please visit www.rotoracquisition.com.
Additional Information about the Merger and Where to Find It
This press release relates to the proposed merger involving Rotor and Sarcos. Rotor intends to file a proxy statement with the SEC, and each party will file other documents with the SEC regarding the proposed transaction. A definitive proxy statement will also be sent to the stockholders of Rotor, seeking any required stockholder approvals. Before making any voting or investment decision, investors and security holders of Rotor and Sarcos are urged to carefully read the entire proxy statement, when it becomes available, and any other relevant documents filed with the SEC, as well as any amendments or supplements to these documents, because they will contain important information about the proposed transaction. The documents filed by Rotor with the SEC may be obtained free of charge at the SEC’s website at www.sec.gov. Alternatively, these documents, when available, can be obtained free of charge from Rotor upon written request to Rotor Acquisition Corp., The Chrysler Building, 405 Lexington Avenue, New York, New York 10174.
Rotor, Sarcos and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Rotor, in favor of the approval of the merger. Information regarding Rotor’s directors and executive officers is contained in the section of Rotor’s Form S-1 titled “Management”, which was filed with the SEC on December 18, 2020. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the proxy statement and other relevant documents filed with the SEC when they become available. Free copies of these documents may be obtained as described in the preceding paragraph.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, Rotor’s and Sarcos’ expectations or predictions of future financial or business performance or conditions, Sarcos’ product roadmap, including the expected timing of new product releases, Sarcos’ plans to expand its product availability globally, the expected composition of the management team and board of directors following the transaction, the expected use of capital following the transaction, including Sarcos’ ability to accomplish the initiatives outlined above, the expected timing of the closing of the transaction and the expected cash balance of the combined company following the closing. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events, or results of operations, are forward-looking statements. These statements may be preceded by, followed by, or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates,” “intends” or “continue” or similar expressions. Such forward-looking statements involve risks and uncertainties that may cause actual events, results or performance to differ materially from those indicated by such statements. Certain of these risks are identified and discussed in the section of Rotor’s Form S-1 titled “Risk Factors,” which was filed with the SEC on December 18, 2020. These risk factors will be important to consider in determining future results and should be reviewed in their entirety. These forward-looking statements are based on Rotor’s or Sarcos’ management’s current expectations and beliefs, as well as a number of assumptions concerning future events. However, there can be no assurance that the events, results, or trends identified in these forward-looking statements will occur or be achieved. Forward-looking statements speak only as of the date they are made, and neither Rotor nor Sarcos is under any obligation and expressly disclaim any obligation, to update, alter or otherwise revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law. Readers should carefully review the statements set forth in the reports, which Rotor has filed or will file from time to time with the SEC.
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In addition to factors previously disclosed in Rotor’s reports filed with the SEC, including Rotor’s most recent reports on Form 8-K and all attachments thereto, which are available, free of charge, at the SEC’s website at www.sec.gov, and those identified elsewhere in this press release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: risks and uncertainties related to the inability of the parties to successfully or timely consummate the merger, including the risk that any required regulatory approvals or stockholder approvals of Rotor or Sarcos are not obtained, are delayed or are subject to unanticipated conditions that could adversely affect the combined company or the expected benefits of the merger is not obtained, failure to realize the anticipated benefits of the merger, risks related to Sarcos’ ability to execute on its business strategy, attract and retain users, develop new offerings, enhance existing offerings, compete effectively, and manage growth and costs, the duration and global impact of COVID-19, the possibility that Rotor or Sarcos may be adversely affected by other economic, business and/or competitive factors, the number of redemption requests made by Rotor’s public stockholders, the ability of the combined company to meet Nasdaq’s listing standards (or the standards of any other securities exchange on which securities of the public entity are listed) following the merger, the inability to complete the private placement of common stock of Rotor to certain institutional accredited investors, the risk that the announcement and consummation of the transaction disrupts Sarcos’ current plans and operations, costs related to the transaction, changes in applicable laws or regulations, the outcome of any legal proceedings that may be instituted against Rotor, Sarcos, or any of their respective directors or officers, following the announcement of the transaction, the ability of Rotor or the combined company to issue equity or equity-linked securities in connection with the proposed merger or in the future, the failure to realize anticipated pro forma results and underlying assumptions, including with respect to estimated stockholder redemptions and purchase price and other adjustments; and those factors discussed in documents of Rotor filed, or to be filed, with SEC.
Additional factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements can be found in Rotor’s most recent reports on Form 8-K, which are available, free of charge, at the SEC’s website at www.sec.gov, and will also be provided in Rotor’s proxy statement, when available. Any financial projections in this press release are forward-looking statements that are based on assumptions that are inherently subject to significant uncertainties and contingencies, many of which are beyond Rotor’s and Sarcos’ control. While all projections are necessarily speculative, Rotor and Sarcos believe that the preparation of prospective financial information involves increasingly higher levels of uncertainty the further out the projection extends from the date of preparation. The assumptions and estimates underlying the projected results 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. The inclusion of projections in this press release should not be regarded as an indication that Rotor and Sarcos, or their representatives, considered or consider the projections to be a reliable prediction of future events.
Annualized, pro forma, projected and estimated numbers are used for illustrative purposes only, are not forecasts, and may not reflect actual results.
This press release is not intended to be all-inclusive or to contain all the information that a person may desire in considering an investment in Rotor and is not intended to form the basis of an investment decision in Rotor. All subsequent written and oral forward-looking statements concerning Rotor and Sarcos, the proposed transaction, or other matters and attributable to Rotor and Sarcos or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above.
No Offer or Solicitation
This press release does not constitute a solicitation of a proxy, consent, or authorization with respect to any securities or in respect of the proposed transaction. This press release also does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, 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 other jurisdiction. No offering of securities will be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, or an exemption therefrom.
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Rotor, Sarcos and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Rotor, in favor of the approval of the merger. Information regarding Rotor’s directors and executive officers is contained in the section of Rotor’s Form S-1 titled “Management,” which was filed with the SEC on December 18, 2020. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the proxy statement and other relevant documents filed with the SEC when they become available. Free copies of these documents may be obtained as described in the preceding paragraph.
Contacts
Sarcos Robotics
Kristi Martindale
801-419-0438
Joele Frank / Jonathan Keehner / Aaron Palash
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449
Rotor Acquisition Corp.
Stefan Selig
347-396-1377
6
Exhibit 99.2
THE PREMIER HIGH - GROWTH, PURE PLAY INDUSTRIAL ROBOTICS INVESTMENT ,QYHVWRU3UHVHQWDWLRQ $SULO
DISCLAIMER • Legal Disclaimer • This presentation is for informational purposes only to assist interested parties in making their own evaluation with respect to the potential business combination between Sarcos Corp. (“ Sarcos ”) and Rotor Acquisition Corp. (“Rotor”) (the “Potential Business Combination”). This presentation is made solely for informational purposes; Sarcos , Rotor, and their respective representatives expressly disclaim liability for, and make no express or implied representation or warranty with respect to, the information contained in or omitted from this presentation, or any other information or communication (whether written or ora l) transmitted to any prospective investor. • Recipients of this presentation acknowledge that (a) they are aware that United States securities laws prohibit any person wh o h as material, non - public information concerning a company from purchasing and selling securities of such company or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person ma y purchase or sell such securities and (b) they will neither use, nor cause any third party to use, this presentation or any information contained herein in violation of the Securities Exchange Act of 1934, as amended, including, without limitati on, Rule 10b - 5 thereunder. • This presentation and any oral statements made in connection therewith do not constitute an offer or invitation or solicitati on of any offer to sell or purchase any securities, or the solicitation of any vote, consent or approval in any jurisdiction in connection with the Potential Business Combination or any related transactions, nor shall there be any sale, issuance or tran sfe r of any securities in any jurisdiction where, or to any person to whom, such offer, solicitation or sale may be unlawful und er the laws of such jurisdiction. This presentation does not constitute either advice or a recommendation regarding any securiti es. The communication of this presentation is restricted by law; it is not intended for distribution to, or use by any person in, a ny jurisdiction where such distribution or use would be contrary to local law or regulation. • No representations or warranties, express or implied are given in, or in respect of, this presentation. To the fullest extent pe rmitted by law, in no circumstances will Sarcos , Rotor or any of their respective subsidiaries, stockholders, affiliates, representatives, partners, directors, officers, employees, advisers or agents be responsible or liable for any direct, indire ct or consequential loss or loss of profit arising from the use of this presentation, its contents, its omissions, reliance on t he information contained within it, or on opinions communicated in relation thereto or otherwise arising in connection therewith . R ecipients of this presentation are not to construe its contents, or any prior or subsequent communications from or with Rotor , Sarcos or their respective representatives as investment, legal or tax advice. In addition, this presentation does not purport to be a ll - inclusive or to contain all of the information that may be required to make a full analysis of Sarcos or the Potential Business Combination. Recipients of this presentation should each make their own evaluation of Sarcos and/or the Potential Business Combination and of the relevance and adequacy of the information and should make such other inv es tigations as they deem necessary. Nothing contained in this presentation shall be deemed to be a recommendation from Rotor, Sarcos , or their respective representatives to any party to enter into any transaction or to take any course of action. • Forward - Looking Statements • Information in this presentation represents current expectations relating to transaction structure and is subject to further dis cussion and negotiation of definitive documentation in its entirety. All statements in this presentation other than statement s o f historical fact, including, but not limited to, statements regarding Sarcos ’ future operating results, financial position, business strategy, addressable market, anticipated benefits of its technologi es, and plans and objectives for future operations and offerings are “forward - looking statements” and can often be identified by the use of terminology such as “may,” “will,” “estimat e,” “intend,” “continue,” “believe,” “expect,” “anticipate,” “should,” “could,” “potential,” “projection,” “forecast,” “plan, ” “ trend,” “assumption,” “opportunity,” “predict,” “seek,” “target,” or similar terminology, although not all forward - looking statements co ntain these identifying terms. These forward - looking statements include, but are not limited to, statements regarding estimates and forecasts of other financial and performance metrics, projections of market opportunity and market share, expectations an d t iming related to commercial product launches, potential benefits of the transaction and the potential success of Sarcos ’ strategy, and expectations related to the terms and timing of the transaction. These forward - looking statements are based upon Sarcos management’s current expectations, assumptions and estimates as of the date of this presentation and are not guarantees of future results or the timing thereof. These forward - looking statements are provided for illustrative purposes only and are not intended to serve, and must not be relied on by any investor, as a guarantee, assurance, prediction or definitive statement of fact or probability. Actual results may differ materially from those contemplated in these statements due to a v ari ety of risks and uncertainties, including, but not limited to, risks and uncertainties related to the inability of the partie s t o successfully or timely consummate the Potential Business Combination, including the risk that any required regulatory approva ls are not obtained, are delayed or are subject to unanticipated conditions that could adversely affect the combined company or the expected benefits of the Potential Business Combination, and the failure to realize the anticipated benefits o f t he Potential Business Combination; Sarcos’ ability to execute on its business strategy, ability to attract and retain custome rs, ability to develop new products and services and enhance existing products and services, ability to respond rapidly to emergi ng technology trends, ability to compete effectively and ability to manage growth; the duration and global impact of COVID - 19; the number of redemption requests made by Rotor’s public stockholders and the ability of Rotor or the combined company to iss ue equity or equity - linked securities in connection with the proposed business combination or in the future; and those factors included in the summary risk factors in the Appendix to this presentation and discussed in documents of Rotor filed, or to be filed, with SEC. If any of these risks materialize or our assumptions prove incorrect, actual results could differ mate ria lly from the results implied by these forward - looking statements. There may be additional risks that neither Rotor nor Sarcos presen tly know of that Rotor and Sarcos currently believe are immaterial that could also cause actual results to differ from those contained in the forward - looking statements. In addition, forward - looking statements reflect Rotor’s and Sarcos ’ expectations, plans or forecasts of future events and views as of the date of this presentation. Rotor and Sarcos anticipate that subsequent events and developments will cause Rotor’s and Sarcos ’ assessments to change.
