TruGolf Holdings, Inc 8-K, filed Jul 18, 2022
TruGolf Holdings, Inc. (TRUG)
About this 8-K
TruGolf Holdings, Inc filed this 8-K on July 18, 2022, reporting on events of July 12, 2022.
Items reported
- Item 1.01: Entered into a material agreement
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
telephone number, including area code:
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01 Entry Into A Material Definitive Agreement
BUSINESS COMBINATION AGREEMENT
This section describes the material provisions of the Business Combination Agreement but does not purport to describe all of the terms thereof. The Company’s stockholders, warrant holders, rights holders and other interested parties are urged to read such agreement in its entirety. The following summary is qualified in its entirety by reference to the complete text of the Business Combination Agreement, a copy of which is attached hereto as Exhibit 2.1. Unless otherwise defined herein, the capitalized terms used below are defined in the Business Combination Agreement.
General Description of the Business Combination Agreement
On July 12, 2022, Deep Medicine Acquisition Corp., a Delaware corporation (the “Company”), entered into a definitive Business Combination Agreement (the “Business Combination Agreement”) with Chijet Inc., a Cayman Islands exempted company (together with its subsidiaries, “Chijet”), each of the referenced holders of Chijet’s outstanding shares (collectively, the “Sellers”), Chijet Motor Company, Inc., a Cayman Islands exempted company and wholly-owned subsidiary of Chijet (“Pubco”), and Chijet Motor (USA) Company, Inc., a Delaware corporation and a wholly-owned subsidiary of Pubco (“Merger Sub”). Chijet indirectly holds an over 85% interest in Shandong Baoya New Energy Vehicle Co., Ltd., a Chinese company (“Baoya”), which is a producer and manufacturer of electric vehicles. In addition, Chijet indirectly holds an over 64% interest in FAW Jilin Automobile Co., Ltd., a Chinese company (“FAW Jilin”), which manufactures and sells traditional fuel vehicles. The transactions contemplated by the Business Combination Agreement are referred to herein as the “Business Combination”.
Subject to its terms and conditions, the Business Combination Agreement provides that Company and Chijet will become wholly-owned subsidiaries of Pubco, a newly formed holding company. Pursuant to the Business Combination Agreement, subject to the terms and conditions set forth therein, at the closing of the Business Combination (the “Closing”), (a) Merger Sub will merge with and into the Company, with the Company continuing as the surviving entity and a wholly-owned subsidiary of Pubco (the “Merger”), and with holders of Company securities receiving substantially equivalent securities of Pubco, and (b) immediately prior to the Merger, Pubco will acquire all of the issued and outstanding ordinary shares of Chijet (the “Purchased Shares”) from the Sellers in exchange for ordinary shares of Pubco and Chijet shall surrender for no consideration its shares in Pubco, as described below, with Chijet likewise becoming a wholly-owned subsidiary of Pubco (the “Share Exchange”).
Effect of Merger on Company Securities
At the effective time of the of the Business Combination (the “Effective Time”): (i) every issued and outstanding share of Class A Common Stock, par value $0.0001 per share of the Company (“Common Stock”) immediately prior to that Effective Time (other than treasury stock), will be exchanged for one ordinary share, par value $0.0001 per share, of Pubco (“Ordinary Share”), following which all shares of the Company’s Common Stock will be canceled and will cease to exist; and (ii) each issued and outstanding right of the Company, entitling the registered holder thereof to receive one-tenth (1/10th) of a share of the Company’s Class A Common Stock upon the consummation by the Company of its initial business combination shall be issued equivalent shares of Common Stock of the Company, which shall be aggregated per registered holder to the amount of full shares of Common Stock for which such holder is eligible, and which shall be automatically converted into the number of Pubco Ordinary Shares that would have been received by the holder thereof if such right had been automatically exercised immediately prior to the Effective Time in accordance with clause (i) of this paragraph. In addition, (iii) each share of Class B Common Stock, par value $0.0001 per share (“Class B Common Stock”) of the Company will be exchanged for one Pubco Ordinary Share, and (iv) each privately placed warrant of the Company to acquire Common Stock shall be exchanged for a substantially equivalent warrant to acquire Pubco Ordinary Shares, in each case pursuant to the Company’s certificate of incorporation and the terms of these securities.
| 2 |
Exchange Consideration
The total consideration to be paid by Pubco to the Sellers for the Purchased Shares shall be an aggregate number of Pubco’s Ordinary Shares (the “Exchange Shares”) with an aggregate value (the “Exchange Consideration”) equal to the product of (i) 0.851717 and (ii) $2,550,000,000 (the latter amount, subject to adjustment as described below, being the “Valuation”), with each Pubco Ordinary Share to be issued to the Sellers valued at a price equal to the price at which each share of Company’s Common Stock is redeemed pursuant to the redemption by the Company of its public stockholders in connection with the Company’s initial business combination, as required by its certificate of incorporation, as amended (the “Redemption”).
During the sixty (60) day period following the date of the Business Combination Agreement (the “Due Diligence Period”), the Company will undertake a due diligence review of Chijet, Pubco and their subsidiaries and their respective operations and complete the Company’s determination of the Valuation (the “Revised Valuation”). If the Company determines, in its reasonable discretion following consultation with its financial advisors, that the Revised Valuation is equal to or greater than $2,295,000,000 (the “Minimum Valuation”), then the Exchange Consideration shall be based upon the initial Valuation of $2,550,000,000. If the Company determines, in its reasonable discretion following consultation with its financial advisors, that the Revised Valuation is less than the Minimum Valuation, then for a period of five (5) days following the Company’s delivery of notice thereof (the “Negotiation Period”), the parties will reasonably cooperate to agree on a revised amount of Exchange Consideration. If the parties do not agree during the Negotiation Period on a revised amount of Exchange Consideration, the Company will have the option either to terminate the Business Combination Agreement (as further described below) or to proceed to the Closing with the Exchange Consideration being based on the Minimum Valuation.
Representations and Warranties
The Business Combination Agreement contains a number of representations and warranties made by the Company, Chijet and Pubco as of the date of such agreement or other specific dates solely for the benefit of certain of the parties to the Business Combination Agreement, which in certain cases are subject to specified exceptions and materiality, Material Adverse Effect, knowledge and other qualifications contained in the Business Combination Agreement or in information provided pursuant to certain disclosure schedules to the Business Combination Agreement. “Material Adverse Effect” as used in the Business Combination Agreement means with respect to any specified person or entity, any fact, event, occurrence, change or effect that has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business, assets, liabilities, results of operations or condition (financial or otherwise) of such person or entity and its subsidiaries, taken as a whole, or the ability of such person or entity or any of its subsidiaries on a timely basis to consummate the Business Combination, subject to certain customary exceptions.
In the Business Combination Agreement, Chijet made certain customary representations and warranties to the Company and Pubco, including among others, related to the following: (1) corporate matters, including due organization, existence and good standing; (2) authority and binding effect relating to execution and delivery of the Business Combination Agreement and other ancillary documents; (3) capitalization; (4) subsidiaries; (5) governmental approvals; (6) non-contravention; (7) financial statements; (8) absence of certain changes; (9) compliance with laws; (10) permits; (11) litigation; (12) material contracts; (13) intellectual property; (14) taxes and tax returns; (15) real property; (16) personal property; (17) title to and sufficiency of assets; (18) employee matters; (19) benefit plans; (20) environmental matters; (21) transactions with affiliates; (22) insurance; (23) customers and suppliers; (24) business practices; (25) Investment Company Act of 1940 (“Investment Company Act”); (26) finders and brokers; (27) information supplied and (28) independent investigation. Additionally, Pubco made certain customary representations and warranties to the Company, Chijet and Sellers, with respect to Pubco and Merger Sub, including representations and warranties related to the following: (1) corporate matters, including due organization, existence and good standing; (2) authority and binding effect relating to execution and delivery of the Business Combination Agreement and other ancillary documents; (3) governmental approvals; (4) non-contravention; (5) capitalization; (6) title and ownership of the Pubco shares to be issued to the Sellers; (7) Pubco and Merger Sub activities; (8) SEC filings; (9) absence of certain changes; (10) compliance with laws; (11) litigation, orders and permits; (12) taxes and tax returns; (13) employees and employee benefit plans; (14) properties; (15) material contracts; (16) transactions with affiliates; (17) Investment Company Act and the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”); (18) business practices; (19) insurance; (20) finders and brokers; (21) information supplied; and (22) independent investigation.
| 3 |
In the Business Combination Agreement, the Company made certain customary representations and warranties to Chijet, Sellers and Pubco, including among others, related to the following: (1) corporate matters, including due organization, existence and good standing; (2) authority and binding effect relative to execution and delivery of the Business Combination Agreement and other ancillary documents; (3) governmental approvals; (4) non-contravention; (5) capitalization; (6) SEC filings, financial statements and internal controls; (7) absence of certain changes; (8) compliance with laws; (9) litigation, orders and permits; (10) taxes and tax returns; (11) employees and employee benefit plans; (12) properties; (13) material contracts; (14) transactions with affiliates; (15) Investment Company Act and the JOBS Act; (16) finders and brokers; (17) business practices; (18) insurance; (19) information supplied; (20) independent investigation; and (21) trust account.
In the Business Combination Agreement, each Seller made customary representations and warranties to the Company and Pubco, including among others, related to the following: (1) organization and good standing; (2) authority and binding effect relating to execution and delivery of the Business Combination Agreement and other ancillary documents; (3) ownership of the Purchased Shares; (4) governmental approvals; (5) non-contravention; (6) litigation; (7) investment representations; (8) finders and brokers; (9) information supplied; and (10) independent investigation.
Covenants of the Parties
Each party agreed in the Business Combination Agreement to use its commercially reasonable efforts to effect the Closing. The Business Combination Agreement also contains certain customary covenants by each of the parties during the period between the signing of the Business Combination Agreement and the earlier of the Closing or the termination of the Business Combination Agreement in accordance with its terms (the “Interim Period”), including, among others, covenants regarding: (1) the provision of access to their properties, books and personnel; (2) the operation of their respective businesses in the ordinary course of business, in compliance with law, and using commercially reasonable efforts to preserve their respective organizations, access to services of personnel and consultants, and material assets; (3) the Company’s public filing obligations and Chijet’s obligation to deliver interim financial statements; (4) no solicitation of, or entering into, any alternative competing transactions; (5) no insider trading; (6) notifications of certain breaches, consent requirements or other matters; (7) efforts to consummate the Closing and obtain third party and regulatory approvals; (8) further assurances; (9) public announcements; (10) confidentiality; (11) indemnification of directors and officers after the Closing; (12) use of trust proceeds after the Closing; and (13) efforts to conduct a private placement, backstop or redemption waiver arrangements, if sought.
The Company agreed that its board of directors will not withhold, withdraw or modify its recommendation that the Company’s stockholders vote in favor of the approval of the Business Combination Agreement and the Business Combination and other matters relating thereto unless the Company’s board of directors determines in good faith, after consultation with its legal and financial advisors, that it is required to do so in order to comply with its fiduciary duties under applicable law (and then only subject to certain requirements).
The parties also agreed to take all necessary actions to cause Pubco’s board of directors immediately after the Closing to consist of seven directors, a majority of which will be independent. Two directors (each one being an independent director) will be designated by the Company prior to the Closing and four directors (at least two being independent directors) will be designated by Chijet prior to the Closing. An additional independent director will be mutually agreed upon by the Company and Chijet prior to the Closing.
The Company and Pubco also agreed to jointly prepare, and Pubco shall file with the Securities and Exchange Commission (“SEC”), a registration statement on Form F-4 (as amended, the “Registration Statement”) in connection with the registration under the Securities Act of 1933, as amended (the “Securities Act”) of the issuance of securities of Pubco to the holders of Company securities and containing a proxy statement/prospectus for the purpose of soliciting proxies from the stockholders of the Company for the matters relating to the Business Combination to be acted on at the special meeting of the stockholders of the Company and providing such stockholders with an opportunity to participate in the Redemption.
Chijet further undertook to bear up to $500,000 of the Company’s costs incurred with respect to the engagement of advisors to the Company in connection with the Company’s due diligence review of Chijet and its operations after the date of the Business Combination Agreement.
| 4 |
Survival and Indemnification
None of the representations and warranties of the parties to the Business Combination Agreement will survive the Closing, and no claim for indemnification may be made with respect thereto.
None of the covenants and agreements of the parties contained in the Business Combination Agreement will survive the Closing, except that those covenants and agreements that by their terms apply or are contemplated to be performed in whole or in part after the Closing will survive the Closing and continue until fully performed in accordance with their terms.
Conditions to Closing
The obligations of the parties to consummate the Business Combination are subject to various conditions, including the following mutual conditions of the parties unless waived: (i) the approval of the Business Combination Agreement and the Business Combination, the adoption of Pubco’s amended and restated memorandum and articles of association (if such a vote is required by federal securities laws), the adoption and approval of a new equity incentive plan for Pubco, the appointment of the members of the Pubco’s post-Closing board of directors and other related matters by the requisite vote of the Company’s stockholders; (ii) expiration of any waiting period under applicable antitrust laws; (iii) receipt of all consents required to be obtained from governmental authorities; (iv) no law or order preventing or prohibiting the Business Combination; (v) the Company having at least $5,000,001 in net tangible assets as of the Closing, after giving effect to the completion of the Redemption and any private placement financing; (vi) the amendment by the shareholders of Pubco of Pubco’s memorandum and articles of association in a form acceptable to Chijet and the Company; (vii) receipt by Chijet and the Company of evidence reasonably satisfactory to each such party that Pubco qualifies as a foreign private issuer; (viii) the effectiveness of the Registration Statement; (ix) the Exchange Shares shall have been approved for listing on Nasdaq, subject only to the official notice of issuance; and (x) no pending litigation to enjoin or restrict the consummation of the Closing.
In addition, unless waived by Chijet, the obligations of Chijet, Pubco, Merger Sub and the Sellers to consummate the Business Combination are subject to the satisfaction of the following Closing conditions, in addition to customary certificates and other closing deliveries: (i) the representations and warranties of the Company being true and correct as of the date of the Business Combination Agreement and as of the Closing (subject to materiality or Material Adverse Effect qualifications); (ii) the Company having performed in all material respects its obligations and complied in all material respects with its covenants and agreements under the Business Combination Agreement required to be performed or complied the Company by it on or prior the date of the Closing; (iii) the absence of any Material Adverse Effect with respect to the Company since the date of the Business Combination Agreement which is continuing and uncured; (iv) receipt by Chijet and Pubco of the executed Amended and Restated Registration Rights Agreement by and among the Company, Pubco, the Sellers and the other parties thereto (the “Amended and Restated Registration Rights Agreement”), amending and restating the Company’s Registration Rights Agreement that was entered into by the Company at the time of its initial public offering (“IPO”) (the “Founder Registration Rights Agreement”) in order to, among other matters, include Pubco and the Sellers as parties and to make it apply to (A) the Pubco securities to be received in connection with the Merger by the Company’s stockholders who are parties to the Founder Registration Rights Agreement and (B) to the Exchange Shares delivered to the Sellers at the Closing; (v) the election or appointment of members to Pubco’s post-Closing board of the independent director and the directors designated by Chijet; and (vi) the Company having upon the Closing cash and cash equivalents (including funds remaining in the trust account after completion and payment of the Redemption and the proceeds of any private placement financing), net of the Company’s unpaid expenses and liabilities, at least equal to $10,000,000.
Unless waived by the Company, the obligations of the Company to consummate the Business Combination are subject to the satisfaction of the following Closing conditions, in addition to customary certificates and other closing deliveries: (i) the representations and warranties of Chijet, Pubco and the Sellers being true and correct as of the date of the Business Combination Agreement and as of the Closing (subject to materiality or Material Adverse Effect qualifications); (ii) Chijet, Pubco, Merger Sub and the Sellers having performed in all material respects their respective obligations and complied in all material respects with their respective covenants and agreements under the Business Combination Agreement required to be performed or complied with on or prior the date of the Closing; (iii) absence of any Material Adverse Effect with respect to Chijet or Pubco since the date of the Business Combination Agreement which is continuing and uncured; (iv) receipt by the Company of employment agreements, effective as of the Closing, in form and substance acceptable to the Company and Chijet, between certain persons and Chijet or a Chijet affiliate, as applicable, duly executed by the parties thereto; (v) receipt by the Company of the Amended and Restated Registration Rights Agreement, duly executed by Pubco and the Sellers party thereto; (vi) receipt by the Company of the evidence of the termination of any outstanding options, warrants or other convertible securities of Chijet (if any); (vii) receipt by the Company of share certificates and other documents evidencing the transfer of the Purchased Shares to Pubco; (viii) receipt by the Company of reasonably acceptable evidence of the termination of certain Chijet group related party contracts; (ix) receipt by the Company of copies of lock-up agreements, effective as of the Closing, in the form attached to the Business Combination Agreement (“Lock-Up Agreements”), duly executed by Pubco and certain Sellers; (x) receipt by the Company of non-competition agreements, effective as of the Closing, in form and substance acceptable to the Company and Chijet among Pubco, Chijet and certain Sellers, duly executed by the parties thereto; and (xi) the election or appointment of members to Pubco’s post-Closing board of the independent director and the directors designated by the Company.
| 5 |
Termination
The Business Combination Agreement may be terminated at any time prior to the Closing by either the Company or Chijet if the Closing has not occurred on or prior to October 28, 2022 (the “Outside Date”); provided that if the Company elects to extend the date by which it must consummate its initial business combination (by up to an additional six (6) months in two extensions of three (3) months each) (each, an “Extension”), Chijet will fund the aggregate amount that the Company is required to deposit into its trust account in order to accomplish any such Extension, by means of a purchase by Chijet of limited liability company membership interests in the Sponsor (up to a maximum aggregate purchase price of $2,600,000 for both three (3) month Extensions together), all on the terms and conditions set forth in the Business Combination Agreement. Upon an effective Extension as described above, the Outside Date will be automatically extended to the last day of such Extension period. A party is not entitled to terminate the Business Combination Agreement if the failure of the Closing to occur by such date was caused by or the result of a breach of the Business Combination Agreement by such party (or with respect to Chijet, by the Sellers, Pubco or Merger Sub).
The Business Combination Agreement may also be terminated under certain other customary and limited circumstances prior the Closing, including, among other reasons: (i) by mutual written consent of the Company and Chijet; (ii) by either the Company or Chijet if a governmental authority of competent jurisdiction has issued an order or taken any other action permanently restraining, enjoining or otherwise prohibiting the Business Combination, and such order or other action has become final and non-appealable; (iii) by Chijet for the Company’s uncured breach of the Business Combination Agreement, if the breach would result in the failure of the related Closing condition; (iv) by the Company for the uncured breach of the Business Combination Agreement by Chijet, Pubco, Merger Sub or any Seller, if the breach would result in the failure of the related Closing condition; (v) by the Company if there has been a Material Adverse Effect with respect to Chijet or Pubco since the date of the Business Combination Agreement which is uncured and continuing; or (vi) by either the Company or Chijet if the Company holds a special meeting of its stockholders to approve the Business Combination Agreement and the Business Combination and such approval is not obtained.
In addition, if during the Due Diligence Period the Company determines, in its reasonable discretion following consultation with its financial advisors that the Revised Valuation is less than the Minimum Valuation and the parties do not reach agreement on a revised Exchange Consideration during the Negotiation Period, the Company may terminate the Business Combination Agreement. If, during the Due Diligence Period, the Company determines that there are any facts, circumstances or events related to the operations, results of operations, contracts, prospects, services or prospects of Chijet and its subsidiaries that have resulted or would reasonably be expected to result in a material and adverse effect on the business operations or results of operations of Chijet and its subsidiaries, the Company may terminate the Business Combination Agreement
If the Business Combination Agreement is terminated, all obligations of the parties under the Business Combination Agreement (except for certain obligations related to public announcements, confidentiality, fees and expenses, trust account waiver, termination and general provisions) will terminate, and no party to the Business Combination Agreement will have any further liability to any other party thereto except for liability for certain fraud claims or for willful breach of the Business Combination Agreement prior to the termination.
Trust Account Waiver and Releases
Chijet, Pubco, Merger Sub and each of the Sellers have agreed that they and their affiliates will not have any right, title, interest or claim of any kind in or to any monies in the Company’s trust account held for its public stockholders, and have agreed not to, and waived any right to, make any claim against the trust account (including any distributions therefrom directly or indirectly to the Company’s public stockholders).
| 6 |
Each Seller, on behalf of itself and its affiliates that own shares of such Seller, provided a general release of Chijet and its subsidiaries, effective as of the Closing, other than with respect to its rights under the Business Combination Agreement and ancillary documents and certain other customary exceptions.
Governing Law
The Business Combination Agreement is governed by New York law, except that to the extent that Delaware law is required to apply with respect to the Merger or other actions under the Business Combination Agreement, Delaware law will so apply. The state and federal courts sitting in New York, New York will have exclusive jurisdiction.
A copy of the Business Combination Agreement is filed with this Current Report on Form 8-K as Exhibit 2.1 and is incorporated herein by reference, and the foregoing description of the Business Combination Agreement is qualified in its entirety by reference thereto.
The Business Combination Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of such agreement or other specific dates. The assertions embodied in those representations, warranties, covenants and agreements were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating such agreement. The Business Combination Agreement has been filed to provide investors with information regarding its terms, but it is not intended to provide any other factual information about the Company, Chijet or any other party to the Business Combination Agreement. In particular, the representations and warranties, covenants and agreements contained in the Business Combination Agreement, which were made only for purposes of such agreement and as of specific dates, were solely for the benefit of the parties to the Business Combination 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 Business Combination Agreement instead of establishing these matters as facts) and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors and reports and documents filed with the SEC. Investors should not rely on the representations, warranties, covenants and agreements, or any descriptions thereof, as characterizations of the actual state of facts or condition of any party to the Business Combination Agreement. In addition, the representations, warranties, covenants and agreements and other terms of the Business Combination Agreement may be subject to subsequent waiver or modification. Moreover, information concerning the subject matter of the representations and warranties and other terms may change after the date of the Business Combination Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
Related Agreements
This section describes the material provisions of certain additional agreements entered into or to be entered into pursuant to the Business Combination Agreement (the “Related Agreements”) but does not purport to describe all of the terms thereof. The following summary is qualified in its entirety by reference to the complete text of each of the Related Agreements, copies of each of which are attached hereto as exhibits. Stockholders and other interested parties are urged to read such Related Agreements, or forms thereof, in their entirety.
Support Agreement
Simultaneously with the execution of the Business Combination Agreement, the Company, Pubco, Chijet and the Company’s sponsor, Bright Vision Sponsor LLC, a Delaware limited liability company (the “Sponsor”), entered into a Support Agreement (the “Support Agreement”) pursuant to which the Sponsor agreed to support the Business Combination and to vote all of its shares of the Company’s Common Stock (and any other Company securities owned or acquired by the Sponsor) in favor of the Business Combination Agreement and the Business Combination. The Sponsor also agreed to take certain other actions in support of the Business Combination Agreement and the Business Combination and to refrain from taking such actions that would adversely impede the ability of the parties to perform the Business Combination Agreement. The Support Agreement also prevents transfers of Company securities held by the Sponsor between the date of the Support Agreement and the date of the Closing or earlier termination of the Business Combination Agreement unless the transferee executes a joinder to the Support Agreement.
| 7 |
The Sponsor also agreed to be bound by and comply with the provisions of the Business Combination Agreement relating to Chijet’s funding of a potential Extension and, upon and subject to the funding of such an Extension by Chijet in accordance with the Business Combination Agreement, to issue to Chijet the relevant limited liability company membership interests in the Sponsor.
The Sponsor, solely in connection with the Business Combination, agreed to waive certain anti-dilution provisions under the Company’s governing documents relating to the conversion of the Company’s Class B Common Stock.
The Sponsor, on behalf of itself and its affiliates, provided a general release of the Company, Pubco, Chijet and Merger Sub, effective as of the Closing, other than with respect to rights under the Business Combination Agreement and ancillary documents and certain other customary exceptions.
Lock-Up Agreements
The Business Combination Agreement provides that, at or before the Closing, and effective as of the Closing, certain Sellers holding approximately 78% of Chijet’s capital stock will enter into a Lock-Up Agreement with Pubco with regard to the Exchange Shares to be received by such Seller. In such Lock-Up Agreement, the Sellers to be parties thereto will agree that such Seller will not, during the period commencing from the Closing and ending on the six (6) month anniversary of the Closing (or if earlier, the date on which Pubco consummates a liquidation, merger, share exchange or other similar transaction with an unaffiliated third party that results in all of Pubco’s shareholders having the right to exchange their equity holdings in Pubco for cash, securities or other property) (the “Lock-Up Period”) (i) lend, offer, pledge (except as provided below), hypothecate, encumber, donate, assign, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any of such Seller’s Exchange Shares, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any of such Seller’s Exchange Shares, or (iii) publicly announce any intention to effect any transaction specified in clause (i) or (ii). Notwithstanding the foregoing, solely with respect to 50% of such Exchange Shares, the Lock-Up Period, if not earlier terminated in accordance with the terms of the Lock-Up Agreement, will be deemed to terminate on the date on which the closing price of Pubco’s publicly traded Ordinary Shares equals or exceeds $12.50 per share for any 20 days within a 30-day trading period after the Closing. However, each such Seller will be allowed to transfer any of its Exchange Shares by gift, will or intestate succession or to any immediate family member (or related trust), trustor or trust beneficiary, as a distribution to equity holders upon liquidation or to an affiliate or pursuant to a court order or settlement agreement in divorce; provided in each such case that the transferee thereof agrees to be bound by the restrictions set forth in the Lock-Up Agreement. The Sellers who sign Lock-Up Agreements will also be permitted to pledge their shares during the Lock-Up Period so long as the pledgee agrees not to exercise its remedies with respect to the Exchange Shares during the Lock-Up Period.
Amended and Restated Registration Rights Agreement
The Business Combination Agreement provides that, at or before the Closing, and effective as of the Closing, the Company, Pubco, the Sellers party thereto, and the holders of a majority of the “Registrable Securities” pursuant to the Founder Registration Rights Agreement, will enter into an Amended and Restated Registration Rights Agreement. The Amended and Restated Registration Rights Agreement will obligate Pubco to register for resale under the Securities Act all or any portion of their Exchange Shares (the “Exchange Investor Registrable Securities”), and (ii) certain founding investors of the Company (the “Initial Investors”) shall have registration rights that will obligate Pubco to register for resale under the Securities Act all or any portion of the Pubco Ordinary Shares to be received in respect of their Company founder shares pursuant to the Business Combination Agreement (the “Initial Investor Registrable Securities”, and together with the Exchange Investor Registrable Securities, as well as, in each case, with any warrants, capital shares or other securities issued as a dividend or distribution with respect thereto or in exchange therefor, the “ Registrable Securities “), except that Registrable Securities that are subject to contractual transfer restrictions may not be requested to be registered or registered until the end of the applicable lock-up period. After the Closing, (i) Sellers holding a majority-in-interest of the Exchange Investor Registrable Securities, or (ii) Initial Investors holding a majority-in-interest of the Initial Investor Registrable Securities, will be entitled under the Amended and Restated Registration Rights Agreement to make a written demand for registration under the Securities Act of all or part of their Registrable Securities, and other holders of Registrable Securities will be entitled to join in such demand registration. Subject to certain exceptions, if any time after the Closing, Pubco proposes to file a registration statement under the Securities Act with respect to its securities, under the Amended and Restated Registration Rights Agreement, Pubco shall give notice to the holders of Registrable Securities as to the proposed filing and offer them an opportunity to register the sale of such number of Registrable Securities as requested by them in writing, subject to customary cut-backs. In addition, subject to certain exceptions, holders of Registrable Securities will be entitled under the Amended and Restated Registration Rights Agreement to request in writing that Pubco register the resale of any or all of such Registrable Securities on Form S-3 or F-3 and any similar short-form registration that may be available at such time. Under the Amended and Restated Registration Rights Agreement, Pubco will indemnify the holders of Registrable Securities and certain persons or entities related to them, such as their officers, directors, employees, agents and representatives, against any losses or damages resulting from any untrue statement or omission of a material fact in any registration statement or prospectus pursuant to which they sell Registrable Securities, unless such liability arose from their misstatement or omission, and the holders of Registrable Securities, including Registrable Securities in any registration statement or prospectus, will agree to indemnify Pubco and certain persons or entities related to Pubco, such as its officers and directors and underwriters, against all losses caused by their misstatements or omissions in those documents.
| 8 |
The Support Agreement, the form of Lock-Up Agreement and the form of Amended and Restated Registration Rights Agreement are filed with this Current Report on Form 8-K as Exhibits 10.1, 10.2 and 10.3 respectively, and are incorporated herein by reference, and the foregoing descriptions of the Support Agreement, the form of Lock-Up Agreement and the form of Amended and Restated Registration Rights Agreement are qualified in their entirety by reference thereto.
Important Information About the Proposed Business Combination and Where to Find It
This Form 8-K relates to the proposed Business Combination transaction among the Company, Chijet, Pubco and Merger Sub. Pubco intends to file with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form F-4, which will include a prospectus of Pubco with respect to the securities to be issued in connection with the proposed Business Combination and a preliminary proxy statement of the Company with respect to the solicitation of proxies for the special meeting of stockholders of the Company to vote on the Business Combination among other matters (the “Registration Statement”). The Registration Statement has not yet been filed with or declared effective by the SEC. After the Registration Statement is declared effective, the definitive proxy statement/prospectus (included in the Registration Statement), and other relevant documents, will be mailed to stockholders of the Company as of a record date to be established for voting on the Business Combination. Each of the Company and Chijet urges its investors, stockholders and other interested persons to read, when available, the preliminary proxy statement/prospectus, and amendments thereto, the Registration Statement and the definitive proxy statement/prospectus as well as other documents filed with the SEC because these documents will contain important information about the Company, Chijet, Pubco and the Business Combination. Once available, Company shareholders and other interested persons will also be able to obtain a copy of the Registration Statement, including the proxy statement/prospectus included therein, and other documents filed with the SEC, without charge, by directing a request to: Deep Medicine Acquisition Corp. 595 Madison Avenue, 12th Floor, New York, NY 10017, Attention Humphrey P. Polanen, (917) 289-2776 or on the SEC’s website at www.sec.gov.
Participants in Solicitation
The Company, Chijet and Pubco, and their respective directors and executive officers, may be deemed participants in the solicitation of proxies from the stockholders of the Company in connection with the proposed Business Combination. The Company’s shareholders and other interested persons may obtain more detailed information about the names and interests of these directors and officers of the Company (and as applicable, Chijet and Pubco) in the Business Combination is set forth in the Company’s annual report on Form 10-K for the year ended March 31, 2022, which was filed with the SEC on June 24, 2022 (the “Form 10-K”) and in other filings with the SEC, including when filed, the Registration Statement and the accompanying proxy statement/prospectus. These documents can be obtained free of charge from the sources specified above and at the SEC’s web site at www.sec.gov.
This communication does not contain all the information that should be considered concerning the Business Combination and is not intended to form the basis of any investment decision or any other decision in respect of the Business Combination. Before making any voting or investment decision, investors and security holders are urged to read the Registration Statement and accompanying proxy statement/prospectus and all other relevant documents filed or that will be filed with the SEC in connection with the proposed Business Combination as they become available because they will contain important information about the proposed Business Combination.
| 9 |
No Offer or Solicitation
This Current Report on Form 8-K and its exhibits will not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the Business Combination. This Current Report on Form 8-K and its exhibits will also not constitute an offer to sell or the solicitation of an offer to buy any securities, nor will there be any sale of securities in any states or jurisdictions in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities will be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act, as amended, or an exemption therefrom.
Forward-Looking Statements
This Current Report on Form 8-K, exhibits hereto and information incorporated by reference herein, contains certain “forward-looking statements” within the meaning of the “safe harbor” provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the proposed Business Combination. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result” and similar expressions, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Actual results may differ from their expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. As used herein, references to Chijet include references to each of its subsidiaries, Baoya and FAW Jilin. Many factors could cause actual future events to differ materially from the forward-looking statements in this Current Report on Form 8-K, including but not limited to: (i) the risk that the Business Combination may not be completed in a timely manner or at all, which may adversely affect the price of the Company’s securities; (ii) the risk that the Business Combination may not be completed by the Company’s business combination deadline and the potential failure to obtain an extension of the business combination deadline if sought by the Company; (iii) the Company’s stockholders’ redemptions exceeding a maximum threshold or the failure to meet The Nasdaq Stock Market’s or other market’s initial listing standards in connection with the consummation of the contemplated transactions; (iv) the effect of the announcement or pendency of the Business Combination on business relationships of Chijet or any of its subsidiaries, including Baoya or FAW Jilin, or each of their respective operating results, prospects or business; (v) the impact, if any, on any governmental registration, declaration or action, or lack of any of the foregoing, in connection with the Business Combination; (vi) risks that the proposed Business Combination disrupts current plans or operations of Chijet or any of its subsidiaries; (vii) changes in the vehicle and electric vehicle markets in which Chijet or any of its subsidiaries competes, including with respect to its competitive landscape, technology evolution or regulatory changes, (viii) changes in domestic and global general economic conditions; (ix) the risk that Chijet is not able to recognize revenue for its products or secure additional contracts that generate revenue; (x) the risk that Chijet may not be able to execute its growth strategies; (xi) expectations, assessments or predictions about any implied enterprise value or pro forma ownership, future financial condition or performance of Chijet and/or any of its subsidiaries, or the combined company after the consummation of the Business Combination, and the expected financial impacts of the Business Combination, (xii) risks related to the ongoing COVID-19 pandemic and response; (xiii) risk that Pubco or Chijet may not be able to develop and maintain effective internal controls; (xiv) costs related to the Business Combination and the failure to realize anticipated benefits of the Business Combination or to realize estimated pro forma results and underlying assumptions, including with respect to estimated stockholder redemptions; and (xv) risks related to competition in the markets in which Chijet or any of its subsidiaries intends to compete; (xvi) risks related to the early stage of Chijet’s business; (xvii) the failure to satisfy the conditions to the consummation of the Business Combination, including the completion of the Company’s satisfactory due diligence review and the approval of the Business Combination Agreement by the stockholders of the Company; (xviii) the occurrence of any event, change or other circumstance that could give rise to the termination of the Business Combination Agreement; (xix) the outcome of any legal proceedings that may be instituted against any of the parties to the Business Combination Agreement, or any of their subsidiaries, following the announcement of the entry into the Business Combination Agreement and proposed Business Combination; (xx) the ability of the parties to recognize the benefits of the Business Combination Agreement and the Business Combination; (xxi) the lack of useful financial information for an accurate estimate of future capital expenditures and future revenue; (xxii) statements regarding the industry and market size of Chijet, Baoya or FAW Jilin; (xxiii) financial condition and performance of Chijet, any of its subsidiaries or Pubco, including the anticipated benefits, the implied enterprise value, the expected financial impacts of the Business Combination, potential level of redemptions of the Company’s public shareholders, the financial condition, liquidity, results of operations, the products, the expected future performance and market opportunities of Chijet and Pubco; and (xix) and those factors discussed in the Company’s and Pubco’s filings with the SEC and that that will be contained in the registration statement on Registration Statement relating to the Business Combination. You should carefully consider the foregoing factors and the other risks and uncertainties that will be described in the “Risk Factors” section of the registration statement and other documents to be filed by the Company, including its Form 10-K, or Pubco from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. None of Pubco, Chijet or the Company gives any assurance that Pubco, Chijet or the Company will achieve its expectations. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and while Pubco, Chijet and the Company may elect to update these forward-looking statements at some point in the future, they assume no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, subject to applicable law.
| 10 |
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are filed as part of this report.
| Exhibit No. | Description | |
| 2.1* | Business Combination Agreement dated July 12, 2022, among Deep Medicine Acquisition Corp., Chijet Inc., Chijet Motor Company, Inc., Chijet Motor (USA) Company, Inc. and the Sellers named therein | |
| 10.1 | Support Agreement dated July 12, 2022, among Deep Medicine Acquisition Corp., Bright Vision Sponsor LLC, Chijet Inc. and Chijet Motor Company, Inc. | |
| 10.2 | Form of Lock-Up Agreement | |
| 10.3 | Form of Amended and Restated Registration Rights Agreement | |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document) |
* Certain of the exhibits, appendices, annexes and/or 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, annexes, appendices and schedules to the Securities and Exchange Commission upon its request.
| 11 |
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.
| Date: July 18, 2022 | DEEP MEDICINE ACQUISITION CORP. | |
| By: | /s/ Humphrey P. Polanen | |
| Name: | Humphrey P. Polanen | |
| Title: | Chief Executive Officer | |
| 12 |
Exhibit 2.1
Execution Version
BUSINESS COMBINATION AGREEMENT
by and among
DEEP MEDICINE ACQUISITION CORP.,
as DMAC,
CHIJET MOTOR COMPANY, INC.,
as Pubco,
CHIJET MOTOR (USA) COMPANY, INC.,
as Merger Sub,
CHIJET INC.,
as the Company,
and
THE SHAREHOLDERS OF THE COMPANY NAMED HEREIN,
as the Sellers
Dated as of July 12, 2022
TABLE OF CONTENTS
| Page | |
| ARTICLE I. MERGER | 2 |
| 1.1. Merger | 2 |
| 1.2. Merger Effective Time | 2 |
| 1.3. Effect of the Merger | 2 |
| 1.4. Organizational Documents of Surviving Corporation | 2 |
| 1.5. Directors and Officers of the Surviving Corporation | 2 |
| 1.6. Effect of Merger on Issued Securities of DMAC | 3 |
| 1.7. Effect of Merger on Merger Sub and Pubco Capital Shares | 4 |
| 1.8. Surrender of DMAC Certificates | 4 |
| 1.9. Lost, Stolen or Destroyed DMAC Certificates | 4 |
| 1.10. Tax Consequences | 4 |
| 1.11. Taking of Necessary Action; Further Action | 4 |
| Article II. SHARE EXCHANGE | 5 |
| 2.1. Exchange of Company Shares | 5 |
| 2.2. Exchange Consideration | 5 |
| 2.3. Surrender of Purchased Shares and Disbursement of Exchange Consideration | 6 |
| 2.4. Seller Consent | 6 |
| 2.5. Termination of Certain Agreements | 6 |
| Article III. CLOSING | 7 |
| 3.1. Closing | 7 |
| Article IV. representations and warranties of DMAC | 7 |
| 4.1. Organization and Standing | 7 |
| 4.2. Authorization; Binding Agreement | 7 |
| 4.3. Governmental Approvals | 8 |
| 4.4. Non-Contravention | 8 |
| 4.5. Capitalization | 8 |
| 4.6. SEC Filings; DMAC Financials; Internal Controls | 9 |
| 4.7. Absence of Certain Changes | 11 |
| 4.8. Compliance with Laws | 11 |
| 4.9. Actions; Orders; Permits | 11 |
| 4.10. Taxes and Returns | 11 |
| 4.11. Employees and Employee Benefit Plans | 11 |
| 4.12. Properties | 12 |
| 4.13. Material Contracts | 12 |
| 4.14. Transactions with Affiliates | 12 |
| 4.15. Investment Company Act; JOBS Act | 12 |
| 4.16. Finders and Brokers | 12 |
| 4.17. Certain Business Practices | 13 |
| 4.18. Insurance | 13 |
| 4.19. Information Supplied | 13 |
| 4.20. Independent Investigation | 14 |
| 4.21. Trust Account | 14 |
| Article V. representations and warranties of pubco | 15 |
| 5.1. Incorporation and Standing | 15 |
| 5.2. Authorization; Binding Agreement | 15 |
| 5.3. Governmental Approvals | 15 |
| 5.4. Non-Contravention | 16 |
| i |
| 5.5. Capitalization | 16 |
| 5.6. Merger Shares and Exchange Shares; Pubco Warrants | 17 |
| 5.7. Pubco and Merger Sub Activities | 18 |
| 5.8. Pubco SEC Filings | 18 |
| 5.9. Absence of Certain Changes | 19 |
| 5.10. Compliance with Laws | 19 |
| 5.11. Actions; Orders; Permits | 19 |
| 5.12. Taxes and Returns | 19 |
| 5.13. Employees and Employee Benefit Plans | 20 |
| 5.14. Properties | 20 |
| 5.15. Material Contracts | 20 |
| 5.16. Transactions with Affiliates | 21 |
| 5.17. Investment Company Act; JOBS Act | 21 |
| 5.18. Certain Business Practices | 21 |
| 5.19. Insurance | 22 |
| 5.20. Finders and Brokers | 22 |
| 5.21. Investment Company Act | 22 |
| 5.22. Information Supplied | 22 |
| 5.23. Independent Investigation | 22 |
| Article VI. representations and warranties of THE COMPANY | 23 |
| 6.1. Incorporation and Standing | 23 |
| 6.2. Authorization; Binding Agreement | 23 |
| 6.3. Capitalization | 24 |
| 6.4. Subsidiaries | 24 |
| 6.5. Governmental Approvals | 25 |
| 6.6. Non-Contravention | 25 |
| 6.7. Financial Statements | 26 |
| 6.8. Absence of Certain Changes | 27 |
| 6.9. Compliance with Laws | 27 |
| 6.10. Company Permits | 27 |
| 6.11. Litigation | 27 |
| 6.12. Material Contracts | 27 |
| 6.13. Intellectual Property | 29 |
| 6.14. Taxes and Returns | 31 |
| 6.15. Real Property | 32 |
| 6.16. Personal Property | 32 |
| 6.17. Title to and Sufficiency of Assets | 32 |
| 6.18. Employee Matters | 32 |
| 6.19. Benefit Plans | 34 |
| 6.20. Environmental Matters | 34 |
| 6.21. Transactions with Related Persons | 35 |
| 6.22. Insurance | 36 |
| 6.23. Top Customers and Suppliers | 36 |
| 6.24. Certain Business Practices | 36 |
| 6.25. Investment Company Act | 37 |
| 6.26. Finders and Brokers | 37 |
| 6.27. Information Supplied | 37 |
| 6.28. Independent Investigation | 38 |
| ii |
| Article VII. representations and warranties of THE SELLERS | 38 |
| 7.1. Organization and Standing | 38 |
| 7.2. Authorization; Binding Agreement | 38 |
| 7.3. Ownership | 38 |
| 7.4. Governmental Approvals | 39 |
| 7.5. Non-Contravention | 39 |
| 7.6. No Litigation | 39 |
| 7.7. Investment Representations | 40 |
| 7.8. Finders and Brokers | 41 |
| 7.9. Information Supplied | 41 |
| 7.10. Independent Investigation | 41 |
| Article VIII. COVENANTS | 42 |
| 8.1. Access and Information | 42 |
| 8.2. Conduct of Business of the Company, Pubco, Merger Sub and the Sellers | 42 |
| 8.3. Conduct of Business of DMAC | 45 |
| 8.4. Annual and Interim Financial Statements | 47 |
| 8.5. DMAC Public Filings | 48 |
| 8.6. No Solicitation | 48 |
| 8.7. No Trading | 49 |
| 8.8. Notification of Certain Matters | 49 |
| 8.9. Efforts | 49 |
| 8.10. Further Assurances | 51 |
| 8.11. The Registration Statement | 51 |
| 8.12. Change of Recommendation | 53 |
| 8.13. Public Announcements | 53 |
| 8.14. Confidential Information | 54 |
| 8.15. Post-Closing Board of Directors and Executive Officers | 55 |
| 8.16. Indemnification of Directors and Officers; Tail Insurance | 56 |
| 8.17. Trust Account Proceeds | 56 |
| 8.18. PIPE Investment | 56 |
| Article IX. survival and indemnification | 57 |
| 9.1. No Survival | 57 |
| Article X. Closing conditions | 57 |
| 10.1. Conditions to Each Party’s Obligations | 57 |
| 10.2. Conditions to Obligations of the Company, Pubco, Merger Sub and the Sellers | 58 |
| 10.3. Conditions to Obligations of DMAC | 59 |
| 10.4. Frustration of Conditions | 61 |
| Article XI. TERMINATION AND EXPENSES | 61 |
| 11.1. Termination | 61 |
| 11.2. Extension; Costs | 63 |
| 11.3. Effect of Termination | 63 |
| 11.4. Fees and Expenses | 63 |
| Article XII. WAIVERs And releases | 64 |
| 12.1. Waiver of Claims Against Trust | 64 |
12.2. Release and Covenant Not to Sue |
65 |
| iii |
| Article XIII. MISCELLANEOUS | 66 |
| 13.1. Notices | 66 |
| 13.2. Binding Effect; Assignment | 68 |
| 13.3. Third Parties | 68 |
| 13.4. Governing Law; Jurisdiction | 69 |
| 13.5. WAIVER OF JURY TRIAL | 69 |
| 13.6. Specific Performance | 69 |
| 13.7. Severability | 69 |
| 13.8. Amendment | 70 |
| 13.9. Waiver | 70 |
| 13.10. Entire Agreement | 70 |
| 13.11. Interpretation | 70 |
| 13.12. Counterparts | 71 |
| 13.13. No Recourse | 71 |
| 13.14. Legal Representation | 71 |
| Article XIV DEFINITIONS | 72 |
| 14.1. Certain Definitions | 72 |
| 14.2. Section References | 81 |
INDEX OF ANNEXES AND EXHIBITS
| Annex | Description | |
| Annex I | List of Sellers |
| Exhibit | Description | |
| Exhibit A | Form of Lock-Up Agreement | |
| Exhibit B | Form of Amended and Restated Registration Rights Agreement | |
| Exhibit C | Form of Support Agreement |
| iv |
BUSINESS COMBINATION AGREEMENT
This Business Combination Agreement (this “Agreement”) is made and entered into as of July 12, 2022 (the “Effective Date”) by and among (i) Deep Medicine Acquisition Corp., a Delaware corporation (together with its successors, “DMAC”), (ii) Chijet Motor Company, Inc., a Cayman Islands exempted company and a wholly owned subsidiary of the Company (as defined below) (“Pubco”), (iii) Chijet Motor (USA) Company, Inc., a Delaware corporation and a wholly owned subsidiary of Pubco (“Merger Sub”), (iv) Chijet Inc., a Cayman Islands exempted company (the “Company”), and (v) each of the holders of the Company’s outstanding capital shares named on Annex I hereto (collectively, the “Sellers”). DMAC, Pubco, Merger Sub, the Company and the Sellers are sometimes referred to herein individually as a “Party” and, collectively, as the “Parties”.
RECITALS:
WHEREAS, the Company, indirectly through its subsidiaries, engages in the business of developing, manufacturing and selling electric vehicles;
WHEREAS, Pubco is a newly-incorporated Cayman Islands exempted company that is currently wholly owned by the Company and Merger Sub is a newly-incorporated Delaware corporation that is wholly owned by Pubco;
WHEREAS, the Parties desire and intend to effect a business combination transaction whereby (a) Pubco will acquire all of the issued and outstanding shares of the Company from the Sellers in exchange for ordinary shares of Pubco and the Company shall surrender for no consideration its shares in Pubco, such that the Company becomes a wholly owned subsidiary of Pubco and the Sellers become shareholders of Pubco (the “Share Exchange”); and immediately thereafter (b) Merger Sub will merge with and into DMAC, with DMAC continuing as the surviving entity, as a result of which, (i) DMAC shall become a wholly owned subsidiary of Pubco; and (ii) each issued and outstanding security of DMAC immediately prior to the Merger Effective Time (as defined below) shall no longer be outstanding and shall automatically be cancelled, in exchange for the right of the holder thereof to receive a substantially equivalent security of Pubco (the “Merger” and, together with the Share Exchange and the other Transactions and the Ancillary Documents (as defined below), the “Transactions”), all upon the terms and subject to the conditions set forth in this Agreement and in accordance with the provisions of applicable Law;
WHEREAS, the boards of directors of DMAC, Pubco, Merger Sub and the Company have each (a) determined that the Transactions are fair, advisable and in the best interests of their respective companies and shareholders, and (b) approved this Agreement and the Transactions, upon the terms and subject to the conditions set forth herein; and
WHEREAS, certain capitalized terms used herein are defined in Article XIV hereof.
NOW, THEREFORE, in consideration of the premises set forth above, which are incorporated in this Agreement as if fully set forth below, and the representations, warranties, covenants and agreements contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledges and agreed, and intending to be legally bound hereby, the Parties hereby agree as follows:
| 1 |
Article I
MERGER
1.1 Merger. At the Merger Effective Time, immediately following the consummation of the Share Exchange, and subject to and upon the terms and conditions of this Agreement, and in accordance with the applicable provisions of the DGCL, DMAC and Merger Sub shall consummate the Merger, pursuant to which Merger Sub shall be merged with and into DMAC with DMAC being the surviving entity, at which time the separate corporate existence of Merger Sub shall cease and DMAC shall continue as the surviving corporation. DMAC, as the surviving corporation after the Merger, is hereinafter sometimes referred to as the “Surviving Corporation” (provided, that references to DMAC for periods after the Merger Effective Time shall include the Surviving Corporation).
1.2 Merger Effective Time. DMAC and Merger Sub shall cause the Merger to be consummated by filing a Certificate of Merger (the “Certificate of Merger”) with the Secretary of State of the State of Delaware in accordance with the relevant provisions of the Delaware General Corporation Law (“DGCL”), for the merger of Merger Sub with and into DMAC (the time of such filings, or such later time as may be specified in the Certificate of Merger, being the “Merger Effective Time”). For the avoidance of doubt, the Merger Effective Time shall in all events be after the time at which the Share Exchange has been consummated in accordance with Article II.
1.3 Effect of the Merger. At the Merger Effective Time, the effect of the Merger shall be as provided in this Agreement, the Certificate of Merger and the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Merger Effective Time, all the property, rights, privileges, agreements, powers and franchises, debts, Liabilities, duties, immunities and obligations of Merger Sub shall become the property, rights, privileges, agreements, powers and franchises, debts, Liabilities, duties, immunities and obligations of the Surviving Corporation (including all rights and obligations with respect to the Trust Account), which shall include the assumption by the Surviving Corporation of any and all agreements, covenants, duties and obligations of Merger Sub as set forth in this Agreement to be performed after the Merger Effective Time, and all the property, rights, privileges, agreements, powers and franchises, debts, Liabilities, duties, immunities and obligations of DMAC (as the Surviving Corporation) shall continue unaffected by the Merger, and the Surviving Corporation shall continue its existence as a wholly owned Subsidiary of Pubco.
1.4 Organizational Documents of Surviving Corporation. At the Merger Effective Time, Certificate of Incorporation of DMAC, as amended and restated prior to the Merger Effective Time in accordance with this Section 1.4, and the Bylaws of DMAC, both as in effect immediately prior to the Merger Effective Time, shall be the Certificate of Incorporation and Bylaws of the Surviving Corporation. Promptly after the Effective Date, the Parties agree to negotiate in good faith (i) a mutually acceptable amended and restated Certificate of Incorporation and (ii) a mutually acceptable amended and restated Bylaws of DMAC, both in customary forms suitable for a wholly owned subsidiary of a company publicly listed in the United States. The amended and restated Certificate of Incorporation of DMAC shall be filed with the Secretary of State of the State of Delaware and shall be effective prior to the filing and the effectiveness of the Certificate of Merger.
1.5 Directors and Officers of the Surviving Corporation. At the Merger Effective Time, the board of directors and executive officers of the Surviving Corporation shall be such directors and officers of the Company or its Subsidiaries designated by the Company, each to hold office in accordance with the Certificate of Incorporation and Bylaws of the Surviving Corporation until their respective successors are duly elected or appointed and qualified.
| 2 |
1.6 Effect of Merger on Issued Securities of DMAC. At the Merger Effective Time, by virtue of the Merger and without any action on the part of any Party or the holders of securities of DMAC, Pubco or Merger Sub (other than the filing of documents required by the Secretary of State of the State of Delaware or as otherwise required pursuant to applicable Law):
(a) DMAC Common Stock. At the Merger Effective Time, every issued and outstanding share of DMAC Common Stock (other than those described in Section 1.6(e) below) shall be converted automatically into one Pubco Ordinary Share, following which, all shares of DMAC Common Stock shall cease to be outstanding and shall automatically be canceled and shall cease to exist. The holders of certificates previously evidencing shares of DMAC Common Stock outstanding immediately prior to the Merger Effective Time shall cease to have any rights with respect to such shares, except as provided herein or by Law. Each certificate previously evidencing shares of DMAC Common Stock shall be exchanged for a certificate (if requested) representing the same number of Pubco Ordinary Shares upon the surrender of such certificate in accordance with Section 1.7. Each certificate formerly representing shares of DMAC Common Stock (other those described in Section 1.6(e) below) shall thereafter represent only the right to receive the same number of Pubco Ordinary Shares.
(b) DMAC Preferred Stock. At the Merger Effective Time, every issued and outstanding share of DMAC Preferred Stock (other than those described in Section 1.6(e) below), if any, shall be converted automatically into one Pubco Preferred Share, following which, all shares of DMAC Preferred Stock shall cease to be outstanding and shall automatically be canceled and shall cease to exist. The holders of certificates previously evidencing shares of DMAC Preferred Stock outstanding immediately prior to the Merger Effective Time shall cease to have any rights with respect to such shares, except as provided herein or by Law. Each certificate previously evidencing shares of DMAC Preferred Stock shall be exchanged for a certificate representing the same number of Pubco Preferred Shares upon the surrender of such certificate in accordance with Section 1.7. Each certificate formerly representing shares of DMAC Preferred Stock (other those described in Section 1.6(e) below) shall thereafter represent only the right to receive the same number of Pubco Preferred Shares.
(c) DMAC Warrants. At the Merger Effective Time, each outstanding DMAC Warrant shall be converted into one Pubco Warrant. At the Merger Effective Time, the DMAC Warrants shall cease to be outstanding and shall automatically be canceled and retired and shall cease to exist. Each of the Pubco Warrants shall have, and be subject to, substantially the same terms and conditions set forth in the DMAC Warrants, except that they shall represent the right to acquire Pubco Ordinary Shares in lieu of shares of DMAC Common Stock. At or prior to the Merger Effective Time, Pubco shall take all corporate actions necessary to reserve for future issuance, and shall maintain such reservation for so long as any of the Pubco Warrants remain outstanding, a sufficient number of Pubco Ordinary Shares for delivery upon the exercise of such Pubco Warrants.
(d) DMAC Rights. At the Merger Effective Time, each issued and outstanding DMAC Right shall be automatically converted into the number of Pubco Ordinary Shares that would have been received by the holder thereof if such DMAC Right had been converted upon the consummation of a Business Combination in accordance with DMAC’s Organizational Documents, the IPO Prospectus and the Rights Agreement into shares of DMAC Common Stock, but for such purposes treating it as if such Business Combination had occurred immediately prior to the Merger Effective Time and the shares of DMAC Common Stock issued upon conversion of the DMAC Rights had then automatically been converted into Pubco Ordinary Shares in accordance with Section 1.6(a) above. At the Merger Effective Time, the DMAC Rights shall cease to be outstanding and shall automatically be canceled and retired and shall cease to exist. The holders of certificates previously evidencing DMAC Rights outstanding immediately prior to the Merger Effective Time shall cease to have any rights with respect to such DMAC Rights, except as provided herein or by Law. Each certificate formerly representing DMAC Rights shall thereafter represent only the right to receive Pubco Ordinary Shares as set forth herein.
(e) Cancellation of Capital Stock Owned by DMAC. At the Merger Effective Time, if there are any shares of capital stock of DMAC that are owned by DMAC as treasury shares or by any director or indirect Subsidiary of DMAC, such shares shall be canceled and extinguished without any conversion thereof or payment therefor.
(f) Transfers of Ownership. If any certificate for securities of DMAC is to be issued in a name other than that in which the certificate surrendered in exchange therefor is registered, it will be a condition of the issuance thereof that the certificate so surrendered will be properly endorsed (or accompanied by an appropriate instrument of transfer) and otherwise in proper form for transfer and that the person requesting such exchange will have paid to DMAC or any agent designated by it any transfer or other Taxes required by reason of the issuance of a certificate for securities of DMAC in any name other than that of the registered holder of the certificate surrendered, or established to the satisfaction of DMAC or any agent designated by it that such tax has been paid or is not payable.
| 3 |
(g) No Liability. Notwithstanding anything to the contrary in this Section 1.6, none of the Surviving Corporation, Pubco or any other Party hereto shall be liable to any Person for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar law.
1.7 Effect of Merger on Merger Sub and Pubco Capital Shares. At the Merger Effective Time, by virtue of the Merger and without any action on the part of any Party or any equityholder of DMAC, Pubco or Merger Sub, (a) all of the shares of Merger Sub Common Stock issued and outstanding immediately prior to the Merger Effective Time shall be converted into an equal number of shares of common stock of the Surviving Corporation, with the same rights, powers and privileges as the shares so converted and shall constitute the only outstanding shares of capital stock of the Surviving Corporation; and (b) all of the shares of Pubco issued and outstanding immediately prior to the Merger Effective Time shall be canceled and extinguished without any conversion thereof or payment therefor.
1.8 Surrender of DMAC Certificates. All securities issued upon the surrender of DMAC Securities in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to such securities, provided that any restrictions on the sale and transfer of DMAC Securities shall also apply to the Pubco Securities so issued in exchange.
1.9 Lost, Stolen or Destroyed DMAC Certificates. In the event any certificates shall have been lost, stolen or destroyed, Pubco shall issue, in exchange for such lost, stolen or destroyed certificates, as the case may be, upon the making of an affidavit of that fact by the holder thereof, such securities, as may be required pursuant to Section 1.6; provided, however, that the Surviving Corporation may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificates to deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against the Surviving Corporation with respect to the certificates alleged to have been lost, stolen or destroyed.
1.10 Tax Consequences. The Parties hereby agree and acknowledge that, for U.S. federal income Tax purposes, the Merger and the Share Exchange, taken together, are intended to qualify as an exchange described in Section 351 of the Code. The Parties hereby agree to file all Tax and other informational returns on a basis consistent with such characterization unless otherwise required pursuant to a determination within the meaning of Section 1313(a) of the Code. Each of the Parties acknowledge and agree that each (i) has had the opportunity to obtain independent legal and Tax advice with respect to the Transactions, and (ii) is responsible for paying its own Taxes, including any adverse Tax consequences that may result if the Merger and the Share Exchange, taken together, does not qualify under Section 351 of the Code.
1.11 Taking of Necessary Action; Further Action. If, at any time after the Merger Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of DMAC and Merger Sub, the officers and directors of DMAC and Merger Sub are fully authorized in the name of their respective entities to take, and will take, all such lawful and necessary action, so long as such action is not inconsistent with this Agreement.
| 4 |
Article II
SHARE EXCHANGE
2.1 Exchange of Company Shares. At the Closing, immediately prior to the Merger Effective Time, and subject to and upon the terms and conditions of this Agreement, the Sellers shall sell, transfer and deliver to Pubco, and Pubco shall purchase, acquire and accept from the Sellers, all of the issued and outstanding Company Shares held by the Sellers (collectively, the “Purchased Shares”), free and clear of all Liens (other than potential restrictions on resale under applicable securities Laws). Simultaneously, the Company shall surrender for no consideration its share in Pubco. At or prior to the Closing, the Company will terminate any issued and outstanding Company Convertible Securities, without any consideration, payment or Liability therefor.
2.2 Exchange Consideration; Diligence; Adjustment.
(a) Subject to and upon the terms and conditions of this Agreement, in full payment for the Purchased Shares, Pubco shall issue and deliver to the Sellers an aggregate number of Pubco Ordinary Shares (the “Exchange Shares”) with an aggregate value (the “Exchange Consideration”) equal to the product of (i) 0.851717 and (ii) the Valuation (as defined below), with each Pubco Ordinary Share valued at the Redemption Price. Each Seller shall receive its pro rata share of the applicable Exchange Shares, based on the number of Purchased Shares owned by such Seller, divided by the total number of Purchased Shares owned by all Sellers (such percentage being each such Seller’s “Pro Rata Share”), with each Seller receiving its Pro Rata Share of the Exchange Shares.
(b) For the purposes hereof, “Valuation” means the valuation of the Target Companies as a group, including the value derived from minority interests in the Target Companies that are not directly or indirectly wholly owned by the Company. The Parties acknowledge and agree that as of the date of this Agreement, for purposes of this Agreement as of the Effective Date, the Valuation is Two Billion Five Hundred Fifty Million U.S. Dollars ($2,550,000,000), and therefore the calculation of the Exchange Consideration as set forth in Section 2.2(a) would result in Exchange Consideration of $2,171,878,350 ($2,550,000,000 multiplied by 0.851717), provided that such Valuation (and resulting Exchange Consideration) has been determined based on information provided to DMAC by the Company, and shall be subject to confirmation, adjustment and agreement as set forth herein.
(c) Following the Effective Date and during the period ending sixty (60) days thereafter (the “Due Diligence Period”), DMAC and its Representatives shall (i) undertake a due diligence review of the Company Entities and their operations; and (ii) complete DMAC’s own determination of the Valuation (the “Revised Valuation”). DMAC shall notify the Company of the Revised Valuation at or prior to the end of the Due Diligence Period.
(d) In the event that DMAC determines, in its reasonable discretion following consultation with its financial advisors, that the Revised Valuation is equal to or in excess of $2,295,000,000 (the “Minimum Valuation”), then the Valuation for purposes of the Closing shall be $2,550,000,000, and the Exchange Consideration shall be determined based on such Valuation, in each case subject to the other terms and conditions herein.
(e) In the event that DMAC determines, in its reasonable discretion following consultation with its financial advisors, that the Revised Valuation is less than the Minimum Valuation, then, for a period of five (5) days following the delivery of such notice (the “Negotiation Period”), the Parties will reasonably cooperate to reach agreement on a revised valuation for the Target Companies for purposes of Section 2.2(a) and, in connection therewith, on a revised amount of Exchange Consideration, with each Party having the right to agree or not agree on such revised valuation and revised Exchange Consideration in its sole discretion, and if the Parties do so agree prior to the expiration of the Negotiation Period, the Parties will execute an amendment to this Agreement to reflect such agreement, and if the Parties do not so agree or do not execute such amendment prior to the expiration of the Negotiation Period, then DMAC shall have the option to either (i) terminate this Agreement pursuant to the provisions of this Section 2.2(e) and Section 11.1(h) or (ii) proceed to the Closing (subject to the other terms and conditions herein) based on the Valuation being the Minimum Valuation and with the resulting Exchange Consideration being determined based on the Minimum Valuation. DMAC shall notify the Company of its election pursuant to the preceding sentence no later than two (2) Business Days following the expiration of the Negotiating Period.
| 5 |
(f) In the event that DMAC determines, as a result DMAC’s due diligence review of the Company Entities and their operations, that that there are any facts, circumstances or events related to the business operations, results of operations, Contracts, products, services or prospects of the Company Entities which has or have resulted in, or would reasonably be expected to result in, a material and adverse effect on the business operations or results of operations of the Company Entities prior to or following the Merger Effective Time, then DMAC may terminate this Agreement upon written notice by DMAC to the Company at any time during the Due Diligence Period, pursuant to the provisions of this Section 2.2(f) and Section 11.1(i). In the event that DMAC terminates this Agreement pursuant to the provisions of this Section 2.2(f) and Section 11.1(i), DMAC shall inform the Company of the reasons therefor, and provided further that, for the avoidance of doubt, such reasons for DMAC’s termination hereunder shall not require the approval or consent of any Person, and will be provided to the Company solely for the Company’s information.
2.3 Surrender of Purchased Shares and Disbursement of Exchange Consideration
(a) At the Closing, Pubco shall cause the Exchange Shares to be issued to each Seller in exchange for such Seller’s Pro Rata Share of the Exchange Shares in accordance with Section 2.2.
(b) At the Closing, each Seller will deliver to Pubco their Purchased Shares, including any certificates representing Company Shares (“Company Certificates”), along with applicable share power or transfer forms reasonably acceptable to Pubco and the Company will update its register of members accordingly.
(c) Notwithstanding anything to the contrary contained herein, no fraction of a Pubco Ordinary Share will be issued by Pubco by virtue of this Agreement or the transactions contemplated hereby, and each Person who would otherwise be entitled to a fraction of a Pubco Ordinary Share (after aggregating all fractional Pubco Ordinary Shares that would otherwise be received by such Person) shall instead have the number of Pubco Ordinary Shares issued to such Person rounded down in the aggregate to the nearest whole Pubco Ordinary Share.
2.4 Seller Consent Each Seller, as a shareholder or other security holder of the Company, hereby approves, authorizes and consents to the Company’s execution and delivery of this Agreement and the Ancillary Documents to which the Company is or is required to be a party or otherwise bound, the performance by the Company of its obligations hereunder and thereunder and the consummation by the Company of the transactions contemplated hereby and thereby. Each Seller acknowledges and agrees that the consents set forth herein are intended and shall constitute such consent of the Sellers as may be required (and shall, if applicable, operate as a written shareholder resolution of the Company) pursuant to the Company Organizational Documents, any other agreement in respect of the Company to which any Seller is a party or bound and all applicable Laws.
2.5 Termination of Certain Agreements. Without limiting the provisions of Section 12.2, The Company and the Sellers hereby agree that, effective at the Closing, (a) any shareholders, voting or similar agreement among the Company and any of the Sellers or among the Sellers with respect to the Company’s capital shares, and (b) any registration rights agreement between the Company and its shareholders, in each case of clauses (a) and (b), shall automatically, and without any further action by any of the Parties, terminate in full and become null and void and of no further force and effect. Further, each Seller and the Company hereby waive any obligations of the parties under the Company Organizational Documents or any agreement described in clause (a) above with respect to the Transactions and the Ancillary Documents, and any failure of the parties to comply with the terms thereof in connection with the Transactions and the Ancillary Documents.
| 6 |
Article III
CLOSING
3.1 Closing. Subject to the satisfaction or waiver (by the Party for whose benefit the applicable condition exists, in such Party’s sole discretion) of the conditions set forth in Article X, the consummation of the Transactions (the “Closing”) shall take place at the offices of Ellenoff Grossman & Schole LLP (“EGS”), 1345 Avenue of the Americas, New York, NY 10105, on the second (2nd) Business Day after all the Closing conditions to this Agreement have been satisfied or waived at 10:00 a.m. local time, or at such other date, time or place as DMAC and the Company may agree (the date and time at which the Closing is actually held being the “Closing Date”).
Article IV
REPRESENTATIONS AND WARRANTIES OF DMAC
Except as set forth in (i) the disclosure schedules delivered by DMAC to the Company, Pubco and the Sellers on the Effective Date (the “DMAC Disclosure Schedules”), the Section numbers of which are numbered to correspond to the Section numbers of this Agreement to which they refer, or (ii) the SEC Reports that are available on the SEC’s website through EDGAR on or after August 3, 2021 and at least two (2) Business Days prior to the Effective Date (excluding any risk factors, forward-looking statements or similar predictive statements), DMAC represents and warrants to the Company, Pubco and the Sellers, as of the Effective Date and as of the Closing (unless otherwise set forth below with respect to the representations and warranties which are given only as of a specific date), as follows:
4.1 Organization and Standing. DMAC is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Delaware. DMAC has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. DMAC is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, other than where the failure to be so qualified, licensed or in good standing would not reasonably be expected to result in a Material Adverse Effect on DMAC. DMAC has heretofore made available to the Company accurate and complete copies of its Organizational Documents, each as currently in effect. DMAC is not in violation of any provision of its Organizational Documents in any material respect.
4.2 Authorization; Binding Agreement. DMAC has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby, subject to obtaining the Required Stockholder Approval. The execution and delivery of this Agreement and each Ancillary Document to which it is a party and the consummation of the transactions contemplated hereby and thereby (a) have been duly and validly authorized by the board of directors of DMAC and (b) other than the Required Stockholder Approval, no other corporate proceedings, other than as set forth elsewhere in the Agreement, on the part of DMAC are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the transactions contemplated hereby and thereby. DMAC’s board of directors, at a duly called and held meeting, has unanimously (i) determined that this Agreement and the transactions contemplated hereby, including the Merger, are advisable, fair to and in the best interests of DMAC and DMAC’s stockholders in accordance with the DGCL, (ii) approved and adopted this Agreement, (iii) recommended that DMAC’s stockholders vote in favor of the approval of this Agreement, the Merger, and the other Stockholder Approval Matters in accordance with the DGCL (the “DMAC Recommendation”) and (iv) directed that this Agreement and the Stockholder Approval Matters be submitted to the DMAC stockholders for their approval, provided that, for the avoidance of doubt, each of the foregoing shall be subject to the provisions of Section 8.11(f). This Agreement has been, and each Ancillary Document to which DMAC is a party shall be when delivered, duly and validly executed and delivered by DMAC and, assuming the due authorization, execution and delivery of this Agreement and such Ancillary Documents by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the valid and binding obligation of DMAC, enforceable against DMAC in accordance with its terms, except to the extent that enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization and moratorium laws and other laws of general application affecting the enforcement of creditors’ rights generally and subject to general principles of equity (collectively, the “Enforceability Exceptions”).
| 7 |
4.3 Governmental Approvals. Except as otherwise described in Schedule 4.3, no Consent of or with any Governmental Authority, on the part of DMAC is required to be obtained or made in connection with the execution, delivery or performance by DMAC of this Agreement and each Ancillary Document to which it is a party or the consummation by DMAC of the transactions contemplated hereby and thereby, other than (a) pursuant to Antitrust Laws, (b) such filings as expressly contemplated by this Agreement, (c) any filings required with Nasdaq or the SEC with respect to the Transactions, (d) applicable requirements, if any, of the Securities Act, the Exchange Act, and/ or any state “blue sky” securities Laws, and the rules and regulations thereunder, and (e) where the failure to obtain or make such Consents or to make such filings or notifications, would not reasonably be expected to have a Material Adverse Effect on DMAC.
4.4 Non-Contravention. Except as otherwise described in Schedule 4.4, the execution and delivery by DMAC of this Agreement and each Ancillary Document to which it is a party, the consummation by DMAC of the transactions contemplated hereby and thereby, and compliance by DMAC with any of the provisions hereof and thereof, will not (a) conflict with or violate any provision of DMAC’s Organizational Documents, (b) subject to obtaining the Consents from Governmental Authorities referred to in Section 4.3 hereof, and the waiting periods referred to therein having expired, and any condition precedent to such Consent or waiver having been satisfied, to the Knowledge of DMAC, conflict with or violate any Law, Order or Consent applicable to DMAC or any of its properties or assets, or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by DMAC under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien (other than a Permitted Lien) upon any of the properties or assets of DMAC under, (viii) give rise to any obligation to obtain any third party Consent or provide any notice to any Person or (ix) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of, any DMAC Material Contract, except for any deviations from any of the foregoing clauses (a), (b) or (c) that would not reasonably be expected to have a Material Adverse Effect on DMAC.
4.5 Capitalization.
(a) DMAC is authorized to issue 111,000,000 shares, of which 110,000,000 shares are Common Stock, and 1,000,000 shares are Preferred Stock. The issued and outstanding DMAC Securities as of the Effective Date are set forth on Schedule 4.5(a). As of the Effective Date, there are no issued or outstanding shares of DMAC Preferred Stock. All outstanding shares of DMAC Common Stock are duly authorized, validly issued, fully paid and non-assessable and not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL, DMAC’s Organizational Documents or any Contract to which DMAC is a party. None of the outstanding DMAC Securities has been issued in violation of any applicable securities Laws. Prior to giving effect to the Transactions, DMAC does not have any Subsidiaries or own any equity interests in any other Person.
| 8 |
(b) Except as set forth in Schedule 4.5(a) or Schedule 4.5(b) there are no (i) outstanding options, warrants, puts, calls, convertible or exchangeable securities, “phantom” stock rights, stock appreciation rights, stock-based units, preemptive or similar rights, (ii) bonds, debentures, notes or other Indebtedness having general voting rights or that are convertible or exchangeable into securities having such rights or (iii) subscriptions or other rights, agreements, arrangements, Contracts or commitments of any character (other than this Agreement and the Ancillary Documents), (A) relating to the issued or unissued securities of DMAC or (B) obligating DMAC to issue, transfer, deliver or sell or cause to be issued, transferred, delivered, sold or repurchased any options or shares or securities convertible into or exchangeable for any capital shares, or (C) obligating DMAC to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment for such capital shares. Other than the Redemption or as expressly set forth in this Agreement, there are no outstanding obligations of DMAC to repurchase, redeem or otherwise acquire any shares of DMAC or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any Person. Except as set forth in Schedule 4.5(b), there are no shareholders’ agreements, voting trusts or other agreements or understandings to which DMAC is a party with respect to the voting of any shares of DMAC.
(c) All Indebtedness of DMAC as of the Effective Date is disclosed on Schedule 4.5(c). Other than as set forth on Schedule 4.5(c), no Indebtedness of DMAC contains any restriction upon: (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness by DMAC or (iii) the ability of DMAC to grant any Lien on its properties or assets.
(d) Since the date of formation of DMAC, and except as contemplated by this Agreement, DMAC has not declared or paid any distribution or dividend in respect of its shares and has not repurchased, redeemed or otherwise acquired any of its shares, and DMAC’s board of directors has not authorized any of the foregoing.
4.6 SEC Filings; DMAC Financials; Internal Controls .
(a) DMAC, since the IPO, has filed all forms, reports, schedules, statements, registration statements, prospectuses and other documents required to be filed by DMAC with the SEC under the Securities Act and/or the Exchange Act, together with any amendments, restatements or supplements thereto. Except to the extent available on the SEC’s web site through EDGAR, DMAC has delivered to the Company copies in the form filed with the SEC of all of the following: (i) DMAC’s annual reports on Form 10-K for each fiscal year of DMAC beginning with the first year DMAC was required to file such a form, (ii) DMAC’s quarterly reports on Form 10-Q for each fiscal quarter that DMAC filed such reports to disclose its quarterly financial results in each of the fiscal years of DMAC referred to in clause (i) above, (iii) all other forms, reports, registration statements (including DMAC’s Registration Statements on Form S-1, which was originally filed on September 13, 2021 and made effective on October 26, 2021), prospectuses and other documents (other than preliminary materials) filed by DMAC with the SEC since the beginning of the first fiscal year referred to in clause (i) above (the forms, reports, registration statements, prospectuses and other documents referred to in clauses (i), (ii) and (iii) above, whether or not available through EDGAR, are, collectively, the “SEC Reports”) and (iv) all certifications and statements required by (A) Rules 13a-14 or 15d-14 under the Exchange Act, and (B) 18 U.S.C. §1350 (Section 906 of SOX) with respect to any report referred to in clause (i) above (collectively, the “Public Certifications”). The SEC Reports (x) were prepared in all material respects in accordance with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder and (y) did not, as of their respective effective dates (in the case of SEC Reports that are registration statements filed pursuant to the requirements of the Securities Act) and at the time they were filed with the SEC (in the case of all other SEC Reports) 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. The Public Certifications are each true as of their respective dates of filing. As used in this Section 4.6, the term “file” shall be broadly construed to include any manner permitted by SEC rules and regulations in which a document or information is furnished, supplied or otherwise made available to the SEC.
| 9 |
(b) As of the Effective Date, (A) the DMAC Common Stock and the DMAC Rights are listed on Nasdaq, (B) DMAC has not received any written deficiency notice from Nasdaq relating to the continued listing requirements of such DMAC Securities, (C) there are no Actions pending or, to the Knowledge of DMAC, threatened against DMAC by the Financial Industry Regulatory Authority with respect to any intention by such entity to suspend, prohibit or terminate the quoting of such DMAC Securities on Nasdaq and (D) such DMAC Securities are in compliance with all of the applicable corporate governance rules of Nasdaq.
(c) The financial statements and notes of DMAC contained or incorporated by reference in the SEC Reports (the “DMAC Financials”), fairly present in all material respects the financial position and the results of operations, changes in shareholders’ equity, and cash flows of DMAC at the respective dates of and for the periods referred to in such financial statements, all in accordance with (i) GAAP methodologies applied on a consistent basis throughout the periods involved and (ii) Regulation S-X or Regulation S-K, as applicable (except as may be indicated in the notes thereto and for the omission of notes and audit adjustments in the case of unaudited quarterly financial statements to the extent permitted by Regulation S-X or Regulation S-K, as applicable), and (iii) audited in accordance with PCAOB standards.
(d) Except as and to the extent reflected or reserved against in the DMAC Financials, DMAC has not incurred any Liabilities or obligations of the type required to be reflected on a balance sheet in accordance with GAAP that is not adequately reflected or reserved on or provided for in the DMAC Financials, other than Liabilities of the type required to be reflected on a balance sheet in accordance with GAAP that have been incurred since DMAC’s formation in the ordinary course of business. DMAC does not maintain any “off-balance sheet arrangement” within the meaning of Item 303 of Regulation S-K of the Securities Act. As of the Effective Date, no financial statements other than those of DMAC are required by GAAP to be included in the financial statements of DMAC.
(e) Since the IPO, DMAC has not received from its independent auditors any written notification of any (i) “significant deficiency” in the internal controls over financial reporting of DMAC, (ii) “material weakness” in the internal controls over financial reporting of DMAC or (iii) fraud, whether or not material, that involves management or other employees of DMAC who have a significant role in the internal controls over financial reporting of DMAC.
(f) Except as not required in reliance on exemptions from various reporting requirements by virtue of DMAC’s status as an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, since the IPO, (i) DMAC 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 DMAC’s financial reporting and the preparation of DMAC’s financial statements for external purposes in accordance with GAAP and (ii) DMAC 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 DMAC is made known to DMAC’s principal executive officer and principal financial officer by others within DMAC, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared.
(g) DMAC has not taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.
| 10 |
4.7 Absence of Certain Changes. As of the Effective Date, except as set forth in Schedule 4.7, DMAC has, since its formation, (a) conducted no business other than its formation, the public offering of its securities (and the related private offerings), public reporting and its search for an initial Business Combination as described in the IPO Prospectus (including the investigation of the Target Companies and the negotiation and execution of this Agreement) and related activities and (b) not been subject to a Material Adverse Effect.
4.8 Compliance with Laws. DMAC is, and has since its formation been, in compliance with all Laws applicable to it and the conduct of its business except for such noncompliance which would not reasonably be expected to have a Material Adverse Effect on DMAC, and DMAC has not received written notice alleging any violation of applicable Law in any material respect by DMAC.
4.9 Actions; Orders; Permits. There is no pending or, to the Knowledge of DMAC, threatened Action to which DMAC is subject which would reasonably be expected to have a Material Adverse Effect on DMAC. There is no material Action that DMAC has pending against any other Person. DMAC is not subject to any material Orders of any Governmental Authority, nor, to the Knowledge of DMAC, are any such Orders pending. DMAC holds all material Permits necessary to lawfully conduct its business as presently conducted, and to own, lease and operate its assets and properties, all of which are in full force and effect, except where the failure to hold such Consent or for such Consent to be in full force and effect would not reasonably be expected to have a Material Adverse Effect on DMAC.
4.10 Taxes and Returns.
(a) DMAC has or will have timely filed, or caused to be timely filed, all material Tax Returns required to be filed by it, which Tax Returns are true, accurate, correct and complete in all material respects, and has paid, collected or withheld, or caused to be paid, collected or withheld, all material Taxes required to be paid, collected or withheld, other than such Taxes for which adequate reserves in the DMAC Financials have been established in accordance with GAAP. Schedule 4.10(a) sets forth each jurisdiction where DMAC files or is required to file a Tax Return. There are no claims, assessments. audits, examinations, to the Knowledge of DMAC, investigations or other Actions pending against DMAC in respect of any material Tax, and DMAC has not been notified in writing of any material proposed Tax claims or assessments against DMAC (other than, in each case, claims or assessments for which adequate reserves in the DMAC Financials have been established in accordance with GAAP). There are no Liens with respect to any Taxes upon any of DMAC’s assets, other than Permitted Liens. DMAC has no outstanding waivers or extensions of any applicable statute of limitations to assess any material amount of Taxes. There are no outstanding requests by DMAC for any extension of time within which to file any Tax Return or within which to pay any Taxes shown to be due on any Tax Return. DMAC is not, and never has been, a member of any consolidated, combined, unitary or affiliated group of corporations for any Tax purposes.
(b) Since the date of its formation, DMAC has not (i) changed any Tax accounting methods, policies or procedures except as required by a change in Law, (ii) made, revoked, or amended any material Tax election, (iii) filed any amended Tax Returns or claim for refund or (iv) entered into any closing agreement affecting or otherwise settled or compromised any material Tax Liability or refund.
4.11 Employees and Employee Benefit Plans. Except as set forth on Schedule 4.11, DMAC does not (a) have any paid employees or (b) maintain, sponsor, contribute to or otherwise have any Liability under, any Benefit Plans. Except as set forth on Schedule 4.11, neither the execution and delivery of this Agreement or the Ancillary Documents nor the consummation of the Transactions and the Ancillary Documents will (i) result in any payment or benefit (including severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due to any director, officer or employee of DMAC; or (b) result in the acceleration of the time of payment or vesting of any such payment or benefit.
| 11 |
4.12 Properties. DMAC does not own, license or otherwise have any right, title or interest in any material Intellectual Property. DMAC does not own or lease any material real property or Personal Property.
4.13 Material Contracts.
(a) Except as set forth on Schedule 4.13(a) or as disclosed in the SEC Reports, other than this Agreement and the Ancillary Documents, there are no Contracts to which DMAC is a party or by which any of its properties or assets may be bound, subject or affected, which (i) creates or imposes a Liability greater than $100,000, (ii) may not be cancelled by DMAC on less than sixty (60) days’ prior notice without payment of a material penalty or termination fee or (iii) prohibits, prevents, restricts or impairs in any material respect any business practice of DMAC or any of its current or future Affiliates, any acquisition of material property by DMAC or any of its current or future Affiliates, or restricts in any material respect the ability of DMAC or any of its current or future Affiliates from engaging in business as currently conducted by it or from competing with any other Person (each, a “DMAC Material Contract”). All DMAC Material Contracts have been made available to the Company other than those that are exhibits to the SEC Reports.
(b) With respect to each DMAC Material Contract: (i) the DMAC Material Contract (other than those set forth on Schedule 4.14) was entered into at arms’ length and in the ordinary course of business; (ii) is legal, valid, binding and enforceable in all material respects against DMAC and, to the Knowledge of DMAC, the other parties thereto, and is in full force and effect (except, in each case, as such enforcement may be limited by the Enforceability Exceptions); (ii) DMAC is not in breach or default in any material respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a breach or default in any material respect by DMAC, or permit termination or acceleration by the other party, under such DMAC Material Contract; and (iii) to the Knowledge of DMAC, no other party to any DMAC Material Contract is in breach or default in any material respect and no event has occurred that with the passage of time or giving of notice or both would constitute such a breach or default by such other party, or permit termination or acceleration by DMAC under any DMAC Material Contract.
4.14 Transactions with Affiliates. Schedule 4.14 sets forth a true, correct and complete list of the Contracts and arrangements that are in existence as of the Effective Date under which there are any existing or future Liabilities or obligations between DMAC, on the one hand, and any (a) present or former director, officer, employee, manager, direct equityholder or Affiliate of DMAC, or any immediate family member of any of the foregoing, or (b) record or beneficial owner of more than five percent (5%) of DMAC’s outstanding capital stock as of the Effective Date, on the other hand.
4.15 Investment Company Act; JOBS Act. DMAC is not an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of a person subject to registration and regulation as an “investment company”, in each case within the meaning of the Investment Company Act. DMAC constitutes an “emerging growth company” within the meaning of the JOBS Act.
4.16 Finders and Brokers. Except as set forth on Schedule 4.16, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from DMAC, Pubco, the Target Companies, the Sellers or any of their respective Affiliates in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of DMAC. If applicable, Schedule 4.16 sets forth, as of the Effective Date, the amounts of any such fees or commissions that are due or would, upon the Closing, be due.
| 12 |
4.17 Certain Business Practices.
(a) Neither DMAC, nor, to the Knowledge of DMAC, any of its Representatives acting on its behalf, has (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees, to foreign or domestic political parties or campaigns or violated any provision of the U.S. Foreign Corrupt Practices Act of 1977 or any other local or foreign anti-corruption or bribery Law, (iii) made any other unlawful payment or (iv) since the formation of DMAC, directly or indirectly, given or agreed to give any unlawful gift or similar benefit in any material amount to any customer, supplier, governmental employee or other Person who is or may be in a position to help or hinder DMAC or assist it in connection with any actual or proposed transaction.
(b) The operations of DMAC are and have been conducted at all times in material compliance with money laundering statutes in all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority, and no Action involving DMAC with respect to the any of the foregoing is pending or, to the Knowledge of DMAC, threatened.
(c) None of DMAC or any of its directors or officers, or, to the Knowledge of DMAC, any other Representative acting on behalf of DMAC is currently (i) identified on the specially designated nationals or other blocked person list or otherwise currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”), the U.S. Department of State, or other applicable Governmental Authority; (ii) organized, resident, or located in, or a national of a comprehensively sanctioned country (currently, Cuba, Iran, North Korea, and the Crimea region of Ukraine); or (iii) in the aggregate, fifty (50) percent or greater owned, directly or indirectly, or otherwise controlled, by a person identified in (i) or (ii); and DMAC has not, directly or indirectly, used any funds, or loaned, contributed or otherwise made available such funds to any Subsidiary, joint venture partner or other Person, in connection with any sales or operations in any other country sanctioned by OFAC or for the purpose of financing the activities of any Person currently subject to, or otherwise in violation of, any U.S. sanctions administered by OFAC or the U.S. Department of State in the last five (5) fiscal years.
4.18 Insurance. Schedule 4.18 lists all insurance policies (by policy number, insurer, coverage period, coverage amount, annual premium and type of policy) held by DMAC relating to DMAC or its business, properties, assets, directors (as related to DMAC), officers (as related to DMAC) and employees (as related to DMAC), copies of which have been provided to Pubco. All premiums due and payable under all such insurance policies have been timely paid and DMAC is otherwise in material compliance with the terms of such insurance policies. All such insurance policies are in full force and effect, and to the Knowledge of DMAC, there is no threatened termination of, or material premium increase with respect to, any of such insurance policies. There have been no insurance claims made by DMAC. DMAC has reported to its insurers all claims and pending circumstances that would reasonably be expected to result in a claim, except where such failure to report such a claim would not be reasonably be likely to result in a Material Adverse Effect on DMAC.
4.19 Information Supplied. None of the information supplied by DMAC expressly for inclusion or incorporation by reference: (a) in any current report on Form 8-K, and any exhibits thereto or any other report, form, registration or other filing made with any Governmental Authority (including the SEC) with respect to the Transactions or any Ancillary Documents; (b) in the Registration Statement; or (c) in the mailings or other distributions to DMAC’s or Pubco’s shareholders and/or prospective investors with respect to the consummation of the Transactions or in any amendment to any of documents identified in (a) through (c), will, when supplied by DMCA or when such filing is made, if made by DMAC, 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. None of the information supplied or to be supplied by DMAC expressly for inclusion or incorporation by reference in any of the Signing Press Release, the Signing Filing, the Closing Filing and the Closing Press Release will, when supplied by DMCA or when such filing is made, if made by DMAC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, DMAC makes no representation, warranty or covenant with respect to any information supplied by or on behalf of Pubco, the Target Companies, the Sellers or any of their respective Affiliates.
| 13 |
4.20 Independent Investigation. Effective as of the completion of DMAC’s due diligence review of the Target Companies as referenced in Section 2.2, DMAC has conducted its own independent investigation, review and analysis of the business, results of operations, condition (financial or otherwise) or assets of the Target Companies, Pubco and Merger Sub and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of the Target Companies, Pubco and Merger Sub for such purpose. DMAC acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, it has relied solely upon its own investigation, including the investigation to be undertaken following the Effective Date as referenced in Section 2.2, and the express representations and warranties of the Company, the Sellers, Pubco and Merger Sub set forth in this Agreement (including the related portions of the Company Disclosure Schedules) and in any certificate delivered to DMAC pursuant hereto, and the information provided by or on behalf of the Company, the Sellers, Pubco or Merger Sub for the Registration Statement; and (b) none of the Company, the Sellers, Pubco, Merger Sub or their respective Representatives have made any representation or warranty as to the Target Companies, the Sellers, Pubco or Merger Sub or this Agreement, except as expressly set forth in this Agreement (including the related portions of the Company Disclosure Schedules) or in any certificate delivered to DMAC pursuant hereto.
4.21 Trust Account. As of the Effective Date, DMAC has an amount of assets in the Trust Account equal to approximately One Hundred Twenty-Seven Million Seven Hundred Sixty-Seven Thousand Dollars ($127,767,000). 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 the Trust Agreement. The Trust Agreement is in full force and effect and is a legal, valid and binding obligation of DMAC and the Trustee, enforceable in accordance with its terms, except as such enforcement may be limited by the Enforceability Exceptions. As of the Effective Date the Trust Agreement has not been terminated, repudiated, rescinded, amended, supplemented or modified, in any respect, and no such termination, repudiation, rescission, amendment, supplement or modification is contemplated. As of the Effective Date there are no separate Contracts, side letters or other arrangements or understandings (whether written or unwritten, express or implied) that would cause the description of the Trust Agreement in the SEC Reports to be inaccurate in any material respect or, to the Knowledge of DMAC, that would entitle any Person (other than (i) in respect of deferred underwriting commissions set forth in Schedule 4.21 or Taxes, (ii) the holders of DMAC Securities prior to the Merger Effective Time who shall have elected to redeem their DMAC Common Stock pursuant to DMAC’s Organizational Documents or in connection with an amendment thereof to extend DMAC’s deadline to consummate a Business Combination or (iii) if DMAC fails to complete a Business Combination within the allotted time period and liquidates the Trust Account, subject to the terms of the Trust Agreement, DMAC in limited amounts to permit DMAC to pay the expenses of the Trust Account’s liquidation and dissolution, and then DMAC’s public shareholders) to any portion of the funds in the Trust Account. Prior to the Closing, none of the funds held in the Trust Account have been released, except to pay Taxes from any interest income earned in the Trust Account, and to redeem DMAC Common Stock pursuant to DMAC’s Organizational Documents, or in connection with an amendment thereof to extend DMAC’s deadline to consummate a Business Combination. As of the Effective Date, there are no Actions pending or, to the Knowledge of DMAC, threatened with respect to the Trust Account.
| 14 |
Article V
REPRESENTATIONS AND WARRANTIES OF PUBCO
Except as set forth in the disclosure schedules delivered by Pubco to DMAC and the Company on the Effective Date (the “Pubco Disclosure Schedules”), each Section of which qualifies the correspondingly numbered representation or warranty if specified therein and such other representation or warranty where its relevance as an exception to (or disclosure for purposes of) such other representation or warranty is reasonably apparent on the face of such disclosure, Pubco hereby represents and warrants to DMAC, the Company and the Sellers, as of the Effective Date and as of the Closing (unless otherwise set forth below with respect to the representations and warranties which are given only as of a specific date), as follows:
5.1 Incorporation and Standing. Pubco is an exempted company duly incorporated, validly existing and in good standing under the Laws of the Cayman Islands, and Merger Sub is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Delaware. Each of Pubco and Merger Sub has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Each of Pubco and Merger Sub is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. Pubco has heretofore made available to DMAC and the Company accurate and complete copies of the Organizational Documents of Pubco and Merger Sub, each as currently in effect. Neither Pubco nor Merger Sub is in violation of any provision of its Organizational Documents in any material respect.
5.2 Authorization; Binding Agreement. Each of Pubco and Merger Sub has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is a party, to perform its obligations hereunder and, subject to filing the Amended Pubco Charter, to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each Ancillary Document to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the board of directors and shareholders of Pubco and Merger Sub and no other corporate proceedings, other than as expressly set forth elsewhere in the Agreement (including the filing of the Amended Pubco Charter), on the part of Pubco or Merger Sub are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each Ancillary Document to which Pubco or Merger Sub is a party has been or shall be when delivered, duly and validly executed and delivered by such Party and, assuming the due authorization, execution and delivery of this Agreement and such Ancillary Documents by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, subject to the Enforceability Exceptions.
5.3 Governmental Approvals. No Consent of or with any Governmental Authority, on the part of Pubco or Merger Sub is required to be obtained or made in connection with the execution, delivery or performance by such Party of this Agreement and each Ancillary Document to which it is a party or the consummation by such Party of the transactions contemplated hereby and thereby, other than (a) pursuant to Antitrust Laws, (b) such filings as are expressly contemplated by this Agreement, including the Amended Pubco Charter, (c) any filings required with Nasdaq or the SEC with respect to the Transactions, (d) applicable requirements, if any, of the Securities Act, the Exchange Act, and/ or any state “blue sky” securities Laws, and the rules and regulations thereunder, and (e) where the failure to obtain or make such Consents or to make such filings or notifications, would not reasonably be expected to have a Material Adverse Effect on Pubco.
| 15 |
5.4 Non-Contravention. The execution and delivery by Pubco and Merger Sub of this Agreement and each Ancillary Document to which it is a party, the consummation by such Party of the transactions contemplated hereby and thereby, and compliance by such Party with any of the provisions hereof and thereof, will not (a) subject to the filing of the Amended Pubco Charter, conflict with or violate any provision of such Party’s Organizational Documents, (b) subject to obtaining the Consents from Governmental Authorities referred to in Section 5.3 hereof, and the waiting periods referred to therein having expired, and any condition precedent to such Consent or waiver having been satisfied, conflict with or violate any Law, Order or Consent applicable to such Party or any of its properties or assets, or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by such Party under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien (other than a Permitted Lien) upon any of the properties or assets of such Party under, (viii) give rise to any obligation to obtain any third party Consent or provide any notice to any Person or (ix) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of, any material Contract of such Party, except for any deviations from any of the foregoing clauses (a), (b) or (c) that would not reasonably be expected to have a Material Adverse Effect on Pubco.