',6&/$,0(5 • The information contained herein is provided only as of the date on which this presentation is made and is subject to change. Ho wever, while Sarcos and Rotor may elect to update these forward - looking statements in the future, each of Sarcos and Rotor is not under any obligation, and expressly disclaims any duty, to update or otherwise revise the information after the dat e of this presentation, whether as a result of new information, new developments or otherwise. These forward - looking statements should not be relied upon as representing Rotor’s and Sarcos ’ assessments as of any date subsequent to the date of this presentation. Accordingly, you should not place undue reliance on th e forward - looking statements. Sarcos and Rotor have not independently verified the statistical and other industry data generated by independent parties and contained in thi s p resentation and accordingly cannot guarantee their accuracy or completeness. • Use of Data • This presentation also contains estimates and other statistical data made by independent parties and by Sarcos relating to ma rke t size and growth and other industry data. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Sarcos and Rotor have not independently verified the statistical and ot her industry data generated by independent parties and contained in this presentation and, accordingly, cannot guarantee their accuracy or completeness. In addition, projections, assumptions and estimates of Sarcos ’ future performance and the future performance of the markets in which it competes are necessarily subject to a high degree of uncertainty and risk due to a variety of factors. These and other factors could cause results or outcomes to differ materially from those expressed in the est imates made by the independent parties and by Sarcos. • Trademarks • Sarcos and Rotor own or have rights to various trademarks, service marks and trade names that they use in connection with the op eration of their respective businesses. This presentation may also contain trademarks, service marks, trade names and copyrights of third parties, which are the property of their respective owners. The use or display of third parties’ trademar ks, service marks, trade names or products in this presentation is not intended to, and does not imply, a relationship with Sarco s or Rotor, or an endorsement or sponsorship by or of Sarcos or Rotor. Solely for convenience, the trademarks, service marks, t rad e names and copyrights referred to in this presentation may appear without the TM, SM, ® or © symbols, but such references are not intended to indicate, in any way, that Sarcos or Rotor will not assert, to the fullest extent under applic abl e law, their rights or the right of the applicable licensor to these trademarks, service marks, trade names and copyrights. • Use of Projections • The projections, estimates and targets in this presentation are forward - looking statements that are based on assumptions that ar e inherently subject to significant uncertainties and contingencies, many of which are beyond Sarcos’ and Rotor’s control. Such projections, estimates and targets are included for illustrative purposes only and should not be relied upon as necessar ily being indicative of future results. While all projections, estimates and targets are necessarily speculative, Sarcos and Roto r believe that the preparation of prospective financial information involves increasingly higher levels of uncertainty the furt her out the projection, estimate or target extends from the date of preparation. The assumptions and estimates underlying the projected, expected or target results are inherently uncertain and are subject to a wide variety of significant business, eco nom ic, regulatory and competitive risks and uncertainties that could cause actual results to differ materially from those contai ned in such projections, estimates and targets. The inclusion of projections, estimates and targets in this presentation should n ot be regarded as an indication that Sarcos and Rotor, or their representatives, considered or consider the financial projection s, estimates and targets to be a reliable prediction of future events. The independent auditors of Rotor and of Sarcos did not a udi t, review, compile or perform any procedures with respect to the projections for the purpose of their inclusion in this presentation, and accordingly, neither of them expressed an opinion or provided any other form of assurance with respect ther eto for the purpose of this presentation. • Financial Information; Non - GAAP Financial Measures • The financial information and data for the year ended December 31, 2020 are unaudited and do not conform to Regulation S - X. Acco rdingly, such information and data may not be included in, may be adjusted in or may be presented differently in, any proxy statement or registration statement to be filed by Rotor or Sarcos with the SEC. Some of the financial information and dat a contained in this presentation, such as EBIT, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow, have not been prepared in accordance with United States generally accepted accounting principles (“GAAP”). EBIT is defined as ne t loss adjusted for income and taxes, and other income or expenses. EBITDA is defined as net loss adjusted for income and taxes, depreciation and amortization not derived from XO/XT unit deployment, and other income or expense. Adjusted EB ITDA is defined as net loss adjusted for interest and taxes, depreciation and amortization, and other income or expenses, amortization of costs related to XO/XT unit deployment that is reflected in cost of goods sold. Adjusted EBITDA mar gin is defined as Adjusted EBITDA divided by revenue. Free Cash Flow is defined as operating cash flows less capital expenditures. Adjusted EBITDA and Free Cash Flow have been included in this presentation because they are key measures used b y S arcos’ management and board of directors to evaluate its operating performance and liquidity, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain exp ens es in calculating Adjusted EBITDA facilitates operating performance comparisons on a period - to - period basis and, in the case of exclusion of the impact of equity - based compensation, excludes items that Sarcos does not consider to be indicative of its co re operating performance. Accordingly, Sarcos and Rotor believe that the use of these non - GAAP financial measures provide useful information to investors and others in understanding and evaluating Sarcos’ operating results in the same mann er as its management and board of directors. Non - GAAP financial measures have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of Sarcos’ results as reported under GAAP. For example, ot her companies may calculate non - GAAP measures differently, or may use other measures to calculate their financial performance, and therefore Sarcos’ non - GAAP measures may not be directly comparable to similarly titled measures of other compan ies. The principal limitation of these non - GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in Sarcos’ financial statements. In addition, they are subject to inherent li mit ations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non - GAAP financial measures. In order to compensate for these limitations, management presents non - GAAP fin ancial measures in connection with GAAP results. • A reconciliation of the non - GAAP financial measures to the corresponding GAAP measures is included in the supplemental materials at the end of the presentation. A reconciliation that forward - looking non - GAAP financial measures has not been provided because the various reconciling items are difficult to predict and subject to constant change.
DISCLAIMER • Additional Information • In connection with the Potential Business Combination, Rotor intends to file with the SEC a preliminary proxy statement (and ame ndments thereto) and mail a definitive proxy statement/prospectus relating to the Potential Business Combination to its shareholders. This presentation does not contain all the information that should be considered concerning the Potential Busin ess Combination and is not intended to form the basis of any investment decision or any other decision in respect of the Business Combination. Rotor’s shareholders and other interested persons are advised to read, when available, the preliminary pro xy statement and the amendments thereto and the definitive proxy statement and other documents filed in connection with the Potential Business Combination, as these materials will contain important information about Rotor, Sarcos and the Potential Business Combination. When available, the definitive proxy statement and other relevant materials for the P ot ential Business Combination will be mailed to shareholders of Rotor as of a record date to be established for voting on the Potentia l B usiness Combination. Shareholders will also be able to obtain copies of the preliminary proxy statement, the definitive proxy statement and other documents filed with the SEC, without charge, once available, at the SEC’s website at www.sec.gov, or by directing a request to: Rotor Acquisition Corp. 405 Lexington Avenue, New York, New York 10174. • Participants in the Solicitation • Rotor and its directors and executive officers may be deemed participants in the solicitation of proxies from Rotor’s shareho lde rs with respect to the Potential Business Combination. A list of the names of those directors and executive officers and a description of their interests in Rotor is contained in Rotor’s final prospectus related to its initial public offering, whic h w as filed with the SEC on January 19, 2021 and is available free of charge at the SEC’s web site at www.sec.gov, or by directi ng a request to Rotor Acquisition Corp. 405 Lexington Avenue, New York, New York 10174. Additional information regarding the inte res ts of such participants will be contained in the proxy statement for the Potential Business Combination when available . • Sarcos and its directors and executive officers may also be deemed to be participants in the solicitation of proxies from the shareh ol ders of Rotor in connection with the Potential Business Combination. A list of the names of such directors and executive officers and information regarding their interests in the Potential Business Combination will be included in the pr eli minary proxy statement and definitive proxy statement for the Potential Business Combination when available.
6$5&2635235,(7$5<$1'&21),'(17,$/ ROTOR ACQUISITION CORP. OVERVIEW 5272529(59,(: Brian Finn CEO Stefan Selig Chairman – Rotor’s investment focus is on companies operating in large and growing markets that are ripe for disruption – Key business characteristics include attractive disruptive technology, high returns on invested capital and potential for recurring revenue streams – Searching out innovators with a distinct technology advantage that command high, stable margins – Founders have participated in building successful companies as board members, investors and financial advisors – Diverse network and access to experienced operators and management teams anticipated to add value post transaction +,6725<:,7+6$5&26 ± $IILOLDWHRI5RWRUOHG6DUFRV ¶ 6HULHV& ILQDQFLQJURXQGLQ)HEUXDU\ ± 6LJQLILFDQWGXHGLOLJHQFHGRQHE\WKH5RWRU WHDPLQFOXGLQJFXVWRPHUVFDOOV ± 3DUWLFLSDWHGLQSURGXFWXQYHLOLQJDW&(6LQ -DQXDU\
6 SARCOS PROPRIETARY AND CONFIDENTIAL TRANSACTION OVERVIEW Valuation Sarcos Business Overview &DSLWDO 6WUXFWXUH 2IIHULQJ 6 L]H x A global leader in dexterous mobile robots x Revolutionizing the future of work through an advanced line of robotic products designed to augment humans x Robust revenue growth profile with over $2.5 billion in sales projected by 2026 and long term projected Adjusted EBITDA margins of ~70% x Pro forma valuation of $1.3 billion (2) x Implies an attractive entry multiple versus peers at 2025E and 2026E EV/Revenue multiples of 1.1x and 0.5x and EV /Adjusted EBITDA multiples of 1.7x and 0.7x, respectively 9 ([LVWLQJ VKDUHKROGHUVZLOOEHUROOLQJ RIWKHLUHTXLW\ 9 a PLOOLRQRIJURVVSURFHHGVSURMHFWHGWRPRUHWKDQIXOO\IXQGEXVLQHVVXQWLO SURMHFWHGFDVKIORZSRVLWLYHLQ 9 6WURQJEDODQFHVKHHW ± 6DUFRV 5RERWLFVKDVQRVXEVWDQWLDOGHEW 9 PVKDUHVVXEMHFWWRHDUQ RXW PVKDUHVHDUQHGDW VKDUHDQG PHDUQHGDW VKDUH x Rotor Acquisition Corp. has $276 million (1) of cash in trust x PIPE raising of $220 million (1) Assumes no redemptions from the public shareholders of Rotor. (2) Valuation excludes 28.1 million shares subject to earnouts achieved at the following levels: 14.06 million shares at $15 / share and 14.06 million shares at $20 / share. • Creating a publicly traded high - growth, pure play robotics investment
6$5&2635235,(7$5<$1'&21),'(17,$/ Goal to multiply worker productivity and reduce employee injuries -- all for a monthly service fee equal to a single fully - burdened $25 per hour employee 6&$/$%/(1(;7 *(1(5$7,2152%27,&6$6 $ 6(59,&( 62/87,2172(032:(57+(/$%25)25&( ROBOTS THAT AUGMENT RATHER THAN REPLACE HUMANS FOR JOBS THAT CANNOT BE AUTOMATED
8 6$5&2635235,(7$5<$1'&21),'(17,$/ WORLD CLASS LEADERSHIP WITH EXPERTISE REQUIRED TO SCALE EACH KEY LEADER HAS EXPERIENCE FROM START - UP THROUGH MULTI - BILLI ON DOLLAR COMPANIES KRISTI MARTINDALE EVP, Chief Product & Marketing Officer ‡ \HDUWHFKQRORJ\LQGXVWU\YHWHUDQ ‡ /DXQFKHGZRUOG FKDQJLQJEOHHGLQJ HGJHWHFKQRORJLHVJOREDOO\ UHVXOWLQJLQ ELOOLRQLQUHYHQXHV ‡ 'HILQHGDQGODXQFKHGDQHZEXVLQHVVPRGHOUHVXOWLQJLQH[FHVVRI ELOOLRQLQUHYHQXH ‡ ([SHULHQFHVSDQQLQJIRUWXQH VWDUW XSVWHFKQRORJLHVVHUYLFHVVRIWZDUHKDUGZDUHDQGOLFHQVLQJ BEN WOLFF Co - founder, Chairman & CEO • Co - founder and CEO of Clearwire Corp -- Led multiple rounds of debt and equity financing and largest U.S. venture round of its time –– raising more than $12 billion -- sold to Sprint Corp for $14 billion • Led restructuring of publicly - traded satellite communications company • Recognized as one of the top 45 lawyers in the U.S. under 45 by American Lawyer Magazine and one of the top IP strategists in the world by Intellectual Asset Management • Recipient of Innovation Achievement Award from Wireless Communications Industry Association 67(9(+$16(1 (93 &)2 ‡ &)2ZLWK \HDUVH[SHULHQFHLQFOXGLQJSXEOLFFRPSDQ\ILQDQFLDOOHDGHUVKLS3HSVL4ZHVWDQG:HVWHUQ 8QLRQDQG \HDUVH[SHULHQFHZLWKVWDUWXSVDQGHPHUJLQJHQWLWLHV ‡ /HDG VXFFHVVIXO,32VLQ707 ‡ 5DLVHGPRUHWKDQ ELOOLRQLQFDSLWDO ‡ 'HHSJOREDOH[SHULHQFHLQ(XURSH$VLDDQG6RXWK$PHULFD DR. FRASER SMITH Co - founder & Chief Innovation Officer JULIE WOLFF Co - founder & General Counsel '5'(1,6 *$5$*,û &KLHI6FLHQWLVW$, $GYDQFHG6\VWHPV DR. MARC OLIVIER Co - founder & Chief Architect MARIAN JOH Chief Strategy Officer ‡ 3URYHQWUDFNUHFRUGRIH[HFXWLRQJURZWKDQGIXQGUDLVLQJ0RVWUHFHQWO\WUDQVLWLRQHGDVPDOOFRPSDQ\LQWRPXOWLSOH GLYLVLRQFRUSRUDWHVWUXFWXUH EDFNHGE\ PLOOLRQRIYHQWXUHFDSLWDO ‡ 6HUYHGDV&R )RXQGHU&KDLU3UHVLGHQWDQG&)2RI6SDFHIOLJKW IND $QGUHZ6SDFHDQLQGXVWU\OHDGLQJ DHURVSDFHFRPSDQ\WKDWUHFHQWO\DQQRXQFHG GH VSDF WUDQVDFWLRQDWD ELOOLRQYDOXDWLRQ ‡ $V9LFH3UHVLGHQWRI)LQDQFH 6WUDWHJ\RI7RUQDGR'HYHORSPHQWDVVLVWHGLQUDLVLQJRYHU PLOOLRQLQYHQWXUH FDSLWDO 7RGD\ ¶ VSUHVHQWHUV
9 SARCOS PROPRIETARY AND CONFIDENTIAL SARCOS AT A GLANCE UNIQUE OPPORTUNITY TO INVEST IN A HIGH - GROWTH, PURE PLAY INDUSTR IAL ROBOTICS COMPANY COMPANY OVERVIEW 352-(&7('5(9(18( ± $JOREDOOHDGHULQKLJKO\GH[WHURXVPRELOHURERWV ± 8QLTXH5RERW DV D 6HUYLFH5DD6PRGHOH[SHFWHGWRDFFHOHUDWHDGRSWLRQE\ RIIHULQJUREXVWYDOXHSURSRVLWLRQWRFXVWRPHUV ± .H\SURGXFWVLQFOXGH ± *XDUGLDQ;2 *URXQG EUHDNLQJLQGXVWULDOIXOO ERG\SRZHUHGH[RVNHOHWRQ ± *XDUGLDQ;7 7HOHRSHUDWHGURERWLFV\VWHPOHYHUDJLQJ $5WRSHUIRUP SUHFLVHWDVNVLQGDQJHURXVHQYLURQPHQWV 2 Additional Fortune 100 Companies STRATEGIC INVESTORS* AND / OR ADVISORS 6(/(&7$:$5'6$1'5(&2*1,7,21 $8 $9 $22 $1,229 $2,714 2020A 2021E 2022E 2023E 2024E 2025E 2026E Adjusted EBITDA margin (1) NM NM 10 52% 61% “Company of the Year” December 2020 “Best 100 Inventions of 2020” November 2020 ( $ MILLIONS) 7KH%RHLQJ &RPSDQ\ 7LPH 0DJD]LQH Source: Bureau of Labor Statistics Occupational Employment Statistics Survey, Company Materials. (1) Adjusted EBITDA includes XO / XT product amortization, which is recognized in cost of goods sold and excludes stock - based compensation. Please refer to the Adjusted EBITDA reconciliation in the appendix. (2) TAM includes jobs identified from US BLS employment data that would benefit from Sarcos’ product offerings, with an assum ed XO / XT utilization rate at a blended annual cost of service. Assumes 10% initial market adoption for SOM. Does not include jobs outs ide of the US. * * * * ³ 3URGXFW,QQRYDWLRQ RIWKH\HDU ´
10 SARCOS PROPRIETARY AND CONFIDENTIAL 20 YEARS OF DEVELOPMENT WITH OVER $300 MILLION INVESTED IN R&D SARCOS EVOLUTION 2006 2007 2015 2016 2017 2019 2020 XO program begins (DARPA) 1 st XO hydraulic (DARPA) 2nd XO hydraulic (DARPA) Air Force XO contract US SOCOM XO contract Marine Corp XO contract XO debut at CES GS multi - unit sale to US DoD US Navy XT contract Raytheon buys Sarcos Ben Wolff leads group to purchase from Raytheon Series B ($30M) Industry Advisory Group established Series A ($15M) Added 4 distribution partners (2 NA 2 EU) Series C ($40m)
SARCOS PROPRIETARY AND CONFIDENTIAL SIGNIFICANT MARKET OPPORTUNITY
12 SARCOS PROPRIETARY AND CONFIDENTIAL GLOBAL NEED DRIVES DEMAND AND CREATES A MASSIVE OPPORTUNITY WORKER SHORTAGE, INJURY & FATIGUE KEY DRIVERS OF OPPORTUNITY $100 billion spent annually on back injuries in the U.S. Spine Research Institute & OSHA $136 billion annual US costs in lost production due to fatigue OSHA, 2007 2.4 million U.S. worker shortage in manufacturing between 2018 - 2028 Industry Source Falls from height #4 most disabling & costly injury after overexertion, falling from the same level and struck by objects in the workplace 2019 Liberty Mutual Workplace Safety Index $4.98 billion direct compensation cost for injuries from falling to a lower level * 2019 Liberty Mutual Workplace Safety Index $1.6 trillion global labor productivity shortfall in the construction industry Industry Source $2.5 trillion negative impact on U.S. economy from 2018 - 2028 Industry Source 44 34 33 32 30 28 28 22 22 19 13 13 9 72 62 60 39 44 42 67 36 51 33 39 25 19 Japan Italy Germany Sweden France UK Spain US Poland Russia China World India OLD AGE DEPENDENCY RATIO (%) # of people 65+ as % of labor force (15 - 64), forecasts n 2015 n 2050 Source: European Commission * Excludes indirect costs and OSHA fines. Over the past two decades, there has been ~ 1% annual growth in construction productivity Industry Source
13 SARCOS PROPRIETARY AND CONFIDENTIAL Maintenance & repair Assembly support Ship / receive Assemble Non - cons Heavy duty Logistics Maintenance & repair Maintenance & diagnostics Construct / deconstruct Line and transformer maintenance Infrastructure inspection Build & repair Material transport Move & manipulate Assemble $147 BILLION ANNUAL TARGET MARKET IN THE US ALONE SCALE AND EFFICIENCY TRANSCEND INDUSTRIES AND APPLICATIONS OFFER ING BLUE OCEAN OPPORTUNITY LARGE ADDRESSABLE MARKET * END MARKETS & APPLICATIONS Aerospace Construction Manufacturing Power & Utilities Oil & Gas Defense Automotive Logistics Source: Bureau of Labor Statistics Occupational Employment Statistics Survey. * TAM includes jobs identified from US BLS employment data that would benefit from Sarcos’ product offerings, with an assumed XO / XT utilization rate at a blended annual cost of service. Assumes 10% initial market adoption for SOM. Does not include jobs outs ide of the US. Total Addressable US Market: $147bn Serviceable Obtainable US Market: $15bn
SARCOS PROPRIETARY AND CONFIDENTIAL PIONEERING THE MARKET FOR DEXTEROUS ROBOTIC SYSTEMS
15 SARCOS PROPRIETARY AND CONFIDENTIAL AI & AUTOMATION CAN’T ADDRESS DYNAMIC ENVIRONMENTS Brain Computer Processing power Highly variable Fixed Petaflops 1,000 Petaflops 54.9 Petaflops (world’s fastest single computer 2019) Operations Up to 1,000,000 trillion 93 trillion Resilience Very high Almost none Failure robustness Extremely high Single fault often leads to system failure Memory Content addressable Location addressable Human Intelligence Artificial Intelligence + Supercomputer SARCOS PRODUCTS ARE BUILT TO LEVERAGE THE BEST OF HUMANS AND MACHINES “ AI and robotic applications take time to develop and deploy, especially in safety - and production - critical applications. While they are coming, they are not as close as some would fear… Flexibility in dynamic environments remains a key human attribute still largely out of reach. ” - MIT The Work of the Future Nov 2020