5.5 Capitalization.
(a) As of the Effective Date, (i) the share capital of Pubco is $50,000 divided into 500,000,000 ordinary shares, par value $0.0001 per share, of which one (1) Pubco Ordinary Share is issued and outstanding, which is owned by the Company, and (ii) Merger Sub is authorized to issue 1,000 shares of Merger Sub Common Stock, of which 1,000 shares are issued and outstanding, and all of which are owned by Pubco.
(b) As of immediately prior to the Closing Date and the consummation of the Merger and the Share Exchange, and following the filing of the Amended Pubco Charter, (i) the authorized share capital of Pubco will be $50,000 divided into 500,000,000 ordinary shares, par value $0.0001 per share, of which one (1) Pubco Ordinary Share will be issued and outstanding, which will be owned by the Company, and (ii) Merger Sub will be authorized to issue 1,000 shares of Merger Sub Common Stock, of which 1,000 shares will be issued and outstanding, and all of which will be owned by Pubco.
(c) Prior to giving effect to the Transactions, other than Merger Sub, Pubco does not have any Subsidiaries or own any equity interests in any other Person. As of immediately prior to the Closing, Pubco qualifies as a foreign private issuer pursuant to Rule 3b-4 of the Exchange Act.
(d) All outstanding Pubco Ordinary Shares as of the Effective Date are, and as of the Closing Date all of the Pubco Ordinary Shares issued in connection with the consummation of the Transactions will be, duly authorized, validly issued, fully paid and non-assessable and not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of applicable Law, the Organizational Documents of Pubco or Merger Sub or any Contract to which Pubco or Merger Sub is a party. None of the outstanding securities of Pubco or Merger Sub have been issued in violation of any applicable securities Laws. Prior to giving effect to the Transactions, Merger Sub does not have any Subsidiaries and Pubco does not have any Subsidiaries other than Merger Sub, and, other than as set forth herein, neither Pubco nor Merger Sub own any equity interests in any other Person.
| 16 |
(e) There are no (i) outstanding options, warrants, puts, calls, convertible or exchangeable securities, “phantom” stock rights, stock appreciation rights, stock-based units, preemptive or similar rights, (ii) bonds, debentures, notes or other Indebtedness having general voting rights or that are convertible or exchangeable into securities having such rights or (iii) subscriptions or other rights, agreements, arrangements, Contracts or commitments of any character (other than this Agreement and the Ancillary Documents), (A) relating to the issued or unissued securities of Pubco or Merger Sub or (B) obligating Pubco or Merger Sub to issue, transfer, deliver or sell or cause to be issued, transferred, delivered, sold or repurchased any options or shares or securities convertible into or exchangeable for any capital shares, or (C) obligating Pubco or Merger Sub to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment for such capital shares. There are no outstanding obligations of Pubco or Merger Sub to repurchase, redeem or otherwise acquire any shares of Pubco or Merger Sub or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any Person. There are no shareholders’ agreements, voting trusts or other agreements or understandings to which Pubco or Merger Sub is a party with respect to the voting of any shares of Pubco or Merger Sub.
(f) All Indebtedness of Pubco and Merger Sub as of the Effective Date is disclosed on Schedule 5.5(f). Other than as set forth on Schedule 5.5(f), no Indebtedness of DMAC contains any restriction upon: (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness by Pubco or Merger Sub or (iii) the ability of Pubco or Merger Sub to grant any Lien on its properties or assets.
(g) Since the date of formation of Pubco and Merger Sub, and except as contemplated by this Agreement, neither Pubco nor Merger Sub has declared or paid any distribution or dividend in respect of its shares and has not repurchased, redeemed or otherwise acquired any of its shares, and neither Pubco’s or Merger Sub’s respective board of directors has not authorized any of the foregoing.
5.6 Merger Shares and Exchange Shares; Pubco Warrants.
(a) All Merger Shares to be issued and delivered in accordance with Article I, and the shares of Pubco Ordinary Shares to be issued on any exercise of the Pubco Warrants (collectively, the “Merger Securities”) shall be, upon issuance and delivery of such Merger Securities, duly authorized and validly issued and fully paid and non-assessable, free and clear of all Liens, and (ii) upon issuance and delivery of such Merger Securities, each holder thereof shall have good and valid title thereto, in each case of clauses (i) and (ii), other than restrictions arising from applicable securities Laws, the provisions of this Agreement and any Liens incurred by the holder thereof, and (iii) the issuance and sale of such Merger Securities pursuant hereto will not be subject to or give rise to any preemptive rights or rights of first refusal.
(b) Upon their issuance, the Pubco Warrants shall be duly authorized and validly issued and shall constitute the valid and binding obligation of Pubco to issue the Pubco Ordinary Shares upon exercise, enforceable against Pubco in accordance with their respective terms, subject to the Enforceability Exceptions. As of the Closing Date, Pubco shall have reserved out of its authorized and unissued share capital a number of Pubco Ordinary Shares to permit full exercise of the Pubco Warrants, and shall at all time retain in reserve out of its authorized and unissued share capital a number of Pubco Ordinary Shares to permit full exercise of any remaining unexercised Pubco Warrants for as long as such Pubco Warrants remain exercisable.
(c) All Exchange Shares to be issued and delivered in accordance with Article II to the Sellers shall be, upon issuance and delivery of such Exchange Shares, duly authorized and validly issued and fully paid and non-assessable, free and clear of all Liens, and (ii) upon issuance and delivery of such Exchange Shares each Seller shall have good and valid title to its portion of such Exchange Shares, in each case of clauses (i) and (ii), other than restrictions arising from applicable securities Laws, the Lock-Up Agreements, the provisions of this Agreement and any Liens incurred by the Sellers, and (iii) the issuance and sale of such Exchange Shares pursuant hereto will not be subject to or give rise to any preemptive rights or rights of first refusal.
| 17 |
5.7 Pubco and Merger Sub Activities. Since their formation, Pubco and Merger Sub have not engaged in any business activities other than as contemplated by this Agreement, do not own directly or indirectly any ownership, equity, profits or voting interest in any Person (other than Pubco’s 100% ownership of Merger Sub) and have no assets or Liabilities except those incurred in connection with this Agreement and the Ancillary Documents to which they are a party and the Transactions, or as set forth in the Disclosure Schedules, and, other than their respective Organizational Documents, this Agreement and the Ancillary Documents to which they are a party, Pubco and Merger Sub are not party to or bound by any Contract.
5.8 Pubco SEC Filings. The representations and warranties in this Section 5.8 shall be deemed given by Pubco on and as of the Closing Date.
(a) Pubco has filed all forms, reports, schedules, statements, registration statements, prospectuses and other documents required to be filed by Pubco with the SEC under the Securities Act and/or the Exchange Act, together with any amendments, restatements or supplements thereto, all of which forms, reports, schedules, statements, registration statements, prospectuses and other documents (x) were prepared in all material respects in accordance with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder and (y) did not, as of their respective effective dates (in the case of registration statements filed pursuant to the requirements of the Securities Act) and at the time they were filed with the SEC (in the case of all other filings Reports) 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. The Public Certifications are each true as of their respective dates of filing. As used in this Section 5.8, the term “file” shall be broadly construed to include any manner permitted by SEC rules and regulations in which a document or information is furnished, supplied or otherwise made available to the SEC.
(b) As of the Closing Date (A) the Pubco Ordinary Shares are listed on Nasdaq; (ii) Pubco has not received any written deficiency notice from Nasdaq relating to the continued listing requirements of such Pubco Ordinary Shares, (C) there are no Actions pending or, to the Knowledge of Pubco, threatened against Pubco by the Financial Industry Regulatory Authority with respect to any intention by such entity to suspend, prohibit or terminate the quoting of such Pubco Ordinary Shares on Nasdaq and (D) such Pubco Ordinary Shares are in compliance with all of the applicable corporate governance rules of Nasdaq.
(c) The financial statements and notes of Pubco contained or incorporated by reference in the filings and reports referenced in Section 5.8(a) (the “Pubco Financials”), fairly present in all material respects the financial position and the results of operations, changes in shareholders’ equity, and cash flows of Pubco at the respective dates of and for the periods referred to in such financial statements, all in accordance with (i) GAAP methodologies applied on a consistent basis throughout the periods involved and (ii) Regulation S-X or Regulation S-K, as applicable (except as may be indicated in the notes thereto and for the omission of notes and audit adjustments in the case of unaudited quarterly financial statements to the extent permitted by Regulation S-X or Regulation S-K, as applicable), and (iii) audited in accordance with PCAOB standards.
(d) Except as and to the extent reflected or reserved against in the Pubco Financials, Pubco has not incurred any Liabilities or obligations of the type required to be reflected on a balance sheet in accordance with GAAP that is not adequately reflected or reserved on or provided for in the Pubco Financials, other than Liabilities of the type required to be reflected on a balance sheet in accordance with GAAP that have been incurred since Pubco’s formation in the ordinary course of business. Pubco does not maintain any “off-balance sheet arrangement” within the meaning of Item 303 of Regulation S-K of the Securities Act. As of the Closing Date, no financial statements other than those of Pubco are required by GAAP to be included in the financial statements of Pubco.
| 18 |
(e) Pubco has not received from its independent auditors any written notification of any (i) “significant deficiency” in the internal controls over financial reporting of Pubco, (ii) “material weakness” in the internal controls over financial reporting of Pubco or (iii) fraud, whether or not material, that involves management or other employees of Pubco who have a significant role in the internal controls over financial reporting of Pubco.
(f) Except as not required in reliance on exemptions from various reporting requirements by virtue of Pubco’s status as an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, (i) Pubco 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 Pubco’s financial reporting and the preparation of Pubco’s financial statements for external purposes in accordance with GAAP and (ii) Pubco 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 Pubco is made known to Pubco’s principal executive officer and principal financial officer by others within Pubco, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared.
(g) Pubco has not taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.
5.9 Absence of Certain Changes. As of the Effective Date, except as set forth in Schedule 5.9, Pubco and Merger Sub have, since their respective formation, conducted no business other than their respective formation and activities related to this Agreement and the Transactions.
5.10 Compliance with Laws. Each of Pubco and Merger Sub is, and has since its formation been, in compliance with all Laws applicable to it and the conduct of its business except for such noncompliance which would not reasonably be expected to have a Material Adverse Effect on Pubco or Merger Sub and neither Pubco and Merger Sub has received written notice alleging any violation of applicable Law in any material respect by Pubco and Merger Sub.
5.11 Actions; Orders; Permits. There is no pending or, to the Knowledge of Pubco, threatened Action to which Pubco or Merger Sub is subject which would reasonably be expected to have a Material Adverse Effect on either Pubco or Merger Sub. There is no material Action that Pubco or Merger Sub has pending against any other Person. Neither Pubco nor Merger Sub is subject to any material Orders of any Governmental Authority, nor, to the Knowledge of Pubco, are any such Orders pending. Each of Pubco and Merger Sub hold all material Permits necessary to lawfully conduct their respective business as presently conducted, and to own, lease and operate their respective assets and properties, all of which are in full force and effect, except where the failure to hold such Consent or for such Consent to be in full force and effect would not reasonably be expected to have a Material Adverse Effect on Pubco or a Material Adverse Effect on Merger Sub.
5.12 Taxes and Returns.
(a) Each of Pubco and Merger Sub has or will have timely filed, or caused to be timely filed, all material Tax Returns required to be filed by it, which Tax Returns are true, accurate, correct and complete in all material respects, and has paid, collected or withheld, or caused to be paid, collected or withheld, all material Taxes required to be paid, collected or withheld, other than such Taxes for which adequate reserves in the Pubco Financials have been established in accordance with GAAP. Schedule 5.12(a) sets forth each jurisdiction where Pubco or Merger Sub file or are required to file a Tax Return. There are no claims, assessments. audits, examinations, to the Knowledge of Pubco, investigations or other Actions pending against Pubco or Merger Sub in respect of any material Tax, and neither Pubco nor Merger Sub has been notified in writing of any material proposed Tax claims or assessments against Pubco or Merger Sub (other than, in each case, claims or assessments for which adequate reserves in the Pubco Financials have been established in accordance with GAAP). There are no Liens with respect to any Taxes upon any of Pubco or Merger Sub’s assets, other than Permitted Liens. Neither Pubco nor Merger Sub has any outstanding waivers or extensions of any applicable statute of limitations to assess any material amount of Taxes. There are no outstanding requests by Pubco or Merger Sub for any extension of time within which to file any Tax Return or within which to pay any Taxes shown to be due on any Tax Return. Other than each other, neither Pubco nor Merger Sub are not, and have never been, a member of any consolidated, combined, unitary or affiliated group of corporations for any Tax purposes.
| 19 |
(b) Since the date of their respective formations, each of Pubco and Merger Sub has not (i) changed any Tax accounting methods, policies or procedures except as required by a change in Law, (ii) made, revoked, or amended any material Tax election, (iii) filed any amended Tax Returns or claim for refund or (iv) entered into any closing agreement affecting or otherwise settled or compromised any material Tax Liability or refund.
5.13 Employees and Employee Benefit Plans. Except as set forth on Schedule 5.13, neither Pubco nor Merger Sub (a) has any paid employees or (b) maintains, sponsors, contributes to or otherwise has any Liability under, any Benefit Plans. Except as set forth on Schedule 5.13, neither the execution and delivery of this Agreement or the Ancillary Documents nor the consummation of the Transactions and the Ancillary Documents will (i) result in any payment or benefit (including severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due to any director, officer or employee of Pubco or Merger Sub; or (b) result in the acceleration of the time of payment or vesting of any such payment or benefit.
5.14 Properties. Neither Pubco nor Merger Sub owns, licenses or otherwise has any right, title or interest in any material Intellectual Property. Neither Pubco nor Merger Sub owns or leases any material real property or Personal Property.
5.15 Material Contracts.
(a) Except as set forth on Schedule 5.15(a), other than this Agreement and the Ancillary Documents, there are no Contracts to which Pubco or Merger Sub is a party or by which any of their respective properties or assets may be bound, subject or affected, which (i) creates or imposes a Liability greater than $100,000, (ii) may not be cancelled by Pubco or Merger Sub on less than sixty (60) days’ prior notice without payment of a material penalty or termination fee or (iii) prohibits, prevents, restricts or impairs in any material respect any business practice of Pubco or Merger Sub or any of their respective current or future Affiliates, any acquisition of material property by Pubco or Merger Sub or any of their respective current or future Affiliates, or restricts in any material respect the ability of Pubco or Merger Sub or any of their respective current or future Affiliates from engaging in business as currently conducted by it or from competing with any other Person (each, a “Pubco Material Contract”). All Pubco Material Contracts have been made available to the Company other than those that are exhibits to Pubco’s filings and reports referenced in Section 5.8(a).
(b) With respect to each Pubco Material Contract: (i) The Pubco Material Contract is legal, valid, binding and enforceable in all material respects against Pubco or Merger Sub, as applicable, and, to the Knowledge of Pubco, the other parties thereto, and is in full force and effect (except, in each case, as such enforcement may be limited by the Enforceability Exceptions); (ii) neither Pubco nor Merger Sub is in breach or default in any material respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a breach or default in any material respect by Pubco or Merger Sub, or permit termination or acceleration by the other party, under such Pubco Material Contract; and (iii) to the Knowledge of Pubco, no other party to any Pubco Material Contract is in breach or default in any material respect and no event has occurred that with the passage of time or giving of notice or both would constitute such a breach or default by such other party, or permit termination or acceleration by Pubco or Merger Sub under any Pubco Material Contract.
| 20 |
5.16 Transactions with Affiliates. Schedule 5.16 sets forth a true, correct and complete list of the Contracts and arrangements that are in existence as of the Effective Date under which there are any existing or future Liabilities or obligations between Pubco or Merger Sub, on the one hand, and any (a) present or former director, officer, employee, manager, direct equityholder or Affiliate of Pubco or Merger Sub, or any immediate family member of any of the foregoing, or (b) record or beneficial owner of more than five percent (5%) of Pubco’s or Merger Sub’s outstanding capital stock as of the Effective Date, on the other hand.
5.17 Investment Company Act; JOBS Act. Neither Pubco nor Merger Sub is an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of a person subject to registration and regulation as an “investment company”, in each case within the meaning of the Investment Company Act. Pubco constitutes an “emerging growth company” within the meaning of the JOBS Act.
5.18 Certain Business Practices.
(a) Neither Pubco and Merger Sub, nor, to the Knowledge of Pubco, any of their respective Representatives acting on either of their behalf, has (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees, to foreign or domestic political parties or campaigns or violated any provision of the U.S. Foreign Corrupt Practices Act of 1977 or any other local or foreign anti-corruption or bribery Law, (iii) made any other unlawful payment or (iv) since the formation of Pubco or Merger Sub, as applicable, directly or indirectly, given or agreed to give any unlawful gift or similar benefit in any material amount to any customer, supplier, governmental employee or other Person who is or may be in a position to help or hinder Pubco or Merger Sub or assist it in connection with any actual or proposed transaction.
(b) The operations of Pubco and Merger Sub are and have been conducted at all times in material compliance with money laundering statutes in all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority, and no Action involving Pubco or Merger Sub with respect to the any of the foregoing is pending or, to the Knowledge of Pubco, threatened.
(c) None of Pubco, Merger Sub or any of their respective directors or officers, or, to the Knowledge of Pubco, any other Representative acting on behalf of Pubco or Merger Sub is currently (i) identified on the specially designated nationals or other blocked person list or otherwise currently subject to any U.S. sanctions administered by OFAC, the U.S. Department of State, or other applicable Governmental Authority; (ii) organized, resident, or located in, or a national of a comprehensively sanctioned country (currently, Cuba, Iran, North Korea, and the Crimea region of Ukraine); or (iii) in the aggregate, fifty (50) percent or greater owned, directly or indirectly, or otherwise controlled, by a person identified in (i) or (ii); neither Pubco nor Merger Sub has, directly or indirectly, used any funds, or loaned, contributed or otherwise made available such funds to any Subsidiary, joint venture partner or other Person, in connection with any sales or operations in any other country sanctioned by OFAC or for the purpose of financing the activities of any Person currently subject to, or otherwise in violation of, any U.S. sanctions administered by OFAC or the U.S. Department of State in the last five (5) fiscal years.
| 21 |
5.19 Insurance. Schedule 5.19 lists all insurance policies (by policy number, insurer, coverage period, coverage amount, annual premium and type of policy) held by Pubco or Merger Sub relating to Pubco or Merger Sub or their respective business, properties, assets, directors (as related to Pubco or Merger Sub), officers (as related to Pubco or Merger Sub) and employees (as related to Pubco or Merger Sub), copies of which have been provided to DMAC. All premiums due and payable under all such insurance policies have been timely paid and Pubco and Merger Sub are otherwise in material compliance with the terms of such insurance policies. All such insurance policies are in full force and effect, and to the Knowledge of Pubco, there is no threatened termination of, or material premium increase with respect to, any of such insurance policies. There have been no insurance claims made by Pubco or Merger Sub. Pubco and Merger Sub have reported to their respective insurers all claims and pending circumstances that would reasonably be expected to result in a claim, except where such failure to report such a claim would not be reasonably be likely to result in a Material Adverse Effect on Pubco and or a Material Adverse Effect on Merger Sub.
5.20 Finders and Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from DMAC, Pubco, the Target Companies or any of their respective Affiliates in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of Pubco or Merger Sub.
5.21 Investment Company Act. Pubco is not an “investment company” or, a Person directly or indirectly controlled by or acting on behalf of a person subject to registration and regulation as an “investment company”, in each case within the meanings of the Investment Company Act.
5.22 Information Supplied. None of the information supplied or to be supplied by Pubco or Merger Sub expressly for inclusion or incorporation by reference: (a) in any Current Report on Form 8-K or 6-K, and any exhibits thereto or any other report, form, registration or other filing made with any Governmental Authority (including the SEC) with respect to the Transactions or any Ancillary Documents; (b) in the Registration Statement; or (c) in the mailings or other distributions to DMAC’s or Pubco’s shareholders and/or prospective investors with respect to the consummation of the Transactions or in any amendment to any of documents identified in (a) through (c), will, when filed, made available, mailed or distributed, as the case may be, 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. None of the information supplied or to be supplied by Pubco or Merger Sub expressly for inclusion or incorporation by reference in any of the Signing Press Release, the Signing Filing, the Closing Filing and the Closing Press Release will, when filed or distributed, as applicable, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, neither Pubco nor Merger Sub makes any representation, warranty or covenant with respect to any information supplied by or on behalf of DMAC, the Target Companies, the Sellers or any of their respective Affiliates.
5.23 Independent Investigation. Each of Pubco and Merger Sub has conducted its own independent investigation, review and analysis of the business, results of operations, condition (financial or otherwise) or assets of the Target Companies and DMAC and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of the Target Companies and DMAC for such purpose. Each of Pubco and Merger Sub acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, it has relied solely upon its own investigation and the express representations and warranties of the Company, the Sellers and DMAC set forth in this Agreement (including the related portions of the Company Disclosure Schedules and the DMAC Disclosure Schedules) and in any certificate delivered to Pubco or Merger Sub pursuant hereto, and the information provided by or on behalf of the Company, the Sellers or DMAC for the Registration Statement; and (b) none of the Company, the Sellers, DMAC or their respective Representatives have made any representation or warranty as to the Target Companies, the Sellers, DMAC or this Agreement, except as expressly set forth in this Agreement (including the related portions of the Company Disclosure Schedules and the DMAC Disclosure Schedules) or in any certificate delivered to Pubco or Merger Sub pursuant hereto.
| 22 |
Article VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedules delivered by the Company to DMAC and Pubco on the Effective Date (the “Company Disclosure Schedules”), each Section of which qualifies the correspondingly numbered representation or warranty if specified therein and such other representation or warranty where its relevance as an exception to (or disclosure for purposes of) such other representation or warranty is reasonably apparent on the face of such disclosure, the Company hereby represents and warrants to DMAC and Pubco, as of the Effective Date and as of the Closing (unless otherwise set forth below with respect to the representations and warranties which are given only as of a specific date), as follows:
6.1 Incorporation and Standing. The Company is a company duly organized, validly existing and in good standing under the Laws of the Cayman Islands and has all requisite corporate or other entity power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Each other Target Company is a corporation or other entity duly formed, validly existing and in good standing under the Laws of its jurisdiction of organization and has all requisite corporate or other entity power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Each Target Company is duly qualified or licensed and in good standing (to the extent that such concept applies) in the jurisdiction in which it is incorporated or registered and in each other jurisdiction where it does business or operates to the extent that the character of the property owned, or leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary except if the failure to be so qualified or licensed or be in good standing would not be material to the Target Companies taken as a whole. Schedule 6.1 lists all jurisdictions in which any Target Company is qualified to conduct business and all names other than its legal name under which any Target Company does business as of the Effective Date. The Company has provided to DMAC accurate and complete copies of the Organizational Documents of each Target Company, each as amended to date and as currently in effect. No Target Company is in violation of any provision of its Organizational Documents in any material respect.
6.2 Authorization; Binding Agreement. The Company has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is or is required to be a party, to perform the Company’s obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each Ancillary Document to which the Company is or is required to be a party and the consummation of the transactions contemplated hereby and thereby, (a) have been duly and validly authorized by the board of directors and shareholders of the Company in accordance with the Company Organizational Documents, the Laws of the Cayman Islands and any other applicable Law, and (b) no other corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each Ancillary Document to which the Company is or is required to be a party shall be when delivered, duly and validly executed and delivered by the Company, and assuming the due authorization, execution and delivery of this Agreement and any such Ancillary Document by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the legal, valid and binding obligation of the Company, in each case, enforceable against the Company in accordance with its terms, subject to the Enforceability Exceptions.
| 23 |
6.3 Capitalization.
(a) The authorized share capital of the Company is $50,000 divided into 500,000,000 shares of nominal or par value of $0.0001 each. The issued and outstanding share capital of the Company consists of 266,102,827 Company Shares, and there are no other issued or outstanding equity interests of the Company. The Sellers are the legal (registered) and beneficial owners, in the aggregate, of all of the Purchased Shares, with each Seller owning the Company Shares set forth on Schedule 6.3(a), all of which Company Shares are owned by the Sellers free and clear of any Liens other than those imposed under the Company Organizational Documents and applicable securities Laws. After giving effect to the Share Exchange, Pubco shall own all of the issued and outstanding equity interests of the Company free and clear of any Liens other than those imposed under the Company Organizational Documents and applicable securities Laws. All of the outstanding shares and other equity interests of the Company have been duly authorized, are fully paid and non-assessable and not in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Laws of the Cayman Islands, any other applicable Law, the Company Organizational Documents or any Contract to which the Company is a party or by which the Company or its securities are bound. The Company does not, directly or indirectly, hold any of its shares or other equity interests in treasury.
(b) No Target Company currently has, and no Target Company has had, since its formation, any stock option or other equity incentive plans. Except as set forth on Schedule 6.3(b), there are no Company Convertible Securities or preemptive rights or rights of first refusal or first offer, nor are there any Contracts, commitments, arrangements or restrictions to which any Target Company or, to the Knowledge of the Company, any of their respective shareholders are a party or bound relating to any equity securities of any Target Company, whether or not outstanding. There are no outstanding or authorized equity appreciation, phantom equity or similar rights with respect to the Company. Except as set forth on Schedule 6.3(b), there are no voting trusts, proxies, shareholder agreements or any other written agreements or understandings with respect to the voting of any Target Company’s equity interests. Except as set forth in the relevant Target Company’s Organizational Documents, there are no outstanding contractual obligations of any Target Company to repurchase, redeem or otherwise acquire any of its equity interests or securities, nor has any Target Company granted any registration rights to any Person with respect to its equity securities. All of the issued and outstanding securities of each Target Company have been granted, offered, sold and issued in compliance with all applicable securities Laws. As a result of the consummation of the Transactions, no equity interests of any Target Company are issuable and no rights in connection with any interests, warrants, rights, options or other securities of any Target Company accelerate or otherwise become triggered (whether as to vesting, exercisability, convertibility or otherwise).
(c) Except as disclosed in the Company Financials or as set forth on Schedule 6.3(c), since January 1, 2019, no Target Company has declared or paid any distribution or dividend in respect of its equity interests and has not repurchased, redeemed or otherwise acquired any equity interests of such Target Company, the board of directors of such Target Company has not authorized any of the foregoing and the board of directors of such Target Company or of the Company has not authorized any of the foregoing.
6.4 Subsidiaries. Schedule 6.4 sets forth the name of each direct and indirect Subsidiary of the Company, and with respect to each such Subsidiary (a) its jurisdiction of organization, (b) its authorized shares or other equity interests (if applicable), and (c) the number of issued and outstanding shares or other equity interests and the record holders and beneficial owners thereof. All of the outstanding equity securities of each Subsidiary of the Company are duly authorized and validly issued, fully paid and non-assessable (if applicable); were offered, sold and delivered in compliance with all applicable securities Laws and not in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of applicable Law, the applicable Subsidiary’s Organizational Documents or any Contract to which such Subsidiary is a party or by which such Subsidiary or its securities are bound; and are owned by one or more of the Target Companies free and clear of all Liens (other than those, if any, imposed by the applicable Subsidiary’s Organizational Documents or applicable securities Laws). There are no Contracts to which the Company or any of its Affiliates is a party or bound with respect to the voting (including voting trusts or proxies) of the interests of any Subsidiary of the Company other than the Organizational Documents of any such Subsidiary. There are no outstanding or authorized options, warrants, rights, agreements, subscriptions, convertible securities or commitments to which any Subsidiary of the Company is a party or which are binding upon any Subsidiary of the Company providing for the issuance or redemption of any equity interests of any Subsidiary of the Company. There are no outstanding equity appreciation, phantom equity, profit participation or similar rights granted by any Subsidiary of the Company. No Subsidiary of the Company has any limitation, whether by Contract, Order or applicable Law, on its ability to make any distributions or dividends to its equity holders or repay any debt owed to another Target Company. Except for the equity interests of the Subsidiaries listed on Schedule 6.4, no Target Company owns or has any rights to acquire, directly or indirectly, any equity interests of, or otherwise Control, any Person. No Target Company is a participant in any joint venture, partnership or similar arrangement. There are no outstanding contractual obligations of a Target Company to provide funds to, or make any loan or capital contribution to any other Person.
| 24 |
6.5 Governmental Approvals. Except as otherwise described in Schedule 6.5, no Consent of or with any Governmental Authority on the part of any Target Company is required to be obtained or made in connection with the execution, delivery or performance by the Company of this Agreement or any Ancillary Documents or the consummation by the Company of the transactions contemplated hereby or thereby other than (a) such filings as expressly contemplated by this Agreement, (b) pursuant to Antitrust Laws, (c) any filings required with Nasdaq or the SEC with respect to the Transactions, (d) applicable requirements, if any, of the Securities Act, the Exchange Act, and/ or any state “blue sky” securities Laws, and the rules and regulations thereunder, and (e) where the failure to obtain or make such Consents or to make such filings or notifications, would not reasonably be expected to have a Material Adverse Effect on the Company.
6.6 Non-Contravention. Except as otherwise described in Schedule 6.6, the execution and delivery by the Company (or any other Target Company, as applicable) of this Agreement and each Ancillary Document to which any Target Company is or is required to be a party, and the consummation by any Target Company of the transactions contemplated hereby and thereby and compliance by any Target Company with any of the provisions hereof and thereof, will not (a) conflict with or violate any provision of any Target Company Organizational Documents, (b) subject to obtaining the Consents from Governmental Authorities referred to in Section 6.5 hereof, the waiting periods referred to therein having expired, and any condition precedent to such Consent or waiver having been satisfied, conflict with or violate any Law, Order or Consent applicable to any Target Company or any of its properties or assets, or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by any Target Company under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien (other than a Permitted Lien) upon any of the properties or assets of any Target Company under, (viii) give rise to any obligation to obtain any third party Consent or provide any notice to any Person or (ix) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of any Company Material Contract, except in cases of clauses (b) and (c), as would not individually or in the aggregate reasonably be expected to have a Material Adverse Effect on the Company.
| 25 |
6.7 Financial Statements.
(a) As used herein, the term “Company Financials” means the consolidated financial statements of the Target Companies (including, in each case, any related notes thereto), consisting of the (i) audited consolidated balance sheets of the Target Companies as of December 31, 2021 (the “Balance Sheet Date”), and December 31, 2020, and the related consolidated audited income statements, changes in shareholder equity and statements of cash flows for the years then ended and (ii) reviewed and unaudited consolidated financial statements of the Target Companies, consisting of the consolidated balance sheet of the Target Companies as of March 31, 2022, and the related reviewed and unaudited consolidated income statement, changes in shareholder equity and statement of cash flows for the three (3) month period then ended True and correct copies of the Company Financials have been provided to DMAC. The Company Financials (i) were prepared from the books and records of the Target Companies as of the times and for the periods referred to therein, (ii) were prepared in accordance with GAAP, consistently applied throughout and among the periods involved (except that the unaudited statements exclude the footnote disclosures and other presentation items required for GAAP and exclude year-end adjustments which will not be material in amount), and (iii) fairly present in all material respects the consolidated financial position of the Target Companies as of the respective dates thereof and the consolidated results of the operations and cash flows of the Target Companies for the periods indicated. No Target Company has ever been subject to the reporting requirements of Sections 13(a) and 15(d) of the Exchange Act.
(b) Each Target Company maintains books and records reflecting its assets and Liabilities and maintains proper and adequate internal accounting controls that are designed to provide reasonable assurance that (i) such Target Company does not maintain any off-the-book accounts and that such Target Company’s assets are used only in accordance with such Target Company’s management directives, (ii) transactions are executed with management’s authorization, (iii) transactions are recorded as necessary to permit preparation of the financial statements of such Target Company and to maintain accountability for such Target Company’s assets, (iv) access to such Target Company’s assets is permitted only in accordance with management’s authorization, and (v) adequate procedures are implemented to effect the collection of accounts, notes and other receivables on a timely basis. All of the financial books and records of the Target Companies are complete and accurate in all material respects and have been maintained in the ordinary course consistent with past practice and in accordance with applicable Laws. No Target Company has been subject to or involved in any material fraud that involves management or other employees who have a significant role in the internal controls over financial reporting of any Target Company. Since the Balance Sheet Date, no Target Company or its Representatives has received any written complaint, allegation, assertion or claim regarding the accounting or auditing practices, procedures, methodologies or methods of any Target Company or its internal accounting controls, including any material written complaint, allegation, assertion or claim that any Target Company has engaged in questionable accounting or auditing practices.
(c) As of the Effective Date, the Target Companies do not have any Indebtedness other than the Indebtedness set forth on Schedule 6.7(c), and in such amounts (including principal and any accrued but unpaid interest with respect to such Indebtedness), as set forth on Schedule 6.7(c). Except as disclosed on Schedule 6.7(c), no Indebtedness of any Target Company contains any restriction upon (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness by any Target Company, or (iii) the ability of the Target Companies to grant any Lien on their respective properties or assets.
(d) No Target Company is subject to any Liabilities or obligations (whether or not required to be reflected on a balance sheet prepared in accordance with GAAP), including any off-balance sheet obligations or any “variable interest entities” (within the meaning of Accounting Standards Codification 810), except for those that are either (i) adequately reflected or reserved on or provided for in the consolidated balance sheet of the Target Companies as of the Balance Sheet Date contained in the Company Financials or (ii) not material and that were incurred after the Balance Sheet Date in the ordinary course of business consistent with past practice (other than Liabilities for breach of any Contract or violation of any Law).
(e) All financial projections with respect to the Target Companies that were delivered by or on behalf of any Target Company to DMAC or Pubco or their respective Representatives were prepared in good faith using assumptions that the Company believes to be reasonable.
| 26 |
6.8 Absence of Certain Changes. Except as set forth on Schedule 6.8 or for actions expressly contemplated by this Agreement, each Target Company: (a) since December 31, 2019 to the Effective Date, has conducted its business only in the ordinary course of business consistent with past practice, (b) since December 31, 2019, has not been subject to a Material Adverse Effect and (c) since December 31, 2019, has not taken any action or committed or agreed to take any action that would be prohibited by Section 8.2 (without giving effect to Schedule 8.2 ) if such action were taken on or after the Effective Date without the consent of DMAC.
6.9 Compliance with Laws. Except as set forth on Schedule 6.9, no Target Company is or since the date of its formation, has been in conflict or non-compliance with, or in default or violation of, any applicable Laws, except as would reasonably be expected to result in a Material Adverse Effect on the applicable Target Company, nor has any Target Company received, since the date of its formation, any written or, to the Knowledge of the Company, oral notice of any material conflict or non-compliance with, or material default or violation of, any applicable Laws by which it is or was bound.
6.10 Company Permits. Each Target Company (and its employees who are legally required to be licensed by a Governmental Authority in order to perform his or her duties with respect to his or her employment with any Target Company), holds all Permits necessary to lawfully conduct in all material respects its business as presently conducted, and to own, lease and operate its assets and properties (collectively, the “Company Permits”). The Company has made available to DMAC true, correct and complete copies of all material Company Permits. All of the Company Permits are in full force and effect, and no suspension or cancellation of any of the Company Permits is pending or, to the Knowledge of the Company, threatened. No Target Company is in violation in any material respect of the terms of any Company Permit, and since January 1, 2019, no Target Company has received any written or, to the Knowledge of the Company, oral notice of any Actions relating to the revocation or modification of any material Company Permit.
6.11 Litigation. Except as described on Schedule 6.11, as of the Effective Date, there is no (a) Action of any nature currently pending or, to the Knowledge of the Company, threatened, against any Target Company (and no such Action has been brought or, to the Knowledge of the Company, threatened since the date of formation of the applicable Target Company); or (b) Order now pending or outstanding or that was rendered by a Governmental Authority since the date of its formation, in either case of (a) or (b) by or against any Target Company, its current or former directors, officers or equity holders in their capacity as such, its business, equity securities or assets. The items listed on Schedule 6.11, if finally determined adverse to the Target Companies, will not have, either individually or in the aggregate, a Material Adverse Effect upon any Target Company. Since the date of its formation, none of the current or former officers, senior management or directors of any Target Company have been charged with, indicted for, arrested for, or convicted of any felony or any crime involving fraud.
6.12 Material Contracts.
(a) Schedule 6.12(a) sets forth a true, correct and complete list of, and the Company has made available to DMAC (including written summaries of oral Contracts), true, correct and complete copies of, each Contract to which any Target Company is a party or by which any Target Company, or any of its properties or assets are bound (each Contract required to be set forth on Schedule 6.12(a), a “Company Material Contract”) that:
(i) contains covenants that limit in any material respect the ability of any Target Company (A) to compete in any line of business or with any Person or in any geographic area or to sell, or provide any service or product or solicit any Person, including any non-competition covenants, employee and customer non-solicit covenants, exclusivity restrictions, rights of first refusal or most-favored pricing clauses or (B) to purchase or acquire an interest in any other Person;
(ii) relates to the formation, creation, operation, management or control of any joint venture, profit-sharing, partnership, limited liability company or other similar agreement or arrangement;
| 27 |
(iii) involves any exchange traded, over the counter or other swap, cap, floor, collar, futures contract, forward contract, option or other derivative financial instrument or Contract, based on any commodity, security, instrument, asset, rate or index of any kind or nature whatsoever, whether tangible or intangible, including currencies, interest rates, foreign currency and indices other than those entered into in the ordinary course of business of the Target Companies on behalf of a customers or any ordinary course transactions that are settled on a daily basis;
(iv) evidences Indebtedness (whether incurred, assumed, guaranteed or secured by any asset) of any Target Company having an outstanding principal amount in excess of $1,500,000, other than those incurred in the ordinary course of business of the Target Companies on behalf of a customers or any ordinary course transactions that are settled on a daily basis;
(v) involves the acquisition or disposition, directly or indirectly (by merger or otherwise), of assets with an aggregate value in excess of $1,500,000 (other than in the ordinary course of business consistent with past practice) or shares or other equity interests of any Target Company or another Person;
(vi) relates to any merger, consolidation or other business combination with any other Person or the acquisition or disposition of any other entity or its business or material assets or the sale of any Target Company, its business or material assets;
(vii) by its terms, individually or with all related Contracts, calls for aggregate payments or receipts by the Target Companies under such Contract or Contracts of at least $1,500,000 per year or $3,000,000 in the aggregate;
(viii) is with any Top Customer or Top Vendor;
(ix) obligates any Target Company to provide continuing indemnification or a guarantee of obligations of a third party after the Effective Date in excess of $1,500,000;
(x) is between any (A) Target Company and (B) any directors, officers or employees of a Target Company (other than at-will employment, assignment of Intellectual Property or confidentiality arrangements entered into in the ordinary course of business) or any other Related Person, including all non-competition, severance and indemnification agreements;
(xi) obligates any Target Company to make any capital commitment or expenditure in excess of $1,500,000 (including pursuant to any joint venture);
(xii) relates to a material settlement of any Action entered into within three (3) years prior to the Effective Date or under which any Target Company has outstanding obligations (other than customary confidentiality or non-disparagement obligations);
(xiii) provides another Person (other than another Target Company or any manager, director or officer of any Target Company) with a power of attorney; or
(xiv) that will be required to be filed with the Registration Statement under applicable SEC requirements or would otherwise be required to be filed by the Company as an exhibit for a Form S-1 pursuant to Items 601(b)(1), (2), (4), (9) or (10) of Regulation S-K under the Securities Act as if the Company were the registrant.
| 28 |
(b) Except as disclosed in Schedule 6.12(b), with respect to each Company Material Contract: (i) such Company Material Contract is valid and binding and enforceable in all respects against the Target Company party thereto and, to the Knowledge of the Company, each other party thereto, and is in full force and effect (except, in each case, as such enforcement may be limited by the Enforceability Exceptions); (ii) the consummation of the Transactions will not affect the validity or enforceability of any Company Material Contract; (iii) no Target Company is in breach or default in any material respect, and Knowledge of the Company, no event has occurred that with the passage of time or giving of notice or both would constitute a material breach or default by any Target Company, or permit termination or acceleration by the other party thereto, under such Company Material Contract; (iv) to the Knowledge of the Company, no other party to such Company Material Contract is in breach or default in any material respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a material breach or default by such other party, or permit termination or acceleration by any Target Company, under such Company Material Contract; (v) no Target Company has received written or, to the Knowledge of the Company, oral notice of an intention by any party to any such Company Material Contract to terminate such Company Material Contract or amend the terms thereof, other than modifications in the ordinary course of business that do not adversely affect the Target Companies, taken as a whole, in any material respect; and (vi) no Target Company has waived any material rights under any such Company Material Contract.
6.13 Intellectual Property.
(a) Schedule 6.13(a)(i) sets forth as of the Effective Date all Patents and Patent applications, trademarks and service mark registrations and applications, copyright registrations and applications and domain name registrations owned by a Target Company (“Company Registered IP”), specifying as to each item, as applicable: (A) the title of the item, if applicable, (B) the owner of the item, (C) the jurisdictions in which the item is issued or registered or in which an application for issuance or registration has been filed and (D) the issuance, registration or application numbers and dates. Schedule 6.13(a)(ii) sets forth all Intellectual Property licenses, sublicenses and other agreements or permissions that are material to the Target Companies’ businesses as currently conducted (“Company IP Licenses”) (other than “shrink wrap,” “click wrap,” and “off the shelf” software agreements and other agreements for Software commercially available to the public generally with license, maintenance, support and other fees of less than $20,000 per year, which are not required to be listed, although such licenses that are material to the Target Companies’ businesses as currently conducted are “Company IP Licenses” as that term is used herein), under which a Target Company is a licensee or otherwise is authorized to use or practice any material Intellectual Property. Each Target Company owns, free and clear of all Liens (other than Permitted Liens) all Company IP. Except as set forth on Schedule 6.13(a)(iii), all material Company Registered IP is owned exclusively by the applicable Target Company without obligation to pay royalties, licensing fees or other fees, or otherwise account to any third party with respect to such Company Registered IP, except for fees and costs payable to file, apply for, register, patent or maintain Company Registered IP.
(b) Each Target Company has a valid and enforceable license to use all material Intellectual Property that is the subject of the Company IP Licenses applicable to such Target Company. Other than Company IP, the Company IP Licenses include all of the licenses, sublicenses and other agreements or permissions for material Intellectual Property necessary to operate the Target Companies as presently conducted. Each Target Company has performed all material obligations imposed on it in the applicable Company IP Licenses, has made all material payments required under the applicable Company IP Licenses to date, and such Target Company is not in material breach or material default thereunder. The continued use by the Target Companies of the material Intellectual Property that is the subject of the Company IP Licenses in the same or similar manner that it is currently being used is not prohibited by such Company IP Licenses in material respects. To the Knowledge of the Company, all registrations for material Copyrights, Patents and Trademarks that are owned by any Target Company are valid and in force.
| 29 |
(c) To the Knowledge of the Company, no Action is pending or threatened against a Target Company that challenges the validity, enforceability, ownership, or right to use, sell, license or sublicense any material Intellectual Property currently owned, licensed, used or held for use by the Target Companies, except for any Action relating to applications for Intellectual Property. During the past three (3) years, no Target Company has received any written or to the Knowledge of the Company, oral notice or claim that is currently pending, asserting that any infringement, misappropriation, violation, dilution or unauthorized use of the Intellectual Property of any other Person in material respects is or may be occurring or has or may have occurred, in each case, as a consequence of the business activities of any Target Company. There are no Orders to which any Target Company is a party or is otherwise bound that (i) restrict the rights of a Target Company to use, transfer, license or enforce any material Intellectual Property owned by a Target Company, (ii) restrict the conduct of the business of a Target Company in any material respects in order to accommodate a third Person’s Intellectual Property, or (iii) grant any third Person any right with respect to any Intellectual Property owned by a Target Company. To the Knowledge of the Company, no Target Company is currently infringing, or has, in the past three (3) years, infringed, misappropriated or violated any Intellectual Property of any other Person in any material respect as a result of the ownership, use or license of any material Intellectual Property owned by a Target Company. To the Knowledge of the Company, no third party is infringing upon, misappropriating or otherwise violating any Intellectual Property owned by any Target Company and material to the Target Companies’ businesses as currently conducted (“Company IP”) in any material respect.
(d) All employees and independent contractors of a Target Company who develop material Intellectual Property for such Target Company have assigned to such Target Company such material Intellectual Property arising from the services performed for a Target Company by such Persons. To the Knowledge of the Company, no current or former officers, employees or independent contractors of a Target Company have claimed in writing any ownership interest in any material Intellectual Property owned by a Target Company. The Company has made available to DMAC true and complete copies of templates of written Contracts used by the Target Companies under which employees and independent contractors of a Target Company assigned the material Intellectual Property developed for a Target Company by such employees and independent contractors to such Target Company. Each Target Company has taken commercially reasonable security measures for the purposes of protecting the secrecy and confidentiality of the material Trade Secrets included in Company IP.
(e) To the Knowledge of the Company, during the past three (3) years, (i) no Person has obtained unauthorized access in any material respects to third party personal information and data regarding individuals that are protected by applicable data privacy Law, in the possession of a Target Company and (ii) nor has there been any other material compromise of the security, confidentiality or integrity of such information or data. Each Target Company has complied in all material respects with all applicable Laws relating to privacy, personal data protection, and the collection, processing and use of such personal information and its own privacy policies and guidelines.
(f) The consummation of any of the Transactions will not result in the material breach, material modification, cancellation, termination, suspension of, or acceleration of any payments by a Target Company under, or release of source code for software included in Company IP because of: (i) any Contract providing for the license granted by a Target Company to a third party to use material Intellectual Property owned by a Target Company, or (ii) any Company IP License. Following the Closing, the Company shall be permitted to exercise, directly or indirectly through its Subsidiaries, all of the Target Companies’ material rights under such Contracts or Company IP Licenses to the same or similar extent that the Target Companies would have been able to exercise had the Transactions not occurred, without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which the Target Companies would otherwise be required to pay in the absence of such transactions.
| 30 |
6.14 Taxes and Returns Except as set forth on Schedule 6.14:
(a) Each Target Company has or will have timely filed, or caused to be timely filed, all material Tax Returns required to be filed by it (taking into account all available extensions), which Tax Returns are true, accurate, correct and complete in all material respects, and has paid, collected or withheld, or caused to be paid, collected or withheld, all material Taxes required to be paid, collected or withheld, other than such Taxes for which adequate reserves in the Company Financials have been established.
(b) Within the past three (3) years, no claim has ever been made against a Target Company by a Governmental Authority in a jurisdiction where the Target Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.
(c) No Target Company is being audited by any Tax authority or has been notified in writing or, to the Knowledge of the Company, orally by any Tax authority that any such audit is contemplated or pending. There are no claims, assessments, audits, examinations, investigations or other Actions pending against a Target Company in respect of any material Tax, and no Target Company has been notified in writing of any material proposed Tax claims or assessments against it (other than, in each case, claims or assessments for which adequate reserves in the Company Financials have been established).
(d) There are no Liens with respect to any Taxes upon any Target Company’s assets, other than Permitted Liens.
(e) Each Target Company has collected or withheld all material Taxes currently required to be collected or withheld by it, and all such Taxes have been paid to the appropriate Governmental Authorities or set aside in appropriate accounts for future payment when due.
(f) No Target Company has any outstanding waivers or extensions of any applicable statute of limitations to assess any material amount of Taxes. There are no outstanding requests by a Target Company for any extension of time within which to file any Tax Return or within which to pay any Taxes shown to be due on any Tax Return outside of the ordinary course of business.
(g) No Target Company has participated in, or sold, distributed or otherwise promoted, any “listed transaction,” as defined in U.S. Treasury Regulation section 1.6011-4.
(h) No Target Company has any Liability for the Taxes of another Person (other than another Target Company) (i) as a transferee or successor or (ii) by contract, indemnity or otherwise (excluding commercial agreements entered into in the ordinary course of business the primary purpose of which was not the sharing of Taxes). No Target Company is a party to or bound by any Tax indemnity agreement, Tax sharing agreement or Tax allocation agreement or similar agreement, arrangement or practice (excluding commercial agreements entered into in the ordinary course of business the primary purpose of which was not the sharing of Taxes) with respect to Taxes (including advance pricing agreement, closing agreement or other agreement relating to Taxes with any Governmental Authority) that will be binding on such Target Company with respect to any period following the Closing Date.
(i) No Target Company: (i) has constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of securities (to any Person or entity that is not a member of the consolidated group of which the Company is the common parent corporation) qualifying for, or intended to qualify for, Tax-free treatment under Section 355 of the Code (A) within the two-year period ending on the Effective Date or (B) in a distribution which could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the Transactions; or (ii) is or has ever been (A) a U.S. real property holding corporation within the meaning of Section 897(c)(2) of the Code, or (B) a member of any consolidated, combined, unitary or affiliated group of corporations for any Tax purposes other than a group of which the Company is or was the common parent corporation.
| 31 |
(j) No Target Company is treated as a domestic corporation (as such term is defined in Section 7701 of the Code) for U.S. federal income tax purposes.
6.15 Real Property. Schedule 6.15 contains a complete and accurate list of all premises currently leased or subleased by any Target Company for the operation of the business of a Target Company, and of all current leases, lease guarantees, agreements and documents related thereto as of the Effective Date, including all amendments, terminations and modifications thereof or waivers thereto (collectively, the “Company Real Property Leases”), as well as the current annual rent and term under each Company Real Property Lease. The Company has provided to DMAC a true and complete copy of each of the Company Real Property Leases, and in the case of any oral Company Real Property Lease, a written summary of the material terms of such Company Real Property Lease. The Company Real Property Leases are valid, binding and enforceable against the applicable Target Company party thereto and, to the Knowledge of the Company, each other party thereto, in accordance with their terms and are in full force and effect (except, in each case, as such enforcement may be limited by the Enforceability Exceptions). To the Knowledge of the Company, no event has occurred which (whether with or without notice, lapse of time or both or the happening or occurrence of any other event) would constitute a default on the part of a Target Company or any other party under any of the Company Real Property Leases, and no Target Company has received notice of any such condition. No Target Company owns or has ever owned any real property or any interest in real property (other than the leasehold interests in the Company Real Property Leases).
6.16 Personal Property. Except as set forth in Schedule 6.16, all items of Personal Property with a book value or fair market value of greater than One Hundred Thousand Dollars ($100,000) are in good operating condition and repair in all material respects (reasonable wear and tear excepted consistent with the age of such items), and are suitable for their intended use in the business of the Target Companies. The operation of each Target Company’s business as it is now conducted or presently proposed to be conducted is not in any material respect dependent upon the right to use the Personal Property of Persons other than a Target Company, except for such Personal Property that is owned, leased or licensed by, or otherwise contracted to, a Target Company.
6.17 Title to and Sufficiency of Assets. Each Target Company has good and marketable title to, or a valid leasehold interest in or right to use, all of its assets, and with respect to assets owned by any applicable Target Company, free and clear of all Liens other than (a) Permitted Liens, (b) the rights of lessors under leasehold interests, (c) Liens specifically identified on the consolidated balance sheet of the Target Companies and (d) Liens set forth on Schedule 6.17. The assets (including Intellectual Property rights and contractual rights) of each Target Company constitute all of the assets, rights and properties that are used in the operation of the businesses of the applicable Target Company as it is now conducted or that are used or held by the applicable Target Company for use in the operation of its businesses and are adequate and sufficient for the operation of the businesses of the applicable Target Company as currently conducted.
6.18 Employee Matters.
(a) Except as set forth in Schedule 6.18(a), no Target Company is a party to any collective bargaining agreement or other Contract covering any group of employees, labor organization or other representative of any of the employees of any Target Company and, to the Knowledge of the Company, there are no activities or proceedings of any labor union or other party to organize or represent such employees. There has not occurred or, to the Knowledge of the Company, been threatened any strike, slow-down, picketing, work-stoppage, or other similar labor activity with respect to any such employees. Schedule 6.18(a) sets forth all unresolved labor controversies (including unresolved grievances and age or other discrimination claims), if any, that are pending or, to the Knowledge of the Company, threatened between any Target Company and Persons employed by or providing services as independent contractors to a Target Company. No current officer or employee of a Target Company has, to the Knowledge of the Company, provided any Target Company written or oral notice of his or her plan to terminate his or her employment with any Target Company.
| 32 |
(b) Except as set forth in Schedule 6.18(b), each Target Company (i) is and has been in compliance in all material respects with all applicable Laws respecting employment and employment practices, terms and conditions of employment, health and safety and wages and hours, and other Laws relating to discrimination, disability, labor relations, hours of work, payment of wages and overtime wages, pay equity, immigration, workers compensation, working conditions, employee scheduling, occupational safety and health, family and medical leave, and employee terminations, and has not received written or, to the Knowledge of the Company, oral notice that there is any pending Action involving unfair labor practices against a Target Company, (ii) is not liable for any material past due arrears of wages or any material penalty for failure to comply with any of the foregoing, and (iii) is not liable for any material payment to any Governmental Authority with respect to unemployment compensation benefits, social security or other benefits or obligations for employees, independent contractors or consultants (other than routine payments to be made in the ordinary course of business and consistent with past practice). There are no material Actions pending or, to the Knowledge of the Company, threatened against a Target Company brought by or on behalf of any applicant for employment, any current or former employee, any Person alleging to be a current or former employee, or any Governmental Authority, relating to any such Law or regulation, or alleging breach of any express or implied contract of employment, wrongful termination of employment, or alleging any other discriminatory, wrongful or tortious conduct in connection with the employment relationship.
(c) Schedule 6.18(c) hereto sets forth a complete and accurate list as of the Effective Date of all employees (with names redacted) of the Target Companies showing for each as of such date (i) the employee’s staff identification number job title or description, employer, location, salary level (including any bonus, commission, deferred compensation or other remuneration payable (other than any such arrangements under which payments are at the discretion of the Target Companies)), (ii) any bonus, commission or other remuneration other than salary paid during the calendar year ending December 31, 2021, and (iii) any wages, salary, bonus, commission or other compensation due and owing to each employee during or for the calendar year ending December 31, 2022. Except as set forth on Schedule 6.18(c), (A) no employee is a party to a written employment Contract with a Target Company, and (B) the Target Companies have paid in full to all their employees all wages, salaries, commission, bonuses and other compensation due to their employees, including overtime compensation, and no Target Company has any obligation or Liability (whether or not contingent) with respect to severance payments to any such employees under the terms of any written or, to the Knowledge of the Company, oral agreement, or commitment or any applicable Law, custom, trade or practice. Except as set forth in Schedule 6.18(c), each Target Company employee has entered into the Company’s standard form of employee non-disclosure, inventions and restrictive covenants agreement with a Target Company (whether pursuant to a separate agreement or incorporated as part of such employee’s overall employment agreement), a copy of which has been made available to DMAC by the Company.
(d) Schedule 6.18(d) contains a list of all independent contractors (including consultants) currently engaged by any Target Company, along with the position, the entity engaging such independent contractor, date of retention and rate of remuneration. Except as set forth on Schedule 6.18(d), each such independent contractor is a party to a written contract with a Target Company and has entered into customary covenants regarding confidentiality, non-competition and assignment of inventions and copyrights in such Person’s Contract. For the purposes of applicable Law, including the Code, all independent contractors who are currently, or within the last three (3) years have been, engaged by a Target Company are bona fide independent contractors and not employees of a Target Company. Each independent contractor’s engagement is terminable on fewer than thirty (30) days’ notice, without any obligation of any Target Company to pay severance or a termination fee.
| 33 |
6.19 Benefit Plans.
(a) Set forth on Schedule 6.19(a) is a true and complete list of each material Foreign Plan of each Target Company (each, a “Company Benefit Plan”). Except as set forth on Schedule 6.19(a), no Target Company maintains or contributes to (or has an obligation to contribute to) any Benefit Plan, whether or not subject to ERISA, which is not a Foreign Plan.
(b) With respect to each material Company Benefit Plan which covers any current or former officer, director, individual consultant or employee (or beneficiary thereof) of a Target Company, the Company has made available to DMAC accurate and complete copies, if applicable, of: (i) the current plan documents and related trust agreements or annuity Contracts (including any amendments thereto), and written descriptions of any material Company Benefit Plans which are not in writing; (ii) the most recent annual and periodic accounting of plan assets; (iii) the most recent actuarial valuation; and (iv) all material communications in the past three (3) years with any Governmental Authority concerning any matter that is still pending or for which any Target Company has any outstanding material Liability.
(c) With respect to each Company Benefit Plan: (i) such Company Benefit Plan has been administered and enforced in all material respects in accordance with its terms and the requirements of all applicable Laws, and has been maintained, where required, in good standing in all material respects with applicable regulatory authorities and Governmental Authorities; (ii) no breach of fiduciary duty that would result in material Liability to any Target Company has occurred; (iii) no Action that would result in a material Liability to the Target Companies is pending, to the Knowledge of the Company, threatened (other than routine claims for benefits arising in the ordinary course of administration); and (iv) all contributions, premiums and other payments (including any special contribution, interest or penalty) required to be made with respect to a Company Benefit Plan have been timely made. No Target Company has incurred any material obligation in connection with the termination of, or withdrawal from, any Company Benefit Plan.
(d) To the extent applicable, the present value of the accrued benefit liabilities (whether or not vested) under each Company Benefit Plan, determined as of the end of the applicable Target Company’s most recently ended fiscal year on the basis of reasonable actuarial assumptions, did not materially exceed the current value of the assets of such Company Benefit Plan allocable to such benefit liabilities.
(e) The consummation of the Transactions and the Ancillary Documents will not: (i) entitle any individual to severance pay, unemployment compensation or other benefits or compensation under any Company Benefit Plan or under any applicable Law; or (ii) accelerate the time of payment or vesting, or increase the amount of any compensation due, or in respect of, any director, employee or independent contractor of any Target Company.
(f) Except to the extent required by applicable Law, no Target Company provides material health or life insurance benefits to any former or retired employee or is obligated to provide such benefits to any active employee following such employee’s retirement or other termination of employment or service.
6.20 Environmental Matters. Except as set forth in Schedule 6.20:
(a) Each Target Company is and has been in compliance in all material respects with all applicable Environmental Laws, including obtaining, maintaining in good standing, and complying in all material respects with all material Permits required for its business and operations by Environmental Laws (“Environmental Permits”), and no Action is pending or, to the Knowledge of the Company, threatened to revoke, modify in any material respect, or terminate any such Environmental Permit.
| 34 |
(b) No Target Company is the subject of any outstanding Order or Contract with any Governmental Authority in respect of any (i) Environmental Laws, (ii) Remedial Action, or (iii) Release or threatened Release of a Hazardous Material in each case that would reasonably be expected to give rise to any material Liability. No Target Company has assumed, contractually or by operation of Law, any outstanding material Liabilities or obligations under any Environmental Laws.
(c) No Action is pending to the Knowledge of the Company, threatened against any Target Company or any assets of a Target Company alleging either or both that a Target Company may be in material violation of any Environmental Law or Environmental Permit or may have any material Liability under any Environmental Law.
(d) No Target Company has manufactured, treated, stored, disposed of, arranged for or permitted the disposal of, generated, handled or Released any Hazardous Material, or owned or operated any property or facility, in a manner that has given or would reasonably be expected to give rise to any material Liability or obligation of any Target Company under applicable Environmental Laws. To the Knowledge of the Company, no fact, circumstance, or condition exists in respect of any Target Company or any property currently or formerly owned, operated, or leased by any Target Company or any property to which a Target Company arranged for the disposal or treatment of Hazardous Materials that could reasonably be expected to result in a Target Company incurring any material Environmental Liabilities.
(e) To the Knowledge of the Company, there is no investigation by any Governmental Authority of the business, operations, or currently owned, operated, or leased property of a Target Company pending or threatened in writing that could reasonably be expected to result in a Target Company incurring material Environmental Liabilities.
(f) To the Knowledge of the Company, there is not located at any of the properties of a Target Company any (i) underground storage tanks, (ii) asbestos-containing material, or (iii) equipment containing polychlorinated biphenyls, in each case that could reasonably be expected to result in a Target Company incurring any material Liability or obligation under applicable Environmental Laws.
(g) The Company has provided to DMAC all material environmental site assessments, audits, studies, reports, analysis and results of investigations that have been performed in respect of the currently owned, leased, or operated properties of any Target Company, in each case that are in the Company’s possession.
6.21 Transactions with Related Persons. Except as set forth on Schedule 6.21, no Target Company nor any officer or director of a Target Company or any of its Affiliates, nor any immediate family member of any of the foregoing (each of the foregoing, a “Related Person”) is presently, or in the past three (3) years, has been, a party to any transaction with a Target Company, including any Contract (a) providing for the furnishing of services by (other than as officers, directors or employees of the Target Company), (b) providing for the rental of real property or Personal Property from or (c) otherwise requiring payments to (other than for services or expenses as directors, officers or employees of the Target Company in the ordinary course of business consistent with past practice) any Related Person or any Person in which any Related Person has a position as an officer, manager, director, trustee or partner or in which any Related Person has any direct or indirect ownership interest (other than the ownership of securities representing no more than two percent (2%) of the outstanding voting power or economic interest of a publicly traded company), in each case, other than any Ancillary Document. Except as set forth on Schedule 6.21, or as contemplated by or provided for in any Ancillary Document, no Target Company has outstanding any Contract or other arrangement or commitment with any Related Person, and no Related Person owns any real property or Personal Property, or right, tangible or intangible (including Intellectual Property) which is used in the business of any Target Company. Except as set forth on Schedule 6.21, or as contemplated by or provided for in any Ancillary Document, the assets of the Target Companies do not include any material receivable or other material obligation from a Related Person, and the liabilities of the Target Companies do not include any material payable or other material obligation or commitment to any Related Person.
| 35 |
6.22 Insurance.
(a) Schedule 6.22(a) lists all insurance policies (by policy number, insurer, coverage period, coverage amount, annual premium and type of policy) held by a Target Company relating to a Target Company or its business, properties, assets, directors, officers and employees, copies of which have been provided to DMAC. All premiums due and payable under all such insurance policies have been timely paid and the Target Companies are otherwise in material compliance with the terms of such insurance policies. To the Knowledge of the Company, each such insurance policy (i) is legal, valid, binding, enforceable and in full force and effect and (ii) will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the Closing. No Target Company has any self-insurance or co-insurance programs. Since January 1, 2020, no Target Company has received any notice from, or on behalf of, any insurance carrier relating to or involving any adverse change or any change other than in the ordinary course of business, in the conditions of insurance, any refusal to issue an insurance policy or non-renewal of a policy.
(b) Since January 1, 2020, no Target Company has made any insurance claim in excess of $100,000. Since January 1, 2020, each Target Company has reported to its insurers all claims and pending circumstances that would reasonably be expected to result in a claim, except where such failure to report such a claim would not be reasonably likely to be material to the Target Companies, taken as a whole. To the Knowledge of the Company, no event has occurred, and no condition or circumstance exists, that would reasonably be expected to (with or without notice or lapse of time) give rise to or serve as a basis for the denial of any such insurance claim. Since January 1, 2020, no Target Company has made any claim against an insurance policy as to which the insurer is denying coverage.
6.23 Top Customers and Suppliers. Schedule 6.23 lists, by dollar volume received by or paid to the Target Companies, as applicable, for the twelve (12) months ended on December 31, 2021, the ten (10) largest customers (with names redacted but with customer identification numbers provided in lieu thereof) of the Target Companies (the “Top Customers”) and the ten largest suppliers of goods or services to the Target Companies (the “Top Vendors”), along with the amounts of such dollar volumes. The relationships of each Target Company with the Top Customers and Top Vendors are good commercial working relationships and (i) no Top Vendor or Top Customer within the last twelve (12) months has cancelled or otherwise terminated, or, has given any Target Company any written notice to cancel or otherwise terminate, any material relationships of such Person with a Target Company, and (ii) no Top Vendor or Top Customer has during the last twelve (12) months decreased materially or, to the Knowledge of the Company, threatened in writing to (A) stop, decrease or limit materially, or modify materially its material relationships with a Target Company or (B) stop, decrease or limit materially its products or services to any Target Company or its usage or purchase of the products or services of any Target Company, (iii) to the Knowledge of the Company, no Top Vendor or Top Customer intends to refuse to pay any material amount due to any Target Company or seek to exercise any remedy against any Target Company, and (iv) no Target Company has within the past twelve (12) months been engaged in any material dispute with any Top Vendor or Top Customer.
6.24 Certain Business Practices.
(a) Since January 1, 2019, no Target Company, nor any of their respective Representatives acting on their behalf has (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees, to foreign or domestic political parties or campaigns or violated any provision of the U.S. Foreign Corrupt Practices Act of 1977 or (iii) made any other unlawful payment. Since January 1, 2019, no Target Company, nor any of their respective Representatives acting on their behalf has directly or knowingly indirectly, given or agreed to give any unlawful gift or similar benefit in any material amount to any customer, supplier, governmental employee or other Person who is or may be in a position to help or hinder any Target Company or assist any Target Company in connection with any actual or proposed transaction.
| 36 |
(b) Since January 1, 2019, the operations of each Target Company are and have been conducted at all times in compliance with money laundering statutes in all applicable jurisdictions that govern the operations of the Target Company, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority that have jurisdiction over the Target Companies, and no Action involving a Target Company with respect to the any of the foregoing is pending or, to the Knowledge of the Company, threatened.
(c) No Target Company or any of their respective directors or officers, or, to the Knowledge of the Company, any other Representative acting on behalf of a Target Company is currently (i) identified on the specially designated nationals or other blocked person list or otherwise currently subject to any U.S. sanctions administered by OFAC, the U.S. Department of State, or other applicable Governmental Authority; (ii) organized, resident, or located in, or a national of a comprehensively sanctioned country (currently, Cuba, Iran, North Korea, and the Crimea region of Ukraine); or (iii) in the aggregate, fifty percent (50%) or greater owned, directly or indirectly, or otherwise controlled, by a person identified in (i) or (ii); and no Target Company has, directly or, knowingly, indirectly, used any funds, or loaned, contributed or otherwise made available such funds to any Subsidiary, joint venture partner or other Person, in connection with any sales or operations in Cuba, Iran, Syria, or any other country comprehensively sanctioned by OFAC (currently, Cuba, Iran, North Korea, Syria, and the Crimea region of Ukraine) or for the purpose of financing the activities of any Person currently subject to, or otherwise in violation of, any U.S. sanctions administered by OFAC or the U.S. Department of State in the last five (5) fiscal years.
6.25 Investment Company Act. No Target Company is an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of a person subject to registration and regulation as an “investment company”, in each case within the meaning of the Investment Company Act.
6.26 Finders and Brokers. Except as set forth in Schedule 6.26, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from DMAC, Pubco, the Target Companies or any of their respective Affiliates in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of any Target Company.
6.27 Information Supplied. None of the information supplied or to be supplied by the any Target Company expressly for inclusion or incorporation by reference: (a) in any current report on Form 8-K, and any exhibits thereto or any other report, form, registration or other filing made with any Governmental Authority (including the SEC) with respect to the Transactions or any Ancillary Documents; (b) in the Registration Statement; or (c) in the mailings or other distributions to DMAC’s or Pubco’s shareholders and/or prospective investors with respect to the consummation of the Transactions or in any amendment to any of documents identified in (a) through (c), will, when filed, made available, mailed or distributed, as the case may be, 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. None of the information supplied or to be supplied by any Target Company expressly for inclusion or incorporation by reference in any of the Signing Press Release, the Signing Filing, the Closing Press Release and the Closing Filing will, when filed or distributed, as applicable, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, the Company makes no representation, warranty or covenant with respect to any information supplied by or on behalf of DMAC or its Affiliates.
| 37 |
6.28 Independent Investigation. The Company has conducted its own respective independent investigation, review and analysis of the business, results of operations, condition (financial or otherwise) or assets of DMAC, Pubco and Merger Sub and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of DMAC, Pubco and Merger Sub for such purpose. The Company acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, it has relied solely upon its own investigation and the express representations and warranties of DMAC, Pubco and Merger Sub set forth in this Agreement (including the related portions of the DMAC Disclosure Schedules) and in any certificate delivered to the Company pursuant hereto, and the information provided by or on behalf of DMAC, Pubco or Merger Sub for the Registration Statement; and (b) none of DMAC, Pubco, Merger Sub or their respective Representatives have made any representation or warranty as to DMAC, Pubco or Merger Sub or this Agreement, except as expressly set forth in this Agreement (including the related portions of the DMAC Disclosure Schedules) or in any certificate delivered to Company pursuant hereto.
Article VII
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller hereby severally, and not jointly, represents and warrants to DMAC and Pubco, as of the Effective Date and as of the Closing, as follows:
7.1 Organization and Standing. Such Seller, if not an individual person, is an entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its formation and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted.
7.2 Authorization; Binding Agreement. Such Seller has all requisite power, authority and legal right and capacity to execute and deliver this Agreement and each Ancillary Document to which it is a party, to perform such Seller’s obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each Ancillary Document to which such Seller is or is required to be a party has been or shall be when delivered, duly and validly executed and delivered by such Seller and assuming the due authorization, execution and delivery of this Agreement and any such Ancillary Document by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the legal, valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, subject to the Enforceability Exceptions.
7.3 Ownership. Such Seller is as of the Effective Date, and on the Closing Date will be, the record and beneficial owner and holder of, and the owner of good, valid and marketable title to, the Purchased Shares set forth opposite such Seller’s name on Annex I, free and clear of any and all Liens (other than those imposed by applicable securities Laws or the Company Organizational Documents). There are no proxies, voting rights, shareholders’ agreements or other agreements, to which such Seller is a party or by which such Seller is bound, with respect to the voting or transfer of any of such Seller’s Purchased Shares other than this Agreement. None of the Purchased Shares held by such Seller is subject to pre-emptive or similar rights, either pursuant to any Company Organizational Document, requirement of Law or any contract, and no Person has any pre-emptive rights or similar rights to purchase or receive any Purchased Shares or other interests in the Company from such Seller. Upon delivery of such Seller’s Purchased Shares to Pubco on the Closing Date in accordance with this Agreement, the entire legal and beneficial interest in such Purchased Shares and good, valid and marketable title to such Purchased Shares, free and clear of all Liens (other than those imposed by applicable securities Laws or those incurred by Pubco), will pass to Pubco.
| 38 |
7.4 Governmental Approvals. No Consent of or with any Governmental Authority on the part of such Seller is required to be obtained or made in connection with the execution, delivery or performance by such Seller of this Agreement or any Ancillary Documents or the consummation by such Seller of the transactions contemplated hereby or thereby other than (a) such filings as expressly contemplated by this Agreement, (b) pursuant to Antitrust Laws, (c) any filings required with Nasdaq or the SEC with respect to the Transactions, (d) applicable requirements, if any, of the Securities Act, the Exchange Act, and/ or any state “blue sky” securities Laws, and the rules and regulations thereunder, and (e) where the failure to obtain or make such Consents or to make such filings or notifications, would not reasonably be expected to materially impair or delay the ability of Seller to consummate the Transactions.
7.5 Non-Contravention. The execution and delivery by such Seller of this Agreement and each Ancillary Document to which it is a party or otherwise bound and the consummation by such Seller of the transactions contemplated hereby and thereby, and compliance by such Seller with any of the provisions hereof and thereof, will not, (a) if such Seller is an entity, conflict with or violate any provision of such Seller’s Organizational Documents, (b) conflict with or violate any Law, Order or Consent applicable to such Seller or any of its properties or assets or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by such Seller under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien upon any of the properties or assets of such Seller under, (viii) give rise to any obligation to obtain any third party consent or (ix) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of, any Contract to which such Seller is a party or such Seller or its properties or assets are otherwise bound, except for any deviations from any of the foregoing clauses (a), (b) or (c) that has not had and would not reasonably be expected to materially impair or delay the ability of such Seller to consummate the Transactions. If such Seller is an entity, the governing or managing body or persons of such Seller has authorized the execution and delivery of this Agreement by such Seller and has approved this Agreement and the Transactions.
7.6 No Litigation. There is no Action pending or, to the Knowledge of such Seller, threatened, nor any Order is outstanding, against or involving such Seller, whether at law or in equity, before or by any Governmental Authority, which would reasonably be expected to materially and adversely affect the ability of such Seller to consummate the transactions contemplated by, and discharge its obligations under, this Agreement and the Ancillary Documents to which such Seller is or is required to be a party.
| 39 |
7.7 Investment Representations.
(a) Such Seller: (a) is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the Securities Act; (b) is acquiring its portion of the Exchange Shares for itself for investment purposes only, and not with a view towards any resale or distribution of such Exchange Shares; (c) has been advised and understands that the Exchange Shares (i) are being issued in reliance upon one or more exemptions from the registration requirements of the Securities Act and any applicable state securities Laws, (ii) have not been and shall not be registered under the Securities Act or any applicable state securities Laws and, therefore, must be held indefinitely and cannot be resold unless such Exchange Shares are registered under the Securities Act and all applicable state securities Laws, unless exemptions from registration are available and such Seller has complied with the requirements set forth in Section 7.7(b), and (iii) are subject to additional restrictions on transfer pursuant to such Seller’s Lock-Up Agreement (if applicable); (d) is aware that an investment in Pubco is a speculative investment and is subject to the risk of complete loss; and (e) acknowledges that unless otherwise agreed Pubco is under no obligation hereunder to register the Exchange Shares under the Securities Act. Such Seller does not have any Contract with any Person to sell, transfer, or grant participations to such Person, or to any third Person, with respect to the Exchange Shares. By reason of such Seller’s business or financial experience, or by reason of the business or financial experience of such Seller’s “purchaser representatives” (as that term is defined in Rule 501(h) under the Securities Act), such Seller is capable of evaluating the risks and merits of an investment in Pubco and of protecting its interests in connection with this investment. Such Seller has carefully read and understands all materials provided by or on behalf of Pubco, DMAC or their respective Representatives to such Seller or such Seller’s Representatives pertaining to an investment in Pubco and has consulted, as such Seller has deemed advisable, with its own attorneys, accountants or investment advisors with respect to the investment contemplated hereby and its suitability for such Seller. Such Seller acknowledges that the Exchange Shares are subject to dilution for events not under the control of such Seller. Such Seller has completed its independent inquiry and has relied fully upon the advice of its own legal counsel, accountant, financial and other Representatives in determining the legal, tax, financial and other consequences of this Agreement and the transactions contemplated hereby and the suitability of this Agreement and the transactions contemplated hereby for such Seller and its particular circumstances, and, except as set forth herein, has not relied upon any representations or advice by Pubco, DMAC or their respective Representatives. Such Seller acknowledges and agrees that, except as set forth in Article IV (including the related portions of the DMAC Disclosure Schedules) and Article V, no representations or warranties have been made by Pubco, Merger Sub, DMAC or any of their respective Representatives, and that such Seller has not been guaranteed or represented to by any Person, (i) any specific amount or the event of the distribution of any cash, property or other interest in Pubco or (ii) the profitability or value of the Exchange Shares in any manner whatsoever. Such Seller: (A) has been represented by independent counsel (or has had the opportunity to consult with independent counsel and has declined to do so); (B) has had the full right and opportunity to consult with such Seller’s attorneys and other advisors and has availed itself of this right and opportunity; (C) has carefully read and fully understands this Agreement in its entirety and has had it fully explained to it or him by such counsel; (D) is fully aware of the contents hereof and the meaning, intent and legal effect thereof; and (E) is competent to execute this Agreement and has executed this Agreement free from coercion, duress or undue influence.
(b) In addition to the requirements of Section 7.7(a), such Seller understands and agrees that if the Exchange Shares are to be sold pursuant to an exemption from registrations under the Securities Act, then (i) such Seller shall be required to have delivered to Pubco, at the cost of such Seller, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in comparable transactions to the effect that the Exchange Shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, which opinion shall be accepted by Pubco, (ii) the Exchange Shares are sold or transferred to an “affiliate” (as defined in Rule 144 promulgated under the Securities Act (or a successor rule) (“Rule 144”)) of such Seller who agree to sell or otherwise transfer the Exchange Shares only in accordance with this Section 7.7(b) and who is an accredited investor as such term is defined in Rule 501(a) of Regulation D under the Securities Act, (d) the Exchange Shares are sold pursuant to Rule 144, or (e) the Exchange Shares are sold pursuant to Regulation S under the Securities Act (or a successor rule), and such Seller shall have delivered to Pubco, at the cost of such Seller, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate transactions, which opinion shall be accepted by Pubco; (ii) any sale of such Exchange Shares made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such Exchange Shares under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC thereunder; and (iii) neither Pubco nor any other person is under any obligation to register such Exchange Shares under the Securities Act or any state securities Laws or to comply with the terms and conditions of any exemption thereunder (in each case).
(c) Such Seller understands that the Exchange Shares, until such time as the Exchange Shares have been registered under the Securities Act, or may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Exchange Shares may bear a standard Rule 144 legend and a stop-transfer order may be placed against transfer of the certificates for such Exchange Shares.
| 40 |
7.8 Finders and Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from DMAC, Pubco, the Target Companies or any of their respective Affiliates in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of such Seller.
7.9 Information Supplied. None of the information supplied or to be supplied by such Seller expressly for inclusion or incorporation by reference: (a) in any Current Report on Form 8-K or 6-K, and any exhibits thereto or any other report, form, registration or other filing made with any Governmental Authority (including the SEC) with respect to the Transactions or any Ancillary Documents; (b) in the Registration Statement; or (c) in the mailings or other distributions to DMAC’s or Pubco’s shareholders and/or prospective investors with respect to the consummation of the Transactions or in any amendment to any of documents identified in (a) through (c), will, when filed, made available, mailed or distributed, as the case may be, 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. None of the information supplied or to be supplied by such Seller expressly for inclusion or incorporation by reference in any of the Signing Press Release, the Signing Filing, the Closing Filing and the Closing Press Release will, when filed or distributed, as applicable, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, such Seller does not make any representation, warranty or covenant with respect to any information supplied by or on behalf of DMAC or its Affiliates.
7.10 Independent Investigation. Such Seller has conducted its own independent investigation, review and analysis of the business, results of operations, condition (financial or otherwise) or assets of DMAC, Pubco and Merger Sub and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of DMAC, Pubco and Merger Sub for such purpose. Such Seller acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, it has relied solely upon its own investigation and the express representations and warranties of DMAC, Pubco and Merger Sub set forth in this Agreement (including the related portions of the DMAC Disclosure Schedules) and in any certificate delivered to such Seller pursuant hereto, and the information provided by or on behalf of DMAC, Pubco or Merger Sub for the Registration Statement; and (b) none of DMAC, Pubco, Merger Sub or their respective Representatives have made any representation or warranty as to DMAC, Pubco, Merger Sub or this Agreement, except as expressly set forth in this Agreement (including the related portions of the DMAC Disclosure Schedules) or in any certificate delivered to such Seller pursuant hereto.
| 41 |
Article VIII
COVENANTS
8.1 Access and Information.
(a) During the period from the Effective Date and continuing until the earlier of the termination of this Agreement in accordance with Section 11.1 or the Closing (the “Interim Period”), subject to Section 8.14, each of the Company, Pubco and Merger Sub (collectively with the Target Companies, the “Company Entities”) shall give, and shall cause their respective Representatives to give, DMAC and its Representatives, at reasonable times during normal business hours and at reasonable intervals and upon reasonable advance notice, reasonable access to all offices and other facilities and to all employees, properties, Contracts, books and records, financial and operating data and other similar information (including Tax Returns, internal working papers, client files, client Contracts and director service agreements), of or pertaining to the Company Entities as DMAC or its Representatives may reasonably request regarding the Company Entities and their respective businesses, assets, Liabilities, financial condition, operations, management, employees and other aspects (including unaudited quarterly financial statements, including a consolidated quarterly balance sheet and income statement, a copy of each material report, schedule and other document filed with or received by a Governmental Authority pursuant to the requirements of applicable securities Laws, and independent public accountants’ work papers (subject to the consent or any other conditions required by such accountants, if any) in each case, if the financial statements or other documents already exist) and cause each of the Representatives of any Company Entity to reasonably cooperate with DMAC and its Representatives in their investigation; provided, however, that DMAC and its Representatives shall conduct any such activities in such a manner as not to unreasonably interfere with the business or operations of the Company Entities. DMAC hereby agrees that, during the Interim Period, it shall not contact any employee (other than executive officers), customer, supplier, distributor or other material business relation of any Company Entity regarding any Company Entity, its business or the Transactions and the Ancillary Documents without the prior written consent of the Company (such consent not to be unreasonably withheld, conditioned or delayed). Notwithstanding the foregoing, the Company Entities shall not be required to provide access to any information (i) that is personally identifiable information of a third party which is prohibited from being disclosed pursuant to the terms of a written confidentiality agreement with a third party, (ii) the disclosure of which would violate any Law or (iii) the disclosure of which would constitute a waiver of attorney-client, attorney work product or other legal privilege.
(b) During the Interim Period, subject to Section 8.14, DMAC shall give, and shall cause its Representatives to give, the Company Entities and their respective Representatives, at reasonable times during normal business hours and at reasonable intervals and upon reasonable advance notice, reasonable access to all offices and other facilities and to all employees, properties, Contracts, books and records, financial and operating data and other information (including Tax Returns, internal working papers, client files, client Contracts and director service agreements), of or pertaining to DMAC or its Subsidiaries, as the Company Entities or their respective Representatives may reasonably request regarding DMAC, its Subsidiaries and their respective businesses, assets, Liabilities, financial condition, operations, management, employees and other aspects (including unaudited quarterly financial statements, including a consolidated quarterly balance sheet and income statement, a copy of each material report, schedule and other document filed with or received by a Governmental Authority pursuant to the requirements of applicable securities Laws, and independent public accountants’ work papers (subject to the consent or any other conditions required by such accountants, if any) in each case, if the financial statements or other documents already exist) and cause each of DMAC’s Representatives to reasonably cooperate with the Company Entities and their respective Representatives in their investigation; provided, however, that the Company Entities and their Representatives shall conduct any such activities in such a manner as not to unreasonably interfere with the business or operations of DMAC or any of its Subsidiaries. Notwithstanding the foregoing, DMAC shall not be required to provide access to any information (i) that is personally identifiable information of a third party which is prohibited from being disclosed pursuant to the terms of a written confidentiality agreement with a third party, (ii) the disclosure of which would violate any Law or (iii) the disclosure of which would constitute a waiver of attorney-client, attorney work product or other legal privilege.
8.2 Conduct of Business of the Company Entities and the Sellers.
(a) Unless DMAC shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), during the Interim Period, except as expressly contemplated by this Agreement or any Ancillary Document or as set forth on Schedule 8.2, or as required by applicable Law (including COVID-19 Measures), the Company Entities shall, and shall cause their respective Subsidiaries to, (i) conduct their respective businesses, in all material respects, in the ordinary course of business consistent with past practice, (ii) comply with all Laws applicable to the Company Entities and their respective businesses, assets and employees, and (iii) use commercially reasonable efforts necessary or appropriate to preserve intact, in all material respects, their respective business organizations, to keep available the services of their respective managers, directors, officers, employees and consultants, and to preserve the possession, control and condition of their respective material assets, all as consistent with past practice; provided, that no action by any Company Entity with respect to matters specifically prohibited or restricted by any provision of Section 8.2(b) shall be deemed a breach of this sentence unless such action would constitute a breach of such relevant provision of Section 8.2(b).
| 42 |
(b) Without limiting the generality of Section 8.2(a) and except as contemplated by the terms of this Agreement or any Ancillary Document or as set forth on Schedule 8.2, or as required by applicable Law (including COVID-19 Measures), during the Interim Period, without the prior written consent of DMAC (such consent not to be unreasonably withheld, conditioned or delayed), none of the Company Entities shall, and each shall cause their respective Subsidiaries to not:
(i) amend, waive or otherwise change, in any respect, its Organizational Documents;
(ii) authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any of its equity securities or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its equity securities, or other securities, including any securities convertible into or exchangeable for any of its shares or other equity securities or securities of any class and any other equity-based awards, or engage in any hedging transaction with a third Person with respect to such securities;
(iii) split, combine, recapitalize or reclassify any of its shares or other equity interests or issue any other securities in respect thereof or pay or set aside any dividend or other distribution (whether in cash, equity or property or any combination thereof) in respect of its equity interests, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its securities;
(iv) incur, create, prepay, assume or otherwise become liable for any Indebtedness (directly, contingently or otherwise) in excess of $1,500,000 individually or $3,000,000 in the aggregate, make a loan or advance to or investment in any third party (other than advancement of expenses to employees in the ordinary course of business), or guarantee or endorse any Indebtedness, Liability or obligation of any Person in excess of $1,500,000 individually or $3,000,000 in the aggregate, in each case, except for hedging or over-the-counter derivatives transactions in the ordinary course of business;
(v) increase the wages, salaries or compensation of its employees other than in the ordinary course of business, consistent with past practice, and in any event not in the aggregate by more than five percent (5%), or make or commit to make any bonus payment (whether in cash, property or securities) to any employee, or materially increase other benefits of employees generally, or enter into, establish, materially amend or terminate any Company Benefit Plan with, for or in respect of any current consultant, officer, manager director or employee, in each case other than as required by applicable Law, pursuant to the terms of any Benefit Plans or in the ordinary course of business consistent with past practice;
(vi) make or rescind any material election relating to Taxes, settle any material Action relating to Taxes, file any material amended Tax Return or claim for a material refund, or make any material change in its accounting or Tax policies or procedures, in each case except as required by applicable Law or in compliance with GAAP;
(vii) transfer or license to any Person, other than the license of Intellectual Property in the ordinary course of business, or otherwise permit to lapse or fail to preserve, any material Company Registered IP or other Company IP, or disclose any material Trade Secrets included in Company IP to any Person who has not entered into a written confidentiality agreement and is not otherwise subject to confidentiality obligations;
| 43 |
(viii) terminate, or waive or assign any material right under, any Company Material Contract or enter into any Contract that would be a Company Material Contract, in any case outside of the ordinary course of business consistent with past practice;
(ix) fail to maintain its books, accounts and records in all material respects in the ordinary course of business consistent with past practice;
(x) establish any Subsidiary or enter into any new line of business;
(xi) fail to use commercially reasonable efforts to keep in force insurance policies or replacement or revised policies providing insurance coverage with respect to its assets, operations and activities in such amount and scope of coverage as are currently in effect;
(xii) revalue any of its material assets or make any change in accounting methods, principles or practices, except to the extent required to comply with GAAP and after consulting with such Party’s outside auditors;
(xiii) waive, release, assign, settle or compromise any claim or Action (including any Action relating to this Agreement or the transactions contemplated hereby but excluding any Action between two or more Parties as required to enforce this Agreement or any Party’s rights or obligations hereunder), other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages (and not the imposition of equitable relief on, or the admission of wrongdoing by, such Party or its Affiliates) not in excess of $500,000 (individually or in the aggregate), or otherwise pay, discharge or satisfy any Actions, Liabilities or obligations, unless such amount has been reserved in the Company Financials or the consolidated financial statements of Pubco, as applicable;
(xiv) close or materially reduce its activities, or effect any layoff or other personnel reduction or change, at any of its facilities;
(xv) acquire, including by merger, consolidation, acquisition of equity interests or assets, or any other form of business combination, any corporation, partnership, limited liability company, other business organization or any division thereof, or any material amount of assets in each case, except for transactions in the ordinary course of business;
(xvi) make any capital expenditures in excess of $500,000 (individually for any project (or set of related projects) or $1,000,000 in the aggregate);
(xvii) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization or complete any such plan or the transactions set forth therein;
(xviii) voluntarily incur any Liability or obligation (whether absolute, accrued, contingent or otherwise) in excess of $500,000 individually or $1,000,000 in the aggregate, other than pursuant to the terms of a Company Material Contract or other Contract not required to be disclosed as a Company Material Contract in existence as of the Effective Date or entered into in the ordinary course of business or in accordance with the terms of this Section 8.2 during the Interim Period, or pursuant to a Company Benefit Plan;
| 44 |
(xix) sell, lease, license, transfer, exchange or swap, mortgage or otherwise pledge or encumber (including securitizations), or otherwise dispose of any material portion of its properties, assets or rights, other than licensing of Intellectual Property in the ordinary course of business or suffer or incur any Lien on any their respective assets in excess of $500,000 individually or $1,000,000 in the aggregate;
(xx) enter into any agreement, understanding or arrangement with respect to the voting of equity securities of any Company Entity;
(xxi) take any action that would reasonably be expected to significantly delay or impair the obtaining of any Consents of any Governmental Authority to be obtained in connection with this Agreement;
(xxii) accelerate the collection of any trade receivables or delay the payment of trade payables or any other liabilities other than in the ordinary course of business consistent with past practice;
(xxiii) enter into, amend, waive or terminate (other than terminations in accordance with their terms) any transaction with any Related Person (other than compensation and benefits and advancement of expenses, in each case, provided in the ordinary course of business consistent with past practice);
(xxiv) change their principal place of business or jurisdiction of organization; or
(xxv) authorize or agree to do any of the foregoing actions.
(c) Without limiting Sections 8.2(a) and 8.2(b), during the Interim Period, without the prior written consent of DMAC, (i) the Company shall not issue any Company Securities, and (ii) no Seller shall sell, transfer or dispose of any Company Securities owned by such Seller, in either case of clauses (i) and (ii), unless the recipient or transferee of such Company Securities (the “New Seller”) executes and delivers to DMAC and the Company Parties a joinder agreement in form and substance reasonably acceptable to DMAC and Pubco to become bound by the terms and conditions of this Agreement as a Seller hereunder (a “Joinder”), as well as execute and deliver to DMAC and the Company Parties any Ancillary Documents which such New Seller would have been required to be a party or bound if such New Seller were a Seller on the Effective Date. The Parties shall make any appropriate adjustments to Annex I and each Seller’s Pro Rata Share to account for such New Seller.