16 SARCOS PROPRIETARY AND CONFIDENTIAL INNOVATION, EXPERIENCE AND IP ENABLES A TRUE “BLUE OCEAN” OPPORTUNITY PROPRIETARY INNOVATIONS DEEP ROBOTICS PATENT PORTFOLIO COMPETITIVE STRENGTHS Energetic Autonomy Reduced power from 6,800 to 500 watts Optimized power utilization – elastic recovery Modelled after human movement; designed to human body ratio Intuitive controls with integrated feedback Kinematic equivalency High fidelity force feedback for precision work Platform - agnostic design for diverse environments Teleoperation (XT) Captures human ability to operate in unstructured environments Augments humans with robotic strength, stamina, precision and speed Human - like dexterity Highly experienced robotics team with ~500 years cumulative robotics experience 20 - years and ~$300M in R&D investments 140 patents issued relevant to core technologies with an additional 94 patents pending 140 Issued 94 Pending COVERING FOUNDATIONAL TECHNOLOGIES HARDWARE ALGORITHMS SOFTWARE PROCESS AI / ML robotics platform Success - based teaching Extensible object recognition and task files Advanced controls Comprehensive recovery Safety
17 SARCOS PROPRIETARY AND CONFIDENTIAL Portable Wireless Versatile 100% load relief Gravity compensation Power optimization Human kinematic equivalency Teleoperation Force reflection Wearable input Highly dexterous end effectors *XDUGLDQ Š 6 0RELOH,R7SODWIRUP *XDUGLDQ Š ;2 Š ,QGXVWU\ ZRUNIRUFH *XDUGLDQ Š ;7 $5 HQDEOHGWHOHRSHUDWLRQ CYTAR Œ Supervised autonomy SARCOS IS LEVERAGING CORE TECHNOLOGIES TO SUPPORT A FULL SUITE OF DEXTEROUS ROBOTS EVOLUTION: LEVERAGING CORE TECHNOLOGIES AI + wearable kinematic equivalent Robotics learning platform * CYTAR Œ revenues not included in current business plan. Safe, responsive, fluid, intuitive Feels virtually weightless Carries 100% weight of load XO ® -- 2022 WORN BY A HUMAN I ntuitive and responsive HD first person view Proprietary force and position feedback XT -- 2022 CONTROLLED BY A HUMAN Highly optimized training platform for complex tasks Scalable where time and resources matter CYTAR Œ -- 2026 SUPERVISED BY A HUMAN * Modular sensor platform First Sarcos commercial product GS -- 2020 CONTROLLED BY A HUMAN
18 SARCOS PROPRIETARY AND CONFIDENTIAL *8$5',$1 Š ;2 Š ± $1,1'8675< :25.)25&( 08/7,3/,(5:,7+5('8&('5,6.62),1-85< EXPONENTIAL PRODUCTIVITY FOR THE FULLY - BURDENED COST OF A SINGLE EMPLOYEE Up to 200 lbs of lift capacity Hot - swappable batteries 100% load relief Don / doff in < 30 seconds Pricing of ~$9k / month Features Force multiplier, increased productivity Mitigate risk of injury and fatigue Extend careers Make more physically demanding jobs available to more people Benefits Companies prepared to pay $100,000 - $150,000 per year for an exoskeleton capable of lifting 100 - 200 lbs (1) *8$5',$1 Š ;2 Š $'9$17$*( Capabilities of ~3 or more human workers (2) XO program 1 st XO 2 nd XO Air Force Marine Corps U.S. SOCOM XO debut Multiple XO, XT XO, XT commercial begins hydraulic hydraulic XO contract XO contract XO contract at CES 2 nd gen “Beta” units (DARPA) prototype prototype units for pilots (DARPA) Contract Mfg. XO, XT commercial on board and revenues begin spooling up 2000 2006 2010 2016 2018 2019 2020 2021 2022 Opportunity cost of limited resources Asset damage 2+ people to lift heavy objects Need many specific lift assists &KDOOHQJHV Injury and disability Sarcos is at a commercial inflection point after 20 years of development (1) Independent blind study, respondents not prompted; 46 companies across 20 industries, commissioned by Sarcos , 2019. (2) Based on initial alpha unit testing customer feedback.
19 SARCOS PROPRIETARY AND CONFIDENTIAL *8$5',$1 Š ;2 Š $1(;26.(/(721,1$&/$662),762:1 ,1'8675,$/3$57,$/ %2'< 8132:(5(' FULL BODY POWERED REHABILITATION INDUSTRIAL PARTIAL BODY POWERED FORTIS EKSO ZERO G SAMSUNG 3$1$621,& +21'$ REWALK CYBERDYNE EKSO BIONICS
20 SARCOS PROPRIETARY AND CONFIDENTIAL /(9(5$*,1*;2 Š 833(5%2'< 6$5&26 +,*+),'(/,7< )25&()(('%$&.7(/(23(5$7,21 7(&+12/2*<)281'$7,21)25$02'8/$5+,*+/<'(;7(528652%27)25& +$//(1*,1*(19,5210(176 Power supply & management Advanced gravity compensation Sensing Quick swap end - effectors GUARDIAN ® XO ® GUARDIAN ® GT* GUARDIAN ® XT + = *8$5',$1 Š ;7 'H[WHULW\ 7HOHRSHUDWLRQ )RUFHUHIOHFWLRQ $GMXVWDEOHVWUHQJWKDPSOLILFDWLRQ AR enabled remote work Improved dexterity Advanced controls Situational awareness * Guardian GT is a bespoke large scale tele - operated robot with 1,000 lb. lifting and manipulation capabilities.
21 SARCOS PROPRIETARY AND CONFIDENTIAL *8$5',$1 Š ;7 $1<%$6($1<3/$&( Optimize productivity for precise tasks in dangerous environments Reduce at - height and overhead fatigue, Reduce injury & exposure to hazardous conditions Mitigate risks and associated costs Reduce insurance premiums & hazard pay Benefits Lift and manipulate up to 200 lbs. HD immersive experience Force feedback to control precision Mount to many mobile and telescoping bases Indoor and outdoor use Pricing of $5k / month Features ‡ *8$5',$1 Š ;7 ۛ 7(/(23(5$7('52%27,&6<67(0 GT Prototype Alpha v1 Beta v1 Launch 2010 2020 Ability to reduce standard electric line crew by 50% and complete jobs 20% faster Based on initial alpha unit testing customer feedback +LJK LQVXUDQFH FRVW Challenges Worker fatigue & injury 0RUH VXSSRUW UHTXLUHG Hazardous conditions Cost of equipment
SARCOS PROPRIETARY AND CONFIDENTIAL ROBOT - AS - A - SERVICE ( RAAS ) MODEL EXPECTED TO ACCELERATE ADOPTION AND DELIVER RECURRING REVENUES RAAS INTENDED TO OFFER ECONOMIC ADVANTAGES AND A UNIQUE VALUE PR OPOSITION %(1(),762)5$$6 RAAS VS. BUY x Maintenance and servicing covered by Sarcos x Lowers barriers to deployment due to no CapEx outlay x Simple implementation with no infrastructure modifications required x Cost equivalent to fully - burdened $25 / hour full - time employee x Immediate customer ROI due to multiples of productivity x Eliminates technology obsolescence risk and s oftware updates included as part of the overall service agreement 1R LPSOHPHQWDWLRQ LQIUDVWUXFWXUHFRVW Remote monitoring and updates 1RXSIURQW &DS([ RXWOD\ Opex expenditure Service and maintenance included 6FDODEOHQH[W JHQODERUIRUFHDQWLFLSDWHGWRHQDEOHIOH[LELOLW\ZLWKUHOHYDQFH LQERWKVWURQJDQGZHDNHFRQRPLHV
23 SARCOS PROPRIETARY AND CONFIDENTIAL TARGET CUSTOMERS a 81,7681'(5',6&866,215(35(6(17,1*! 0,//,21,1$118$/5(9(18(6 INDUSTRIAL LOGISTICS ( &200(5&( FOOD SERVICES 50% Domestic direct distribution vs. international distributor channel anticipated 0RQWKV $YHUDJHH[SHFWHGVDOHVF\FOH 36 Months Expected standard contract term contract length * REPRESENTATIVE TARGET MARKETS ! )RUWXQH FRPSDQLHVDQGJRYHUQPHQWDJHQFLHV SD\LQJ RUSUHSDUHGWRSD\IRU;23LORWSURJUDP DOD / GOVERNMENT 3XEOLFO\GLVFORVHGSDUWQHUVLQYHVWRUV KEY GO - TO - MARKET STATS )RUPHU*RYHUQPHQWDQG'HSDUWPHQWRI'HIHQVH HPSOR\HHVRQ$GYLVRU\%RDUG “ We owe it to the best airline employees on the planet to explore how emerging technology can make their jobs safer and easier… That’s why we sought out a partnership with Sarcos” – Gareth Joice , Delta Senior Vice President – Airport Customer Service and Cargo * * The Boeing Company $PD]RQ
24 6$5&2635235,(7$5<$1'&21),'(17,$/ CUSTOMER TESTIMONIALS: CASE STUDIES CUSTOMER A x Relationship with Sarcos since 2015 x Contemplating if 100 to 500 units is the right order for the Guardian XO x Considers $100,000 / unit to be the correct comparative cost x Believes employees will see this as a way to promote health and safety 9 5HODWLRQVKLSZLWK 6DUFRV VLQFH 9 *XDUGLDQ;7 FDQUHGXFHD PDQ FUHZ WRD PDQ FUHZ 9 &RXOG UHSODFH RIHVWLPDWHG EXFNHW WUXFNV LQWKHLQGXVWU\ LQWKHQH[W \HDUV 9 3URGXFWGHPDQG ZLOOEHWKHUHILUVWPRYHUVZLOOVHH PDUJLQEHQHILWV CUSTOMER C &86720(5% x Could order up to 1,000+ units x Tangible, proven prototype x Costs less than an employee but can do 3x the work x No competitors have tangible technology and unplugged standalone capacity CUSTOMER D 9 6DUFRVLV EULQJLQJWKHWHFKQRORJ\WRWKHPDUNHW 9 'LVWLQFWWHFKQRORJLFDODGYDQWDJH 9 *XDUGLDQ;2KDVDQ DSSOLFDWLRQDQ\ZKHUHZKHUHKHDY\OLIWLQJLV LQYROYHG 9 &RXOGVWDUWRUGHULQJLQ DVVRRQDV PRQWKV “ In January of last year, we were proud to announce our partnership with Sarcos Robotics to bring its cutting edge products to our front line teams. It was remarkable to have Sarcos’ Guardian XO industrial exoskeleton join me on stage at the Consumer Electronics Show for its first public demonstration … Delta’s employees are the key ingredient to our success and we are committed to reducing on - the - job injuries as well as fostering workforce diversity and improving worker longevity for a healthier and safer team. My enthusiasm for Sarcos’ potential has only grown since then as we continue to work closely with Sarcos to turn our every day heroes into superheroes, making their jobs safer and easier than ever” – Ed Bastian, Delta CEO
6$5&2635235,(7$5<$1'&21),'(17,$/ POSITIONED TO DELIVER STRONG FINANCIAL GROWTH
6$5&2635235,(7$5<$1'&21),'(17,$/ ASSET - LIGHT APPROACH TO MANUFACTURING $17,&,3$7('3$571(56+,3:,7+:25/' &/$66&2175$&70$18)$&785(57 2(1$%/()$67(5 5(/($6($1'6&$/$%,/,7<:,7+/(66'(3/2<('&$3,7$/ INSOURCED DEVELOPMENT OUTSOURCED PRODUCTION 3URFHVV 0DWXUDWLRQ (QDEOLQJ7UDQVIHU (QJLQHHULQJ 'HYHORSPHQW Rapid Prototyping Supplier & Line Qualification 5DPSWR9ROXPH Alpha units Beta units SARCOS VALUE ADD &2175$&70$18)$&785(5 9$/8($'' ,QWHOOHFWXDOSURSHUW\GHVLJQDQGHQJLQHHULQJH[SHUWLVH $VVHPEO\DQGWHVWSURFHVVGHYHORSPHQW &R ORFDWLRQZLWK5 'FORVHGORRSGHVLJQF\FOHDQG LQLWLDO 'I; 5DSLGSURWRW\SLQJ ± $OSKDDQG%HWDXQLWV Product assembly Reduces over capacity and production risk Leverages established manufacturing operations and supply chain Reduces cash and capital requirements Demand - based ability to quickly scale volumes up or down Prototype units 'HVLJQIRU([FHOOHQFH 9DOXH(QJLQHHULQJ