8.3 Conduct of Business of DMAC.
(a) Unless the Company and Pubco shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), during the Interim Period, except as expressly contemplated by this Agreement or any Ancillary Document or as set forth on Schedule 8.3, or as required by applicable Law, DMAC shall, and shall cause its Subsidiaries to, (i) conduct their respective businesses, in all material respects, in the ordinary course of business consistent with past practice, (ii) comply with all Laws applicable to DMAC and its Subsidiaries and their respective businesses, assets and employees, and (iii) use commercially reasonable efforts to preserve intact, in all material respects, their respective business organizations, to keep available the services of their respective managers, directors, officers, employees and consultants, and to preserve the possession, control and condition of their respective material assets, all as consistent with past practice; provided, that no action by DMAC with respect to matters specifically prohibited or restricted by any provision of Section 8.3(b) shall be deemed a breach of this sentence unless such action would constitute a breach of such relevant provision of Section 8.3(b). Notwithstanding anything to the contrary in this Section 8.3, nothing in this Agreement shall prohibit or restrict DMAC from extending one or more times, in accordance with the DMAC Charter and IPO Prospectus, or by amendment to the DMAC Charter, the deadline by which it much complete its Business Combination as set forth in Section 11.2(a) (each, an “Extension”), and no consent of any other Party shall be required in connection therewith.
| 45 |
(b) Without limiting the generality of Section 8.3(a) and except as contemplated by the terms of this Agreement (including as contemplated by any PIPE Investment) or any Ancillary Document or as set forth on Schedule 8.3, or as required by applicable Law, during the Interim Period, without the prior written consent of the Company and Pubco (such consent not to be unreasonably withheld, conditioned or delayed), DMAC shall not, and shall cause its Subsidiaries to not:
(i) amend, waive or otherwise change, in any respect, its Organizational Documents;
(ii) authorize for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant, sell, pledge or dispose of any of its equity securities or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its equity securities, or other securities, including any securities convertible into or exchangeable for any of its equity securities or other security interests of any class and any other equity-based awards, or engage in any hedging transaction with a third Person with respect to such securities;
(iii) split, combine, recapitalize or reclassify any of its shares or other equity interests or issue any other securities in respect thereof or pay or set aside any dividend or other distribution (whether in cash, equity or property or any combination thereof) in respect of its shares or other equity interests, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its securities;
(iv) incur, create, assume, prepay or otherwise become liable for any Indebtedness (directly, contingently or otherwise) in excess of $200,000 (individually or in the aggregate), make a loan or advance to or investment in any third party, or guarantee or endorse any Indebtedness, Liability or obligation of any Person (provided, that this Section 8.3(b)(iv) shall not prevent DMAC from borrowing funds necessary to finance its ordinary course administrative costs and expenses and Expenses incurred in connection with the consummation of the Transactions, including any PIPE Investment in accordance with Section 8.18, up to aggregate additional Indebtedness during the Interim Period of $1,000,000);
(v) make or rescind any material election relating to Taxes, settle any material Action relating to Taxes, file any amended Tax Return or claim for material refund, or make any material change in its accounting or Tax policies or procedures, in each case except as required by applicable Law or in compliance with GAAP;
(vi) amend, waive or otherwise change the Trust Agreement in any manner adverse to DMAC or DMAC’s ability to consummate the Transactions;
(vii) terminate, waive or assign any material right under any material agreement to which it is a party;
(viii) fail to maintain its books, accounts and records in all material respects in the ordinary course of business consistent with past practice;
(ix) establish any Subsidiary or enter into any new line of business;
(x) fail to use commercially reasonable efforts to keep in force insurance policies or replacement or revised policies providing insurance coverage with respect to its assets, operations and activities in such amount and scope of coverage as are currently in effect;
| 46 |
(xi) revalue any of its material assets or make any change in accounting methods, principles or practices, except to the extent required to comply with GAAP, and after consulting DMAC’s outside auditors;
(xii) waive, release, assign, settle or compromise any claim or Action (including any Action relating to this Agreement or the transactions contemplated hereby but excluding any Action between two or more Parties as required to enforce this Agreement or any Party’s rights or obligations hereunder), other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages (and not the imposition of equitable relief on, or the admission of wrongdoing by, DMAC or its Subsidiary) not in excess of $100,000 (individually or in the aggregate), or otherwise pay, discharge or satisfy any Actions, Liabilities or obligations, unless such amount has been reserved in the DMAC Financials;
(xiii) acquire, including by merger, consolidation, acquisition of equity interests or assets, or any other form of business combination, any corporation, partnership, limited liability company, other business organization or any division thereof, or any material amount of assets outside the ordinary course of business;
(xiv) make capital expenditures in excess of $100,000 individually for any project (or set of related projects) or $200,000 in the aggregate (excluding for the avoidance of doubt, incurring any Expenses);
(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization or complete any such plan or the transactions set forth therein (other than with respect to the Merger);
(xvi) voluntarily incur any Liability or obligation (whether absolute, accrued, contingent or otherwise) in excess of $100,000 individually or $200,000 in the aggregate (excluding the incurrence of any Expenses) other than pursuant to the terms of a Contract in existence as of the Effective Date or entered into in the ordinary course of business or in accordance with the terms of this Section 8.3 during the Interim Period;
(xvii) sell, lease, license, transfer, exchange or swap, mortgage or otherwise pledge or encumber (including securitizations), or otherwise dispose of any material portion of its properties, assets or rights;
(xviii) enter into any agreement, understanding or arrangement with respect to the voting of its equity securities;
(xix) take any action that would reasonably be expected to significantly delay or impair the obtaining of any Consents of any Governmental Authority to be obtained in connection with this Agreement;
(xx) change their principal place of business or jurisdiction of organization; or
(xxi) authorize or agree to do any of the foregoing actions.
8.4 Annual and Interim Financial Statements. During the Interim Period, within thirty (30) calendar days following the end of each calendar month completed after the Effective Date and within forty-five (45) calendar days following the end of each three-month quarterly period completed after the Effective Date, the Company shall deliver to DMAC an unaudited monthly management account or an unaudited quarterly consolidated income statement and consolidated balance sheet, as applicable, of the Target Companies for the applicable calendar month or quarterly period, as applicable. From the Effective Date through the Closing Date, the Company will also promptly deliver to DMAC copies of any audited consolidated financial statements of the Target Companies that the Target Companies’ certified public accountants may issue.
| 47 |
8.5 DMAC Public Filings. During the Interim Period, DMAC will use its commercially reasonable efforts to remain current with its reporting obligations pursuant to the Securities Act and the Exchange Act and to 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 prior to the Merger to maintain the listing of the DMAC Common Stock and the DMAC Rights on Nasdaq; provided, that the Parties acknowledge and agree that from and after the Closing, the Parties intend to list on Nasdaq only the Pubco Ordinary Shares.
8.6 No Solicitation.
(a) For purposes of this Agreement, (i) an “Acquisition Proposal” means any inquiry, proposal or offer, or any indication of interest in making an offer or proposal, from any Person or group at any time relating to an Alternative Transaction, and (ii) an “Alternative Transaction” means (A) with respect to any Company Entity, the Sellers and their respective Affiliates, a transaction (other than the Transactions) concerning the sale of (x) all or any material part of the business or assets of the Target Companies (other than in the ordinary course of business consistent with past practice) or (y) any of the shares or other equity interests or profits of the Target Companies, in any case, whether such transaction takes the form of a sale of shares or other equity interests, assets, merger, consolidation, issuance of debt securities, management Contract, joint venture or partnership, or otherwise and (B) with respect to DMAC and its Affiliates, a transaction (other than the Transactions) concerning a Business Combination for DMAC, and in each case, other than transfers of the Purchased Shares among the Sellers or to an employee of a Target Company who becomes a Seller as long as such employee will sign a Joinder and execute and deliver any other documents required by Section 8.2(c) hereof.
(b) During the Interim Period, in order to induce the other Parties to continue to commit to expend management time and financial resources in furtherance of the transactions contemplated hereby, each Party shall not, and shall cause its Representatives not to, without the prior written consent of the Company, Pubco and DMAC, directly or indirectly, (i) solicit, initiate or knowingly facilitate or assist the making, submission or announcement of, or intentionally encourage, any Acquisition Proposal, (ii) furnish any non-public information regarding such Party or its Affiliates (or with respect to any Seller, any Target Company) or their respective businesses, operations, assets, Liabilities, financial condition, prospects or employees to any Person or group (other than a Party to this Agreement or their respective Representatives) in connection with or in response to an Acquisition Proposal, (iii) engage or participate in discussions or negotiations with any Person or group with respect to, or that would reasonably be expected to lead to, an Acquisition Proposal, (iv) approve, endorse or recommend, or publicly propose to approve, endorse or recommend, any Acquisition Proposal, (v) negotiate or enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement in furtherance of any Acquisition Proposal, or (vi) release any third Person from, or waive any provision of, any confidentiality agreement to which such Party is a party.
(c) Each Party shall notify the others as promptly as practicable (and in any event within 48 hours) orally and in writing of the receipt by such Party or any of its Representatives (or with respect to the Company, any Seller) of any bona fide inquiries, proposals or offers, requests for information or requests for discussions or negotiations regarding or constituting any Acquisition Proposal or any bona fide inquiries, proposals or offers, requests for information or requests for discussions or negotiations that would reasonably be expected to result in an Acquisition Proposal, specifying in each case, the material terms and conditions thereof (including a copy thereof if in writing or a written summary thereof if oral) and the identity of the party making such inquiry, proposal, offer or request for information, each Party shall keep the others promptly informed of the status of any such inquiries, proposals, offers or requests for information. During the Interim Period, each Party shall, and shall cause its Representatives to, immediately cease and cause to be terminated any solicitations, discussions or negotiations with any Person with respect to any Acquisition Proposal and shall, and shall direct its Representatives to, cease and terminate any such solicitations, discussions or negotiations.
| 48 |
8.7 No Trading. The Company Entities and the Sellers each acknowledge and agree that each of them is aware, and that their respective Affiliates are aware (and each of their respective Representatives is aware or, upon receipt of any material nonpublic information of DMAC, will be advised) of the restrictions imposed by U.S. federal securities laws and the rules and regulations of the SEC and Nasdaq promulgated thereunder or otherwise (the “Federal Securities Laws”) and other applicable foreign and domestic Laws on a Person possessing material nonpublic information about a publicly traded company. The Company Entities and the Sellers each hereby agree that, while it is in possession of such material nonpublic information, it shall not purchase or sell any securities of DMAC, communicate such information to any third party, take any other action with respect to DMAC in violation of such Laws, or cause or encourage any third party to do any of the foregoing.
8.8 Notification of Certain Matters. During the Interim Period, each Party shall give prompt notice to the other Parties if such Party or its Affiliates (or, with respect to the Company, any Seller): (a) fails to comply with any material covenant or agreement to be complied with or satisfied by it or its Affiliates (or, with respect to the Company, any Seller) hereunder in any material respect; (b) receives any notice or other communication in writing from any third party (including any Governmental Authority) alleging (i) that the Consent of such third party is required in connection with the Transactions or (ii) any material non-compliance with any Law by such Party or its Affiliates (or, with respect to the Company, any Seller); (c) receives any notice or other communication from any Governmental Authority in connection with the Transactions; (d) discovers any fact or circumstance that, or becomes aware of the occurrence of any event the occurrence of which, would reasonably be expected to cause or result in any of the conditions set forth in Article X not being satisfied or the satisfaction of those conditions being materially delayed; or (e) becomes aware of the commencement or threat, in writing, of any material Action against such Party or any of its Affiliates (or, with respect to the Company, any Seller), or any of their respective properties or assets, or, to the Knowledge of such Party, any officer, director, partner, member or manager, in his, her or its capacity as such, of such Party (or, with respect to the Company, any Seller) with respect to the consummation of the Transactions. No such notice shall constitute an acknowledgement or admission by the Party providing the notice regarding whether or not any of the conditions to the Closing have been satisfied or in determining whether or not any of the representations, warranties or covenants contained in this Agreement have been breached.
8.9 Efforts.
(a) Subject to the terms and conditions of this Agreement, each Party shall use its commercially reasonable efforts, and shall cooperate fully with the other Parties, to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable Laws and regulations to consummate the Transactions (including the receipt of all applicable Consents of Governmental Authorities) and to comply as promptly as practicable with all requirements of Governmental Authorities applicable to the Transactions.
| 49 |
(b) In furtherance and not in limitation of Section 8.9(a), to the extent required under any Laws that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade (“Antitrust Laws”), each Party hereto agrees to make any required filing or application under Antitrust Laws, as applicable, at such Party’s sole cost and expense, with respect to the transactions contemplated hereby as promptly as practicable, to supply as promptly as reasonably practicable any additional information and documentary material that may be reasonably requested pursuant to Antitrust Laws and to take all other actions reasonably necessary, proper or advisable to cause the expiration or termination of the applicable waiting periods under Antitrust Laws as soon as practicable, including by requesting early termination of the waiting period provided for under the Antitrust Laws. Each Party shall, in connection with its efforts to obtain all requisite approvals and authorizations for the Transactions under any Antitrust Law, use its commercially reasonable efforts to: (i) cooperate in all respects with each other Party or its Affiliates in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private Person; (ii) keep the other Parties reasonably informed of any communication received by such Party or its Representatives from, or given by such Party or its Representatives to, any Governmental Authority and of any communication received or given in connection with any proceeding by a private Person, in each case regarding any of the Transactions; (iii) permit a Representative of the other Parties and their respective outside counsel to review any communication given by it to, and consult with each other in advance of any meeting or conference with, any Governmental Authority or, in connection with any proceeding by a private Person, with any other Person, and to the extent permitted by such Governmental Authority or other Person, give a Representative or Representatives of the other Parties the opportunity to attend and participate in such meetings and conferences; (iv) in the event a Party’s Representative is prohibited from participating in or attending any meetings or conferences, the other Parties shall keep such Party promptly and reasonably apprised with respect thereto; and (v) use commercially reasonable efforts to cooperate in the filing of any memoranda, white papers, filings, correspondence or other written communications explaining or defending the transactions contemplated hereby, articulating any regulatory or competitive argument, and/or responding to requests or objections made by any Governmental Authority.
(c) As soon as reasonably practicable following the Effective Date, the Parties shall reasonably cooperate with each other and use (and shall cause their respective Affiliates to use) their respective commercially reasonable efforts to prepare and file with Governmental Authorities requests for approval of the Transactions and shall use all commercially reasonable efforts to have such Governmental Authorities approve the Transactions. Each Party shall give prompt written notice to the other Parties if such Party or any of its Representatives (or with respect to the Company, any Seller) receives any notice from such Governmental Authorities in connection with the Transactions, and shall promptly furnish the other Parties with a copy of such Governmental Authority notice. If any Governmental Authority requires that a hearing or meeting be held in connection with its approval of the transactions contemplated hereby, whether prior to the Closing or after the Closing, each Party shall arrange for one or more Representatives of such Party to be present for such hearing or meeting. If any objections are asserted with respect to the Transactions under any applicable Law or if any Action is instituted (or threatened to be instituted) by any applicable Governmental Authority or any private Person challenging any of the Transactions or any Ancillary Document as violative of any applicable Law or which would otherwise prevent, materially impede or materially delay the consummation of the transactions contemplated hereby or thereby, the Parties shall use their commercially reasonable efforts to resolve any such objections or Actions so as to timely permit consummation of the Transactions and the Ancillary Documents, including in order to resolve such objections or Actions which, in any case if not resolved, could reasonably be expected to prevent, materially impede or materially delay the consummation of the transactions contemplated hereby or thereby. In the event any Action is instituted (or threatened to be instituted) by a Governmental Authority or private Person challenging the Transactions, or any Ancillary Document, the Parties shall, and shall cause their respective Representatives to, reasonably cooperate with each other and use their respective commercially reasonable efforts to contest and resist any such Action and to have vacated, lifted, reversed or overturned any Order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the Transactions or the Ancillary Documents.
(d) Prior to the Closing, each Party shall use its commercially reasonable efforts to obtain any Consents of Governmental Authorities or other third Persons as may be necessary for the consummation by such Party or its Affiliates of the Transactions or required as a result of the execution or performance of, or consummation of the transactions contemplated by, this Agreement by such Party or its Affiliates, and the other Parties shall provide reasonable cooperation in connection with such efforts. With respect to Pubco, during the Interim Period, the Company, Pubco and Merger Sub shall take all reasonable actions necessary to cause Pubco to qualify as “foreign private issuer” as such term is defined under Exchange Act Rule 3b-4 and to maintain such status through the Closing.
| 50 |
8.10 Further Assurances. The Parties hereto shall further cooperate with each other and use their respective commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on their part under this Agreement and applicable Laws to consummate the Transactions as soon as reasonably practicable, including preparing and filing as soon as practicable all documentation to effect all necessary notices, reports and other filings.
8.11 The Registration Statement.
(a) As promptly as practicable after the Effective Date, DMAC and Pubco shall jointly prepare, and Pubco shall (at the sole cost and expense of DMAC with respect to any applicable SEC filing fees and/or registration fees) file with the SEC a registration statement on Form F-4 (as amended or supplemented from time to time, and including the Proxy Statement contained therein, the “Registration Statement”) in connection with the registration under the Securities Act of the Pubco Securities to be issued under this Agreement to the holders of DMAC Securities prior to the Merger Effective Time, which Registration Statement will also contain a proxy statement of DMAC (as amended, the “Proxy Statement”) for the purpose of soliciting proxies or votes from DMAC shareholders for the matters to be acted upon at the Special Stockholder Meeting and providing the Public Stockholders an opportunity in accordance with DMAC’s Organizational Documents and the IPO Prospectus to have their DMAC Common Stock redeemed (the “Redemption”) in conjunction with the stockholder vote on the Stockholder Approval Matters. The Proxy Statement shall include proxy materials for the purpose of soliciting proxies from DMAC shareholders to vote, at a special meeting of DMAC stockholders to be called and held for such purpose (the “Special Stockholder Meeting”), in favor of resolutions approving (A) the adoption and approval of this Agreement and the Transactions (including, to the extent required, the issuance of the Exchange Shares and the PIPE Shares), by the holders of DMAC Common Stock in accordance with DMAC’s Organizational Documents, the DGCL and the rules and regulations of the SEC and Nasdaq, (B) to the extent required by the Federal Securities Laws or the Laws of the Cayman Islands, the adoption of the Amended Pubco Charter, (C) the adoption and approval of a new equity incentive plan for Pubco, which will be in form and substance reasonably acceptable to the Company and DMAC and which will provide that the total awards under such equity incentive plan will be a number of Pubco Ordinary Shares equal to five percent (5%) of the aggregate number of Pubco Ordinary Shares issued and outstanding immediately after the Closing, (D) the appointment of the members of the Post-Closing Pubco Board, in each case in accordance with Section 8.15 hereof, (E) such other matters as the Company, Pubco and DMAC shall hereafter mutually determine to be necessary or appropriate in order to effect the Transactions (the approvals described in foregoing clauses (A) through (E), collectively, the “Stockholder Approval Matters”, and (F) the adjournment of the Special Stockholder Meeting, if necessary or desirable in the reasonable determination of DMAC.
(b) Subject to the provisions of Section 8.11(f), DMAC, acting through the DMAC Board (or a committee thereof), shall (i) make the DMAC Recommendation and include such DMAC Recommendation in the Proxy Statement and (ii) use its commercially reasonable efforts to solicit from its stockholders proxies or votes in favor of the approval of the Stockholder Approval Matters, and (iii) take all other action necessary or advisable to secure the approval of the Stockholder Approval Matters. If on the date for which the Special Stockholder Meeting is scheduled, DMAC has not received proxies and votes representing a sufficient number of shares to obtain the Stockholder Approval Matters, whether or not a quorum is present, DMAC may make one or more successive postponements or adjournments of the Special Stockholder Meeting. In connection with the Registration Statement, DMAC and Pubco will file with the SEC financial and other information about the Transactions in accordance with applicable Law, DMAC’s Organizational Documents, Pubco’s Organizational Documents, the Laws of the Cayman Islands, the DGCL and the rules and regulations of the SEC and Nasdaq. DMAC and Pubco shall cooperate and provide the Company (and its counsel) with a reasonable opportunity to review and comment on the Registration Statement and any amendment or supplement thereto prior to filing the same with the SEC. The Company Entities shall provide DMAC with such information concerning the Company Entities and the Target Companies and their equity holders, officers, directors, employees, assets, Liabilities, condition (financial or otherwise), business and operations that may be required or appropriate for inclusion in the Registration Statement, or in any amendments or supplements thereto, which information provided by the Company Parties shall be true and correct and not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not materially misleading.
| 51 |
(c) DMAC and Pubco shall take any and all reasonable and necessary actions required to satisfy the requirements of the Securities Act, the Exchange Act and other applicable Laws in connection with the Registration Statement, the Special Stockholder Meeting and the Redemption. Each of DMAC, Pubco and the Company shall, and shall cause each of its Subsidiaries to, make their respective directors, officers and employees, upon reasonable advance notice, available to the Company Parties and their respective Representatives in connection with the drafting of the public filings with respect to the Transactions, including the Registration Statement, and responding in a timely manner to comments from the SEC. Each Party shall promptly correct any information provided by it for use in the Registration Statement (and other related materials) if and to the extent that such information has become false or misleading in any material respect or as otherwise required by applicable Laws. DMAC and Pubco shall amend or supplement the Registration Statement and Pubco shall (at the sole cost and expense of DMAC) file the Registration Statement, as so amended or supplemented, to be filed with the SEC and to be disseminated to DMAC’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 DMAC’s Organizational Documents.
(d) DMAC and Pubco, with the assistance of the other Parties, shall promptly respond to any SEC comments on the Registration Statement and shall otherwise use their commercially reasonable efforts to cause the Registration Statement to “clear” comments from the SEC and become effective. DMAC and Pubco shall provide the Company with copies of any written comments, and shall inform the Company of any material oral comments, that DMAC, Pubco or their respective Representatives receive from the SEC or its staff with respect to the Registration Statement, the Special Stockholder Meeting and the Redemption promptly after the receipt of such comments and shall give the Company a reasonable opportunity under the circumstances to review and comment on any proposed written or material oral responses to such comments.
(e) As soon as practicable following the Registration Statement “clearing” comments from the SEC and becoming effective, DMAC and Pubco shall distribute the Registration Statement to DMAC’s shareholders and, DMAC shall call the Special Stockholder Meeting in accordance with the DGCL for a date no later than thirty (30) days following the effectiveness of the Registration Statement.
(f) DMAC and Pubco shall comply with all applicable Laws, any applicable rules and regulations of Nasdaq, DMAC’s Organizational Documents and this Agreement in the preparation, filing and distribution of the Registration Statement, any solicitation of proxies thereunder, the calling and holding of the Special Stockholder Meeting and the Redemption.
| 52 |
8.12 Change of Recommendation.
(a) Notwithstanding anything in this Agreement to the contrary, if, at any time prior to obtaining the Required Stockholder Approval, the DMAC Board determines in good faith, after consultation with its outside legal counsel and financial advisor, that in response to a Intervening Event, making a DMAC Change of Recommendation is necessary for the DMAC Board to comply with its fiduciary duties under applicable Law, the DMAC Board may, prior to obtaining the Required Stockholder Approval, make a DMAC Change of Recommendation; provided, however, that DMAC shall not be entitled to make, or agree or resolve to make, a DMAC Change of Recommendation unless (i) DMAC delivers to Pubco a written notice (an “Intervening Event Notice”) advising Pubco that the DMAC Board proposes to take such action and containing the material facts underlying the DMAC Board’s determination that an Intervening Event has occurred and that to make a DMAC Change of Recommendation is necessary for the DMAC Board to comply with its fiduciary duties under applicable Law and (ii) at or after 5:00 p.m., New York time, on the fourth (4th) Business Day immediately following the day on which DMAC delivered the Intervening Event Notice (such period from the time the Intervening Event Notice is provided until 5:00 p.m., New York time, on the fourth (4th) Business Day immediately following the day on which DMAC delivered the Intervening Event Notice (it being understood that any material development with respect to a Intervening Event shall require a new notice but with an additional three (3) Business Day (instead of four (4) Business Day) period from the date of such notice), the “Intervening Event Notice Period”), the DMAC Board reaffirms in good faith (after consultation with its outside legal counsel and financial advisor) that making a DMAC Change of Recommendation is necessary for the DMAC Board to comply with its fiduciary duties under applicable Law. If requested by the Company, DMAC shall, and shall use its commercially reasonable efforts to cause its Representatives to, during the Intervening Event Notice Period, engage in good faith negotiations with the Company Parties and their Representatives to make such adjustments in the terms and conditions of this Agreement so that a DMAC Change of Recommendation is not necessary for DMAC Board to comply with the DMAC Board’s fiduciary duties under applicable Law.
(b) DMAC agrees that, unless this Agreement is terminated in accordance with the terms herein, its obligation to establish a record date for, duly call, give notice of, convene and hold the Special Stockholder Meeting for the purpose of obtaining the Required Stockholder Approval shall not be affected by any DMAC Change of Recommendation, and DMAC agrees to establish a record date for, duly call, give notice of, convene and hold the Special Stockholder Meeting and submit for the approval of its stockholders the matters contemplated by the Proxy Statement (including the Stockholder Approval Matters) as required herein, regardless of whether or not there shall be any DMAC Change of Recommendation.
8.13 Public Announcements.
(a) The Parties agree that, during the Interim Period, no public release, filing or announcement concerning this Agreement or the Ancillary Documents or the transactions contemplated hereby or thereby shall be issued by any Party or any of their Affiliates without the prior written consent (not be unreasonably withheld, conditioned or delayed) of DMAC, Pubco and the Company, except as such release or announcement may be required by applicable Law or the rules or regulations of any securities exchange, in which case the applicable Party shall use commercially reasonable efforts to allow the other Parties reasonable time to comment on, and arrange for any required filing with respect to, such release or announcement in advance of such issuance.
(b) The Parties shall mutually agree upon and, as promptly as practicable after the execution of this Agreement (but in any event within four (4) Business Days thereafter), issue a press release announcing the execution of this Agreement (the “Signing Press Release”). Promptly after the issuance of the Signing Press Release (but in any event within four (4) Business Days after the execution of this Agreement), DMAC shall file a current report on Form 8-K (the “Signing Filing”) with the Signing Press Release and a description of this Agreement as required by Federal Securities Laws, which the Company shall review, comment upon and approve (which approval shall not be unreasonably withheld, conditioned or delayed) prior to filing (with a draft of which provided to the Company for review and comment no later than two (2) Business Days after the execution of this Agreement). The Parties shall mutually agree upon 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 (the “Closing Press Release”). Promptly after the issuance of the Closing Press Release, Pubco shall file a current report on Form 8-K (the “Closing Filing”) with the Closing Press Release and a description of the Closing as required by Federal Securities Laws which DMAC shall review, comment upon and approve (which approval shall not be unreasonably withheld, conditioned or delayed) prior to filing. In connection with the preparation of the Signing Press Release, the Signing Filing, the Closing Filing, the Closing Press Release, or any other report, statement, filing notice or application made by or on behalf of a Party to any Governmental Authority or other third party in connection with the transactions contemplated hereby, each Party shall, upon request by any other Party, furnish the Parties with all information concerning themselves, their respective directors, officers and equity holders, and such other matters as may be reasonably necessary or advisable in connection with the transactions contemplated hereby, or any other report, statement, filing, notice or application made by or on behalf of a Party to any third party and/ or any Governmental Authority in connection with the transactions contemplated hereby.
| 53 |
8.14 Confidential Information.
(a) The Company Entities and the Sellers agree that during the Interim Period and, in the event this Agreement is terminated in accordance with Article XI, for a period of two (2) years after such termination, they shall, and shall cause their respective Representatives to: (i) treat and hold in strict confidence any DMAC Confidential Information that is provided to such Person or its Representatives, and will not use for any purpose (except in connection with the consummation of the Transactions or the Ancillary Documents, performing their obligations hereunder or thereunder or enforcing their rights hereunder or thereunder), nor directly or indirectly disclose, distribute, publish, disseminate or otherwise make available to any third party any of the DMAC Confidential Information without DMAC’s prior written consent; and (ii) in the event that the Company Entities, any Seller or any of their respective Representatives, during the Interim Period or, in the event that this Agreement is terminated in accordance with Article XI, for a period of two (2) years after such termination, becomes legally compelled to disclose any DMAC Confidential Information, (A) provide DMAC to the extent legally permitted with prompt written notice of such requirement so that DMAC or an Affiliate thereof may seek, at DMAC’s cost, a protective Order or other remedy or waive compliance with this Section 8.14(a), and (B) in the event that such protective Order or other remedy is not obtained, or DMAC waives compliance with this Section 8.14(a), furnish only that portion of such DMAC Confidential Information which is legally required to be provided as advised by outside counsel and to exercise its commercially reasonable efforts to obtain assurances that confidential treatment will be accorded such DMAC Confidential Information. In the event that this Agreement is terminated and the transactions contemplated hereby are not consummated, the Company Entities and the Sellers shall, and shall cause their respective Representatives to, promptly deliver to DMAC or destroy (at DMAC’s election) any and all copies (in whatever form or medium) of DMAC Confidential Information and destroy all notes, memoranda, summaries, analyses, compilations and other writings related thereto or based thereon. Notwithstanding the foregoing, (x) Pubco and its Representatives shall be permitted to disclose any and all DMAC Confidential Information to the extent required by the Federal Securities Laws and (y) Pubco shall, and shall cause its Representatives to, treat and hold in strict confidence any Trade Secret of DMAC disclosed to such Person until such information ceases to be a Trade Secret, subject to any disclosure as may be required pursuant to clause (ii) of the first sentence of this Section 8.14(a).
| 54 |
(b) DMAC hereby agrees that during the Interim Period and, in the event that this Agreement is terminated in accordance with Article XI, for a period of two (2) years after such termination, it shall, and shall cause its Representatives to: (i) treat and hold in strict confidence any Company Confidential Information that is provided to such Person or its Representatives, and will not use for any purpose (except in connection with the consummation of the Transactions or the Ancillary Documents, performing its obligations hereunder or thereunder or enforcing its rights hereunder or thereunder), nor directly or indirectly disclose, distribute, publish, disseminate or otherwise make available to any third party any of the Company Confidential Information without the Company’s prior written consent; and (ii) in the event that DMAC or any of its Representatives, during the Interim Period or, in the event that this Agreement is terminated in accordance with Article XI, for a period of two (2) years after such termination, becomes legally compelled to disclose any Company Confidential Information, (A) provide the Company to the extent legally permitted with prompt written notice of such requirement so that the Company may seek, at the Company’s sole expense, a protective Order or other remedy or waive compliance with this Section 8.14(b) and (B) in the event that such protective Order or other remedy is not obtained, or the Company waives compliance with this Section 8.14(b), furnish only that portion of such Company Confidential Information which is legally required to be provided as advised by outside counsel and to exercise its commercially reasonable efforts to obtain assurances that confidential treatment will be accorded such Company Confidential Information. In the event that this Agreement is terminated and the transactions contemplated hereby are not consummated, DMAC shall, and shall cause its Representatives to, promptly deliver to the Company or destroy (at DMAC’s election) any and all copies (in whatever form or medium) of Company Confidential Information and destroy all notes, memoranda, summaries, analyses, compilations and other writings related thereto or based thereon. Notwithstanding the foregoing, DMAC and its Representatives shall be permitted to disclose any and all Company Confidential Information to the extent required by the Federal Securities Laws, and (y) DMAC shall, and shall cause its Representatives to, treat and hold in strict confidence any Trade Secret of the Company disclosed to such Person until such information ceases to be a Trade Secret, subject to any disclosure as may be required pursuant to clause (ii) of the first sentence of this Section 8.14(b).
(c) For the avoidance of doubt, the obligations set forth in this Section 8.14 are in addition to and shall not supersede any continuing obligations with respect to any DMAC Confidential Information or Company Confidential Information under any existing confidentiality agreements.
8.15 Post-Closing Board of Directors and Executive Officers.
(a) The Parties shall take all necessary action, including causing the directors of the Pubco to resign, so that effective as of the Closing, Pubco’s board of directors (the “Post-Closing Pubco Board”) will consist of seven (7) individuals. Immediately after the Closing, the Parties shall take all necessary action to designate and appoint to the Post-Closing Pubco Board (i) two (2) persons that are designated by DMAC prior to the Closing (the “DMAC Directors”), each of whom shall be required to qualify as an independent director under Nasdaq rules, (ii) four (4) persons that are designated by the Company prior to the Closing (the “Company Directors”), at least two (2) of whom shall be required to qualify as an independent director under Nasdaq rules; and (iii) one (1) person that is mutually agreed upon and designated by DMAC and the Company prior to the Closing (the “Independent Director”), who shall be required to qualify as an independent director under Nasdaq rules. At or prior to the Closing, Pubco will provide each DMAC Director, Company Director and the Independent Director with a customary director indemnification agreement, in form and substance reasonably acceptable to such DMAC Director, Company Director or Independent Director.
(b) The Parties shall take all action necessary, including causing the executive officers of Pubco to resign, so that the individuals serving as the chief executive officer and chief financial officer, respectively, of Pubco immediately after the Closing will be the same individuals (in the same office) as that of the Company immediately prior to the Closing (unless, at its sole discretion, the Company desires to appoint another qualified person to either such role, in which case, such other person identified by the Company shall serve in such role).
| 55 |
8.16 Indemnification of Directors and Officers; Tail Insurance.
(a) The Parties agree that all rights to exculpation, indemnification and advancement of expenses existing in favor of the current or former directors and officers of each Company Entity, each Target Company and DMAC and each Person who served as a director, officer, member, trustee or fiduciary of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise at the request of the applicable Party (the “D&O Indemnified Persons”) as provided in DMAC’s Organizational Documents or under any indemnification, employment or other similar agreements between any D&O Indemnified Person and DMAC, in each case as in effect on the Effective Date, shall survive the Closing and continue in full force and effect in accordance with their respective terms to the extent permitted by applicable Law. For a period of six (6) years after the Merger Effective Time, Pubco shall cause the Organizational Documents of each Company Entity and DMAC to contain provisions no less favorable with respect to exculpation and indemnification of and advancement of expenses to D&O Indemnified Persons than are set forth as of the Effective Date in the Organizational Documents of the applicable Party to the extent permitted by applicable Law. The provisions of this Section 8.16 shall survive the Closing and are intended to be for the benefit of, and shall be enforceable by, each of the D&O Indemnified Persons and their respective heirs and representatives.
(b) For the benefit of DMAC’s directors and officers, DMAC shall be permitted prior to the Merger Effective Time to obtain and fully pay the premium for a “tail” insurance policy (at an aggregate cost that is borne by DMAC of no higher than 200% of the annual premium of DMAC’s directors’ and officers’ liabilities insurance policy as of the Effective Date) that provides coverage for up to a six-year period from and after the Merger Effective Time for events occurring prior to the Merger Effective Time (the “D&O Tail Insurance”) that is substantially equivalent to and in any event not less favorable in the aggregate than DMAC’s existing policy or, if substantially equivalent insurance coverage is unavailable, the best available coverage. If obtained, Pubco and DMAC shall, for a period of six (6) years after the Merger Effective Time, maintain the D&O Tail Insurance in full force and effect, and continue to honor the obligations thereunder, and Pubco and DMAC shall timely pay or cause to be paid all premiums with respect to the D&O Tail Insurance. The D&O Indemnified Parties are intended third party beneficiaries of this Agreement for purposes of this Section 8.16 and shall have the right to enforce this Section 8.16 as though a party to this Agreement.
8.17 Trust Account Proceeds. The Parties agree that after the Closing, the funds in the Trust Account, after taking into account payments for the Redemption, and any proceeds received by Pubco or DMAC from any PIPE Investment shall first be used to pay (i) DMAC’s accrued Expenses, including DMAC’s deferred Expenses of the IPO and (ii) any loans owed by DMAC to Sponsor for Expenses (including deferred Expenses), other administrative costs and expenses incurred by or on behalf of DMAC or Extension Expenses. Such amounts, as well as any Expenses that are required or permitted to be paid by delivery of Pubco Securities, will be paid at the Closing. Any remaining cash will be transferred to a Target Company or Pubco and used for working capital and general corporate purposes.
8.18 PIPE Investment. Without limiting anything to the contrary contained herein, during the Interim Period, DMAC may, but shall not be required to (and if requested by DMAC, Pubco will), enter into and consummate subscription agreements with investors relating to a private equity investment in DMAC or Pubco to purchase shares of DMAC or Pubco (“PIPE Shares”) in connection with a private placement, and/or enter into backstop or redemption waiver arrangements with potential investors, in either case on terms mutually agreeable to the Company, DMAC and Pubco, acting reasonably (a “PIPE Investment”), and, if DMAC elects to seek a PIPE Investment, Pubco, DMAC and the Company shall, and shall use commercially reasonable efforts to cause their respective Representatives to, cooperate with each other and their respective Representatives in connection with such PIPE Investment and use their respective commercially reasonable efforts to cause such PIPE Investment to occur (including having the Company’s senior management participate in any investor meetings and roadshows as reasonably requested by DMAC).
| 56 |
Article IX
SURVIVAL AND INDEMNIFICATION
9.1 No Survival.
(a) All representations and warranties of the Parties contained in this Agreement (including all schedules and exhibits hereto and all certificates, documents and instruments furnished pursuant to this Agreement on or after the Effective Date), shall terminate at, and not survive, the Closing and no claim (including any Fraud Claim) for indemnification may be made with respect thereto.
(b) The covenants and agreements made by the Parties in this Agreement or in any certificate or instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such covenants or agreements, shall not survive the Closing, except for those covenants and agreements contained herein and therein that by their terms apply or are contemplated to be performed in whole or in part after the Closing (which such covenants shall survive the Closing and continue until fully performed in accordance with their terms).
Article X
CLOSING CONDITIONS
10.1 Conditions to Each Party’s Obligations. The obligations of each Party to consummate the Transactions shall be subject to the satisfaction or written waiver (where permissible) by the Company and DMAC of the following conditions:
(a) Required Stockholder Approval. The Stockholder Approval Matters that are submitted to the vote of the shareholders of DMAC at the Special Stockholder Meeting in accordance with the Proxy Statement shall have been approved by the Required Stockholder Approval.
(b) Antitrust Laws. Any waiting period (and any extension thereof) applicable to the consummation of this Agreement under any Antitrust Laws set forth in Schedule 10.1(b) shall have expired or been terminated.
(c) Requisite Regulatory Approvals. All Consents required to be obtained from any Governmental Authority in order to consummate the Transactions, including those as set forth in Schedule 10.1(c), shall have been obtained or made.
(d) No Law or Order. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law (whether temporary, preliminary or permanent) or Order that is then in effect and which has the effect of making the transactions or agreements contemplated by this Agreement illegal or which otherwise prevents or prohibits consummation of the Transactions.
(e) Net Tangible Assets. Upon the Closing, after giving effect to the Redemption and any PIPE Investment, DMAC shall have net tangible assets of at least $5,000,001.
(f) Pubco Charter Amendment. At or prior to the Closing, Pubco shall have amended and restated the memorandum and articles of association of Pubco in a form acceptable to DMAC and the Company (the “Amended Pubco Charter”).
(g) Foreign Private Issuer Status. Each of the Company and DMAC shall have received evidence reasonably satisfactory to such Party that Pubco qualifies as a foreign private issuer pursuant to Rule 3b-4 of the Exchange Act as of the Closing.
(h) Registration Statement. The Registration Statement shall have been declared effective by the SEC and shall remain effective as of the Closing.
(i) Nasdaq Listing. The Exchange Shares to be issued pursuant to this Agreement shall have been approved for listing on the Nasdaq, subject only to the official notice of issuance, and, as of immediately following the Closing, Pubco shall satisfy any applicable initial and continuing listing requirements of Nasdaq and Pubco shall not have received any notice of non-compliance therewith.
| 57 |
(j) No Action. There shall not be any Action brought by a third party that is not an Affiliate of the Parties to enjoin or otherwise restrict the consummation of the Closing.
(k) Joinder by Company Shareholders. Any Person who has acquired any equity securities of the Company, or any other equity or debt interests in the Company which could be exchanged or converted into any equity securities of the Company, and who is therefore a “New Seller”, shall have executed a joinder to this Agreement as contemplated in Section 8.2(c), and shall otherwise have satisfied the conditions of Section 8.2(c) such that, as of the Closing, the Sellers own 100% of the issued and outstanding equity securities of the Company.
10.2 Conditions to Obligations of the Company Entities and the Sellers. In addition to the conditions specified in Section 10.1, the obligations of the Company Entities and the Sellers to consummate the Transactions are subject to the satisfaction or written waiver (by the Company and Pubco) of the following conditions:
(a) Representations and Warranties. All of the representations and warranties of DMAC set forth in this Agreement and in any certificate delivered by or on behalf of DMAC pursuant hereto shall be true and correct on and as of the Effective Date and on and as of the Closing Date as if made on the Closing Date, except for (i) those representations and warranties that address matters only as of a particular date (which representations and warranties shall have been accurate as of such date), (ii) with respect to the DMAC Fundamental Representations, immaterial inaccuracies, and (iii) for all representations and warranties of DMAC other than the DMAC Fundamental Representations, any failures to be true and correct that (without giving effect to any qualifications or limitations as to materiality or Material Adverse Effect), individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on, or with respect to, DMAC.
(b) Agreements and Covenants. DMAC shall have performed in all material respects all of its obligations and complied in all material respects with all of its agreements and covenants under this Agreement to be performed or complied with by it on or prior to the Closing Date.
(c) No Material Adverse Effect. No Material Adverse Effect shall have occurred with respect to DMAC since the Effective Date which is continuing and uncured.
(d) Closing Deliveries.
(i) Officer Certificate. DMAC shall have delivered to the Company and Pubco a certificate, dated the Closing Date, signed by an executive officer of DMAC in such capacity, certifying as to the satisfaction of the conditions specified in Sections 10.2(a), 10.2(b) and 10.2(c) with respect to DMAC.
(ii) Secretary Certificate. DMAC shall have delivered to the Company and Pubco a certificate from its secretary or other executive officer certifying as to, and attaching, (A) copies of DMAC’s Organizational Documents as in effect as of the Closing Date (immediately prior to the Merger Effective Time), (B) the resolutions of DMAC’s board of directors authorizing and approving the execution, delivery and performance of this Agreement and each of the Ancillary Documents to which it is a party or by which it is bound, and the consummation of the transactions contemplated hereby and thereby, (C) evidence that the Required Stockholder Approval has been obtained and (D) the incumbency of officers authorized to execute this Agreement or any Ancillary Document to which DMAC is or is required to be a party or otherwise bound.
(iii) Good Standing. DMAC shall have delivered to the Company and Pubco a good standing certificate (or similar documents applicable for such jurisdictions) for DMAC certified as of a date no earlier than thirty (30) days prior to the Closing Date from the proper Governmental Authority of DMAC’s jurisdiction of organization and from each other jurisdiction in which DMAC is qualified to do business as a foreign entity as of the Closing, in each case to the extent that good standing certificates or similar documents are generally available in such jurisdictions.
| 58 |
(iv) Amended and Restated Registration Rights Agreement Amendment. The Company and Pubco shall have received a copy of the Amended and Restated Registration Rights Agreement to, among other matters, have Pubco assume the registration obligations of DMAC under the Founder Registration Rights Agreement and have such rights apply to the Pubco Securities, and to join the Sellers as parties thereto, in substantially the form attached as Exhibit B hereto (the “Amended and Restated Registration Rights Agreement”), duly executed by DMAC, the holders of a majority of the “Registrable Securities” pursuant to the Founder Registration Rights Agreement, and by the Sellers joining thereto.
(e) Appointment to the Board. The Company Directors and the Independent Director shall have been elected or appointed as of the Closing consistent with the requirements of Section 8.15.
(f) Minimum Cash Condition. Upon the Closing, DMAC shall have cash and cash equivalents, including funds remaining in the Trust Account (after giving effect to the completion and payment of the Redemption) and the proceeds of any PIPE Investment, net of DMAC’s unpaid Expenses or Liabilities, at least equal to Ten Million U.S. Dollars ($10,000,000).
10.3 Conditions to Obligations of DMAC. In addition to the conditions specified in Section 10.1, the obligations of DMAC to consummate the Transactions are subject to the satisfaction or written waiver (by DMAC) of the following conditions:
(a) Representations and Warranties. All of the representations and warranties of the Company Entities and the Sellers set forth in this Agreement and in any certificate delivered by or on behalf of the Company Entities or any Seller pursuant hereto shall be true and correct on and as of the Effective Date and on and as of the Closing Date as if made on the Closing Date, except for (i) those representations and warranties that address matters only as of a particular date (which representations and warranties shall have been accurate as of such date), (ii) with respect to the Company and Sellers Fundamental Representations, immaterial inaccuracies, and (iii) for all representations and warranties of the Company Pubco, Merger Sub and the Sellers other than the Company and Sellers Fundamental Representations, any failures to be true and correct that (without giving effect to any qualifications or limitations as to materiality or Material Adverse Effect), individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on, or with respect to, the Company Entities or any Seller, as applicable.
(b) Agreements and Covenants. The Company Entities and the Sellers shall have performed in all material respects all of their respective obligations and complied in all material respects with all of their respective agreements and covenants under this Agreement to be performed or complied with by them on or prior to the Closing Date.
(c) No Material Adverse Effect. No Material Adverse Effect shall have occurred with respect to the Company or Pubco since the Effective Date which is continuing and uncured.
(d) Certain Ancillary Documents. Each of the Non-Competition Agreement and each Lock-Up Agreement shall be in full force and effect in accordance with the terms thereof as of the Closing.
| 59 |
(e) Closing Deliveries.
(i) Officer Certificate. DMAC shall have received a certificate from the each Company Entity, dated as the Closing Date, signed by an executive officer of each Company Entity in such capacity, certifying as to the satisfaction of the conditions specified in Sections 10.3(a), 10.3(b) and 10.3(c), as applicable to each Company Entity.
(ii) Seller Certificate. DMAC shall have received a certificate from each Seller, dated as the Closing Date, signed by such Seller, certifying as to the satisfaction of the conditions specified in Sections 10.3(a) and 10.3(b) with respect to such Seller.
(iii) Secretary Certificates. The Company and Pubco shall each have delivered to DMAC a certificate from its secretary or other executive officer certifying as to the validity and effectiveness of, and attaching, (A) copies of its Organizational Documents as in effect as of the Closing Date (immediately prior to the Merger Effective Time), (B) the resolutions of its board of directors and shareholders authorizing and approving the execution, delivery and performance of this Agreement and each Ancillary Document to which it is a party or bound, and the consummation of the Transactions, and (C) the incumbency of its officers authorized to execute this Agreement or any Ancillary Document to which it is or is required to be a party or otherwise bound.
(iv) Good Standing. The Company shall have delivered to DMAC good standing certificates (or similar documents applicable for such jurisdictions) for each Company Entity and each Target Company certified as of a date no earlier than thirty (30) days prior to the Closing Date from the proper Governmental Authority of the Company Entity’s or the Target Company’s jurisdiction of organization and from each other jurisdiction in which the Company Entity or Target Company is qualified to do business as a foreign corporation or other entity as of the Closing, in each case to the extent that good standing certificates or similar documents are generally available in such jurisdictions. Pubco shall have delivered to DMAC good standing certificates (or similar documents applicable for such jurisdictions) for each of Pubco and Merger Sub certified as of a date no earlier than thirty (30) days prior to the Closing Date from the proper Governmental Authority of Pubco’s and Merger Sub’s jurisdiction of organization and from each other jurisdiction in which Pubco or Merger Sub is qualified to do business as a foreign corporation or other entity as of the Closing, in each case to the extent that good standing certificates or similar documents are generally available in such jurisdictions.
(v) Employment Agreements. DMAC shall have received employment agreements, in each case effective as of the Closing, in form and substance acceptable to DMAC and the Company, between each of the persons set forth on Schedule 10.3(e)(v) hereto and the applicable Company Entity or Target Company, as noted in Schedule 10.3(e)(v), each such employment agreement duly executed by the parties thereto.
(vi) Amended and Restated Registration Rights Agreement Amendment. DMAC shall have received a copy of the Amended and Restated Registration Rights Agreement, duly executed by Pubco and the Sellers a party thereto.
(vii) Termination of Convertible Securities. Solely to the extent that any Company Convertible Securities is then issued and outstanding, DMAC shall have received evidence reasonably acceptable to DMAC that any issued and outstanding Company Convertible Securities have been terminated, without any consideration, payment or Liability therefor. Solely to the extent that any Company Convertible Securities is then issued and outstanding, DMAC shall have received evidence reasonably acceptable to DMAC that any issued and outstanding Company Convertible Securities have been terminated, without any consideration, payment or Liability therefor.
| 60 |
(viii) Share Certificates and Transfer Instruments. DMAC shall have received copies of each Seller’s Company Certificates and other instruments or documents representing the Purchased Shares, if applicable, together with executed instruments of transfer in respect of the Purchased Shares in favor of Pubco (or its nominee) and in form reasonably acceptable for transfer on the books of the Company.
(ix) Termination of Certain Contracts. DMAC shall have received evidence reasonably acceptable to DMAC that the Contracts set forth on Schedule 10.3(e)(ix) involving any of the Company Entities or the Target Companies and/or Sellers or other Related Persons shall have been terminated with no further obligation or Liability of the Target Companies thereunder.
(x) Lock-Up Agreement. DMAC shall have received from the Company copies of Lock-Up Agreements in the form attached as Exhibit A hereto (each, a “Lock-Up Agreement”) executed by Pubco and those Sellers set forth on Schedule 10.3(e)(x) hereto.
(xi) Non-Competition Agreement. DMAC shall have received from the Company copies of Non-Solicitation Agreements in favor of Pubco, DMAC and the Company, in form and substance acceptable to DMAC and the Company (each, a “Non-Competition Agreement”) executed by Pubco, the Company and those Sellers set forth on Schedule 10.3(e)(xi) hereto.
(f) Appointment to the Board. The DMAC Directors and the Independent Director shall have been elected or appointed as of the Closing consistent with the requirements of Section 8.15.
10.4 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 X to be satisfied if such failure was caused by the failure of such Party or its Affiliates (or with respect to any Company Entity, any Target Company or any Seller) to comply with or perform any of its covenants or obligations set forth in this Agreement.
Article
XI
TERMINATION AND EXPENSES
11.1 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing as follows:
(a) by mutual written consent of DMAC and the Company;
(b) by written notice by DMAC to the Company, or by the Company to DMAC, if any of the conditions to the Closing set forth in Article X have not been satisfied or waived by October 28, 2022 (as extended pursuant to the provisions of Section 11.2(a), the “Outside Date”); provided, however, that the right to terminate this Agreement under this Section 11.1(b) shall not be available to a Party if the breach or violation by such Party or its Affiliates (or with respect to any Company Entity or any Seller) of any representation, warranty, covenant or obligation under this Agreement was the proximate cause of, or proximately resulted in, the failure of the Closing to occur on or before the Outside Date;
(c) by written notice by DMAC to the Company, or by the Company to DMAC if a Governmental Authority of competent jurisdiction shall have issued an Order or taken any other action permanently restraining, enjoining or otherwise prohibiting the Transactions, and such Order or other action has become final and non-appealable; provided, however, that the right to terminate this Agreement pursuant to this Section 11.1(c) shall not be available to a Party if the failure by such Party or its Affiliates (or with respect to any Company Entity or any Seller) to comply with any provision of this Agreement has been a substantial cause of, or substantially resulted in, such action by such Governmental Authority;
| 61 |
(d) by written notice by the Company to DMAC, if (i) there has been a breach by DMAC of any of DMAC’s representations, warranties, covenants or agreements contained in this Agreement, or if any representation or warranty of DMAC shall have become untrue or materially inaccurate, in any case, which would result in a failure of a condition set forth in Section 10.2(a) or Section 10.2(b) to be satisfied (provided that for purposes of this Section 11.1(d), any reference to the Closing Date in, or any applicability of the Closing Date to, any such representations, covenants or agreements shall be deemed a reference to the Effective Date or, if later, the date of such breach (or if the breach is curable, the date by which such breach is required to be cured in the succeeding clause (ii)), and (ii) the breach or inaccuracy is incapable of being cured or is not cured within the earlier of (A) twenty (20) days after written notice of such breach or inaccuracy is provided to DMAC by the Company or (B) the Outside Date; provided, that the Company shall not have the right to terminate this Agreement pursuant to this Section 11.1(d) if at such time the Company Entities or any Seller is in material uncured breach of this Agreement which would result in a failure of any condition set forth in Section 10.3(a) or Section 10.3(b) from being satisfied;
(e) by written notice by DMAC to the Company, if (i) there has been a breach by the Company Entities or any Seller of any of their respective representations, warranties, covenants or agreements contained in this Agreement, or if any representation or warranty of such Parties shall have become untrue or inaccurate, in any case, which would result in a failure of a condition set forth in Section 10.3(a) or Section 10.3(b) to be satisfied (provided that for purposes of this Section 11.1(e), any reference to the Closing Date in, or any applicability of the Closing Date to, any such representations, covenants or agreements shall be deemed a reference to the Effective Date or, if later, the date of such breach (or if the breach is curable, the date by which such breach is required to be cured in the succeeding clause (ii)), and (ii) the breach or inaccuracy is incapable of being cured or is not cured within the earlier of (A) twenty (20) days after written notice of such breach or inaccuracy is provided to the Company by DMAC or (B) the Outside Date; provided, that DMAC shall not have the right to terminate this Agreement pursuant to this Section 11.1(e) if at such time DMAC is in material uncured breach of this Agreement ; which would result in a failure of any condition set forth in Section 10.2(a) or Section 10.2(b) from being satisfied;
(f) by written notice by DMAC to the Company, if there shall have been a Material Adverse Effect on the Company or Pubco following the Effective Date which is uncured and continuing;
(g) by written notice by DMAC to the Company, or by the Company to DMAC if the Special Stockholder Meeting is held (including any adjournment or postponement thereof) and has concluded, DMAC’s stockholders have duly voted, and the Required Stockholder Approval was not obtained;
(h) by DMAC, pursuant to the provisions of Section 2.2(e); or
(i) by DMAC, pursuant to the provisions of Section 2.2(f).
| 62 |
11.2 Extension; Costs.
(a) The Parties acknowledge and that agree if an “Extension” as defined in Section 8.3(a) is comprised of the fact that, if DMAC fails to consummate a Business Combination within twelve (12) months after the closing of the IPO, pursuant to DMAC’s Organizational Documents, DMAC may extend such date by up to an additional six (6) months, to be in two extensions of three (3) months each, provided that at the time of each such extension, pursuant to DMAC’s Organizational Documents and the Trust Agreement, DMAC is required, five (5) days prior to the applicable Extension deadline to deposit into the Trust Account the sum of $1,300,000, and therefore a total of $2,600,000 for both three (3) month Extensions (the “Extension Amount”), which Extension Amount will then be utilized as set forth in DMAC’s Organizational Documents and the Trust Agreement. Provided that this Agreement has not been terminated in accordance with Section 2.2(e) and Section 11.1(h) within two Business Days following the end of the Negotiation Period, if applicable, or in accordance with Section 2.2(f) and Section 11.1(i) at any time within the Due Diligence Period, as applicable, then, on the third (3rd) Business Day following the later of such dates as may be applicable (the “Funding Date”), the Company shall fund the Extension Amount by purchasing from the Sponsor, and DMAC shall cause the Sponsor to sell and issue to the Company in accordance with this paragraph, for a purchase price equal to the Extension Amount, such amount or number of limited liability company membership interests in the Sponsor (“Membership Interests”) as will cause the value of the Company’s interest in shares of DMAC Common Stock held by the Sponsor and allocable to such Membership Interests to be equal to the Extension Amount, with each share of DMAC Common Stock being valued at $10.00 for this purpose. On the Funding Date, the Company will cause the Extension Amount to be deposited in an account designated by the Sponsor and DMAC and the relevant Membership Interests will be issued and delivered to the Company or its designee promptly thereafter, provided that prior to and as a condition of such issuance the Company or such designee, as applicable, shall execute a joinder to join any limited liability company operating agreement or similar agreement of the Sponsor then in effect. Upon an effective Extension pursuant to this paragraph, the Outside Date will be automatically extended to the last day of such Extension period.
(b) The Company shall pay to DMAC such costs as requested by DMAC in writing on or after the Effective Date, up to a maximum aggregate amount of $500,000, in respect of amounts actually incurred on or after the Effective Date and due and owing by DMAC with respect to the engagement of advisors to DMAC to undertake a due diligence review of the Company and its operations. Such amount shall not be repayable to the Company in any circumstances.
11.3 Effect of Termination. This Agreement may only be terminated in the circumstances described in Section 2.2(e), Section 2.2(f) and Section 11.1 and pursuant to a written notice delivered by the applicable Party to the other applicable Parties, which sets forth the basis for such termination, including the provision of Section 11.1 under which such termination is made. In the event of the valid termination of this Agreement pursuant to Section 11.1, this Agreement shall forthwith become void, and there shall be no Liability on the part of any Party or any of their respective Representatives, and all rights and obligations of each Party shall cease, except: (i) Sections 8.13, 8.14, 11.2, 11.4, 12.1, Article XIII and this Section 11.3 shall survive the termination of this Agreement, and (ii) nothing herein shall relieve any Party from Liability for any willful breach of any representation, warranty, covenant or obligation under this Agreement or any Fraud Claim against such Party, in either case, prior to termination of this Agreement (in each case of clauses (i) and (ii) above, subject to Section 12.1). Without limiting the foregoing, and except as provided in Section 11.4 and this Section 11.3 (but subject to Section 12.1, and subject to the right to seek injunctions, specific performance or other equitable relief in accordance with Section 13.6), the Parties’ sole right 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 shall be the right, if applicable, to terminate this Agreement pursuant to Section 11.1.
11.4 Fees and Expenses. Subject to Section 11.3 and Section 12.1, unless otherwise provided for in this Agreement, all Expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such expenses. As used in this Agreement, “Expenses” shall include all out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, financial advisors, financing sources, experts and consultants to a Party hereto or any of its Affiliates) incurred by a Party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution or performance of this Agreement or any Ancillary Document related hereto and all other matters related to the consummation of this Agreement. With respect to DMAC, Expenses shall include any and all deferred expenses (including fees or commissions payable to the underwriters and any legal fees) of the IPO upon consummation of a Business Combination and any Extension Expenses.
| 63 |
Article XII
WAIVERS AND Releases
12.1 Waiver of Claims Against Trust. Reference is made to the IPO Prospectus. Each of the Company Entities and each Seller understands that DMAC has established the Trust Account containing the proceeds of the IPO and the overallotment shares acquired by DMAC’s underwriters and from certain private placements occurring simultaneously with the IPO (including interest accrued from time to time thereon) for the benefit of DMAC’s public stockholders (including overallotment shares acquired by DMAC’s underwriters) (the “Public Stockholders”) and that, except as otherwise described in the IPO Prospectus, DMAC may disburse monies from the Trust Account only: (a) to the Public Stockholders in the event they elect to redeem their shares of DMAC Common Stock (or Pubco Ordinary Shares upon the Merger) in connection with the consummation of its initial business combination (as such term is used in the IPO Prospectus) (“Business Combination”) or in connection with an amendment to DMAC’s Organizational documents to extend DMAC’s deadline to consummate a Business Combination, (b) to the Public Stockholders if DMAC fails to consummate a Business Combination within twelve (12) months after the closing of the IPO (provided such date may be extended by up to an additional six (6) months), subject to further extension by amendment to DMAC’s Organizational Documents, (c) with respect to any interest earned on the amounts held in the Trust Account, amounts necessary to pay for any franchise or income taxes, and (d) to DMAC after or concurrently with the consummation of a Business Combination, in each case, subject to the Trust Agreement. For and in consideration of DMAC entering into this Agreement and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each of the Company Entities and each Seller hereby agrees on behalf of itself and its Affiliates that, notwithstanding anything to the contrary in this Agreement, none of the Company Entities or any Seller nor any of their respective Affiliates do now or shall 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 made directly or indirectly to Public Stockholders (“Public Stockholder Distributions”), or make any claim against the Trust Account (including any Public Stockholder Distributions), regardless of whether such claim arises as a result of, in connection with or relating in any way to, this Agreement or any proposed or actual business relationship between DMAC or any of its Representatives, on the one hand, and the Company Entities or any Seller or any of their respective Representatives, on the other hand, or any other matter, and regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability (collectively, the “Released Claims”). Each of the Company Entities and each Seller on behalf of itself and its Affiliates hereby irrevocably waives any Released Claims that any such Party or any of its Affiliates may have against the Trust Account (including any Public Stockholder Distributions) now or in the future as a result of, or arising out of, any negotiations, contracts or agreements with DMAC or its Representatives and will not seek recourse against the Trust Account (including any Public Stockholder Distributions) for any reason whatsoever (including for an alleged breach of this Agreement or any other agreement with DMAC or its Affiliates). The Company Entities and each Seller each agrees and acknowledges that such irrevocable waiver is material to this Agreement and specifically relied upon by DMAC and its Affiliates to induce DMAC to enter in this Agreement, and each of the Company Entities and each Seller further intends and understands such waiver to be valid, binding and enforceable against such Party and each of its Affiliates under applicable Law. Notwithstanding anything herein to the contrary in this Section 12.1, but otherwise subject to the terms of this Agreement, (A) the Company Entities or any Seller or any of their respective Affiliates may commence any action or proceeding based upon, in connection with, relating to or arising out of any matter relating to DMAC or its Representatives, which proceeding seeks, in whole or in part, monetary relief against DMAC or its Representatives, against assets or funds held outside of the Trust Account (including any funds released from the Trust Account and assets that are acquired with such funds other than the Public Stockholder Distributions); provided that such claim shall not permit such Party or any of its Affiliates (or any Person claiming on any of their behalves or in lieu of them) to have any claim against the Trust Account or any amounts contained therein or Public Stockholder Distributions, and (B) nothing in this Section 12.1 shall limit or prohibit the Company Entities, any Seller or any of their respective Affiliates from pursuing a claim against DMAC for specific performance or other equitable relief. This Section 12.1 shall survive termination of this Agreement for any reason.
| 64 |
12.2 Release and Covenant Not to Sue.
(a) Effective as of the Closing, to the fullest extent permitted by applicable Law, each Seller, on behalf of itself and its Affiliates that owns any share or other equity interest in or of such Seller (the “Seller Releasing Persons”), hereby releases and discharges the Company Entities and the Target Companies from and against any and all Actions, obligations, agreements, debts and Liabilities whatsoever, whether known or unknown, both at law and in equity, which such Seller Releasing Person now has, has ever had or may hereafter have against any of the Company Entities or any of the Target Companies as a result of such Seller’s capacity as a holder of capital shares or other securities of the Company or its Subsidiaries and arising on or prior to the Closing Date or on account of or arising out of any matter occurring on or prior to the Closing Date. Notwithstanding anything herein to the contrary, the releases and restrictions set forth in this Section 12.2(a) shall not apply to any claims a Seller Releasing Person may have against any party with respect to (i) any rights under this Agreement or any of the Ancillary Documents, (ii) any rights to indemnification, fee reimbursement or exculpation under (x) any Organizational Documents of the Target Companies, (y) any (A) Material Contract in effect as of the Effective Date which is disclosed to DMAC and any (B) Contract that is not a Material Contract but is in effect as of the Effective Date and, in either the case of clauses (A) or (B), not required by this Agreement to be terminated as of the Closing, or (z) any Contract that is entered into after the Effective Date in accordance with this Agreement, or (iii) any rights under applicable employment Laws (including common law). From and after the Closing, each Seller Releasing Person hereby irrevocably covenants to refrain from, directly or indirectly, asserting any Action, or commencing or causing to be commenced, any Action of any kind against the Target Companies or their respective Affiliates, based upon any matter purported to be released hereby.
(b) On the Effective Date, DMAC, the Company and the Sponsor shall enter into the Support Agreement in the form attached hereto as Exhibit C which shall provide, among other things, that effective as of the Closing, the Sponsor, on behalf of itself and its Affiliates (the “Sponsor Releasing Persons”), shall release and discharge DMAC from and against any and all Actions, obligations, agreements, debts and Liabilities whatsoever, whether known or unknown, both at law and in equity, which such Sponsor Releasing Person now has, has ever had or may hereafter have against DMAC arising on or prior to the Closing Date as a result of such person’s capacity as a holder of capital shares or other securities of DMAC and arising on or prior to the Closing Date or on account of or arising out of any matter occurring on or prior to the Closing Date, provided that releases and restrictions shall not apply to any claims a Sponsor Releasing Person may have against any party with respect to any rights under this Agreement, any of the Ancillary Documents or any Contract set forth in Schedule 12.2(b) or any rights to indemnification, fee reimbursement or exculpation. The Support Agreement shall also provide that, from and after the Closing, each Sponsor Releasing Person shall irrevocably covenant to refrain from, directly or indirectly, asserting any Action, or commencing or causing to be commenced, any Action of any kind against DMAC or its Affiliates, based upon any matter purported to be released therein.
| 65 |
Article XIII
MISCELLANEOUS
13.1 Notices. All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered (i) in person, (ii) by facsimile or other electronic means, with affirmative confirmation of receipt, (iii) one Business Day after being sent, if sent by reputable, nationally recognized overnight courier service or (iv) three (3) Business Days after being mailed, if sent by registered or certified mail, pre-paid and return receipt requested, in each case to the applicable Party at the following addresses (or at such other address for a Party as shall be specified by like notice):
If to DMAC at or prior to the Closing, to:
Deep Medicine Acquisition Corp. 595 Madison Avenue, 12th Floor New York, New York 10017 U.S.A. Attn: Humphrey P. Polanen, CEO Facsimile No.: Telephone No.: +1 (917) 289-2776 Email: humphrey.polanen@gmail.com |
with a copy (which will not constitute notice) to:
Anthony L.G., PLLC 625 N. Flagler Drive, Suite 600 West Palm Beach, FL 33401 U.S.A. Attn: Laura Anthony Facsimile No.: +1 (561) 514-0832 Telephone No.: +1 (561) 514-0936 ext. 101 Email: Lanthony@anthonypllc.com | |
If to the Company at or prior to the Closing, to:
Chijet Inc. No. 8, Beijing South Road Economic & Technological Development Zone Yantai, Shandong, CN-37 264006 People’s Republic of China Attn: Xinjian Wang Telephone No.: +86-15668335480 Email: bydongban@163.com |
with a copy (which will not constitute notice) to:
Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas, 11th Floor New York, New York 10105 U.S.A. Attn: Barry I. Grossman, Esq. Matthew A. Gray, Esq. Facsimile No.: (212) 370-7889 Telephone No.: (212) 370-1300 Email: bigrossman@egsllp.com mgray@egsllp.com
and
AllBright Law Offices 9/11/12F, Shanghai Tower No. 501 Yincheng Middle Road Pudong New Area Shanghai 200120 People’s Republic of China Attn: Frank Xu Facsimile No.: +86 21 2051-1999 Telephone No.: +86 21 2051-1000 Email: frankxu@allbrightlaw.com |
| 66 |
If to Pubco or Merger Sub at or prior to the Closing, to:
Chijet Motor Company, Inc. No. 8, Beijing South Road Economic & Technological Development Zone Yantai, Shandong, CN-37 264006 People’s Republic of China Attn: Xinjian Wang Telephone No.: +86-15668335480 Email: bydongban@163.com |
with a copy (which will not constitute notice) to:
Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas, 11th Floor New York, New York 10105 U.S.A. Attn: Barry I. Grossman, Esq. Matthew A. Gray, Esq. Facsimile No.: (212) 370-7889 Telephone No.: (212) 370-1300 Email: bigrossman@egsllp.com mgray@egsllp.com
and
AllBright Law Offices 9/11/12F, Shanghai Tower No. 501 Yincheng Middle Road Pudong New Area Shanghai 200120 People’s Republic of China Attn: Frank Xu Facsimile No.: +86 21 2051-1999 Telephone No.: +86 21 2051-1000 Email: frankxu@allbrightlaw.com | |
If to any Seller, to:
the address of such Seller as set forth underneath such Seller’s signature on the signature page hereto |
with a copy (which will not constitute notice) to:
Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas, 11th Floor New York, New York 10105 U.S.A. Attn: Barry I. Grossman, Esq. Matthew A. Gray, Esq. Facsimile No.: (212) 370-7889 Telephone No.: (212) 370-1300 Email: bigrossman@egsllp.com mgray@egsllp.com
and
AllBright Law Offices 9/11/12F, Shanghai Tower No. 501 Yincheng Middle Road Pudong New Area Shanghai 200120 People’s Republic of China Attn: Frank Xu Facsimile No.: +86 21 2051-1999 Telephone No.: +86 21 2051-1000 Email: frankxu@allbrightlaw.com |
| 67 |
If to Pubco, DMAC or the Company after the Closing, to:
Chijet Motor Company, Inc. No. 8, Beijing South Road Economic & Technological Development Zone Yantai, Shandong, CN-37 264006 People’s Republic of China Attn: Facsimile No.: Telephone No.: Email: |
with a copy (which will not constitute notice) to:
Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas, 11th Floor New York, New York 10105 U.S.A. Attn: Barry I. Grossman, Esq. Matthew A. Gray, Esq. Facsimile No.: (212) 370-7889 Telephone No.: (212) 370-1300 Email: bigrossman@egsllp.com mgray@egsllp.com
and
AllBright Law Offices 9/11/12F, Shanghai Tower No. 501 Yincheng Middle Road Pudong New Area Shanghai 200120 People’s Republic of China Attn: Frank Xu Facsimile No.: +86 21 2051-1999 Telephone No.: +86 21 2051-1000 Email: frankxu@allbrightlaw.com |
13.2 Binding Effect; Assignment. Subject to Section 13.3, this Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns. No Party shall have any power or any right to assign or transfer, in whole or in part, this Agreement, or any of its rights or any of its obligations hereunder, including, without limitation, any right to pursue any claim for damages pursuant to this Agreement or the transactions contemplated herein, or to pursue any claim for any breach or default of this Agreement, or any right arising from the purported assignor’s due performance of its obligations hereunder, without the prior written consent of each other Party and any such purported assignment in contravention of the provisions herein shall be null and void and of no force or effect.
13.3 Third Parties. Except for the rights of the D&O Indemnified Persons set forth in Section 8.16, and EGS set forth in Section 13.14, which the Parties acknowledge and agree are express third party beneficiaries of this Agreement, nothing contained in this Agreement or in any instrument or document executed by any party in connection with the transactions contemplated hereby shall create any rights in, or be deemed to have been executed for the benefit of, any Person that is not a Party hereto or thereto or a successor or permitted assign of such a Party. For the avoidance of doubt, no stockholder of Pubco after the Closing (in his, her or its capacity as such) is a third party beneficiary of this Agreement or shall have any rights hereunder.
| 68 |
13.4 Governing Law; Jurisdiction. This Agreement shall be governed by, construed and enforced in accordance with the Laws of the State of New York without regard to the conflict of laws principles thereof, provided, however, that to the extent that the laws of the State of Delaware are required to apply with respect to the Merger or any other actions hereunder, the laws of the State of Delaware shall so apply, without regard to the conflict of laws principles thereof. All Actions arising out of or relating to this Agreement shall be heard and determined exclusively in any state or federal court located in New York, New York (or in any appellate court therefrom) (the “Specified Courts”). Each Party hereto hereby (a) submits to the exclusive jurisdiction of any Specified Court for the purpose of any Action arising out of or relating to this Agreement brought by any Party hereto and (b) irrevocably waives, and agrees not to assert by way of motion, defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the Action is brought in an inconvenient forum, that the venue of the Action is improper, or that this Agreement or the transactions contemplated hereby may not be enforced in or by any Specified Court. Each Party agrees that a final judgment in any Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each Party irrevocably consents to the service of the summons and complaint and any other process in any other Action relating to the Transactions, on behalf of itself, or its property, by personal delivery of copies of such process to such Party at the applicable address set forth in Section 13.1. Nothing in this Section 13.4 shall affect the right of any Party to serve legal process in any other manner permitted by Law.
13.5 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.5. Each of the Parties acknowledge that each has been represented in connection with the signing of this waiver by independent legal counsel selected by the respective Party and that such Party has discussed the legal consequences and import of this waiver with legal counsel. Each of the Parties further acknowledge that each has read and understands the meaning of this waiver and grants this waiver knowingly, voluntarily, without duress and only after consideration of the consequences of this waiver with legal counsel.
13.6 Specific Performance. Each Party acknowledges that the rights of each Party to consummate the Transactions are unique, recognizes and affirms that in the event of a breach of this Agreement by any Party, money damages may be inadequate and the non-breaching Parties may have not adequate remedy at law, and agree that irreparable damage may occur in the event that any of the provisions of this Agreement were not performed by an applicable Party in accordance with their specific terms or were otherwise breached. Accordingly, each Party shall be entitled to seek an injunction, restraining order or other equitable remedy to prevent or remedy any breach of this Agreement and to seek to enforce specifically the terms and provisions hereof, in each case, 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. Each Party agrees that it will not oppose the granting of an injunction, specific performance or other equitable relief on the basis that the other Party has an adequate remedy at law or that an award of specific performance is not an appropriate remedy for any reason at law or equity.
13.7 Severability. In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a jurisdiction, such provision shall be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity, legality or enforceability of such provision be affected thereby in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties will substitute for any invalid, illegal or unenforceable provision a suitable and equitable provision that carries out, so far as may be valid, legal and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.
| 69 |
13.8 Amendment. This Agreement may be amended, supplemented or modified only by execution of a written instrument signed by DMAC, Pubco, the Company, and Sellers holding in the aggregate a Pro Rata Share in excess of fifty percent (50%); provided that no amendment, supplementation or modification shall affect a Seller in a manner materially and disproportionately adverse to the other Sellers without the prior written consent of such Seller.
13.9 Waiver. Each of DMAC, Pubco and the Company on behalf of itself and its Affiliates, and each Seller on its behalf, may in its sole discretion (i) extend the time for the performance of any obligation or other act of any other non-Affiliated Party hereto, (ii) waive any inaccuracy in the representations and warranties by such other non-Affiliated Party contained herein or in any document delivered pursuant hereto and (iii) waive compliance by such other non-Affiliated Party with any covenant or condition contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party or Parties to be bound thereby. Notwithstanding the foregoing, no failure or delay by a Party in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right hereunder.
13.10 Entire Agreement. This Agreement and the documents or instruments referred to herein, including any exhibits, annexes and schedules attached hereto, which exhibits, annexes and schedules are incorporated herein by reference, together with the Ancillary Documents, embody the entire agreement and understanding of the Parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or the documents or instruments referred to herein, which collectively supersede all prior agreements and the understandings among the Parties with respect to the subject matter contained herein.
13.11 Interpretation. The table of contents and the Article and Section headings contained in this Agreement are solely for the purpose of reference and shall not in any way affect the meaning or interpretation of this Agreement. In this Agreement, unless the context otherwise requires: (a) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and words in the singular, including any defined terms, include the plural and vice versa; (b) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity; (c) any accounting term used and not otherwise defined in this Agreement or any Ancillary Document has the meaning assigned to such term in accordance with GAAP, based on the accounting principles used by the applicable Person, provided that any accounting term with respect to any Target Company shall be interpreted in accordance with the Accounting Principles; (d) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding or succeeding such term and shall be deemed in each case to be followed by the words “without limitation”; (e) the words “herein,” “hereto,” and “hereby” and other words of similar import in this Agreement shall be deemed in each case to refer to this Agreement as a whole and not to any particular Section or other subdivision of this Agreement; (f) the word “if” and other words of similar import when used herein shall be deemed in each case to be followed by the phrase “and only if”; (g) the term “or” means “and/or”; (h) the word “day” means calendar day unless Business Day is expressly specified;(i) any reference to the term “ordinary course” or “ordinary course of business” shall be deemed in each case to be followed by the words “consistent with past practice”; (j) any agreement, instrument, insurance policy, Law or Order defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument, insurance policy, Law or Order as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes, regulations, rules or orders) by succession of comparable successor statutes, regulations, rules or orders and references to all attachments thereto and instruments incorporated therein; (k) except as otherwise indicated, all references in this Agreement to the words “Section,” “Article”, “Schedule”, “Annex” and “Exhibit” are intended to refer to Sections, Articles, Schedules, Annexes and Exhibits to this Agreement; and (l) the term “Dollars” or “$” means United States dollars. Any reference in this Agreement to a Person’s directors shall include any member of such Person’s governing body and any reference in this Agreement to a Person’s officers shall include any Person filling a substantially similar position for such Person. Any reference in this Agreement or any Ancillary Document to a Person’s shareholders or stockholders shall include any applicable owners of the equity interests of such Person, in whatever form. The Parties have participated jointly in the negotiation and drafting of this Agreement. Consequently, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement. To the extent that any Contract, document, certificate or instrument is represented and warranted to by the Company to be given, delivered, provided or made available by the Company, in order for such Contract, document, certificate or instrument to have been deemed to have been given, delivered, provided and made available to DMAC or its Representatives, such Contract, document, certificate or instrument shall have been posted to the electronic data site maintained on behalf of the Company for the benefit of DMAC and its Representatives and DMAC and its Representatives have been given access to the electronic folders containing such information, or such information or documentation was made available or otherwise provided to DMAC, its Affiliates or any of their Representatives in-person or by email.
| 70 |
13.12 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
13.13 No Recourse. Notwithstanding anything that may be expressed or implied in this Agreement, the Parties acknowledge and agree that no recourse under this Agreement or under any Ancillary Documents shall be had against any Person that is not a Party to this Agreement (including pursuant to a Joinder) or such Ancillary Document, including any past, present or future director, officer, agent, employee, equityholder or other Representative or any Affiliate or successor or assignee thereof that is not a Party (collectively, the “Non-Recourse Parties”), as such, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable Law, it being expressly agreed and acknowledged that no liability whatsoever shall attach to, be imposed on or otherwise be incurred by any Non-Recourse Party, as such, for any obligation or liability of a Party under this Agreement or Person party to such Ancillary Document under any Ancillary Document for any claim based on, in respect of or by reason of such obligations or liabilities or their creation.
13.14 Legal Representation. Recognizing that EGS has acted as legal counsel to Sellers, their Affiliates, Pubco, Merger Sub and the Target Companies prior to the Closing, and that EGS intends to act as legal counsel to Sellers and their Affiliates after the Closing, DMAC, Pubco and the Company (on its own behalf and on behalf of each Target Company) hereby waives, and agrees to cause its Affiliates to waive, any conflicts that may arise in connection with EGS representing Sellers and/or their Affiliates after the Closing as such representation may relate to DMAC, any Target Company or any of the Transactions or any of the Ancillary Documents. All communications involving attorney-client confidences between any Seller, any of its Affiliates or any Target Company and EGS in the course of the preparations, planning, negotiation, documentation and consummation of the transactions contemplated hereby shall be deemed to be attorney-client confidences that belong solely to Sellers. Accordingly, the Target Companies shall not have access to any such communications, or to the files of EGS relating to engagement, if the Closing shall have occurred. Without limiting the generality of the foregoing, upon and after the Closing, (i) Sellers shall be the sole holders of the attorney-client privilege with respect to such engagement, and none of the Target Companies shall be a holder thereof, (ii) to the extent that files of EGS in respect of such engagement constitute property of the client, only Sellers (and not the Target Companies) shall hold such property rights and (iii) EGS shall have no duty whatsoever to reveal or disclose any such attorney-client communications or files to any of the Target Companies by reason of any attorney-client relationship between EGS and any of the Target Companies or otherwise. Notwithstanding the foregoing, in the event that a dispute arises between DMAC, the Target Companies or any of their Affiliates and a third party (other than a Party or any of its Affiliates) after the Closing, the Target Companies may assert the attorney-client privilege to prevent disclosure of confidential attorney-client communications by EGS to such third party.
| 71 |
Article XIV
DEFINITIONS
14.1 Certain Definitions. For purpose of this Agreement, the following capitalized terms have the following meanings:
“Accounting Principles” means in accordance with GAAP, as in effect at the date of the financial statement to which it refers or if there is no such financial statement, then as of the Closing Date, 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 Target Companies in the preparation of the latest audited Company Financials.
“Action” means any notice of noncompliance or violation, or any claim, demand, charge, action, suit, litigation, audit, complaint, arbitration, governmental inquiry, hearing, proceeding or investigation, by or before any Governmental Authority.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with such Person. For the avoidance of doubt, Sponsor shall be deemed to be an Affiliate of DMAC prior to the Closing.
“Ancillary Documents” means each agreement, instrument or document attached hereto as an Exhibit, including the Lock-Up Agreements, the Non-Competition Agreements, the Amended Pubco Charter, the Amended and Restated Registration Rights Agreement, the Support Agreement and the other agreements, certificates and instruments to be executed or delivered by any of the Parties hereto in connection with or pursuant to this Agreement.
“Benefit Plans” of any Person means any and all deferred compensation, executive compensation, incentive compensation, equity purchase or other equity-based compensation plan, employment or individual consulting, severance or termination pay, holiday, vacation or other bonus plan or practice, hospitalization or other medical, life or other welfare benefit insurance, supplemental unemployment benefits, profit sharing, pension, or retirement plan, program, agreement, commitment or arrangement, and each other employee benefit plan, program, agreement or arrangement, including each “employee benefit plan” as such term is defined under Section 3(3) of ERISA, maintained or contributed to or required to be contributed to by a Person for the benefit of any employee or terminated employee of such Person, or with respect to which such Person has any Liability.
“Business Day” means any day other than a Saturday, Sunday or a legal holiday on which commercial banking institutions in New York, New York or Beijing, PRC are authorized to close for business, excluding as a result of “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 commercially banking institutions in New York, New York and Beijing, PRC are generally open for use by customers on such day.
| 72 |
“Cayman Act” means the Cayman Islands Companies Act (As Revised), as amended.
“Code” means the Internal Revenue Code of 1986, as amended, and any successor statute thereto, as amended. Reference to a specific section of the Code shall include such section and any valid treasury regulation promulgated thereunder.
“Company and Sellers Fundamental Representations” means the representations and warranties contained in Sections 6.1 (Organization and Standing), 6.2 (Authorization; Binding Agreement), 6.3 (Capitalization), 6.4 (Subsidiaries), 6.26 (Finders and Brokers), 7.1 (Organization and Standing), 7.2 (Authorization; Binding Agreement), 7.3 (Ownership) and 7.8 (Finders and Brokers).
“Company Confidential Information” means all confidential or proprietary documents and information concerning the Company Entities, the Target Companies or the Sellers or any of their respective Representatives, furnished in connection with this Agreement or the transactions contemplated hereby; provided, however, that Company Confidential Information shall not include any information which, (i) at the time of disclosure by DMAC or its Representatives, is generally available publicly and was not disclosed in breach of this Agreement or (ii) at the time of the disclosure by any of the Company Entities, the Seller or their respective Representatives to DMAC or its Representatives was previously known by such receiving party without violation of Law or any confidentiality obligation by the Person receiving such Company Confidential Information.
“Company Convertible Securities” means, collectively, any other options, warrants or rights to subscribe for or purchase any capital shares of the Company or securities convertible into or exchangeable for, or that otherwise confer on the holder any right to acquire any capital shares of the Company.
“Company Securities” means, collectively, the Company Shares and the Company Convertible Securities.
“Company Shares” means the ordinary shares of the Company.
“Consent” means any consent, approval, waiver, authorization or Permit of, or notice to or declaration or filing with any Governmental Authority or any other Person.
“Contracts” means all binding contracts, agreements, arrangements, bonds, notes, indentures, mortgages, debt instruments, purchase order, licenses (and all other binding contracts, agreements or binding arrangements concerning Intellectual Property), franchises, leases and other instruments or obligations of any kind, written or oral (including any amendments and other modifications thereto).
“Control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise. “Controlled”, “Controlling” and “under common Control with” have correlative meanings. Without limiting the foregoing, a Person (the “Controlled Person”) shall be deemed Controlled by (a) any other Person (i) owning beneficially, as meant in Rule 13d-3 under the Exchange Act, securities entitling such Person to cast fifty percent (50%) or more of the votes for election of directors or equivalent governing authority of the Controlled Person or (ii) entitled to be allocated or receive fifty percent (50%) or more of the profits, losses, or distributions of the Controlled Person; or (b) an officer, director, general partner, partner (other than a limited partner), manager, or member (other than a member having no management authority that is not a Person described in clause (a) above) of the Controlled Person.
| 73 |
“Copyrights” means any works of authorship, mask works and all copyrights therein, including all renewals and extensions, copyright registrations and applications for registration and renewal, and non-registered copyrights.
“COVID-19” means SARS-CoV-2 or COVID-19, and any evolutions thereof or any other related or associated epidemics, pandemics or disease outbreaks.
“COVID-19 Measures” means any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester or any other Law, directive, guidelines or recommendations by any Governmental Authority (including the Centers for Disease Control and the World Health Organization) in each case in connection with, related to or in response to COVID-19, including the Coronavirus Aid, Relief, and Economic Security Act (CARES) or any changes thereto.
“DMAC Board” means the Board of Directors of DMAC.
“DMAC Change of Recommendation” shall mean any withholding, withdrawal, qualification, amendment or modification of the DMAC Recommendation.
“DMAC Charter” means the Amended and Restated Certificate of Incorporation of DMAC, as amended and in effect under the DGCL; provided, that references herein to the DMAC Charter for periods after the Merger Effective Time includes the certificate of incorporation of the Surviving Corporation.
“DMAC Common Stock” means the shares of common stock, par value $0.0001 per share, of DMAC.
“DMAC Confidential Information” means all confidential or proprietary documents and information concerning DMAC or any of its Representatives; provided, however, that DMAC Confidential Information shall not include any information which, (i) at the time of disclosure by the Company Entities, any Seller or any of their respective Representatives, is generally available publicly and was not disclosed in breach of this Agreement or (ii) at the time of the disclosure by DMAC or its Representatives to by the Company Entities, any Seller or any of their respective Representatives, was previously known by such receiving party without violation of Law or any confidentiality obligation by the Person receiving such DMAC Confidential Information. For the avoidance of doubt, from and after the Closing, DMAC Confidential Information will include the confidential or proprietary information of the Target Companies.
“DMAC Fundamental Representations” means the representations and warranties contained in Sections 4.1 (Organization and Standing), 4.2 (Authorization; Binding Agreement), 4.5 (Capitalization) and 4.16 (Finders and Brokers).
“DMAC Preferred Stock” means shares of preferred stock, par value $0.0001 par value per share, of DMAC.
“DMAC Rights” means one right that was included as part of each DMAC Unit entitling the holder thereof to receive one-tenth (1/10th) of a share of DMAC Common Stock upon the consummation by DMAC of its Business Combination.
“DMAC Private Units” means the units issued by DMAC in a private placement transaction simultaneously with the IPO consisting of one (1) share of DMAC Common Stock and one (1) DMAC Right.
| 74 |
“DMAC Public Units” means the units issued in the IPO (including overallotment units acquired by DMAC’s underwriter) consisting of one (1) share of DMAC Common Stock and one (1) DMAC Right.
“DMAC Securities” means the DMAC Common Stock, the DMAC Preferred Stock, the DMAC Warrants and the DMAC Rights, collectively.
“DMAC Units” means the DMAC Public Units, the DMAC Private Units and the DMAC Working Capital Units.
“DMAC Warrants” means the warrants issued to DMAC’s underwriter at the time of the consummation of the IPO, entitling the holder thereof to purchase one (1) share of DMAC Common Stock per warrant at a purchase price of $12.00 per share.
“DMAC Working Capital Units” means the units into which working capital loans extended to DMAC by the Sponsor or affiliates of the Sponsor or certain of the Company’s officers or directors may be convertible.
“Environmental Law” means any Law in effect on or prior to the Effective Date any way relating to (a) the protection of human health and safety (to the extent relating to exposure to Hazardous Materials), (b) the protection, preservation or restoration of the environment and natural resources (including air, water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or (c) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Hazardous Materials.
“Environmental Liabilities” means, in respect of any Person, all Liabilities, obligations, responsibilities, Remedial Actions, Actions, Orders, losses, damages, costs, and expenses (including all reasonable fees, disbursements, and expenses of counsel, experts, and consultants and costs of investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a result of any claim or demand by any other Person or in response to any violation of Environmental Law, whether known or unknown, accrued or contingent, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, to the extent based upon, related to, or arising under or pursuant to any Environmental Law, Environmental Permit, Order, or Contract with any Governmental Authority or other Person, that relates to any environmental, health or safety condition, violation of Environmental Law, or a Release or threatened Release of Hazardous Materials.
“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended.
“Event” means any event, state of facts, development, change, circumstance, occurrence or effect.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Foreign Plan” means any plan, fund (including any superannuation fund) or other similar program or arrangement established or maintained outside the United States by the Company or any one or more of its Subsidiaries primarily for the benefit of employees of the Company or such Subsidiaries residing outside the United States, which plan, fund or other similar program or arrangement provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code.
“Founder Registration Rights Agreement” means the Registration Rights Agreement, dated as of October 26, 2021, by and among DMAC, Sponsor and the other “Holders” named therein.
| 75 |
“Fraud Claim” means any claim based on actual and intentional fraud with respect to this Agreement or the transactions contemplated hereby.
“GAAP” means generally accepted accounting principles as in effect in the United States of America.
“Governmental Authority” means any federal, state, local, foreign or other governmental, quasi-governmental or administrative body, instrumentality, department or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body.
“Hazardous Material” means any waste, gas, liquid or other substance or material that is defined, listed or designated as a “hazardous substance”, “pollutant”, “contaminant”, “hazardous waste”, “regulated substance”, “hazardous chemical”, or “toxic chemical” (or by any similar term) under any Environmental Law, or any other material regulated, or that could result in the imposition of Liability or responsibility, under any Environmental Law, including petroleum and its by-products, asbestos, polychlorinated biphenyls, radon, mold, and urea formaldehyde insulation.
“Indebtedness” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money (including the outstanding principal and accrued but unpaid interest), (b) all obligations for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business), (c) any other indebtedness of such Person that is evidenced by a note, bond, debenture, credit agreement or similar instrument, (d) all obligations of such Person under leases that should be classified as capital leases in accordance with GAAP (as applicable to such Person), (e) all obligations of such Person for the reimbursement of any obligor on any line or letter of credit, banker’s acceptance, guarantee or similar credit transaction, in each case, that has been drawn or claimed against and not settled, (f) all obligations of such Person in respect of acceptances issued or created, (g) all interest rate and currency swaps, caps, collars and similar agreements or hedging devices under which payments are obligated to be made by such Person, whether periodically or upon the happening of a contingency, (h) all obligations secured by an Lien on any property of such Person, (i) any premiums, prepayment fees or other penalties, fees, costs or expenses associated with payment of any Indebtedness of such Person and (j) all obligation described in clauses (a) through (i) above of any other Person which is directly or indirectly guaranteed by such Person or which such Person has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which it has otherwise assured a creditor against loss.
“Intellectual Property” means all of the following as they exist in any jurisdiction throughout the world: Patents, Trademarks, Copyrights, Trade Secrets, intellectual property rights in Software and other intellectual property.
“Intervening Event” means any Event (a) that is materially adverse to the business, assets, operations or prospects of the Company Entities, taken as a whole, and (b) that does not relate to an Alternative Proposal or any Acquisition Transaction; provided, however, that any Event arising from or related to conditions of the financial, banking, capital or securities markets generally in any country, including changes in interest rates in any country and changes in exchange rates for the currencies of any countries, changes in the general economy, effects arising from or relating to epidemics, pandemics, or disease outbreaks, including COVID-19 or any COVID-19 Measures, or the timing of any approval or clearance of any Governmental Authority required for the consummation of the Transactions shall be excluded for purposes of determining whether an Intervening Event has occurred.
“Investment Company Act” means the U.S. Investment Company Act of 1940, as amended.
“IPO” means the initial public offering of DMAC Units pursuant to the IPO Prospectus.
| 76 |
“IPO Prospectus” means the final prospectus of DMAC, dated as of October 26, 2021, and filed with the SEC on October 28, 2021 (File Nos. 333-259500 and 333-260515).
“JOBS Act” means the Jumpstart Our Business Startups Act of 2012.
“Knowledge” means, with respect to (i) the Company, the actual knowledge of Hongwei Mu, Shengwang Liu or Xinjian Wang after reasonable inquiry, or (ii) any other Party, (A) if an entity, the actual knowledge of its directors and executive officers, after reasonable inquiry, or (B) if a natural person, the actual knowledge of such Party after reasonable inquiry.
“Law” means any federal, state, local, municipal, foreign or other law, statute, legislation, principle of common law, ordinance, code, edict, decree, proclamation, treaty, convention, rule, regulation, directive, requirement, writ, injunction, settlement, Order or Consent that is or has been issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Governmental Authority.
“Liabilities” means any and all liabilities, Indebtedness, or obligations of any nature (whether absolute, accrued, contingent or otherwise, whether known or unknown, whether direct or indirect, whether matured or unmatured, whether due or to become due and whether or not required to be recorded or reflected on a balance sheet under GAAP or other applicable accounting standards), including Tax liabilities due or to become due.
“Lien” means any mortgage, pledge, security interest, attachment, right of first refusal, option, proxy, voting trust, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof), restriction (on voting, sale, transfer, disposition), any subordination arrangement in favor of another Person, or any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar Law.
“Material Adverse Effect” means, with respect to any specified Person, any fact, event, occurrence, change or effect that has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect upon (a) the business, assets, Liabilities, results of operations or condition (financial or otherwise) of such Person and its Subsidiaries, taken as a whole, or (b) the ability of such Person or any of its Subsidiaries on a timely basis to consummate the Transactions; provided, however, that any fact, event, event, occurrence, change or effect directly or indirectly attributable to, resulting from, relating to or arising out of the following (by themselves or when aggregated with any other, facts, events, occurrences, changes or effects) shall not be deemed to be, constitute, or be taken into account when determining whether there has or may, would or could have occurred a Material Adverse Effect: (i) general changes in the financial or securities markets or general economic or political conditions in the country or region in which such Person or any of its Subsidiaries do business; (ii) changes, conditions or effects that generally affect the industries in which such Person or any of its Subsidiaries principally operate; (iii) changes in applicable Laws (including COVID-19 Measures) or GAAP or other applicable accounting principles or mandatory changes in the regulatory accounting requirements applicable to any industry in which such Person and its Subsidiaries principally operate; (iv) conditions caused by acts of God, epidemic, terrorism, war (whether or not declared), natural disaster or pandemic (including COVID-19); (v) any failure in and of itself by such Person and its Subsidiaries to meet any internal or published budgets, projections, forecasts or predictions of financial performance for any period (provided that the underlying cause of any such failure may be considered in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur to the extent not excluded by another exception herein) and (vi), with respect to DMAC, the consummation and effects of the Redemption; (vii) the announcement or the existence of, express compliance with or performance under, this Agreement or the transactions contemplated hereby; (viii) any action not otherwise required by this Agreement or the Ancillary Documents or applicable Law that is taken at the express written request of DMAC and in accordance with such instructions; or (ix) any changes after the Effective Date in applicable Law, excluding GAAP or any other accounting principles (or authoritative interpretations thereof); provided further, however, that any event, occurrence, fact, condition, or change referred to in clauses (i), (ii), (iv) and (ix) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition, or change has a disproportionate effect on such Person or any of its Subsidiaries compared to other participants in the industries in which such Person or any of its Subsidiaries primarily conducts its businesses. Notwithstanding the foregoing, with respect to DMAC, the amount of the Redemption or the failure to obtain the Required Stockholder Approval shall not be deemed to be a Material Adverse Effect on or with respect to DMAC.
| 77 |
“Merger Shares” means the Pubco Ordinary Shares and Pubco Preferred Shares issued or to be issued pursuant to the closing of the Merger as set forth in Article I.