27 6$5&2635235,(7$5<$1'&21),'(17,$/ n Setup n Repair n Amortization ILLUSTRATIVE PER UNIT ECONOMICS (6 - YEAR SERVICE LIFE AS OF 2026) XO DX / XT REVENUE &267 &$6+)/2: n Setup n Repair n Amortization $600 Cumulative Cumulative $425 Cumulative REVENUE $360 Cumulative &267 Cumulative CASH FLOW $270 Cumulative 3$<%$&. 3(5,2' PAYBACK PERIOD ~8 MONTHS ~8 MONTHS LQWKRXVDQGV 75% Cash flow margin &DVKIORZ PDUJLQ
28 SARCOS PROPRIETARY AND CONFIDENTIAL ),1$1&,$/352-(&7,216 Source: Company information. (1) Adjusted EBITDA includes XO / XT product amortization, which is recognized in cost of goods sold and excludes stock - based compensation. Please refer to the Adjusted EBITDA reconciliation in the appendix. (2) Free Cash Flow defined as CFO less Capex. $8 $9 $166 $438 2020A 2021E 2022E 2023E 2024E 2025E 2026E $2 $13 $48 $294 $733 2020A 2021E 2022E 2023E 2024E 2025E 2026E $4 $5 $89 $649 $1,591 2020A 2021E 2022E 2023E 2024E 2025E 2026E ($99) ($50) ($6) $587 2020A 2021E 2022E 2023E 2024E 2025E 2026E REVENUE *5266 352),7 )5((&$6+)/2: CAPITAL EXPENDITURES Gross margin LQPLOOLRQV ($ in millions) ($ in millions) LQPLOOLRQV 46% 22% 54% 53% 59% $VRI VDOHV 151% 219% 69% 60% 39% ($59) $46 $228 $1,906 2020A 2021E 2022E 2023E 2024E 2025E 2026E ADJUSTED EBITDA (1) LQPLOOLRQV $GMXVWHG (%,7'$ PDUJLQ NM NM NM 52% 61%
29 SARCOS PROPRIETARY AND CONFIDENTIAL KEY TAKEAWAYS 2 3 5 6 7 3URYHQDQGH[SHULHQFHGOHDGHUVKLSWHDPZLWKH[WHQVLYHSXEOLFFRPSDQ\H[SHULHQFH Massive multi - billion - dollar global TAM across a wide range of industries looking to solve for skilled labor shortage, aging work force and gender / age discrimination Technology leader for a challenging and financially compelling sector of the robotics market with a competitive advantage derived from 20 years of development and extensive patent portfolio Investment from, and / or collaboration with, more than a dozen Fortune 100 companies and DoD agencies Robot - as - a - Service can deliver multiples of productivity and reduced injuries for the fully - burdened annual cost of a single FTE with low capital or technology risk "Sticky" value proposition and c apital efficient business model with rapid payback on each unit Extending and future proofing the Guardian Platform with products in pipeline Unique opportunity to invest in high - growth, pure play robotics
30 SARCOS PROPRIETARY AND CONFIDENTIAL TRANSACTION STRUCTURE AND PRO FORMA EQUITY OWNERSHIP TRANSACTION STRUCTURE ▪ The transaction is expected to close in Q3 2021 ▪ Post - closing, the combined company will be listed on the Nasdaq, will be named “Sarcos Technology and Robotics Corporation” and will trade under the symbol STRC VALUATION ƒ 7RWDOSURIRUPDYDOXDWLRQRI ELOOLRQDWD ((9$GM(%,7'$PXOWLSOHRI [ DQGD ((9$GM(%,7'$PXOWLSOHRI [ ƒ 3URFHHGVIURPWKHWUDQVDFWLRQZLOOEHXVHGWRFDSLWDOL]HWKHEDODQFHVKHHWZLWK PLOOLRQ ZKLFKZLOOSULPDULO\EHXVHGWRIXQGWKHJURZWKRIWKHEXVLQHVVDQG FRPIRUWDEO\H[FHHGVSURMHFWHGFDVKQHHGV CAPITAL STRUCTURE ▪ The transaction will be funded by a combination of $276 million cash held in trust and $220 million in PIPE proceeds (1) ▪ All - primary transaction; existing Sarcos Corp. shareholders, are rolling their equity and are expected to collectively own ~68% of the pro forma company at closing ▪ Transaction includes 28.1m shares subject to earn - out aligning incentives between management and investors – 14.06m shares earned at $15 / share, with another 14.06m earned at $20 / share SOURCES & USES (1)(2) PRO FORMA VALUATION AND OWNERSHIP (1)(2) Rollover shares to existing shareholders 68.2% Shares to SPAC 15.7% Shares to PIPE 12.5% 6KDUHVWR63$& VSRQVRU (1) Assumes no redemptions from the public shareholders of Rotor. Assumes PIPE proceeds of $220m. (2) Values shown assuming $10 per Rotor shares. Does not include the impact of earn - out or Rotor warrants outstanding. (3) Excludes outstanding PPP loan. The transaction will fully fund Sarcos’ growth plan, with additional $181 million of cash to balance sheet – leaving ample room to pursue potential M&A opportunities ($ in millions) Transaction sources Transaction uses Seller equity rollover (1) $1,200 Stock to existing Sarcos shareholders $1,200 Cash from SPAC (1) 276 Capital uses 265 Cash from PIPE 220 Remaining cash to balance sheet 181 Founder shares 64 Founder shares 64 Estimated transaction expenses 50 Total cash sources $1,760 Total cash uses $1,760 ($ in millions) Pro Forma Valuation Share price $10.00 Pro forma shares oustanding (mm) 176 Pro forma equity value $1,760 Plus: debt (3) – Less: cash to balance sheet (446) Pro forma enterprise value $1,314
31 SARCOS PROPRIETARY AND CONFIDENTIAL PUBLIC COMPARABLE UNIVERSE FOR SARCOS ROBOTICS Robotics & Automation 'LVUXSWLYH&DWHJRU\ &UHDWRUV Recent Hardware de - SPACs x Accessing same broad market mega trends on industrial technology Not direct competitors with Sarcos Established companies with sustained earnings x Industry disrupters with significant level of first mover advantage Different level of scale and brand recognition Unrelated end markets x Expanding industry driven by technological adoption x Capitalizing on market momentum to secure attractive valuation x Similar growth trajectory Employ Hardware - as - a - Service business model Differing degrees of capital intensity Varying end markets
32 SARCOS PROPRIETARY AND CONFIDENTIAL 18% 17% 16% 14% 14% 9% 9% 6% 6% 33% 17% 16% 12% 10% 208% 145% 103% 101% 94% 88% 76% 63% 41% 13% SARCOS’ BUSINESS MODEL COMPARES FAVORABLY TO PEERS YoY revenue growth Robotics & Automation 'LVUXSWLYH&DWHJRU\&UHDWRUV Recent Hardware de - SPACs Peer Average: 12% Peer Average: 16% Peer Average: 90% Adjusted EBITDA margin (1) 2021E 2025E 6RXUFH&RPSDQ\ILOLQJVDQG)DFW6HWDVRI 1RWH3URMHFWLRQVIURP:DOO6WUHHWFRQVHQVXVRUSXEOLFLQYHVWRUSUHVHQWDWLRQVZKHUHUHOHYDQW $GMXVWHG(%,7'$LQFOXGHV;2;7SURGXFWDPRUWL]DWLRQZKLFKLVUHFRJQL]HGLQFRVWRIJRRGVVROGDQGH[FOXGHVVWRFN EDVHG FRPSHQVDWLRQ3OHDVHUHIHUWRWKH$GMXVWHG(%,7'$UHFRQFLOLDWLRQLQWKHDSSHQGL[ (2024E) (2024E) (2022E) (2024E) 61% 54% 40% 34% 34% 30% 21% 21% 15% 12% 23% 20% 17% 16% NM 61% 39% 36% 31% 27% 25% 25% 22% 22% Peer Average: 30% Peer Average: 23% Peer Average: 31% (2024E) (2022E) (2024E)
33 6$5&2635235,(7$5<$1'&21),'(17,$/ 9.6x 5.6x 24.6x 0.7x | $1.3bn 1.7x | $1.3bn 28.6x [ 11.7x SARCOS – AN ATTRACTIVE VALUATION PARADIGM FOR INVESTORS Revenue Illustrative Discounted Enterprise Value (3) Pro Forma Enterprise Value $1.3 billion Source: Company materials, filings, and FactSet as of 3/4/2021. (1) Adjusted EBITDA includes XO / XT product amortization, which is recognized in cost of goods sold and excludes stock - based co mpensation. Please refer to the Adjusted EBITDA reconciliation in the appendix. (2) Reference range based on approximate ± 5.0x of Robotics & Automation multiple. Implied values driven off EV / Adj. EBITDA multiple. (3) Assumes discount rate of 30.0% (4) Excludes Virgin Galactic. (9 $'-(%,7'$ EV / REVENUE Adj. EBITDA (1) Illustrative Adj. EBITDA Reference Range (2) 2025E $1,229 million $6.3 billion – $9.0 billion $753 million [ ± [ EV / EBIT Pro forma Value (2025E) Robotics & Automation (2021E) Disruptive Category Creators (2025E) Recent Hardware de - SPACs (2025E) (2025E) Implied Future Enterprise Value (2) ELOOLRQ ± ELOOLRQ 2.4x 1.6x 4.4x 0.5x | $1.3bn 1.1x | $1.3bn 8.6x 2.5x [ Robotics & Automation (2021E) (2025E) 11.8x 7.4x 32.7x 1.0x | $1.3bn 2.7x | $1.3bn [ 12.4x 11.5x Robotics & Automation (2021E) (2025E) Current trading At deal announcement Disruptive Category Creators (2025E) 5HFHQW+DUGZDUH GH 63$&V ( Disruptive Category Creators (2025E) Recent Hardware de - SPACs (2025E) (4) Pro forma Value (2026E) Pro forma Value (2025E) Pro forma Value (2026E) Pro forma Value (2025E) 3URIRUPD9DOXH (
SARCOS PROPRIETARY AND CONFIDENTIAL APPENDIX
35 SARCOS PROPRIETARY AND CONFIDENTIAL Q2 2021 Q4 2021 Q2 2022 .(<1($57(500,/(6721(6 ANTICIPATED COMPANY TIMELINE First “Beta” proof of concept assembled for both XO and XT Re - commence “Alpha” testing / simulations with DoD and lighthouse commercial customers Low - rate initial production of commercial XO and XT units Commercial revenues begin for XO and XT 2nd Gen “Beta” XO and XT units produced and ready for customer pilot program Contract manufacturer on board and spooling up
36 SARCOS PROPRIETARY AND CONFIDENTIAL &<%(51(7,&75$,1,1*)25$87212028652%276 &<7$5 Œ ,1,7,$/%8,/',1*%/2&.6)81'('%<'2' KINEMATIC EQUIVALENT EXOSKELETON PROVIDES UNIQUE ABILITY TO GATH ER DATA DIRECTLY FROM THE HUMAN CYTAR Œ training platform, built on Sarcos proprietary innovations, effectively and rapidly teaches robots to perform complex tasks via teleoperation and evaluate them under supervised autonomy Trial and error is rate limited and not scalable Time and costs required to create viable solutions is impractical CYTAR Œ benefits Highly optimized training platform for tasks, regardless of complexity and duration Scalable for the real world, where time and resources matter Inputs from the operator wearing the kinematic equivalent XO, teach robots to perform tasks in unstructured, dynamic and uncertain environments These inputs are used to generate machine learning control policies Fleet accessible database of successful task completion strategies scale teaching • TRIAL & ERROR • SUCCESS - BASED :HDU ;2 Š WHDFKGLUHFWO\ TELE - OPERATION DIRECT CONTROL TELE - OPERATION VIRTUAL AVATAR ‡ &<7$5 Œ $3352$&+ Note: CYTAR Œ is not contemplated in the financial model and represents additional future upside.
37 SARCOS PROPRIETARY AND CONFIDENTIAL 6$5&26(;3(&7672%($%/(727$3,172$08/7, %,//,21 '2//$57$0 620 Total Addressable Market $146.6 Billion Serviceable Obtainable Market Assumptions 0LOOLRQ :RUNHUVLQ7DUJHW6HFWRUV 1 / 10 Jobs Utilizing XO / XT $14.7 Billion Serviceable Obtainable Market 1.7 Million Total Number of XO’s / XT’s Projected $88,560 (1) Blended XO / XT Annual Cost of Service %LOOLRQ 7$0 10.0% Initial Market Adoption Source: Bureau of Labor Statistics Occupational Employment Statistics Survey * TAM includes jobs identified from US BLS employment data that would benefit from Sarcos’ product offerings, with an assumed X O / XT utilization rate at a blended annual cost of service. Assumes 10% initial market adoption for SOM. Does not include jobs outside of the US. (1) Assumes unit costs are the same for both distributors and direct sales channels. Unit costs are and % of total units are $108 ,00 0 and $59,400 and 60% and 40% for the XO and XT respectively. 6HUYLFHDEOH 2EWDLQDEOH 0DUNHW %LOOLRQ
38 SARCOS PROPRIETARY AND CONFIDENTIAL OCCUPATION DATA INCLUDED IN THE TAM ANALYSIS 6RXUFH%XUHDXRI/DERU6WDWLVWLFV2FFXSDWLRQDO(PSOR\PHQW6WDWLVWLFV6XUYH\ Occupation Employees Boilermakers 15,820 Brickmasons, Blockmasons, and Stonemasons 73,040 Carpenters 734,170 Construction Laborers 1,020,350 Construction Equipment Operators 455,050 Drywall Installers, Ceiling Tile Installers, and Tapers 120,820 Pipelayers, Plumbers, Pipefitters, and Steamfitters 479,140 Plasterers and Stucco Masons 27,360 Reinforcing Iron and Rebar Workers 18,870 Structural Iron and Steel Workers 76,570 Helpers, Construction Trades 242,400 Hazardous Materials Removal Workers 44,240 Miscellaneous Construction and Related Workers 32,040 Derrick, Rotary Drill, and Service Unit Operators, Oil and Gas 84,880 Roustabouts, Oil and Gas 58,930 Helpers--Extraction Workers 16,700 Radio and Telecommunications Equipment Installers and Repairers 222,850 Aircraft Mechanics and Service Technicians 133,310 Bus and Truck Mechanics and Diesel Engine Specialists 266,330 Heavy Vehicle and Mobile Equipment Service Technicians and Mechanics 210,020 Miscellaneous Vehicle and Mobile Equipment Mechanics, Installers, and Repairers 139,640 Control and Valve Installers and Repairers 75,320 Occupation Employees Industrial Machinery Installation, Repair, and Maintenance Workers 508,660 Wind Turbine Service Technicians 5,960 Aircraft Structure, Surfaces, Rigging, and Systems Assemblers 42,940 Structural Metal Fabricators and Fitters 76,890 Fiberglass Laminators and Fabricators 20,010 Miscellaneous Assemblers and Fabricators 1,371,920 Metal Furnace Operators, Tenders, Pourers, and Casters 25,160 Welding, Soldering, and Brazing Workers 445,850 Miscellaneous Metal Workers and Plastic Workers 100,300 Stationary Engineers and Boiler Operators 32,520 Crushing, Grinding, Polishing, Mixing, and Blending Workers 187,870 Cutting Workers 67,620 Miscellaneous Production Workers 740,570 Hoist and Winch Operators 4,800 Laborers and Material Movers 6,168,600 Tank Car, Truck, and Ship Loaders 11,620 Miscellaneous Material Moving Workers 28,240 Maintenance and Repair Workers, General 1,418,990 Tree Trimmers and Pruners 47,210 Line Installers and Repairers 232,560 Packaging and Filling Machine Operators and Tenders 390,540 Slaughterers and Meat Packers 73,390 Total 16,550,070
39 SARCOS PROPRIETARY AND CONFIDENTIAL US TOTAL ADDRESSABLE MARKET ANALYSIS US Total Addressable Market Analysis (2020) Total # of Workers in Target Sectors (mm) 16.6 Number of Human Workers / Robot 10.0 Total Number of Robots Projected (mm) 1.7 Annual Cost Per Sapphire Unit ($000) $88.6 TAM Projection ($bn) $146.6 Initial Market Adoption (%) 10% Serviceable Obtainable Market ($bn) $14.7 Unit Cost Assumptions XO DX/XT Annual RaaS Fee ($000) $108.0 $59.4 % of Total Units 60% 40% Blended Cost per Unit $88.6 TAM & SOM Projections - US Only 2020 2021 2022 2023 2024 2025 2026 20-'26 CAGR (%) TAM Size ($BN) $146.6 $149.5 $152.5 $155.5 $158.6 $161.8 $165.1 2.0% TAM Growth (%) 2% 2% 2% 2% 2% 2% SOM Size ($ BN) $14.7 $16.2 $17.8 $19.4 $21.2 $22.9 $24.8 9.1% Market Adoption Rates (%) 10.0% 10.8% 11.7% 12.5% 13.3% 14.2% 15.0% Source: Bureau of Labor Statistics Occupational Employment Statistics Survey * TAM includes jobs identified from US BLS employment data that would benefit from Sarcos ’ product offerings, with an assumed XO / XT utilization rate at a blended annual cost of service. Assumes 10% initial market adoption for SOM. Does not include jobs outside of the US.
40 SARCOS PROPRIETARY AND CONFIDENTIAL 121 *$$35(&21&,/,$7,21 ,10,//,216 Note: EBITDA includes amortization expense for RaaS units which is included in the respective COGS lines. Adjusted EBITDA 2020A 2021E 2022E 2023E 2024E 2025E 2026E Net Income/(Loss) ($17.9) ($51.6) ($63.8) $3.6 $126.1 $352.4 $929.6 Depreciation and Amortization 1.6 1.1 0.7 0.3 0.4 0.5 0.6 Interest Income/(Expense) 0.1 - - - - - - Other Income/(Expense) 2.4 - - - - - - Income Tax Expense 0.0 - - - - 133.6 437.5 EBITDA (18.8) (50.6) (63.1) 3.9 126.4 486.5 1,367.7 Amortization from XO/XT Units - - 4.3 41.9 101.5 266.6 538.0 Adjusted EBITDA ($18.8) ($50.6) ($58.9) $45.7 $228.0 $753.1 $1,905.6 EBIT 2020A 2021E 2022E 2023E 2024E 2025E 2026E Net Income/(Loss) ($17.9) ($51.6) ($63.8) $3.6 $126.1 $352.4 $929.6 Interest Income/(Expense) 0.1 - - - - - - Income Tax Expense 0.0 - - - - 133.6 437.5 EBIT ($18.0) ($51.6) ($63.8) $3.6 $126.1 $486.0 $1,367.1 Free Cash Flow 2020A 2021E 2022E 2023E 2024E 2025E 2026E Net Income/(Loss) ($17.9) ($51.6) ($63.8) $3.6 $126.1 $352.4 $929.6 Deprec/Amort/ Other Income (0.9) 1.1 0.7 0.3 0.4 0.5 0.6 Amortization from XO/XT Units - - 4.3 41.9 101.5 266.6 538.0 Advanced XO/XT Payments - - 7.4 18.7 60.5 140.5 184.6 Other Operating Adjustments (0.8) (0.0) - - - - - Cash from Operating Activities (18.1) (50.6) (51.4) 64.4 288.5 759.9 1,652.8 CapEx - Revenue Generating - - (47.6) (114.3) (294.0) (732.9) (1,066.1) CapEx - Other (2.1) (13.0) - - - - - Cash used in Investing Activities (2.1) (13.0) (47.6) (114.3) (294.0) (732.9) (1,066.1) Free Cash Flow ($20.1) ($63.6) ($99.0) ($50.0) ($5.6) $27.1 $586.7
41 SARCOS PROPRIETARY AND CONFIDENTIAL 6(/(&7('38%/,&&203$5$%/(&203$1,(6 Source: Factset and Company filings as of 3/4/2021. ($ in millions, except per share values) Share price as of % 52-week Equity Ent. EV / EBITDA EV / Revenue EV / EBIT Revenue growth EBITDA margin Company 3/4/21 high value value CY'21E CY'22E CY'23E CY'24E CY'25E CY'21E CY'22E CY'23E CY'24E CY'25E CY'21E CY'22E CY'23E CY'24E CY'25E CY'21E CY'22E CY'23E CY'24E CY'25E Sapphire $10.00 1,760 1,314 NM NM 28.8x 5.8x 1.7x NM 60.3x 7.9x 3.0x 1.1x NM NA NM 10.4x 2.7x NA NA 659.2% 164.5% 180.7% Robotics & Automation Keyence ¥49,640.00 84% 111,887 102,549 33.9x 28.6x 23.3x 19.7x NA 18.3x 15.8x 13.3x 11.4x NA 35.0x 29.4x 23.8x 20.1x NA 13.9% 15.7% 19.1% 16.2% NA Intuitive Surgical $709.17 87% 86,937 80,097 40.7x 33.4x 28.7x 25.4x 23.3x 16.2x 13.9x 12.2x 10.7x 9.7x 45.2x 36.6x 31.9x 27.4x 24.6x 13.7% 16.6% 13.5% 13.7% 10.6% ABB CHF 27.41 100% 60,169 60,456 14.2x 12.5x 11.5x 10.7x NA 2.2x 2.1x 2.0x 2.0x NA 18.9x 15.6x 14.0x 13.4x NA 9.1% 4.6% 4.2% 1.2% NA Fanuc ¥26,040.00 90% 46,421 40,834 21.3x 17.8x 18.8x 17.7x NA 7.2x 6.5x 5.9x 5.5x NA 29.2x 23.5x 19.9x 17.7x NA 16.4% 10.7% 10.0% 8.0% NA Hexagon 720.40 kr 94% 31,333 31,601 17.5x 16.6x 15.8x 15.0x NA 6.4x 6.1x 5.8x 5.5x NA 23.6x 21.9x 20.6x NA NA 8.8% 5.8% 5.3% 4.9% NA Rockwell Automation $246.07 92% 28,784 30,500 20.4x 19.1x 17.8x 16.9x NA 4.4x 4.1x 4.0x 3.8x NA 23.8x 21.5x 20.1x NA NA 8.1% 5.4% 4.2% 5.1% NA Ametek $120.39 97% 27,922 29,418 20.5x 19.1x 18.3x NA NA 6.1x 5.8x 5.3x NA NA 25.1x 23.2x 21.4x NA NA 6.3% 6.0% 7.6% NA NA Cognex $77.06 82% 13,665 13,272 40.4x 34.7x 31.5x 33.1x NA 13.8x 12.3x 11.0x 10.2x NA 44.5x 37.5x 34.0x 35.5x NA 18.3% 12.8% 11.9% 7.6% NA Teledyne $367.66 90% 13,908 14,240 21.1x 19.3x 17.8x NA NA 4.4x 4.1x 3.9x NA NA 25.7x 23.1x 21.1x NA NA 5.7% 5.3% 5.2% NA NA Siasun ¥12.14 72% 2,910 3,114 56.4x 47.2x NA NA NA 6.8x 5.9x NA NA NA 83.3x 66.0x NA NA NA 17.2% 14.8% NA NA NA Mean 92% 28.6x 24.8x 20.4x 19.8x 23.3x 8.6x 7.7x 7.0x 7.0x 9.7x 35.4x 29.8x 23.0x 22.8x 24.6x 11.8% 9.8% 9.0% 8.1% 10.6% Median 92% 21.2x 19.2x 18.3x 17.7x 23.3x 6.6x 6.0x 5.8x 5.5x 9.7x 27.4x 23.3x 21.1x 20.1x 24.6x 11.4% 8.3% 7.6% 7.6% 10.6% Disruptive Category Creators Tesla $621.44 70% 682,242 672,943 75.2x 53.3x 39.7x 38.3x 30.2x 13.6x 10.0x 8.3x 7.2x 6.2x 129.7x 85.6x 59.9x 54.5x 43.1x 57.1% 35.9% 20.0% 15.6% 16.3% Uber $53.07 84% 94,758 86,848 NM 64.0x 26.9x 17.2x 13.2x 5.4x 4.0x 3.2x 2.7x 2.3x NM NM 97.5x 39.6x 22.3x 44.7% 