“Merger Sub Common Stock” means the shares of common stock, par value $0.0001 per share, of Merger Sub.
“Nasdaq” means the Nasdaq Capital Market.
“Net Income” means the “net income” line item in the consolidated audited income statement of Pubco for the applicable calendar year.
“Order” means any order, decree, ruling, judgment, injunction, writ, determination, binding decision, verdict, judicial award or other Action that is or has been entered, rendered, or otherwise put into effect by or under the authority of any Governmental Authority.
“Organizational Documents” means, with respect to any Person, its certificate of incorporation and bylaws, memorandum and articles of association or similar organizational documents, in each case, as amended.
“Patents” means any patents, and patent applications (including any divisionals, provisionals, continuations, continuations-in-part, substitutions, or reissues thereof).
“PCAOB” means the U.S. Public Company Accounting Oversight Board (or any successor thereto).
“Permits” means all federal, state, local or foreign or other third-party permits, grants, easements, consents, approvals, authorizations, exemptions, licenses, franchises, concessions, ratifications, permissions, clearances, confirmations, endorsements, waivers, certifications, designations, ratings, registrations, qualifications or orders of any Governmental Authority or any other Person.
“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) Liens for Taxes or assessments and similar governmental charges or levies, which either are (i) not delinquent or (ii) being contested in good faith and by appropriate proceedings, and for which adequate reserves have been established with respect thereto, (c) encumbrances and restrictions on real property (including easements, covenants, conditions, rights of way and similar restrictions) that do not prohibit or materially interfere with any of the Target Companies’ use or occupancy of such real property for the operation of their business, (d) other Liens imposed by operation of Law or arising in the ordinary course of business for amounts which are not due and payable or as would not in the aggregate materially adversely affect the value of, or materially adversely interfere with the use of, the property subject thereto, (e) Liens incurred or deposits made in the ordinary course of business in connection with social security, (f) Liens on goods in transit incurred pursuant to documentary letters of credit, in each case arising in the ordinary course of business, including statutory liens in favor of carriers, warehousemen, mechanics and materialmen, to secure claims for labor, materials or supplies, (g) licenses of Intellectual Property in the ordinary course of business, (h) deposits or pledges made in connection with, or to secure payment of, workers’ compensation, unemployment insurance or similar programs mandated by Law; or (i) Liens arising under this Agreement or any Ancillary Document.
| 78 |
“Person” means an individual, corporation, partnership (including a general partnership, limited partnership or limited liability partnership), limited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political subdivision thereof, or an agency or instrumentality thereof.
“Personal Property” means any machinery, equipment, tools, vehicles, furniture, leasehold improvements, office equipment, plant, parts and other tangible personal property.
“Pubco Charter” means the memorandum and articles of association of Pubco, as amended and in effect under the Cayman Act.
“Pubco Financials” means the financial statements of Pubco and Merger Sub on a consolidated basis.
“Pubco Ordinary Shares” means the ordinary shares, par value $0.0001 per share, of Pubco,
“Pubco Preferred Shares” means the preference shares, par value $0.0001 per share, of Pubco, which have the same rights and preferences as the shares of DMAC Preferred Stock for which they are exchanged in the Merger.
“Pubco Securities” means the Pubco Ordinary Shares, the Pubco Preferred Shares and the Pubco Warrants, collectively.
“Pubco Warrant” means one whole warrant entitling the holder thereof to purchase one (1) Pubco Ordinary Share at a purchase price of $12.00 per share.
“Redemption Price” means an amount equal to price at which each share of DMAC Common Stock (or after the Merger, Pubco Ordinary Share) is redeemed or converted pursuant to the Redemption (as equitably adjusted for share splits, share dividends, combinations, recapitalizations and the like after the Closing).
“Reference Time” means the close of business of the Company on the Closing Date (but without giving effect to the Transactions, including any payments by DMAC hereunder to occur at the Closing, but treating any obligations in respect of Indebtedness or other liabilities that are contingent upon the consummation of the Closing as currently due and owing without contingency as of the Reference Time).
“Company Organizational Documents” means the Articles of Association and the Memorandum of Association of the Company.
“Release” means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, or leaching into the environment.
“Remedial Action” means all actions required by Environmental Law to (i) clean up, remove, treat, or in any other way address any Release of Hazardous Material, (ii) prevent the Release of any Hazardous Material so it does not endanger or threaten to endanger public health or welfare or the environment, (iii) perform pre-remedial studies and investigations or post-remedial monitoring and care, or (iv) correct a condition of noncompliance with Environmental Laws.
“Representatives” means, as to any Person, such Person’s Affiliates and the respective managers, directors, officers, employees, consultants, advisors (including financial advisors, counsel and accountants), agents and other legal representatives of such Person or its Affiliates.
“Required Stockholder Approval” means the approval of the Stockholder Approval Matters by holders of the issued and outstanding shares of DMAC in accordance with the Organizational Documents of DMAC.
“Rights Agreement” means the Rights Agreement, dated as of October 26, 2021, by and between DMAC and American Stock Transfer & Trust Company, LLC.
“SEC” means the U.S. Securities and Exchange Commission (or any successor Governmental Authority).
“Securities Act” means the U.S. Securities Act of 1933, as amended.
“Software” means any computer software programs, including all source code and object code.
“SOX” means the U.S. Sarbanes-Oxley Act of 2002, as amended.
“Sponsor” means Bright Vision Sponsor LLC, a Delaware limited liability company.
| 79 |
“Subsidiary” means, with respect to any Person, any corporation, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of capital shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, association or other business entity, a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons will be deemed to have a majority ownership interest in a partnership, association or other business entity if such Person or Persons will be allocated a majority of partnership, association or other business entity gains or losses or will be or control the managing director, managing member, general partner or other managing Person of such partnership, association or other business entity. A Subsidiary of a Person will also include any variable interest entity which is consolidated with such Person under applicable accounting rules.
“Target Company” means the Company and each of its direct and indirect Subsidiaries.
“Tax Return” means any return, declaration, report, claim for refund, information return or other documents (including any related or supporting schedules, statements or information) filed or required to be filed in connection with the determination, assessment or collection of any Taxes or the administration of any Laws or administrative requirements relating to any Taxes.
“Taxes” means (a) all direct or indirect federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, value-added, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, social security and related contributions due in relation to the payment of compensation to employees, excise, severance, stamp, occupation, premium, property, windfall profits, alternative minimum, estimated, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts with respect thereto, (b) any Liability for payment of amounts described in clause (a) whether as a result of being a member of an affiliated, consolidated, combined or unitary group for any period or otherwise through operation of law and (c) any Liability for the payment of amounts described in clauses (a) or (b) as a result of any tax sharing, tax group, tax indemnity or tax allocation agreement with, or any other express or implied agreement to indemnify, any other Person.
“Trade Secrets” means any trade secrets, confidential business information, concepts, ideas, designs, research or development information, processes, procedures, techniques, technical information, specifications, operating and maintenance manuals, engineering drawings, methods, know-how, data, mask works, discoveries, inventions, modifications, extensions, and improvements (whether or not patentable or subject to copyright, trademark, or trade secret protection), in each case, to the extent the foregoing are confidential and protected by applicable Law.
“Trademarks” means any trademarks, service marks, trade dress, trade names, brand names, internet domain names, designs, logos, or corporate names (including, in each case, the goodwill associated therewith), whether registered or unregistered, and all registrations and applications for registration and renewal thereof.
“Transaction Expenses” means all fees and expenses of any of the Target Companies incurred or payable as of the Closing and not paid prior to the Closing (i) in connection with the consummation of the transactions contemplated hereby, including any amounts payable to third party professional advisors (including investment bankers, brokers, finders, attorneys, accountants and other consultants and advisors) retained by or on behalf of any of the Target Companies; (ii) any change in control bonus, transaction bonus, retention bonus, termination or severance payment or payment relating to terminated options, warrants or other equity appreciation, phantom equity, profit participation or similar rights, in any case, to be made to any current or former employee, independent contractor, director or officer of any of the Target Companies at the Closing pursuant to any agreement to which any of the Target Companies is a party prior to the Closing which become payable (including if subject to continued employment) solely as a result of the execution of this Agreement or the consummation of the Transactions; and (iii) any sales, use, real property transfer, stamp, stock transfer or other similar transfer Taxes imposed on DMAC, Pubco, Merger Sub or a Target Company in connection with the Transactions.
“Trust Account” means the trust account established by DMAC with the proceeds from the IPO pursuant to the Trust Agreement in accordance with the IPO Prospectus.
“Trust Agreement” means that certain Investment Management Trust Agreement, dated as of October 26, 2021, by and between DMAC and the Trustee, as it may be amended (including to accommodate the Merger.
“Trustee” means American Stock Transfer & Trust Company, LLC, in its capacity as trustee under the Trust Agreement.
| 80 |
14.2 Section References. The following capitalized terms, as used in this Agreement, have the respective meanings given to them in the Section as set forth below adjacent to such terms:
| Term | Section | Term | Section | |||
| Acquisition Proposal | 8.6(a) | Merger Securities | 5.6(a) | |||
| Agreement | Preamble | Merger Sub | Preamble | |||
| Alternative Transaction | 8.6(a) | Minimum Valuation | 2.2(d) | |||
| Amended and Restated Registration | Negotiation Period | 2.2(e) | ||||
| Rights Agreement | 10.2(d)(iv)) | New Seller | 8.2(c) | |||
| Amended Pubco Charter | 10.1(f) | Non-Competition Agreement | 10.3(e)(xi) | |||
| Antitrust Laws | 8.9(b) | Non-Recourse Parties | 13.13 | |||
| Automatic Extension | 11.1(b) | OFAC | 4.17(c) | |||
| Balance Sheet Date | 6.7(a) | Outside Date | 11.1(b) | |||
| Business Combination | 12.1 | Party(ies) | Preamble | |||
| Certificate of Merger | 1.2 | PIPE Investment | 8.18 | |||
| Charter Extension | 11.1(b) | PIPE Shares | 8.18 | |||
| Company Subsidiary | 6.3(c) | Post-Closing Pubco Board | 8.15(a) | |||
| Closing | 3.1 | Pro Rata Share | 2.2(a) | |||
| Closing Date | 3.1 | Proxy Statement | 8.11(a) | |||
| Closing Filing | 8.13(b) | Pubco | Preamble | |||
| Closing Press Release | 8.13(b) | Pubco Disclosure Schedules | Article V | |||
| Company | Preamble | Pubco Financials | 5.8(c) | |||
| Company Benefit Plan | 6.19(a) | Pubco Material Contract | 5.15(a) | |||
| Company Certificates | 2.3(a) | Public Certifications | 4.6(a) | |||
| Company Directors | 8.15(a) | Public Disclosure Schedules | Article V | |||
| Company Disclosure Schedules | Article VI | Pubco Material Contract | 5.15 | |||
| Company Entities | 8.1(a) | Public Stockholder Distributions | 12.1 | |||
| Company Financials | 6.7(a) | Public Stockholders | 12.1 | |||
| Company IP | 6.13(c) | Purchased Shares | 2.1 | |||
| Company IP Licenses | 6.13(a) | Redemption | 2.2(c) | |||
| Company Material Contract | 6.12(a) | Revised Valuation | 8.11(a) | |||
| Company Permits | 6.10 | DMAC | Preamble | |||
| Company Real Property Leases | 6.15 | DMAC Directors | 8.15(a) | |||
| Company Registered IP | 6.13(a) | DMAC Disclosure Schedules | Article IV | |||
| D&O Indemnified Person | 8.16(a) | DMAC Financials | 4.6(c) | |||
| D&O Tail Insurance | 8.16(b) | DMAC Material Contract | 4.13(a) | |||
| DGCL | 1.2 | DMAC Recommendation | 4.2 | |||
| Due Diligence Period | 2.2(c) | Redemption | 8.11(a) | |||
| Merger Effective Time | 1.2 | Registration Statement | 8.11(a) | |||
| EGS | 3.1 | Related Person | 6.21 | |||
| Enforceability Exceptions | 4.2 | Released Claims | 12.1 | |||
| Environmental Permits | 6.20(a) | Rule 144 | 7.7(b) | |||
| Exchange Consideration | 2.2(a) | SEC Reports | 4.6(a) | |||
| Exchange Shares | 2.2(a) | Seller Releasing Persons | 12.2(a) | |||
| Expenses | 11.4 | Sellers | Preamble | |||
| Extension | 8.3(a) | Share Exchange | Recitals | |||
| Extension Expenses | 8.3(b)(iv) | Signing Filing | 8.13(b) | |||
| Extension Amount | 11.2(a) | Signing Press Release | 8.13(b) | |||
| Federal Securities Laws | 8.7 | Special Stockholder Meeting | 8.11(a) | |||
| Funding Date | 11.2(a) | Specified Courts | 13.4 | |||
| Independent Director | 8.15(a) | Sponsor Releasing Persons | 12.2(a) | |||
| Interim Period | 8.1(a) | Stockholder Approval Matters | 8.11(a) | |||
| Intervening Event Notice | 8.12(a) | Surviving Corporation | 1.1 | |||
| Intervening Event Notice Period | 8.12(a) | Top Customers | 6.23 | |||
| Joinder | 8.2(c) | Top Vendors | 6.23 | |||
| Lock-Up Agreement | 10.3(e)(x) | Transactions | Recitals | |||
| Membership Interests | 11.2(a) | Valuation | 2.2(b) | |||
| Merger | Recitals |
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES FOLLOW]
| 81 |
IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be signed and delivered by its respective duly authorized officer as of the date first written above.
| DMAC: | |
| DEEP MEDICINE ACQUISITION CORP. |
| By: | /s/ Humphrey Polanen | |
| Name: | Humphrey Polanen | |
| Title: | Chief Executive Officer |
| Pubco: | |
| CHIJET MOTOR COMPANY, INC. |
| By: | /s/ Hongwei Mu (慕宏伟) | |
| Name: | Hongwei Mu (慕宏伟) | |
| Title: | Director |
| Merger Sub: | |
| CHIJET MOTOR (USA) COMPANY, INC. |
| By: | /s/ Qingjun Wang (王庆军) | |
| Name: | Qingjun Wang (王庆军) | |
| Title: | Chief Executive Officer |
| The Company: | |
| CHIJET INC. |
| By: | /s/ Hongwei Mu (慕宏伟) | |
| Name: | Hongwei Mu (慕宏伟) | |
| Title: | Director |
[Signature Page to Business Combination Agreement]
| The Sellers: | |
| Print Name of Seller: | |
| Euroamer Kaiwan Technology Company Limited |
| By: | /s/ Lichun Wu（吳立春 | |
| [Signature] |
| If Entity, Print Name and Title of Signatory: | |
| Lichun Wu（吳立春）, Director | |
| Address: 12/F, ASIA TRADE CENTRE, 79 LEI MUK ROAD, KWAI CHUNG, NT, Hong Kong | |
| Telephone: | |
| Email: |
[Signature Page to Business Combination Agreement]
| The Sellers: | |
| Print Name of Seller: | |
| Chijet Holdings Limited |
| By: | /s/ Hongwei Mu (慕宏伟) | |
| [Signature] |
| If Entity, Print Name and Title of Signatory: |
| Hongwei Mu (慕宏伟) , Director | |
| Address: Sertus Chambers, P.O. Box 905, Quastisky Building, Road Town, Tortola, British Virgin Islands | |
| Telephone: | |
| Email: |
[Signature Page to Business Combination Agreement]
| The Sellers: | |
| Print Name of Seller: | |
| Sunrise 18 Limited |
| By: | /s/ Hiuwa Chan (陳曉華) | |
| [Signature] |
| If Entity, Print Name and Title of Signatory: | |
| Hiuwa Chan (陳曉華), CEO | |
Address: FLAT/RM 910 9/F 655 NATHAN ROAD MONG KOK KL, HONG KONG |
|
| Facsimile: | |
| Telephone: | |
| Email: |
[Signature Page to Business Combination Agreement]
| The Sellers: | |
| Print Name of Seller: | |
| Hong Kong Yeda International Holdings Co., Limited |
| By: | /s/ Zhidong Pan（潘志楝） | |
| [Signature] |
| If Entity, Print Name and Title of Signatory: | |
| Zhidong Pan（潘志楝）, Director | |
| Address: Rooms 1318-19, Hollywood Plaza,610 Nathan Road, Mongkok,Kowloon, Hong Kong | |
| Telephone: | |
| Email: |
[Signature Page to Business Combination Agreement]
| Print Name of Seller: | |
| Hong Kong Guotai International Holdings Co., Limited |
| By: | /s/ Xia Yu（於霞） | |
| [Signature] |
| If Entity, Print Name and Title of Signatory: | |
| Xia Yu（於霞）, Director | |
| Address: Room A, 17 / F, Jiazhao commercial building, 75-77 Wyndham Street, Central, Hong Kong | |
| Facsimile: | |
| Telephone: | |
| Email: |
[Signature Page to Business Combination Agreement]
ANNEX I
List of Sellers
The following persons (including their respective estates, heirs, assigns or successors) are Sellers for purposes of this Agreement:
| Seller Name | Number of Company Shares Held by Seller | Pro Rata Share | ||||||
| Euroamer Kaiwan Technology Company Limited | 115,038,859 | 43.2310 | % | |||||
| Chijet Holdings Limited | 93,080,558 | 34.9792 | % | |||||
| Sunrise 18 Limited | 4,104,100 | 1.5423 | % | |||||
| Hong Kong Yeda International Holdings Co., Limited | 26,939,655 | 10.1237 | % | |||||
| Hong Kong Guotai International Holdings Co., Limited | 26,939,655 | 10.1237 | % | |||||
| TOTAL | 266,102,827 | 100 | % | |||||
EXHIBIT A
FORM OF LOCK-UP AGREEMENT
EXHIBIT B
FORM OF AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
EXHIBIT C
FORM OF SUPPORT AGREEMENT
Exhibit 10.1
Execution Version
SUPPORT AGREEMENT
This SUPPORT AGREEMENT, dated as of July 12, 2022 (this “Support Agreement”), is entered into by and among Bright Vision Sponsor LLC, a Delaware limited liability company (“Sponsor”), Chijet Inc., a Cayman Islands exempted company (the “Company”), Chijet Motor Company, Inc., a Cayman Islands exempted company (“Pubco”), and Deep Medicine Acquisition Corp., a Delaware corporation (“DMAC”). Capitalized terms used but not defined in this Support Agreement shall have the meanings ascribed to them in the Business Combination Agreement (as defined below).
WHEREAS, as of July 12, 2022, DMAC, Pubco, Chijet Motor (USA) Company, Inc., a Delaware corporation and a wholly owned subsidiary of Pubco (“Merger Sub”), the Company, and the shareholders of the Company named as Sellers therein (collectively, the “Sellers”) entered into that certain Business Combination Agreement (as amended from time to time in accordance with the terms thereof, the “Business Combination Agreement”), pursuant to which, subject to the terms and conditions thereof, among other matters, (a) Pubco will acquire all of the issued and outstanding shares of the Company from the Sellers in exchange for ordinary shares of Pubco and the Company shall surrender for no consideration its shares in Pubco, such that the Company becomes a wholly owned subsidiary of Pubco and the Sellers become shareholders of Pubco (the “Share Exchange”); and immediately thereafter (b) Merger Sub will merge with and into DMAC, with DMAC continuing as the surviving entity (the “Merger”), and as a result of which, (i) DMAC will become a wholly-owned subsidiary of Pubco, and (ii) each issued and outstanding security of DMAC immediately prior to the effective time of the Merger will no longer be outstanding and will automatically be cancelled, in exchange for the right of the holder thereof to receive a substantially equivalent security of Pubco, all upon the terms and subject to the conditions set forth in the Business Combination Agreement and in accordance with the provisions of applicable Law;
WHEREAS, Sponsor is the sponsor of DMAC and, as of the date hereof, Sponsor is the owner of 3,021,958 shares of DMAC’s common stock, par value $0.0001 per share (“DMAC Common Stock”) (all such shares, or any successor or additional shares of DMAC of which ownership of record or the power to vote is hereafter acquired by Sponsor prior to the termination of this Support Agreement being referred to herein as the “Sponsor Shares”);
WHEREAS, the Board of Directors of DMAC has (a) approved and declared advisable the Business Combination Agreement, the Ancillary Documents, the Merger and the other transactions contemplated by any such documents (collectively, the “Transactions”), (b) determined that the Transactions are fair to and in the best interests of DMAC and its stockholders (the “DMAC Stockholders”) and (c) recommended the approval and the adoption by each of the DMAC Stockholders of the Business Combination Agreement, the Ancillary Documents, the Merger and the other Transactions; and
WHEREAS, in order to induce the Company, to enter into the Business Combination Agreement, Sponsor is executing and delivering this Support Agreement to the Company.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, and intending to be legally bound hereby, the parties hereby agree as follows:
1. Voting Agreements. Sponsor, solely in its capacity as a stockholder of DMAC, agrees that, during the term of this Support Agreement, at the DMAC Stockholder Meeting, at any other meeting of the DMAC Stockholders related to the Transactions (whether annual or special and whether or not an adjourned or postponed meeting, however called and including any adjournment or postponement thereof) and/or in connection with any written consent of the DMAC Stockholders related to the Transactions (the DMAC Stockholder Meeting and all other meetings or consents related to the Business Combination Agreement, collectively referred to herein as the “Meeting”), Sponsor shall:
(a) when the Meeting is held, appear at the Meeting or otherwise cause the Sponsor Shares to be counted as present thereat for the purpose of establishing a quorum;
(b) vote (or execute and return an action by written consent), or cause to be voted at the Meeting (or validly execute and return and cause such consent to be granted with respect to), all of the Sponsor Shares in favor of the Business Combination Agreement and the Transactions and each of the other Stockholder Approval Matters; and
(c) vote (or execute and return an action by written consent), or cause to be voted at the Meeting (or validly execute and return and cause such consent to be granted with respect to), all of the Sponsor Shares against any other action that would reasonably be expected to (x) materially impede, interfere with, delay, postpone or adversely affect the Merger or any of the Transactions, (y) result in a breach of any covenant, representation or warranty or other obligation or agreement of DMAC under the Business Combination Agreement or (z) result in a breach of any covenant, representation or warranty or other obligation or agreement of Sponsor contained in this Support Agreement.
2. Restrictions on Transfer. Sponsor agrees that, during the term of this Support Agreement, it shall not sell, assign or otherwise transfer any of the Sponsor Shares unless the buyer, assignee or transferee thereof executes a joinder agreement to this Support Agreement in a form reasonably acceptable to the Company and DMAC. DMAC shall not, and shall not permit DMAC’s transfer agent to, register any sale, assignment or transfer of the Sponsor Shares on DMAC’s stock ledger (book entry or otherwise) that is not in compliance with this Section 2.
3. No Redemption; Conversion of Rights. Sponsor hereby agrees:
(a) that, during the term of this Agreement, it shall not redeem, or submit a request to DMAC’s transfer agent or otherwise exercise any right to redeem, any Sponsor Shares; and
(b) that it will elect to convert, effective prior to the Closing, any and all Private Placement Rights and Working Capital Rights (as those terms are defined in the Rights Agreement) held by it into the underlying shares of DMAC Common Stock in the manner contemplated by the Rights Agreement.
4. New Securities. During the term of this Support Agreement, in the event that, (x) any shares of DMAC Common Stock or other equity securities of DMAC are issued to Sponsor after the date of this Support Agreement pursuant to any stock dividend, stock split, recapitalization, reclassification, combination or exchange of DMAC securities owned by Sponsor, (y) Sponsor purchases or otherwise acquires beneficial ownership of any shares of DMAC Common Stock or other equity securities of DMAC after the date of this Support Agreement, or (c) Sponsor acquires the right to vote or share in the voting of any DMAC Common Stock or other equity securities of DMAC after the date of this Support Agreement (such DMAC Common Stock or other equity securities of DMAC, collectively the “New Securities”), then such New Securities acquired or purchased by Sponsor shall be subject to the terms of this Support Agreement to the same extent as if they constituted the Sponsor Shares as of the date hereof.
| 2 |
5. Company Acquisition of Sponsor Membership Interests. Sponsor agrees to be bound by, and comply with, the provisions of Section 11.2(a) of the Business Combination Agreement insofar as they relate to Sponsor, as though Sponsor were a party to the Business Combination Agreement. Without prejudice to the generality of the foregoing:
(a) Sponsor represents and warrants to the Company and Pubco that it has provided or caused to be provided to the Company true, correct and complete copies of Sponsor’s limited liability company operating agreement and any amendments thereto and any other organizational documents of Sponsor or agreements or instruments governing the relations of Sponsor’s members to each other or to Sponsor, each as in effect on the date hereof (together, the “Sponsor Governing Documents”);
(b) upon and subject to the funding of the Extension Amount by the Company pursuant to Section 11.2(a) of the Business Combination, Sponsor shall issue such amount or number of limited liability company membership interests in Sponsor (“Membership Interests”) to the Company (or its designee) as will cause the value of the Company’s (or its designee’s) interest in shares of DMAC Common Stock held by the Sponsor and allocable to such Membership Interests to be equal to the Extension Amount, with each share of DMAC Common Stock being valued at $10.00 for this purpose. Such Membership Interests will be duly and validly issued, free and clear of any Liens other than those imposed under the Sponsor Governing Documents. For the avoidance of doubt, the Company (or its designee) will not, by virtue of the issuance of the Membership Interests and its admission as a member of the Sponsor, become subject to any obligation to make any additional capital contribution to Sponsor other than its contribution of the Extension Amount;
(c) during the period between the date hereof and the Closing under the Business Combination Agreement, except with the prior written consent of the Company, Sponsor will not amend or modify, or permit to be amended or modified, the Sponsor Governing Documents other than as necessary or appropriate to reflect the issuance of the Membership Interests to the Company (or its designee) and the admission of the Company (or its designee) as a member of Sponsor, if applicable; and
(d) as soon as practicable after the Company’s deposit of the Extension Amount to an account designated by Sponsor and DMAC, Sponsor shall take, or cause to be taken, any and all action necessary for the Company or its designee, as applicable, to be admitted as a member of Sponsor and to become a party to Sponsor’s limited liability company operating agreement, subject to the Company’s (or its designee’s) execution and delivery to Sponsor of a joinder agreement substantially in the form attached hereto as Annex 1 (the “Joinder Agreement to Sponsor Operating Agreement”).
6. No Challenge. Sponsor, on behalf of itself and its Affiliates (the “Sponsor Releasing Persons”), agrees:
(a) not to commence, join in, facilitate, assist or encourage, and agrees to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against DMAC, Pubco, Merger Sub, the Company or any of their respective successors or directors (x) challenging the validity of, or seeking to enjoin the operation of, any provision of this Support Agreement or the Business Combination Agreement or (y) alleging a breach of any fiduciary duty of any Person in connection with the evaluation, negotiation or entry into the Business Combination Agreement;
(b) to release and discharge DMAC, Pubco, Merger Sub, the Company or any of their respective successors or directors from and against any and all Actions, obligations, agreements, debts and Liabilities whatsoever, whether known or unknown, both at law and in equity, which such Sponsor Releasing Person now has, has ever had or may hereafter have against DMAC arising on or prior to the Closing Date as a result of such person’s capacity as a holder of capital shares or other securities of DMAC and arising on or prior to the Closing Date or on account of or arising out of any matter occurring on or prior to the Closing Date, provided that releases and restrictions shall not apply to any claims a Sponsor Releasing Person may have against any party with respect to any rights under the Business Combination Agreement, this Agreement, any of the other Ancillary Documents or any Contract set forth in Schedule 12.2(b) of the Business Combination Agreement or any rights to indemnification, fee reimbursement or exculpation; and
| 3 |
(c) to irrevocably refrain from, directly or indirectly, asserting any Action, or commencing or causing to be commenced, any Action of any kind against DMAC, Pubco, Merger Sub, the Company or any of their respective successors or directors, based upon any matter purported to be released herein, from and after the Closing.
7. Waiver of Anti-Dilution Protection. Sponsor, solely in connection with and only for the purpose of the proposed Transactions, hereby waives, and agrees not to exercise, assert or claim, to the fullest extent permitted by Law, the provisions of Section 4.3(b)(ii) of DMAC’s Second Amended and Restated Certificate of Incorporation (as amended, the “DMAC Charter”), and agrees that the Class B Common Stock (as defined in the DMAC Charter) will convert only upon the Initial Conversion Ratio (as defined in the DMAC Charter) automatically on the Closing. This waiver shall be void and of no force and effect following the date on which the Business Combination Agreement is validly terminated in accordance with its terms. All other terms in the DMAC Charter related to the Class B Common Stock shall remain in full force and effect, and foregoing waiver shall be effective only upon the consummation of the Transactions.
8. Consent to Disclosure. Sponsor hereby consents to the publication and disclosure in the Form F-4 and the Proxy Statement (and, as and to the extent otherwise required by applicable securities Laws or the SEC or any other securities authorities, any other documents or communications provided by DMAC, Pubco or the Company to any Authority or to securityholders of DMAC, Pubco or the Company) of Sponsor’s identity and beneficial ownership of Sponsor Shares and the nature of Sponsor’s commitments, arrangements and understandings under and relating to this Support Agreement and, if deemed appropriate by DMAC, Pubco or the Company, a copy of this Support Agreement. Sponsor will promptly provide any information reasonably requested by DMAC, Pubco or the Company for any regulatory application or filing made or approval sought in connection with the Transactions (including filings with the SEC). Sponsor shall not issue any press release or otherwise make any public statements with respect to the Transactions or the transactions contemplated herein without the prior written approval of the Company and DMAC.
9. Sponsor Representations. Sponsor represents and warrants to DMAC, Pubco and the Company, as of the date hereof, that:
(a) Sponsor has never been suspended or expelled from membership in any securities or commodities exchange or association or had a securities or commodities license or registration denied, suspended or revoked;
(b) Sponsor has full right and power, without violating any agreement to which it is bound (including any non-competition or non-solicitation agreement with any employer or former employer), to enter into this Support Agreement;
(c) Sponsor is duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is organized, and the execution, delivery and performance of this Support Agreement and the consummation of the transactions contemplated hereby are within Sponsor’s organizational powers and have been duly authorized by all necessary organizational actions on the part of Sponsor;
| 4 |
(d) this Support Agreement has been duly executed and delivered by Sponsor and, assuming due authorization, execution and delivery by the other parties to this Support Agreement, this Support Agreement constitutes a legally valid and binding obligation of Sponsor, enforceable against Sponsor in accordance with the terms hereof (except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors’ rights and general principles of equity affecting the availability of specific performance and other equitable remedies);
(e) the execution and delivery of this Support Agreement by Sponsor does not, and the performance by Sponsor of its obligations hereunder will not, (i) conflict with or result in a violation of the organizational documents of Sponsor, or (ii) require any consent or approval from any third party that has not been given or other action that has not been taken by any third party, in each case, to the extent such consent, approval or other action would prevent, enjoin or materially delay the performance by Sponsor of its obligations under this Support Agreement;
(f) there are no Actions pending against Sponsor or, to the knowledge of Sponsor, threatened against Sponsor, before (or, in the case of threatened Actions, that would be before) any Authority, which in any manner challenges or seeks to prevent, enjoin or materially delay the performance by Sponsor of Sponsor’s obligations under this Support Agreement;
(g) no broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection with this Support Agreement or any of the respective transactions contemplated hereby, based upon arrangements made by or on behalf of Sponsor;
(h) Sponsor has had the opportunity to read the Business Combination Agreement and this Support Agreement and has had the opportunity to consult with Sponsor’s tax and legal advisors;
(i) Sponsor has not entered into, and shall not enter into, any agreement that would prevent Sponsor from performing any of Sponsor’s obligations hereunder;
(j) Sponsor has good title to the Sponsor Shares, free and clear of any Liens other than Permitted Liens and Liens under DMAC’s Organizational Documents, and Sponsor has the sole power to vote or cause to be voted the Sponsor Shares; and
(k) the Sponsor Shares are the only shares of DMAC’s outstanding capital stock owned of record or beneficially owned by the Sponsor as of the date hereof, and none of the Sponsor Shares are subject to any proxy, voting trust or other agreement or arrangement with respect to the voting of the Sponsor Shares that is inconsistent with Sponsor’s obligations pursuant to this Support Agreement.
10. Specific Performance. The Sponsor hereby agrees and acknowledges that (a) DMAC, Pubco and the Company would be irreparably injured in the event of a breach by the Sponsor of its obligations under this Support Agreement, (b) monetary damages may not be an adequate remedy for such breach and (c) DMAC, Pubco and the Company shall be entitled to obtain injunctive relief, in addition to any other remedy that such party may have in law or in equity, in the event of such breach or anticipated breach, without the requirement to post any bond or other security or to prove that money damages would be inadequate.
| 5 |
11. Entire Agreement; Amendment; Waiver. This Support Agreement and the other agreements referenced herein constitute the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersede all prior understandings, agreements or representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby provided, that, for the avoidance of doubt, the foregoing shall not affect the rights and obligations of the parties under the Business Combination Agreement or any Additional Agreement. This Support Agreement may not be changed, amended, modified or waived (other than to correct a typographical error) as to any particular provision, except by a written instrument executed by all parties hereto. 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 Support 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.
12. Binding Effect; Assignment; Third Parties. This Support 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 Support Agreement and all obligations of Sponsor are personal to Sponsor and may not be assigned, transferred or delegated by Sponsor at any time without the prior written consent of DMAC, Pubco and the Company, and any purported assignment, transfer or delegation without such consent shall be null and void ab initio. Nothing contained in this Support 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 that is not a party hereto or thereto or a successor or permitted assign of such a party.
13. Counterparts. This Support Agreement may be executed in any number of original, electronic or facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
14. Severability. This Support 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 Support 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 Support Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.
15. Governing Law; Jurisdiction; Jury Trial Waiver. Sections 13.4 and 13.5 of the Business Combination Agreement are incorporated by reference herein to apply with full force to any disputes arising under this Support Agreement.
16. Notice. Any notice, consent or request to be given in connection with any of the terms or provisions of this Support Agreement shall be in writing and shall be sent or given in accordance with the terms of Section 13.1 of the Business Combination Agreement to the applicable party, with respect to the Company, Pubco and DMAC, at the respective addresses set forth in Section 13.1 of the Business Combination Agreement, and, with respect to the Sponsor, at the address set forth underneath Sponsor’s name on the signature page hereto.
17. Termination. This Support Agreement become effective upon the date hereof and shall automatically terminate, and none of DMAC, Pubco, the Company or Sponsor shall have any rights or obligations hereunder, on the earliest of (i) the mutual written consent of DMAC, the Company and the Sponsor, (ii) the Closing (following the performance of the obligations of the parties hereunder required to be performed at or prior to the Closing), or (iii) the termination of the Business Combination Agreement in accordance with its terms. No such termination shall relieve the Sponsor, Pubco, DMAC or the Company from any liability resulting from a breach of this Support Agreement occurring prior to such termination. Notwithstanding anything to the contrary herein, the provisions of Section 15 and this Section 17 shall survive the termination of this Support Agreement.
| 6 |
18. Adjustment for Stock Split. If, and as often as, there are any changes in the Sponsor Shares by way of stock split, stock dividend, combination or reclassification, or through merger, consolidation, reorganization, recapitalization or business combination, or by any other means, equitable adjustment shall be made to the provisions of this Support Agreement as may be required so that the rights, privileges, duties and obligations hereunder shall continue with respect to the Sponsor, DMAC, the Company, the Sponsor Shares as so changed.
19. Further Actions. Each of the parties hereto agrees to execute and deliver hereafter any further document, agreement or instrument of assignment, transfer or conveyance as may be necessary or desirable to effectuate the purposes hereof and as may be reasonably requested in writing by another party hereto.
20. Expenses. Each party shall be responsible for its own fees and expenses (including the fees and expenses of investment bankers, accountants and counsel) in connection with the entering into of this Support Agreement, the performance of its obligations hereunder and the consummation of the transactions contemplated hereby; provided, that in the event of any Action arising out of or relating to this Support Agreement, the non-prevailing party in any such Action will pay its own expenses and the reasonable documented out-of-pocket expenses, including reasonable attorneys’ fees and costs, reasonably incurred by the prevailing party.
21. Interpretation. The titles and subtitles used in this Support Agreement are for convenience only and are not to be considered in construing or interpreting this Support Agreement. In this Support Agreement, unless the context otherwise requires: (i) any pronoun used shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (ii) the term “including” (and with correlative meaning “include”) shall be deemed in each case to be followed by the words “without limitation”; and (iii) the words “herein,” “hereto,” and “hereby” and other words of similar import shall be deemed in each case to refer to this Support Agreement as a whole and not to any particular section or other subdivision of this Support Agreement. The parties have participated jointly in the negotiation and drafting of this Support Agreement. Consequently, in the event an ambiguity or question of intent or interpretation arises, this Support 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 Support Agreement.
22. No Partnership, Agency or Joint Venture. This Support Agreement is intended to create a contractual relationship among Sponsor, Pubco, the Company and DMAC, and is not intended to create, and does not create, any agency, partnership, joint venture or any like relationship among the parties hereto or among any other DMAC Stockholders entering into support agreements with the Company, Pubco or DMAC. Sponsor has acted independently regarding its decision to enter into this Support Agreement. Nothing contained in this Support Agreement shall be deemed to vest in the Company or DMAC any direct or indirect ownership or incidence of ownership of or with respect to any Sponsor Shares.
23. Capacity as Stockholder. Sponsor signs this Support Agreement solely in Sponsor’s capacity as a stockholder of DMAC, and not in any other capacity, including, if applicable, as a director (including “director by deputization”), officer or employee of DMAC or any of its Subsidiaries. Nothing herein shall be construed to limit or affect any actions or inactions by Sponsor or any representative of Sponsor, as applicable, serving as a director of DMAC or any Subsidiary of DMAC, acting in such Person’s capacity as a director of DMAC or any Subsidiary of DMAC.
{remainder of page intentionally left blank}
| 7 |
IN WITNESS WHEREOF, the parties have executed this Support Agreement as of the date first written above.
| The Company: | ||
| CHIJET INC. | ||
| By: | /s/ Hongwei Mu (慕宏伟) | |
| Name: | Hongwei Mu (慕宏伟) | |
| Title: | Director | |
| Pubco: | ||
| CHIJET MOTOR COMPANY, INC. | ||
| By: | /s/ Hongwei Mu (慕宏伟) | |
| Name: | Hongwei Mu (慕宏伟) | |
| Title: | Director | |
| DMAC: | ||
| DEEP MEDICINE ACQUISITION CORP. | ||
| By: | /s/ Humphrey Polanen | |
| Name: | Humphrey Polanen | |
| Title: | Chief Executive Officer | |
{Signature Page to Support Agreement}
| Sponsor: | ||
| BRIGHT VISION SPONSOR LLC | ||
| By: | /s/ Ke Li | |
| Name: | Ke Li | |
| Title: | Managing Member | |
| Address for Notice: | |
| Address: 595 Madison Avenue, 12th Floor | |
| New York, NY 10017 | |
| Telephone No.: | |
| Email: |
{Signature Page to Support Agreement}
ANNEX 1
Form of
Joinder to Limited Liability Company Operating Agreement
Of
Bright Vision Sponsor LLC
Dated as of [____], 2022
The undersigned hereby accepts, and becomes a party to, the Limited Liability Company Operating Agreement of Bright Vision Sponsor LLC, a Delaware limited liability company (the “Company”), dated as of March 15, 2021 (the “Agreement”), in connection with the acquisition of Membership Interests (as defined in the Agreement), and by its signature below signifies its agreement to be bound by the terms and conditions of the Agreement.
| Member Name: | _________________________ |
| By: | __________________________ |
| Name: | __________________________ |
| Title: | __________________________ |
| Capital Contribution: | $_______________________ |
| Membership Interest: | [____]% |
| Founder Shares Percentage: | [____]% |
| Private Placement Units Percentage: [0%] | |
| Residual Percentage: | [____]% |
Following the execution of this Joinder, the Schedule A will be updated to reflect the admission of the above as a new Member (as defined in the Agreement), and such updated Schedule A shall be provided to all Members.
Agreed and Accepted:
| Bright Vision Sponsor LLC | ||
| By: | ||
| Name: | Ke Li | |
| Title: | Managing Member | |
Exhibit 10.2
EXHIBIT A
FORM OF LOCK-UP AGREEMENT
THIS LOCK-UP AGREEMENT (this “Agreement”) is made and entered into as of [_____], 2022, by and between (i) Chijet Motor Company, Inc., a Cayman Islands exempted company (“Pubco”), and (ii) the undersigned (“Holder”). Any capitalized term used but not defined in this Agreement will have the meaning ascribed to such term in the Business Combination Agreement (as defined below). Pubco and the Holder may be referred to herein individually as a “Party” and collectively as the “Parties”.
WHEREAS, as of July 12, 2022, Deep Medicine Acquisition Corp., a Delaware corporation (“Purchaser”), Pubco, Chijet Motor (USA) Company, Inc., a Delaware corporation and a wholly owned subsidiary of Pubco (“Merger Sub”), Chijet Inc., a Cayman Islands exempted company (the “Company”), and the shareholders of the Company named as Sellers therein (collectively, the “Sellers”), including Holder, entered into that certain Business Combination Agreement (as amended from time to time in accordance with the terms thereof, the “Business Combination Agreement”), pursuant to which, subject to the terms and conditions thereof, among other matters, (a) Pubco will acquire all of the issued and outstanding shares of the Company from the Sellers in exchange for ordinary shares of Pubco and the Company shall surrender for no consideration its shares in Pubco, such that the Company becomes a wholly owned subsidiary of Pubco and the Sellers become shareholders of Pubco (the “Share Exchange”); and immediately thereafter (b) Merger Sub will merge with and into Purchaser, with Purchaser continuing as the surviving entity (the “Merger”), and as a result of which, (i) Purchaser will become a wholly-owned subsidiary of Pubco, and (ii) each issued and outstanding security of Purchaser immediately prior to the effective time of the Merger will no longer be outstanding and will automatically be cancelled, in exchange for the right of the holder thereof to receive a substantially equivalent security of Pubco, all upon the terms and subject to the conditions set forth in the Business Combination Agreement and in accordance with the provisions of applicable Law;
WHEREAS, as of the date hereof, Holder is a Seller under the Business Combination Agreement and a holder of the Company Shares in such amounts as set forth underneath Holder’s name on the signature page hereto; and
WHEREAS, pursuant to the Business Combination Agreement, and in view of the valuable consideration to be received by Holder thereunder, the Parties desire to enter into this Agreement, pursuant to which the Exchange Shares to be issued to Holder in the Share Exchange (all such securities, together with any securities paid as dividends or distributions with respect to such securities or into which such securities are exchanged or converted, the “Restricted Securities”) shall become subject to limitations on disposition as set forth herein.
| 1 |
NOW, THEREFORE, in consideration of the premises set forth above, which are incorporated in this Agreement as if fully set forth below, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:
1. Lock-Up Provisions.
(a) Holder hereby agrees not to, during the period commencing from the Closing and ending on the earlier of (x) the six (6) month anniversary of the date of the Closing, and (y) the date on which Pubco consummates a liquidation, merger, share exchange or other similar transaction with an unaffiliated third party that results in all of Pubco’s shareholders having the right to exchange their equity holdings in Pubco for cash, securities or other property (the “Lock-Up Period”): (i) lend, offer, pledge (except as provided herein below), hypothecate, encumber, donate, assign, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future of), directly or indirectly, any Restricted Securities, (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 the Restricted Securities, or (iii) publicly disclose the intention to do any of the foregoing, whether any such transaction described in clauses (i), (ii) or (iii) above is to be settled by delivery of Restricted Securities or other securities, in cash or otherwise (any of the foregoing described in clauses (i), (ii) or (iii), a “Prohibited Transfer”); provided, however, that notwithstanding the foregoing, solely with respect to 50% of the Restricted Securities, the Lock-Up Period, if not terminated earlier in accordance with the terms hereof, shall be deemed to terminate on the date on which the closing price of the Pubco Ordinary Shares equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 days within an 30-trading day period commencing after the Closing. The foregoing sentence shall not apply to the transfer of any or all of the Restricted Securities owned by Holder (I) by gift, will or intestate succession upon the death of Holder, (II) to any Permitted Transferee (defined below), (III) pursuant to a court order or settlement agreement related to the distribution of assets in connection with the dissolution of marriage or civil union or (IV) to Pubco in accordance with the requirements of the Business Combination Agreement; provided, however, that in any of cases (I), (II) or (III) it shall be a condition to such transfer that the transferee executes and delivers to Pubco, prior to such transfer, a lock-up agreement substantially in the form of this Agreement. As used in this Agreement, the term “Permitted Transferee” shall mean: (A) the members of Holder’s immediate family (for purposes of this Agreement, “immediate family” shall mean with respect to any natural person, any of the following: such person’s spouse, the siblings of such person and his or her spouse, and the direct descendants and ascendants (including adopted and step children and parents) of such person and his or her spouses and siblings), (B) any trust for the direct or indirect benefit of Holder or the immediate family of Holder, (C) if Holder is a trust, to the trustor or beneficiary of such trust or to the estate of a beneficiary of such trust, (D) if Holder is an entity, as a distribution to limited partners, shareholders, members of, or owners of similar equity interests in Holder upon the liquidation and dissolution of Holder or (E) to any affiliate of Holder. Holder further agrees to execute such agreements as may be reasonably requested by Pubco that are consistent with the foregoing or that are necessary to give further effect thereto. Notwithstanding the foregoing, a Holder may pledge its Restricted Securities to a third party during the Lock-up Period, provided that the party to whom the Restricted Securities are pledged acknowledges and agrees in writing that the Restricted Securities are subject to this Agreement and that such third party shall not be entitled to enforce its rights and remedies with respect to the Restricted Securities, including, without limitation, the right to vote, sell or take ownership of such Restricted Securities, until after the Lock-Up Period.
(b) If any Prohibited Transfer is made or attempted contrary to the provisions of this Agreement, such purported Prohibited Transfer shall be null and void ab initio, and Pubco shall refuse to recognize any such purported transferee of the Restricted Securities as one of its equity holders for any purpose, and Pubco and its transfer agent are (a) hereby authorized to decline to register any transfer of securities if such transfer would constitute a violation or breach of this Agreement and (b) to imprint on any certificate representing Shares a legend describing the restrictions contained herein. In order to enforce this Agreement, Pubco may impose stop-transfer instructions with respect to the Restricted Securities of Holder (and Permitted Transferees and assigns thereof) until the end of the Lock-Up Period.
| 2 |
(c) During the Lock-Up Period, each certificate 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 [ ], 2022, BY AND BETWEEN THE ISSUER OF SUCH SECURITIES (THE “ISSUER”) AND THE ISSUER’S SECURITY HOLDER 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.”