35.1% 26.4% 17.2% 17.2% Autodesk $265.44 83% 59,670 59,911 41.7x 31.6x 26.7x 24.0x NA 14.0x 11.9x 10.4x 9.5x NA 44.6x 32.6x 27.3x 23.9x NA 13.8% 18.0% 14.1% 9.5% NA C3.ai $88.51 50% 9,631 8,659 NM NM NM NM NA 39.2x 29.3x 19.9x 15.1x NA NM NM NM NM NA NA 33.9% 46.9% 32.5% NA Sunrun $53.42 55% 10,766 11,135 NM 61.3x 34.8x 36.0x 30.3x 8.1x 7.0x 6.2x 5.4x 4.8x NM NM NM NM NM 49.1% 15.0% 13.2% 14.3% 12.2% Proto Labs $130.77 52% 3,546 3,399 32.9x 27.7x NA NA NA 7.1x 6.4x NA NA NA 48.1x 38.0x NA NA NA 10.1% 10.3% NA NA NA Mean 81% 49.9x 47.6x 32.0x 28.9x 24.6x 14.6x 11.4x 9.6x 8.0x 4.4x 74.1x 52.0x 61.6x 39.3x 32.7x 35.0% 24.7% 24.1% 17.8% 15.2% Median 82% 41.7x 53.3x 30.8x 30.0x 30.2x 10.8x 8.5x 8.3x 7.2x 4.8x 48.1x 38.0x 59.9x 39.6x 32.7x 44.7% 26.0% 20.0% 15.6% 16.3% Recent Hardware de-SPACs Virgin Galactic $30.30 51% 7,137 6,395 NM NM NM 34.1x 49.2x NM 69.1x 24.1x 13.7x 12.2x NM NM NM 123.9x NM 5133.6% 642.8% 186.4% 75.9% 12.7% Desktop Metal $16.43 49% 4,075 3,465 NM NM 72.3x 26.4x 15.9x 37.3x 18.6x 10.1x 6.1x 4.3x NM NM 122.0x 32.1x 17.2x 412.0% 100.5% 84.8% 65.7% 40.7% Faraday Future $11.51 60% 3,891 3,153 NM NM NM 3.4x 1.4x NA 6.3x 0.8x 0.3x 0.1x NA NA NA NA NA NA NA 701.2% 161.4% 103.2% Canoo $11.43 52% 2,694 2,087 NM NM NM 11.1x 4.0x 17.4x 6.3x 2.5x 1.5x 0.9x NM NM NM 16.4x 4.5x 2042.9% 174.2% 155.3% 70.2% 63.7% Momentus $14.07 51% 2,127 1,815 NM NM 17.0x 4.4x 1.5x 95.5x 11.9x 3.0x 1.5x 0.9x NA NA NA NA NA 850.0% 700.0% 293.4% 100.7% 63.3% Luminar $23.46 56% 5,373 4,868 NM NM NM 60.1x 17.4x NM NM 41.0x 13.2x 6.6x NM NM NM 64.5x 16.0x 77.5% 30.6% 238.0% 210.2% 101.2% Aeva $13.55 68% 2,912 2,584 NM NM NM 123.0x 7.4x NM 73.8x 34.4x 9.0x 2.9x NA NA NA NA NA 120.0% 218.2% 114.3% 281.3% 207.7% Velodyne Lidar $13.53 44% 2,284 1,986 NM 187.4x 67.1x 17.2x NA 21.4x 10.3x 6.7x 3.8x NA NM NM NM 36.6x NA NM 108.3% 51.9% 75.5% NA Ouster $11.38 70% 2,105 1,825 NM NM 57.0x 7.2x 3.2x 53.7x 17.1x 5.7x 2.2x 1.2x NA NA NA NA NA 78.9% 214.7% 201.9% 153.3% 93.6% Innoviz $11.20 70% 1,571 1,201 NM NM NM 100.1x 6.7x NM 52.2x 15.2x 5.1x 2.1x NM NM NM NM 7.1x 80.0% 155.6% 243.5% 200.0% 145.1% Berkshire Grey $10.43 81% 2,859 2,352 NM NM NM 57.4x 10.1x 39.9x 19.8x 9.5x 4.8x 2.5x NM NM NM 168.0x 12.4x 68.6% 101.7% 108.4% 99.4% 87.5% Mean 63% NM 187.4x 53.3x 40.4x 11.7x 44.2x 28.5x 13.9x 5.6x 3.4x NM NM 122.0x 73.6x 11.5x 984.8% 244.7% 216.3% 135.8% 91.9% Median 55% NM 187.4x 62.1x 26.4x 7.1x 38.6x 17.8x 9.5x 4.8x 2.3x NM NM 122.0x 50.6x 12.4x 120.0% 164.9% 186.4% 100.7% 90.6% Recent Hardware de-SPACs (at announcement) Virgin Galactic $10.00 17% 2,343 1,602 NM NM 56.4x 8.4x 12.3x NM 14.6x 5.8x 3.4x 3.0x NM NM NM 34.7x 53.2x 6612.2% 584.7% 152.8% 69.0% 13.6% Desktop Metal $10.00 30% 2,480 1,870 NM NM 39.0x 14.3x 8.6x 20.1x 10.0x 5.4x 3.3x 2.3x NM NM 65.8x 17.3x 9.3x 412.0% 100.5% 84.8% 65.7% 40.7% Faraday Future $10.00 52% 3,380 2,642 NM NM NM 2.9x 1.1x NA 5.2x 0.7x 0.3x 0.1x NA NA NA NA NA NA NA 701.2% 161.4% 103.2% Canoo $10.00 45% 2,357 1,750 NM NM NM 9.3x 3.4x 14.6x 5.3x 2.1x 1.2x 0.7x NM NM NM 13.8x 3.8x 2042.9% 174.2% 155.3% 70.2% 63.7% Momentus $10.00 36% 1,512 1,200 NM NM 11.2x 2.9x 1.0x 63.2x 7.9x 2.0x 1.0x 0.6x NA NA NA NA NA 850.0% 700.0% 293.4% 100.7% 63.3% Luminar $10.00 24% 2,290 1,786 NM NM NM 22.0x 6.4x 66.4x 50.9x 15.0x 4.8x 2.4x NM NM NM 23.7x 5.8x 77.5% 30.6% 238.0% 210.2% 101.2% Aeva $10.00 50% 2,131 1,803 NM NM NM 85.8x 5.2x NM 51.5x 24.0x 6.3x 2.0x NA NA NA NA NA 120.0% 218.2% 114.3% 281.3% 207.7% Velodyne Lidar $10.00 33% 1,688 1,390 NM 131.1x 47.0x 12.0x NA 14.9x 7.2x 4.3x 2.5x NA NM NM NM 25.6x NA NM 108.3% 68.4% 67.7% NA Ouster $10.00 62% 1,850 1,570 NM NM 49.1x 6.2x 2.8x 46.2x 14.7x 4.9x 1.9x 1.0x NA NA NA NA NA 78.9% 214.7% 201.9% 153.3% 93.6% Innoviz $10.00 63% 1,403 1,033 NM NM NM 86.1x 5.8x NM 44.9x 13.1x 4.4x 1.8x NM NM NM NM 6.1x 80.0% 155.6% 243.5% 200.0% 145.1% Berkshire Grey $10.00 77% 2,741 2,234 NM NM NM 54.5x 9.6x 37.9x 18.8x 9.0x 4.5x 2.4x NM NM NM 159.6x 11.8x 68.6% 101.7% 108.4% 99.6% 87.3% Mean 58% NM 131.1x 40.5x 27.7x 5.6x 37.6x 21.0x 7.8x 3.1x 1.6x NM NM 65.8x 45.8x 15.0x 1149.1% 238.8% 214.7% 134.5% 91.9% Median 63% NM 131.1x 47.0x 12.0x 5.5x 37.9x 14.6x 5.4x 3.3x 1.9x NM NM 65.8x 24.7x 7.7x 120.0% 164.9% 155.3% 100.7% 90.5%
42 SARCOS PROPRIETARY AND CONFIDENTIAL ROTOR ACQUISITION CORP MANAGEMENT BIOGRAPHIES 527250$1$*(0(17 Brian Finn – CEO 6WHIDQ6HOLJ ± &KDLUPDQ – Over 35 years of experience in the financial services industry, including roles as a Strategic Advisor at KKR, Chairman of Covr Financial Technologies, Chairman at Star Mountain Capital, Investment Partner at Nyca Partners ( fintech VC) and as a member of the Board of Directors of Owl Rock Capital Corp. and The Scotts Miracle - Gro Company – Previously served as the CEO and Chairman of Asset Management Finance Corporation from 2009 – 2013 – Held a number of senior management positions at Credit Suisse (25 years), served as Head of M&A, Head of Private Equity - Alternat ive Investments, President of Credit Suisse First Boston and CEO CS USA – Joined CD&R as a partner from 1997 – 2002 – Founder of BridgePark Advisors, a strategic advisory firm – Currently serves on the Board of Directors of Simon Property Group, Entercom Communications Corp., Tuscan Holdings Corp., Safehold Inc., Drive DeVilbiss Healthcare, Array Holdings Corp. and certain subsidiaries of Gulfport Energy Corp. – Previously, was Undersecretary of Commerce for International Trade for the US Department of Commerce from 2014 – 2016 – Served in a number of roles at Bank of America Merrill Lynch from 1999 – 2014, ultimately serving as Executive Vice Chairman of Gl obal Corporate and Investment Banking
43 SARCOS PROPRIETARY AND CONFIDENTIAL 6800$5<5,6.)$&7256 Risks Associated with Sarcos’ Business Sarcos’ business is subject to numerous risks and uncertainties that you should consider before investing. The summary risks an d uncertainties described below are not the only ones Sarcos faces. Additional risks and uncertainties not currently known to Sarcos or that Sarcos currently deem less significant may also affect Sarcos’ business operations or financial results. If an y o f the following risks actually occur, Sarcos stock price, business, operating results and financial condition could be materi all y adversely affected. These risks include, but are not limited to, the following: Risks Related to Sarcos’ Business and Industry ▪ Sarcos is an early stage company with a history of losses, and it expects to incur significant expenses and continuing losses fo r the foreseeable future. ▪ Sarcos may fail to effectively manage future growth; investments it makes may not yield expected returns. ▪ Sarcos’ operating and financial projections rely on management assumptions and analyses. If these assumptions or analyses pro ve to be incorrect, Sarcos’ actual operating results may be materially different from its forecasted results. ▪ Sarcos’ core products are still under development, Sarcos’ has very limited experience commercializing its products and may n ot be able to do so efficiently or effectively. ▪ Sarcos’ business plans require a significant amount of capital. In addition, its future capital needs may require Sarcos to s ell additional equity or debt securities that may dilute its stockholders or introduce covenants that may restrict its operations o r its ability to pay dividends. ▪ Sarcos’ core products represent a new product category in the commercial market, which is unproven, and important assumptions ab out the potential market, pricing, and sales cycle, for its current and future products may be inaccurate. ▪ With Sarcos’ core products still under development, Sarcos has limited current customers and no pending orders for the commer cia l version of its core products, and there is no assurance ongoing and expected customer trials and discussions will result in binding orders or sales. ▪ The benefits of Sarcos’ products to customers and projected return on investment have not been substantiated through long - term t rials or use. ▪ Sarcos may fail to attract or retain customers at sufficient rates or at all. ▪ Even if Sarcos successfully markets its products, the purchase, adoption and use of the products may be materially and negati vel y impacted if the employees of Sarcos’ customers resist the use and adoption of the products. ▪ Sarcos’ robotics - as - a - service revenue model has yet to be tested and may fail to gain commercial acceptance. ▪ If Sarcos is successful in commercializing its products, Sarcos’ revenue will be concentrated in a few models for the foresee abl e future. ▪ Sarcos may not be able to complete or enhance its product offerings through its research and development efforts. ▪ The benefits to customers of Sarcos’ products could be supplanted by artificial intelligence or industrial automation. ▪ Defects in Sarcos’ products or the software that operates them or failure of its products to perform as expected could result in lower than expected return on investment for customers, cause harm to operators and significant safety concerns, and adversely affect Sarcos’ results of operations and its reputation. ▪ Even if Sarcos’ products perform properly and are used as intended, if operators sustain any injuries while using Sarcos’ pro duc ts, Sarcos’ could be exposed to liability and its results of operations and its reputation may be adversely affected. ▪ Sarcos has no experience servicing its products, and if Sarcos or its partners are unable to adequately, efficiently and cost - ef fectively service its products, its business, financial condition and results of operation could be materially adversely affe cte d. ▪ Sarcos’ ability to develop and manufacture products of sufficient quality on schedule and on a large scale is unproven, and d ela ys in the design, production and launch of its products could harm its business. ▪ Sarcos does not have a current contract with a manufacturer to produce Sarcos’ products at scale. If Sarcos is unable to ent er into an agreement on acceptable terms with an acceptable contract manufacturer, Sarcos’ ability to achieve its production projections would be negatively impacted. ▪ Third - party manufacturers may not be able to provide the products at the projected cost, with the expected quality or on the ant icipated timeline to meet Sarcos’ production projections. ▪ Sarcos will likely depend on a single or few third parties to manufacture its products, and it relies on a limited number of thi rd - party suppliers for certain components of its products. ▪ Increases in costs, disruption of supply or shortage of materials could harm Sarcos’ business. ▪ Sarcos may acquire other businesses or enter into collaborations, in - licensing arrangements, joint ventures, strategic alliances or partnerships with third parties that may not result in the development of commercially viable products or the generation o f significant future revenue. ▪ Sarcos is highly dependent on the services of its senior management and other key employees and, if Sarcos is unable to attra ct and retain a sufficient number of qualified employees, its ability to design, manufacture and launch its products, operate it s business and compete could be harmed. ▪ Sarcos will incur significant increased expenses and administrative burdens as a public company, which could have a material adv erse effect on its business, financial condition and results of operations. ▪ Sarcos operates in an industry that is subject to rapid technological change, and it expects competition to increase. ▪ Ongoing impacts from COVID - 19 or another pandemic, epidemic or outbreak of an infectious disease may materially and adversely im pact Sarcos’ business, operations and financial results. ▪ Sarcos’ success depends in part on its ability to obtain and maintain protection for the intellectual property relating to or in corporated into its products. ▪ Sarcos may be subject to intellectual property infringement claims or misappropriation claims, which may be time consuming an d e xpensive and, if adversely determined, could limit Sarcos’ ability to commercialize its products. ▪ Sarcos may become subject to new or changing governmental regulations relating to the design, manufacturing, marketing, distr ibu tion, servicing, or use of its products, and a failure to comply with such regulations could lead to withdrawal or recall of Sarcos’ products from the market. ▪ Sarcos is subject to cybersecurity risks to its operational systems, security systems, infrastructure, integrated software in it s products and customer data processed by Sarcos or third - party vendors.
44 SARCOS PROPRIETARY AND CONFIDENTIAL 6800$5<5,6.)$&7256 Risks Associated with Sarcos’ Business Sarcos’ business is subject to numerous risks and uncertainties that you should consider before investing. The summary risks an d uncertainties described below are not the only ones Sarcos faces. Additional risks and uncertainties not currently known to Sarcos or that Sarcos currently deem less significant may also affect Sarcos’ business operations or financial results. If an y o f the following risks actually occur, Sarcos stock price, business, operating results and financial condition could be materi all y adversely affected. These risks include, but are not limited to, the following: Risks Related to Rotor and/or the Proposed Business Combination • On January 14, 2021, the Registration Statement on Form S - 1 (SEC File No. 333 - 251521) (the “Registration Statement”) relating to the initial public offering of units of Rotor was declared effective. In addition to the summary discussion below, you should carefully consider the risks and uncertainties described in the “Risk Factors” section of the Registration Statement. • Rotor’s stockholders will each have a reduced ownership and voting interest after the Business Combination and will exercise les s influence over management. • The market price of shares of Rotor’s Class A common stock after the Business Combination may be affected by factors differen t f rom those currently affecting the prices of shares of Rotor's Class A common stock. • Sarcos’ directors and officers may have interests in the Business Combination different from the interests of Sarcos’ stockho lde rs. • Rotor directors and officers may have interests different from the interests of holders of shares of Rotor’s Class A common s toc k and the PIPE investors. Such interests include that all Rotor directors and officers are members of Rotor’s sponsor, which owns Rotor’s Class B common stock and private placement warrants and will lose their entire investment in Rotor and will not be reimbursed for any out - of - pocket expenses if an initial business combination is not consummated and Rotor liquidates. • Brian Finn, who is Rotor’s CEO and a director of Rotor and the managing member of Rotor’s sponsor, and John Howard, who is a dir ector of Rotor and a member of Rotor’s sponsor, as well as other members of Rotor’s sponsor who are not directors or officers of Rotor, have interests in the transaction that are different from, or are in addition to, the interests of Rotor’s ot her stockholders and the PIPE investors in the proposed business combination with Sarcos. These interests include, among othe r things, interests in an investment entity that owns an approximate 7.5% fully - diluted equity interest in Sarcos, purchased for a pproximately $20 million in early 2020, and received warrants to acquire an additional approximate 1.0% equity interest in Sarcos. Messrs. Finn and Howard and two members of Rotor’s sponsor who are not directors or officers of Rotor have an invest men t entity that agreed in late January 2021 to purchase a 4.8% fully - diluted equity interest in Sarcos from a Sarcos shareholder for $10 million plus additional contingent consideration and in mid - February 2021, by agreement with that shareholde r, canceled and terminated the transaction. Mr. Finn is chairman of a $67 million private investment fund to which the CEO and the general counsel of Sarcos made a $500,000 investment commitment in August 2020, a portion of which has been funded. Mr. Finn served on the board of directors of Sarcos until his resignation in late January 2021. A member of Rotor’s sponsor who is not a director or officer of Rotor and who participates in the aforementioned investment entities has been and re mains a board observer at Sarcos. Despite Rotor’s agreement to obtain an opinion from an independent investment banking firm or from an independent entity that commonly renders valuation opinions, regarding the fairness to Rotor from a financial po int of view of a business combination with one or more domestic or international businesses affiliated with Rotor’s sponsor, executive officers, directors or existing holders, potential conflicts of interest still may exist and, as a result, the term s o f the business combination may not be as advantageous to other stakeholders as they would be absent any conflicts of interest . Risks Related to Ownership of Our Class A Common Stock Following the Business Combination • Anti - takeover provisions in our governing documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.