(d) For the avoidance of any doubt, Holder shall retain all of its rights as a shareholder of Pubco with respect to the Restricted Securities during the Lock-Up Period, including the right to vote any Restricted Securities, but subject to the obligations under this Agreement and the Business Combination Agreement.
2. Miscellaneous.
(a) Termination of Business Combination Agreement. This Agreement shall be binding upon Holder on Holder’s execution and delivery of this Agreement, but this Agreement shall only become effective upon the Closing. Notwithstanding anything to the contrary contained herein, in the event that the Business Combination Agreement is terminated in accordance with its terms prior to the Closing, this Agreement shall automatically terminate and become null and void, and the Parties shall not have any rights or obligations hereunder.
(b) Binding Effect; Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective permitted successors and assigns. This Agreement and all obligations of Holder are personal to Holder and may not be transferred or delegated by Holder at any time. Pubco 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.
(d) Governing Law; Jurisdiction. This Agreement shall be governed by, construed and enforced in accordance with the Laws of the State of New York without regard to the conflict of laws principles thereof, provided, however, that to the extent that the laws of the State of Delaware are required to apply with respect to the Merger or any other actions hereunder, the laws of the State of Delaware shall so apply, without regard to the conflict of laws principles thereof. All Actions arising out of or relating to this Agreement shall be heard and determined exclusively in any state or federal court located in New York, New York (or in any appellate court therefrom) (the “Specified Courts”). Each Party hereby (a) submits to the exclusive jurisdiction of any Specified Court for the purpose of any Action arising out of or relating to this Agreement brought by any Party and (b) irrevocably waives, and agrees not to assert by way of motion, defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the Action is brought in an inconvenient forum, that the venue of the Action is improper, or that this Agreement or the transactions contemplated hereby may not be enforced in or by any Specified Court. Each Party agrees that a final judgment in any Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each Party irrevocably consents to the service of the summons and complaint and any other process in any other Action relating to the Transactions, on behalf of itself, or its property, by personal delivery of copies of such process to such Party at the applicable address set forth in Section 2(g). Nothing in this Section 2(d) shall affect the right of any Party to serve legal process in any other manner permitted by Law.
(e) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 2(e).
| 3 |
(f) Interpretation. The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement. In this Agreement, unless the context otherwise requires: (i) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (ii) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding or succeeding such term and shall be deemed in each case to be followed by the words “without limitation”; (iii) the words “herein,” “hereto,” and “hereby” and other words of similar import shall be deemed in each case to refer to this Agreement as a whole and not to any particular section or other subdivision of this Agreement; and (iv) the term “or” means “and/or”. 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.
(g) Notices. All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered (i) in person, (ii) by facsimile or other electronic means, with affirmative confirmation of receipt, (iii) one Business Day after being sent, if sent by reputable, nationally recognized overnight courier service or (iv) three (3) Business Days after being mailed, if sent by registered or certified mail, pre-paid and return receipt requested, in each case to the applicable Party at the following addresses (or at such other address for a Party as shall be specified by like notice):
If to Pubco: Chijet Motor Company, Inc. No. 8, Beijing South Road Economic & Technological Development Zone Yantai, Shandong, CN-37 264006 People’s Republic of China Attn: Xinjian Wang Telephone No.: +86-15668335480 Email: bydongban@163.com |
with a copy (which will not constitute notice) to: Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas, 11th Floor New York, New York 10105 Attn: Barry I. Grossman, Esq. Matthew A. Gray, Esq. Facsimile No.: (212) 370-7889 Telephone No.: (212) 370-1300 Email: bigrossman@egsllp.com mgray@egsllp.com
and
AllBright Law Offices 9/11/12F, Shanghai Tower No. 501 Yincheng Middle Road Pudong New Area Shanghai 200120 People’s Republic of China Attn: Frank Xu Facsimile No.: +86 21 2051-1999 Telephone No.: +86 21 2051-1000 Email: frankxu@allbrightlaw.com
|
If to Holder, to:
the address set forth below Holder’s name on the signature page to this Agreement. |
With a copy to (which shall not constitute notice):
Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas, 11th Floor New York, New York 10105 Attn: Barry I. Grossman, Esq. Matthew A. Gray, Esq. Facsimile No.: (212) 370-7889 Telephone No.: (212) 370-1300 Email: bigrossman@egsllp.com mgray@egsllp.com
and
AllBright Law Offices 9/11/12F, Shanghai Tower No. 501 Yincheng Middle Road Pudong New Area Shanghai 200120 People’s Republic of China Attn: Frank Xu Facsimile No.: +86 21 2051-1999 Telephone No.: +86 21 2051-1000 Email: frankxu@allbrightlaw.com
|
| 4 |
(h) Amendments and Waivers. Any term of this Agreement may be amended and 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 Pubco and Holder. 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) Severability. In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a jurisdiction, such provision shall be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity, legality or enforceability of such provision be affected thereby in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties will substitute for any invalid, illegal or unenforceable provision a suitable and equitable provision that carries out, so far as may be valid, legal and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.
(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 Pubco 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, Pubco 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 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 under the Business Combination Agreement or any Ancillary Document. Notwithstanding the foregoing, nothing in this Agreement shall limit any of the rights or remedies of Pubco or any of the obligations of Holder under any other agreement between Holder and Pubco or any certificate or instrument executed by Holder in favor of Pubco, and nothing in any other agreement, certificate or instrument shall limit any of the rights or remedies of Pubco or any of the obligations of Holder under this Agreement.
(l) Further Assurances. From time to time, at another Party’s 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; Facsimile. This Agreement may also be executed and delivered by facsimile signature or by email in portable document format in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
{Remainder of Page Intentionally Left Blank; Signature Pages Follow}
| 5 |
IN WITNESS WHEREOF, the Parties have executed this Lock-Up Agreement as of the date first written above.
| Pubco: | ||
| CHIJET MOTOR COMPANY, INC. | ||
| By: | ||
| Name: | Hongwei Mu | |
| Title: | Director | |
{Additional Signature on the Following Page}
[Signature Page to Lock-Up Agreement]
IN WITNESS WHEREOF, the Parties have executed this Lock-Up Agreement as of the date first written above.
| Holder: | ||
| Name of Holder: | ||
| By: | ||
| Name: | ||
| Title: | ||
Number and Type of Company Shares Owned:
|
||
Company Ordinary Shares: |
| Address for Notice: | ||
| Address: | ||
| Facsimile No.: | ||
| Telephone No.: | ||
| Email: | ||
[Signature Page to Lock-Up Agreement]
Exhibit 10.3
Exhibit B
FORM OF
Amended and Restated REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of [_____], 2022 by and among (i) Chijet Motor Company, Inc., a Cayman Islands exempted company (including any successor entity thereto, “Pubco”), (ii) Deep Medicine Acquisition Corp., a Delaware corporation (“DMAC”), (iii) Bright Vision Sponsor LLC, a Delaware limited liability company (“Sponsor”) and the other undersigned parties listed as “Initial Investors” on the signature pages hereto (each, including Sponsor, an “Initial Investor” and collectively, the “Initial Investors”), and (iv) the undersigned parties listed as “Exchange Investors” on the signature pages hereto (each, an “Exchange Investor” and collectively, the “Exchange Investors”, and the Initial Investors and the Exchange Investors being each an “Investor”, and collectively the “Investors”).
WHEREAS, DMAC and the Initial Investors are parties to that certain Registration Rights Agreement dated as of October 26, 2021 (the “Original Agreement”), pursuant to which DMAC granted certain registration rights to the Initial Investors with respect to DMAC’s securities;
WHEREAS, as of July 12, 2022, DMAC, Pubco, Chijet Motor (USA) Company, Inc., a Delaware corporation and a wholly-owned subsidiary of Pubco (“Merger Sub”), Chijet Inc., a Cayman Islands exempted company (the “Company”), and the shareholders of the Company named as Sellers therein (collectively, the “Sellers”), including the Exchange Investors, entered into a certain Business Combination Agreement (as amended from time to time in accordance with the terms thereof, the “Business Combination Agreement”);
WHEREAS, pursuant to the Business Combination Agreement, subject to the terms and conditions thereof, upon the consummation of the transactions contemplated thereby (the “Closing”), among other matters, (a) Pubco will acquire all of the issued and outstanding shares of the Company from the Sellers in exchange for ordinary shares of Pubco and the Company shall surrender for no consideration its shares in Pubco, such that the Company becomes a wholly-owned subsidiary of Pubco and the Sellers become shareholders of Pubco (the “Share Exchange”); and immediately thereafter (b) Merger Sub will merge with and into DMAC, with DMAC continuing as the surviving entity (the “Merger”), and as a result of which, (i) DMAC will become a wholly-owned subsidiary of Pubco, and (ii) each issued and outstanding security of DMAC immediately prior to the effective time of the Merger will no longer be outstanding and will automatically be cancelled, in exchange for the right of the holder thereof to receive a substantially equivalent security of Pubco, all upon the terms and subject to the conditions set forth in the Business Combination Agreement and in accordance with the provisions of applicable law;
WHEREAS, in connection with the execution of the Business Combination Agreement, certain of the Exchange Investors (the “Lock-Up Exchange Investors”) have, or will prior to the Closing have, entered into a lock-up agreement with Pubco (each, as amended from time to time in accordance with the terms thereof, an “Exchange Investor Lock-Up Agreement”), pursuant to which each such Lock-Up Exchange Investor agreed or will agree not to transfer its Pubco securities for a certain period of time after the Closing as stated in the Exchange Investor Lock-Up Agreement; and
WHEREAS, the parties hereto desire to amend and restate the Original Agreement in its entirety in the form of this Agreement in order to add Pubco and the Exchange Investors as parties and to revise the terms thereof in order to reflect the transactions contemplated by the Business Combination Agreement, including the issuance of the Pubco Ordinary Shares and Pubco Warrants thereunder, and to provide the Exchange Investors with certain rights relating to the registration of the Exchange Shares received by them pursuant to the Business Combination Agreement;
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. Any capitalized term used but not defined in this Agreement will have the meaning ascribed to such term in the Business Combination Agreement. The following capitalized terms used herein have the following meanings:
“Agreement” means this Agreement, as amended, restated, supplemented, or otherwise modified from time to time.
“Business Combination Agreement” is defined in the recitals to this Agreement.
“Closing” is defined in the recitals to this Agreement.
“Company” is defined in the recitals to this Agreement.
“Demand Registration” is defined in Section 2.1.1.
“Demanding Holder” is defined in Section 2.1.1.
“Disinterested Independent Director” means an independent director serving on Pubco’s board of directors at the applicable time of determination that is disinterested in this Agreement (i.e., such independent director is not an Investor, an Affiliate of an Investor, or an officer, director, manager, employee, trustee or beneficiary of an Investor or its Affiliate, nor an immediate family member of any of the foregoing).
“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.
“Exchange Investor” is defined in the preamble to this Agreement.
“Exchange Investor Lock-Up Agreement” is defined in the recitals to this Agreement.
“Exchange Investor Registrable Securities” means the Exchange Shares, including any warrants, capital shares or other securities of Pubco issued as a dividend or other distribution with respect to or in exchange for or in replacement or consideration of the foregoing securities.
“Exchange Shares” is defined in the recitals to this Agreement.
“Founder Securities” means those securities included in the definition of “Registrable Securities” specified in the Original Agreement.
“Indemnified Party” is defined in Section 4.3.
“Indemnifying Party” is defined in Section 4.3.
“Initial Investor” is defined in the preamble to this Agreement.
| 2 |
“Initial Investor Registrable Securities” means the Pubco Ordinary Shares and Pubco Warrants issued by Pubco under the Business Combination Agreement to the security holders of DMAC for their Founder Securities; and including any warrants, capital shares or other securities of Pubco issued as a dividend or other distribution with respect to or in exchange for or in replacement or consideration of the foregoing securities (but excluding the Underwriter Warrant).
“Insider Letter” means that certain letter agreement, dated as of October 26, 2021, by and among DMAC, Sponsor, and the other parties thereto.
“Insider Letter Lock-Up Investors” means Initial Investors who are subject to lock-up or transfer restrictions under the Insider Letter applicable to any Registrable Securities.
“Investor(s)” is defined in the preamble to this Agreement, and include any transferee of the Registrable Securities (so long as they remain Registrable Securities) of an Investor permitted under this Agreement and with respect to a Lock-Up Investor, its Lock-Up Agreement.
“Investor Indemnified Party” is defined in Section 4.1.
“Lock-Up Agreement” means, as to each Lock-Up Exchange Investor, its Exchange Investor Lock-Up Agreement, and as to each Insider Letter Lock-Up Investor, the Insider Letter.
“Lock-Up Investors” means the Lock-Up Exchange Investors and the Insider Letter Lock-Up Investors, as applicable.
“Lock-Up Exchange Investor” is defined in the recitals to this Agreement.
“Maximum Number of Securities” is defined in Section 2.1.4.
“Merger Sub” is defined in the recitals to this Agreement.
“Original Agreement” is defined in the recitals to this Agreement.
“Piggy-Back Registration” is defined in Section 2.2.1.
“Pro Rata” is defined in Section 2.1.4.
“Proceeding” is defined in Section 6.9.
“Pubco” is defined in the preamble to this Agreement, and shall include Pubco’s successors by merger, acquisition, reorganization or otherwise.
“Register,” “Registered” and “Registration” mean a registration or offering 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 any of the Exchange Investor Registrable Securities and the Initial Investor Registrable Securities; provided 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 them not bearing a legend restricting further transfer shall have been delivered by Pubco and subsequent public distribution of them shall not require registration under the Securities Act; (c) such securities shall have ceased to be outstanding; or (d) such securities are freely saleable under Rule 144 without volume limitations. Notwithstanding anything to the contrary contained herein, a Person shall be deemed to be an “Investor holding Registrable Securities” (or words to that effect) under this Agreement only if they are an Investor or a transferee of the applicable Registrable Securities (so long as they remain Registrable Securities) of any Investor permitted under this Agreement and any applicable Lock-Up Agreement.
| 3 |
“Registration Statement” means a registration statement filed by Pubco with the SEC 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, F-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).
“Rule 144” means Rule 144 promulgated under the Securities Act.
“SEC” means the United States Securities and Exchange Commission or any successor thereto.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.
“Share Exchange” is defined in the recitals to this Agreement.
“Short Form Registration” is defined in Section 2.3.
“Specified Courts” is defined in Section 6.9.
“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.
“Underwriter Warrant” means that certain Share Purchase Warrant issued by DMAC to I-Bankers Securities, Inc.
2. REGISTRATION RIGHTS.
2.1 Demand Registration.
2.1.1 Request for Registration. Subject to Section 2.4, at any time and from time to time after the Closing, (i) Investors holding a majority-in-interest of the Exchange Investor Registrable Securities then issued and outstanding, or (ii) Investors holding a majority-in-interest of the Initial Investor Registrable Securities, may make a written demand for registration under the Securities Act of all or part of their Registrable Securities (a “Demand Registration”). Any demand for a Demand Registration shall specify the number of Registrable Securities proposed to be sold and the intended method(s) of distribution thereof. Within thirty (30) days following receipt of any request for a Demand Registration, Pubco will notify all other Investors holding Registrable Securities of the demand, and each Investor holding Registrable Securities who wishes to include all or a portion of such Investor’s Registrable Securities in the Demand Registration (each such Investor including shares of Registrable Securities in such registration, a “Demanding Holder”) shall so notify Pubco within fifteen (15) days after the receipt by the Investor of the notice from Pubco. Upon any such request, the Demanding Holders shall be entitled to have their Registrable Securities included in the Demand Registration, subject to Section 2.1.4 and the provisos set forth in Section 3.1.1. Pubco shall not be obligated under this Section 2.1.1 to effect more than (x) an aggregate of two (2) Demand Registrations initiated by Investors holding Exchange Investor Registrable Securities or (y) an aggregate of two (2) Demand Registrations initiated by Investors holding Initial Investor Registrable Securities. Notwithstanding anything in this Section 2.1 to the contrary, Pubco shall not be obligated to effect a Demand Registration, (i) if a Piggy-Back Registration had been available to the Demanding Holder(s) within the one hundred twenty (120) days preceding the date of request for the Demand Registration, (ii) within sixty (60) days after the effective date of a previous registration effected with respect to the Registrable Securities pursuant this Section 2.1, or (iii) during any period (not to exceed one hundred eighty (180) days) following the closing of the completion of an offering of securities by Pubco if such Demand Registration would cause Pubco to breach a “lock-up” or similar provision contained in the underwriting agreement for such offering.
| 4 |
2.1.2 Effective Registration. A Registration will not count as a Demand Registration until the Registration Statement filed with the SEC with respect to such Demand Registration has been declared effective and Pubco has complied in all material respects with 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 SEC 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 Pubco 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.
2.1.3 Underwritten Offering. If a majority-in-interest of the Demanding Holders so elect and advise Pubco 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. In such event, the right of any Demanding Holder to include its Registrable Securities in such registration shall be conditioned upon such Demanding Holder’s participation in such underwritten offering and the inclusion of such Demanding Holder’s Registrable Securities in the underwritten offering to the extent provided herein. All Demanding Holders proposing to distribute their Registrable Securities through such underwritten offering shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected for such underwritten offering by a majority-in-interest of the Investors initiating the Demand Registration and reasonably acceptable to Pubco.
2.1.4 Reduction of Offering. If the managing Underwriter or Underwriters for a Demand Registration that is to be an underwritten offering advises Pubco and the Demanding Holders in writing that the dollar amount or number of Registrable Securities which the Demanding Holders desire to sell, taken together with all other Pubco Ordinary Shares or other securities which Pubco desires to sell and the Pubco Ordinary Shares or other securities, if any, as to which Registration by Pubco has been requested pursuant to written contractual piggy-back registration rights held by other security holders of Pubco 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 securities, as applicable, the “Maximum Number of Securities”), then Pubco shall include in such Registration: (i) first, the Registrable Securities as to which Demand Registration has been requested by the Demanding Holders (all pro rata in accordance with the number of securities that each applicable Person has requested be included in such registration, regardless of the number of securities held by each such Person, as long as they do not request to include more securities than they own (such proportion is referred to herein as “Pro Rata”)) that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the Pubco Ordinary Shares or other securities that Pubco desires to sell that can be sold without exceeding the Maximum Number of Securities; (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the Registrable Securities of Investors as to which registration has been requested pursuant to Section 2.2, Pro Rata among the holders thereof based on the number of securities requested by such holders to be included in such registration, that can be sold without exceeding the Maximum Number of Securities; and (iv) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i), (ii) and (iii), the Pubco Ordinary Shares or other securities for the account of other Persons that Pubco is obligated to register pursuant to written contractual arrangements with such Persons that can be sold without exceeding the Maximum Number of Securities. In the event that Pubco securities that are convertible into Pubco Ordinary Shares are included in the offering, the calculations under this Section 2.1.4 shall include such Pubco securities on an as-converted to Pubco Ordinary Share basis.
| 5 |
2.1.5 Withdrawal. If a majority-in-interest of the Demanding Holders disapprove of the terms of any underwritten offering 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 Pubco and the Underwriter or Underwriters of their request to withdraw prior to the effectiveness of the Registration Statement filed with the SEC 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 in such event, then such registration shall not count as a Demand Registration provided for in Section 2.1.
2.2 Piggy-Back Registration.
2.2.1 Piggy-Back Rights. Subject to Section 2.4, if at any time after the Closing Pubco proposes to file a Registration Statement under the Securities Act with respect to the Registration of or an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities, by Pubco for its own account or for security holders of Pubco for their account (or by Pubco and by security holders of Pubco including pursuant to Section 2.1), other than a Registration Statement (i) filed in connection with any employee share option or other benefit plan, (ii) for an exchange offer or offering of securities solely to Pubco’s existing security holders, (iii) for an offering of debt that is convertible into equity securities of Pubco, or (iv) for a dividend reinvestment plan, then Pubco shall (x) give written notice of such proposed filing to Investors holding Registrable Securities as soon as practicable but in no event less than ten (10) days before the anticipated filing date, which notice shall describe the amount and type of securities to be included in such offering or registration, 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 Investors holding Registrable Securities in such notice the opportunity to register the sale of such number of Registrable Securities as such Investors may request in writing within five (5) days following receipt of such notice (a “Piggy-Back Registration”). To the extent permitted by applicable securities laws with respect to such registration by Pubco or another demanding security holder, Pubco shall use its best efforts to cause (i) such Registrable Securities to be included in such registration and (ii) 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 Pubco and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All Investors holding 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.
| 6 |
2.2.2 Reduction of Offering. If the managing Underwriter or Underwriters for a Piggy-Back Registration that is to be an underwritten offering advises Pubco and Investors holding Registrable Securities proposing to distribute their Registrable Securities through such Piggy-Back Registration in writing that the dollar amount or number of Pubco Ordinary Shares or other Pubco securities which Pubco desires to sell, taken together with the Pubco Ordinary Shares or other Pubco securities, if any, as to which registration has been demanded pursuant to written contractual arrangements with Persons other than the Investors holding Registrable Securities hereunder, the Registrable Securities as to which registration has been requested under this Section 2.2, and the Pubco Ordinary Shares or other Pubco securities, if any, as to which registration has been requested pursuant to the written contractual piggy-back registration rights of other security holders of Pubco, exceeds the Maximum Number of Securities, then Pubco shall include in any such registration:
(a) If the registration is undertaken for Pubco’s account: (i) first, the Pubco Ordinary Shares or other securities that Pubco desires to sell that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the Registrable Securities of Investors as to which registration has been requested pursuant to this Section 2.2, Pro Rata among the holders thereof based on the number of securities requested by such holders to be included in such registration, that can be sold without exceeding the Maximum Number of Securities; and (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the Pubco Ordinary Shares or other equity securities for the account of other Persons that Pubco is obligated to register pursuant to separate written contractual arrangements with such Persons that can be sold without exceeding the Maximum Number of Securities;
(b) If the registration is a “demand” registration undertaken at the demand of Demanding Holders pursuant to Section 2.1: (i) first, the Pubco Ordinary Shares or other securities for the account of the Demanding Holders, Pro Rata among the holders thereof based on the number of securities requested by such holders to be included in such registration, that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the Pubco Ordinary Shares or other securities that Pubco desires to sell that can be sold without exceeding the Maximum Number of Securities; (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the Registrable Securities of Investors as to which registration has been requested pursuant to this Section 2.2, Pro Rata among the holders thereof based on the number of securities requested by such holders to be included in such registration, that can be sold without exceeding the Maximum Number of Securities; and (iv) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i), (ii) and (iii), the Pubco Ordinary Shares or other equity securities for the account of other Persons that Pubco is obligated to register pursuant to separate written contractual arrangements with such Persons that can be sold without exceeding the Maximum Number of Securities; and
(c) If the registration is a “demand” registration undertaken at the demand of Persons other than either Demanding Holders under Section 2.1: (i) first, the Pubco Ordinary Shares or other securities for the account of the demanding Persons that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the Pubco Ordinary Shares or other securities that Pubco desires to sell that can be sold without exceeding the Maximum Number of Securities; (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the Registrable Securities of Investors as to which registration has been requested pursuant to this Section 2.2, Pro Rata among the holders thereof based on the number of securities requested by such holders to be included in such registration, that can be sold without exceeding the Maximum Number of Securities; and (iv) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i), (ii) and (iii), the Pubco Ordinary Shares or other equity securities for the account of other Persons that Pubco is obligated to register pursuant to separate written contractual arrangements with such Persons that can be sold without exceeding the Maximum Number of Securities.
| 7 |
In the event that Pubco securities that are convertible into Pubco Ordinary Shares are included in the offering, the calculations under this Section 2.2.2 shall include such Pubco securities on an as-converted to Pubco Ordinary Share basis. Notwithstanding anything to the contrary above, to the extent that the registration of an Investor’s Registrable Securities would prevent Pubco or the demanding shareholders from effecting such registration and offering, such Investor shall not be permitted to exercise Piggy-Back Registration rights with respect to such registration and offering.
2.2.3 Withdrawal. Any Investor holding Registrable Securities may elect to withdraw such Investor’s request for inclusion of Registrable Securities in any Piggy-Back Registration by giving written notice to Pubco of such request to withdraw prior to the effectiveness of the Registration Statement. Pubco (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 without any liability to the applicable Investor, subject to the next sentence and the provisions of Section 4. Notwithstanding any such withdrawal, Pubco shall pay all expenses incurred in connection with such Piggy-Back Registration as provided in Section 3.3 (subject to the limitations set forth therein) by Investors holding Registrable Securities that requested to have their Registrable Securities included in such Piggy-Back Registration.
2.3 Short Form Registrations. After the Closing, subject to Section 2.4, Investors holding Registrable Securities may at any time and from time to time, request in writing that Pubco register the resale of any or all of such Registrable Securities on Form S-3 or F-3 or any similar short-form registration which may be available at such time (“Short Form Registration”); provided, however, that Pubco shall not be obligated to effect such request through an underwritten offering. Upon receipt of such written request, Pubco will promptly give written notice of the proposed registration to all other Investors holding Registrable Securities, and, as soon as practicable thereafter, effect the registration of all or such portion of such Investors’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities, if any, of any other Investors joining in such request as are specified in a written request given within fifteen (15) days after receipt of such written notice from Pubco; provided, however, that Pubco shall not be obligated to effect any such registration pursuant to this Section 2.3: (i) if Short Form Registration is not available to Pubco for such offering; or (ii) if Investors holding Registrable Securities, together with the holders of any other securities of Pubco entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at any aggregate price to the public of less than $1,000,000. Registrations effected pursuant to this Section 2.3 shall not be counted as Demand Registrations effected pursuant to Section 2.1.
| 8 |
3. REGISTRATION PROCEDURES.
3.1 Filings; Information. Whenever Pubco is required to effect the registration of any Registrable Securities pursuant to Section 2, Pubco shall use its 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. Pubco shall use its best efforts to, as expeditiously as possible after receipt of a request for a Demand Registration pursuant to Section 2.1, prepare and file with the SEC a Registration Statement on any form for which Pubco then qualifies or which counsel for Pubco 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 efforts to cause such Registration Statement to become effective and use its reasonable efforts to keep it effective for the period required by Section 3.1.3; provided, however, that Pubco 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 Pubco shall furnish to Investors requesting to include their Registrable Securities in such registration a certificate signed by the Chief Executive Officer, Chief Financial Officer or Chairman of Pubco stating that, in the good faith judgment of the Board of Directors of Pubco, it would be materially detrimental to Pubco and its shareholders for such Registration Statement to be effected at such time or the filing would require premature disclosure of material information which is not in the interests of Pubco to disclose at such time; provided further, however, that Pubco shall not have the right to exercise the right set forth in the immediately preceding proviso more than twice in any 365-day period in respect of a Demand Registration hereunder.
3.1.2 Copies. Pubco shall, prior to filing a Registration Statement or prospectus, or any amendment or supplement thereto, furnish without charge to Investors holding Registrable Securities included in such registration, and such Investors’ 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 Investors holding Registrable Securities included in such registration or legal counsel for any such Investors may request in order to facilitate the disposition of the Registrable Securities owned by such Investors.
3.1.3 Amendments and Supplements. Pubco shall prepare and file with the SEC 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 or until such time as the Registrable Securities cease to be Registrable Securities as defined by this Agreement.
3.1.4 Notification. After the filing of a Registration Statement, Pubco shall promptly, and in no event more than five (5) Business Days after such filing, notify Investors holding Registrable Securities included in such Registration Statement of such filing, and shall further notify such Investors promptly and confirm such advice in writing in all events within five (5) Business Days after 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 SEC of any stop order (and Pubco 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 SEC 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 Investors holding Registrable Securities included in such Registration Statement any such supplement or amendment; except that before filing with the SEC a Registration Statement or prospectus or any amendment or supplement thereto, including documents incorporated by reference, Pubco shall furnish to Investors holding Registrable Securities included in such Registration Statement and to the legal counsel for any such Investors, copies of all such documents proposed to be filed sufficiently in advance of filing to provide such Investors and legal counsel with a reasonable opportunity to review such documents and comment thereon; provided that such Investors and their legal counsel must provide any comments promptly (and in any event within five (5) Business Days) after receipt of such documents.
| 9 |
3.1.5 State Securities Laws Compliance. Pubco shall use its reasonable efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as Investors holding 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 Pubco and do any and all other acts and things that may be necessary or advisable to enable Investors holding Registrable Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that Pubco 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 take any action to which it would be subject to general service of process or to taxation in any such jurisdiction where it is not then otherwise subject.
3.1.6 Agreements for Disposition. To the extent required by the underwriting agreement or similar agreements, Pubco shall enter into reasonable 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 Pubco 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 Investors holding Registrable Securities included in such Registration Statement. No Investor holding Registrable Securities included in such Registration Statement shall be required to make any representations or warranties in the underwriting agreement except, if applicable, with respect to such Investor’s organization, good standing, authority, title to Registrable Securities, lack of conflict of such sale with such Investor’s material agreements and organizational documents, and with respect to written information relating to such Investor that such Investor has furnished in writing expressly for inclusion in such Registration Statement.
3.1.7 Cooperation. The principal executive officer of Pubco, the principal financial officer of Pubco, the principal accounting officer of Pubco and all other officers and members of the management of Pubco shall reasonably cooperate in any offering of Registrable Securities hereunder, which cooperation shall include 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.
3.1.8 Records. Pubco shall make available for inspection by Investors holding 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 Investor holding Registrable Securities included in such Registration Statement or any Underwriter, all financial and other records, pertinent corporate documents and properties of Pubco, as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause Pubco’s officers, directors and employees to supply all information reasonably requested by any of them in connection with such Registration Statement; provided that Pubco may require execution of a reasonable confidentiality agreement prior to sharing any such information.
| 10 |
3.1.9 Opinions and Comfort Letters. Pubco shall request its counsel and accountants to provide customary legal opinions and customary comfort letters, to the extent so reasonably required by any underwriting agreement.
3.1.10 Earnings Statement. Pubco shall comply with all applicable rules and regulations of the SEC and the Securities Act, and make available to its shareholders if reasonably required, as soon as reasonably 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.
3.1.11 Listing. Pubco shall use its best efforts to cause all Registrable Securities that are Pubco Ordinary Shares included in any registration to be listed on such exchanges or otherwise designated for trading in the same manner as similar securities issued by Pubco are then listed or designated or, if no such similar securities are then listed or designated, in a manner satisfactory to Investors holding a majority-in-interest of the Registrable Securities included in such registration.
3.1.12 Road Show. If the registration involves the registration of Registrable Securities involving gross proceeds in excess of $25,000,000, Pubco shall use its reasonable efforts to make available senior executives of Pubco to participate in customary “road show” presentations that may be reasonably requested by the Underwriter in any underwritten offering.
3.2 Obligation to Suspend Distribution. Upon receipt of any notice from Pubco of the happening of any event of the kind described in Section 3.1.4(iv), or in the event that the financial statements contained in the Registration Statement become stale, or in the event that the Registration Statement or prospectus included therein contains a misstatement of material fact or omits to state a material fact due to a bona fide business purpose, or, in the case of a resale registration on Short Form Registration pursuant to Section 2.3 hereof, upon any suspension by Pubco, pursuant to a written insider trading compliance program adopted by Pubco’s Board of Directors, of the ability of all “insiders” covered by such program to transact in Pubco’s securities because of the existence of material non-public information, each Investor holding 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 Investor receives the supplemented or amended prospectus contemplated by Section 3.1.4(iv) or the Registration Statement is updated so that the financial statements are no longer stale, or the restriction on the ability of “insiders” to transact in Pubco’s securities is removed, as applicable, and, if so directed by Pubco, each such Investor will deliver to Pubco all copies, other than permanent file copies then in such Investor’s possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice.
3.3 Registration Expenses. Subject to Section 4, Pubco shall bear all reasonable costs and expenses incurred in connection with any Demand Registration pursuant to Section 2.1, any Piggy-Back Registration pursuant to Section 2.2, and any registration on Short Form Registration effected pursuant to Section 2.3, and all reasonable expenses incurred in performing or complying with its other obligations under this Agreement, whether or not the Registration Statement becomes effective, including: (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) Pubco’s internal expenses (including 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 3.1.11; (vi) Financial Industry Regulatory Authority fees; (vii) fees and disbursements of counsel for Pubco and fees and expenses for independent certified public accountants retained by Pubco (including the expenses or costs associated with the delivery of any opinions or comfort letters requested pursuant to Section 3.1.9); (viii) the reasonable fees and expenses of any special experts retained by Pubco in connection with such registration; and (ix) the reasonable fees and expenses (up to a maximum of $30,000 in the aggregate in connection with such registration) of one legal counsel selected by Investors holding a majority-in-interest of the Registrable Securities included in such registration for such legal counsel’s review, comment and finalization of the proposed Registration Statement and other relevant documents. Pubco shall have no obligation to pay any underwriting discounts or selling commissions attributable to the Registrable Securities being sold by the holders thereof, which underwriting discounts or selling commissions shall be borne by such holders. Additionally, in an underwritten offering, all selling security holders and Pubco shall bear the expenses of the Underwriter pro rata in proportion to the respective amount of securities each is selling in such offering.
| 11 |
3.4 Information. Investors holding Registrable Securities included in any Registration Statement shall provide such information as may reasonably be requested by Pubco, or the managing Underwriter, if any, in connection with the preparation of such Registration Statement, including amendments and supplements thereto, in order to effect the registration of any Registrable Securities under the Securities Act pursuant to Section 2 and in connection with the obligation to comply with federal and applicable state securities laws. Investors selling Registrable Securities in any offering must provide all questionnaires, powers of attorney, custody agreements, stock powers, and other documentation reasonably requested by Pubco or the managing Underwriter.
4. INDEMNIFICATION AND CONTRIBUTION.
4.1 Indemnification by Pubco. Subject to the provisions of this Section 4.1 below, Pubco agrees to indemnify and hold harmless each Investor, and each Investor’s officers, employees, affiliates, directors, partners, members, attorneys and agents, and each Person, if any, who controls an Investor (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) (each, an “Investor 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 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 to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by Pubco of the Securities Act or any rule or regulation promulgated thereunder applicable to Pubco and relating to action or inaction required of Pubco in connection with any such registration (provided, however, that the indemnity agreement contained in this Section 4.1 shall not apply to amounts paid in settlement of any such claim, loss, damage, liability or action if such settlement is effected without the consent of Pubco, such consent not to be unreasonably withheld, delayed or conditioned); and Pubco shall promptly reimburse the Investor Indemnified Party for any legal and any other expenses reasonably incurred by such Investor Indemnified Party in connection with investigating and defending any such expense, loss, judgment, claim, damage, liability or action; provided, however, that Pubco 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 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 Pubco, in writing, by such selling holder or Investor Indemnified Party expressly for use therein. Pubco also shall indemnify any Underwriter of the Registrable Securities, their officers, affiliates, directors, partners, members and agents and each Person who controls such Underwriter on substantially the same basis as that of the indemnification provided above in this Section 4.1.
| 12 |
4.2 Indemnification by Investors Holding Registrable Securities. Subject to the provisions of this Section 4.2 below, each Investor selling 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 Investor, indemnify and hold harmless Pubco, each of its directors and officers and each Underwriter (if any), and each other selling holder and each other Person, if any, who controls another selling holder or such Underwriter 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 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 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 Pubco by such selling Investor expressly for use therein (provided, however, that the indemnity agreement contained in this Section 4.2 shall not apply to amounts paid in settlement of any such claim, loss, damage, liability or action if such settlement is effected without the consent of the indemnifying Investor, such consent not to be unreasonably withheld, delayed or conditioned), and shall reimburse Pubco, its directors and officers, each Underwriter 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 Investor’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 Investor.
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 Section 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) 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 (acting reasonably), 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.
| 13 |
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 statement of a material fact or the 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.
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 Investor holding 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 Investor 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. RULE 144.
5.1 Rule 144. Pubco 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 Investors holding Registrable Securities may reasonably request, all to the extent required from time to time to enable such Investors 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 Rule 144 may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.
6. MISCELLANEOUS.
6.1 Other Registration Rights. Pubco represents and warrants that as of the date of this Agreement, no Person, other than the holders of Registrable Securities, has any right to require Pubco to register any of Pubco’s share capital for sale or to include Pubco’s share capital in any registration filed by Pubco for the sale of share capital for its own account or for the account of any other Person.
| 14 |
6.2 Assignment; No Third Party Beneficiaries. This Agreement and the rights, duties and obligations of Pubco hereunder may not be assigned or delegated by Pubco in whole or in part, unless Pubco first provides Investors holding Registrable Securities at least ten (10) Business Days’ prior written notice; provided that no assignment or delegation by Pubco will relieve Pubco of its obligations under this Agreement unless Investors holding a majority-in-interest of the Registrable Securities provide their prior written consent, which consent must not be unreasonably withheld, delayed or conditioned. This Agreement and the rights, duties and obligations of Investors holding Registrable Securities hereunder may be freely assigned or delegated by such Investor in conjunction with and to the extent of any transfer of Registrable Securities by such Investor which is permitted by such Investor’s applicable Lock-Up Agreement; provided that no assignment by any Investor of its rights, duties and obligations hereunder shall be binding upon or obligate Pubco unless and until Pubco shall have received (i) written notice of such assignment and (ii) the written agreement of the assignee, in a form reasonably satisfactory to Pubco, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement). This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties, to the permitted assigns of the Investors or of any assignee of the Investors. 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.
6.3 Notices. All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered (i) in person, (ii) by facsimile or other electronic means, with affirmative confirmation of receipt, (iii) one Business Day after being sent, if sent by reputable, nationally recognized overnight courier service or (iv) three (3) Business Days after being mailed, if sent by registered or certified mail, pre-paid and return receipt requested, in each case to the applicable party at the following addresses (or at such other address for a party as shall be specified by like notice):
If to Pubco or (after Closing) DMAC:
Chijet Motor Company, Inc. No. 8, Beijing South Road Economic & Technological Development Zone Yantai, Shandong, CN-37 264006 People’s Republic of China Attn: Xinjian Wang Telephone No.: +86-15668335480 Email: bydongban@163.com |
with a copy (which will not constitute notice) to:
Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas, 11th Floor New York, New York 10105 Attn: Barry I. Grossman, Esq. Matthew A. Gray, Esq. Facsimile No.: (212) 370-7889 Telephone No.: (212) 370-1300 Email: bigrossman@egsllp.com mgray@egsllp.com
and
AllBright Law Offices 9/11/12F, Shanghai Tower No. 501 Yincheng Middle Road Pudong New Area Shanghai 200120 People’s Republic of China Attn: Frank Xu Facsimile No.: +86 21 2051-1999 Telephone No.: +86 21 2051-1000 Email: frankxu@allbrightlaw.com
|
| 15 |
If to an Initial Investor, to: the address set forth underneath such Exchange Investor’s name on the signature page. |
with a copy (which will not constitute notice) to:
Anthony L.G., PLLC 625 N. Flagler Drive, Suite 600 West Palm Beach, FL 33401 U.S.A. Attn: Laura Anthony Facsimile No.: +1 (561) 514-0832 Telephone No.: +1 (561) 514-0936 ext. 101 Email:Lanthony@anthonypllc.com
|
|
If to an Exchange Investor, to: the address set forth underneath such Exchange Investor’s name on the signature page. |
with a copy (which will not constitute notice) to:
Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas, 11th Floor New York, New York 10105 Attn: Barry I. Grossman, Esq. Matthew A. Gray, Esq.
Facsimile No.: (212) 370-7889 Telephone No.: (212) 370-1300 Email: bigrossman@egsllp.com mgray@egsllp.com
and
AllBright Law Offices 9/11/12F, Shanghai Tower No. 501 Yincheng Middle Road Pudong New Area Shanghai 200120 People’s Republic of China Attn: Frank Xu Facsimile No.: +86 21 2051-1999 Telephone No.: +86 21 2051-1000 Email: frankxu@allbrightlaw.com
|
6.4 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. Notwithstanding anything to the contrary contained in this Agreement, in the event that a duly executed copy of this Agreement is not delivered to Pubco by a Person receiving Registrable Securities in connection with the Closing, such Person failing to provide such signature shall not be a party to this Agreement or have any rights or obligations hereunder, but such failure shall not affect the rights and obligations of the other parties to this Agreement as among such other parties.
| 16 |
6.5 Entire Agreement. This Agreement (together with the Business Combination Agreement and the Lock-Up Agreements to the extent incorporated herein, and including all agreements entered into pursuant hereto or thereto or referenced herein or therein and all certificates and instruments delivered pursuant hereto and thereto) constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, representations, understandings, negotiations and discussions between the parties, whether oral or written, relating to the subject matter hereof; provided, that, for the avoidance of doubt, the foregoing shall not affect the rights and obligations of the parties under the Business Combination Agreement, any other Ancillary Document, or the Underwriter Warrant. Without prejudice to the generality of the foregoing, this Agreement amends, restates, supersedes and replaces in its entirety the Original Agreement. All references to the Original Agreement in any other document shall, from and after the date hereof, be deemed to refer to this Agreement (except to the extent, if any, that such interpretation would conflict with the terms of this Agreement as they refer or pertain to the Original Agreement).
6.6 Interpretation. Titles and headings of sections of this Agreement are for convenience only and shall not affect the construction of any provision of this Agreement. In this Agreement, unless the context otherwise requires: (i) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (ii) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding or succeeding such term and shall be deemed in each case to be followed by the words “without limitation”; (iii) the words “herein,” “hereto,” and “hereby” and other words of similar import in this Agreement shall be deemed in each case to refer to this Agreement as a whole and not to any particular section or other subdivision of this Agreement; and (iv) the term “or” means “and/or”. 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.
6.7 Amendments; Waivers. Any term of this Agreement may be amended and 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 agreement or consent of Pubco (after the Closing by a majority of the Disinterested Independent Directors), Investors holding a majority-in-interest of the Exchange Investor Registrable Securities, and Investors holding a majority-in-interest of the Initial Investor Registrable Securities; provided, that any amendment or waiver of this Agreement which affects an Investor in a manner materially and adversely disproportionate to other Investors will also require the consent of such Investor. 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.
6.8 Remedies Cumulative. In the event a party fails to observe or perform any covenant or agreement to be observed or performed under this Agreement, the other parties may proceed to protect and enforce its rights by suit in equity or action at law, whether for specific performance of any term contained in this Agreement or for an injunction against the breach of any such term or in aid of the exercise of any power granted in this Agreement or to enforce any other legal or equitable right, or to take any one or more of such actions, without being required to post a bond. None of the rights, powers or remedies conferred under this Agreement shall be mutually exclusive, and each such right, power or remedy shall be cumulative and in addition to any other right, power or remedy, whether conferred by this Agreement or now or hereafter available at law, in equity, by statute or otherwise.
| 17 |
6.9 Governing Law; Jurisdiction. This Agreement shall be governed by, construed and enforced in accordance with the Laws of the State of New York without regard to the conflict of laws principles thereof. Each party hereto hereby (i) submits to the exclusive jurisdiction of any state or federal court located in the County of New York in the State of New York (or in any appellate court thereof) (the “Specified Courts”) for the purpose of any claim, action, litigation or other legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby (a “Proceeding”), and (b) irrevocably waives, and agrees not to assert by way of motion, defense or otherwise, in any such Proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the Proceeding is brought in an inconvenient forum, that the venue of the Proceeding is improper, or that this Agreement or the transactions contemplated hereby may not be enforced in or by any Specified Court. Each party agrees that a final judgment in any Proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law. Each party irrevocably consents to the service of the summons and complaint and any other process in any Proceeding, on behalf of itself, or its property, by personal delivery of copies of such process to such party at the applicable address set forth in Section 6.3. Nothing in this Section 6.9 shall affect the right of any party to serve legal process in any other manner permitted by applicable Law.
6.10 WAIVER OF TRIAL BY JURY. EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT, COUNTERCLAIM OR OTHER PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF, CONNECTED WITH OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, OR THE ACTIONS OF THE INVESTORS IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
6.11 Authorization to Act on Behalf of Pubco. The parties acknowledge and agree that from and after the Closing, the Disinterested Independent Directors, by vote, consent, approval or determination of a majority of the Disinterested Independent Directors, is authorized and shall have the sole right to act on behalf of Pubco under this Agreement, including the right to enforce Pubco’s rights and remedies under this Agreement. Without limiting the foregoing, in the event that an Investor serves as a director, officer, employee or other authorized agent of Pubco, such Investor shall have no authority, express or implied, to act or make any determination on behalf of Pubco in connection with this Agreement or any dispute or Action with respect hereto.
6.12 Termination of Business Combination Agreement. This Agreement shall be binding upon each party upon such party’s execution and delivery of this Agreement, but this Agreement shall only become effective upon the Closing. In the event that the Business Combination Agreement is validly terminated in accordance with its terms prior to the Closing, this Agreement shall automatically terminate and become null and void and be of no further force or effect, and the parties shall have no obligations hereunder.
6.13 Counterparts. This Agreement may be executed in multiple counterparts (including by facsimile or pdf or other electronic document transmission), each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument.
{REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES FOLLOW}
| 18 |
IN WITNESS WHEREOF, the parties have caused this Seller Registration Rights Agreement to be executed and delivered as of the date first written above.
| Pubco: | ||
| CHIJET MOTOR COMPANY, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
| DMAC: | ||
| DEEP MEDICINE ACQUISITION CORP. | ||
| By: | ||
| Name: | ||
| Title: | ||
{Signature Page to Amended and Restated Registration Rights Agreement}
IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be executed and delivered as of the date first written above.
| Initial Investors: | ||
| [INITIAL INVESTOR] | ||
| By: | ||
| Name: | ||
| Title: | ||
| Address for Notice: | ||
| Address: | ||
| Facsimile No.: | ||
| Telephone No.: | ||
| Email: | ||
{Signature Page to Amended and Restated Registration Rights Agreement}
WHEREOF, the parties have caused this Registration Rights Agreement to be executed and delivered as of the date first written above.
| Exchange Investors: | ||
| [EXCHANGE INVESTOR] | ||
| By: | ||
| Name: | ||
| Title: | ||
| Address for Notice: | ||
| Address: | ||
| Facsimile No.: | ||
| Telephone No.: | ||
| Email: | ||
{Signature Page to Amended and Restated Registration Rights Agreement}